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Proc-Type: 2001,MIC-CLEAR
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[X] |
ANNUAL REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
[ ] |
TRANSITION REPORT UNDER SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
DELAWARE |
48-1100390 |
||||||
(State or
other jurisdiction of incorporation or organization) |
(IRS employer identification number) |
||||||
Six
Concourse Parkway, Suite 1900, Atlanta, Georgia |
30328 |
||||||
(Address of
principal executive offices) |
(Zip Code) |
||||||
Registrants telephone number, including area code: (678) 987-1700 |
Title of Each Class |
Name of Each Exchange on Which Registered |
|||||
---|---|---|---|---|---|---|
Common Stock,
$0.01 Par Value |
NASDAQ Global Market |
Title of Each Class |
Number of Shares Outstanding at March 1, 2008 |
|||||
---|---|---|---|---|---|---|
Common Stock,
$0.01 Par Value |
29,570,854 |
Form 10-K Item |
Page |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Part
I. |
||||||||||||
Forward-looking Statements |
1 | |||||||||||
Item
1. |
Business |
1 | ||||||||||
Item
1A. |
Risk Factors |
14 | ||||||||||
Item
1B |
Unresolved Staff Comments |
21 | ||||||||||
Item
2. |
Properties |
21 | ||||||||||
Item
3. |
Legal Proceedings |
21 | ||||||||||
Item
4. |
Submission of Matters to a Vote of Security Holders |
21 | ||||||||||
Part
II. |
||||||||||||
Item
5. |
Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
22 | ||||||||||
Item
6. |
Selected Financial Data |
23 | ||||||||||
Item
7. |
Managements Discussion and Analysis of Financial Condition and Results of Operations |
24 | ||||||||||
Item
7A. |
Quantitative and Qualitative Disclosures about Market Risk |
36 | ||||||||||
Item
8. |
Financial Statements and Supplementary Data |
36 | ||||||||||
Item
9. |
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
36 | ||||||||||
Item
9A. |
Controls and Procedures |
36 | ||||||||||
Item
9B. |
Other Information |
37 | ||||||||||
Part
III. |
||||||||||||
Item
10. |
Directors, Executive Officers and Corporate Governance |
37 | ||||||||||
Item
11. |
Executive Compensation |
40 | ||||||||||
Item
12. |
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
53 | ||||||||||
Item
13. |
Certain Relationships and Related Transactions, and Director Independence |
55 | ||||||||||
Item
14. |
Principal Accountant Fees and Services |
56 | ||||||||||
Part
IV. |
||||||||||||
Item
15. |
Exhibits, Financial Statement Schedules |
57 | ||||||||||
Signatures |
Item
1. |
Business |
|
C3. The C3 model uses a patented
combination of high-speed forced air convection heating and microwave energy to cook up to 10 times faster than conventional methods. The C3 bakes,
browns, broils and roasts with food quality that we believe to be comparable or superior to that of traditional cooking. The primary benefit of the C3
is its versatile capability to cook a wide spectrum of food, from dense proteins like filet mignon to delicate soufflés. Because it is certified
by Underwriters Laboratory (UL®) to be operated in a ventless environment, the
C3 does not require a hood, ventilation or a fire suppression system. Its preprogrammed, digital touchpad makes operation and training simple for any
operator or chef. |
|
Tornado. Our Tornado oven has
many of the same operational benefits as our C3, but it is specifically designed to cook, toast and brown sandwiches, pizzas, breakfast items,
appetizers and similar food products. The Tornado combines our patented ventless speed cook technology with a conventional wire baking rack or stone
and independently-controlled infrared browning element to cook up to 12 times faster than conventional methods with food quality that we believe to be
comparable or superior to that of traditional cooking. Like the C3, the Tornado is UL certified to be operated in a ventless environment. We believe
the adoption of the Tornado as their exclusive speed cook oven by several large and widely known restaurant and coffee shop brands validates the oven
and its underlying technologies. |
|
High h Batch. In the High h Batch
oven, we applied breakthrough impingement technology in a batch oven as an efficient alternative to currently-marketed commercial small conveyor ovens.
The High h Batch oven also includes our patented ventless technology and bakes, browns and toasts with speeds up to twice that of competitors
tabletop conveyors and five times the speed of conventional equipment. This model utilizes heated air only with no microwave, and it is particularly
suited for fresh dough pizzas, pasta entrees and appetizers, and raw dough and batter-based baked goods, and it can accommodate a full 1/2 sheet
pan. |
|
i5. The i5 batch oven is expected
to be available the first quarter of 2008. This design captures the exceptional cooking results of the dual air/microwave technology that went into the
Companys residential oven design. It is designed to enable improved throughput with uniform chef-quality results for applications where a wide
variety of foods must be cooked rapidly but with excellent texture and finishing, and it allows the user the flexibility of using metallic pans or
cooking sheets. Air from top and bottom may be separately controlled by the cooking menu affording greater flexibility in achieving the desired cooking
results. |
|
HhC 2020. With the HHC 2020 and
its bigger brother (described below), the Company is entering into a new competitive arena. This electric countertop conveyor oven utilizes Enersyst
high heat coefficient air impingement technology to provide some of the fastest cook times in its category. This product will address a huge market
opportunity where a small conveyor operation, such as a sandwich shop, seeks increased throughput. The Company expects to begin selling this oven the
second quarter of 2008. |
|
HhC 3240. The HhC3240 gas-fired,
impingement air conveyor oven has been designed with a small footprint to fit virtually any application and avoid the energy losses and higher HVAC
needs of larger ovens, and it can bake and toast food items up to 40% faster than conventional conveyor ovens without compromising quality. The speed
comes from a new and unique air handling design and techniques that create a more efficient, smoother air flow, which combined with its
engineered nozzle design yield the highest heat transfer rates measured on any conveyor to date. This oven is appropriate for large throughput
operations, such as pizza establishments. We expect to begin selling this oven the second quarter of 2008. |
|
Speed. Our C3 and Tornado ovens
cook up to 10 and 12 times faster, respectively, than conventional ovens, and each are capable of cooking diverse items together or consecutively with
no lag time. This capability results in significantly increased food throughput for users of our ovens. Our High h Batch oven, applying an advanced
version of the heated air impingement technology commonly found in conveyor ovens, but in a batch configuration in our oven, can double the speed of
competitor tabletop conveyor cooking, and it can cook up to 5 times as fast as a conventional oven. |
|
Quality and Versatility. We
believe that our ovens produce food that is comparable, and in many cases superior, in quality to conventional and other speed cook methods.
Additionally, our ovens are able to bake, brown, broil or roast, allowing them to be used in a broad spectrum of venues, including fine dining
establishments, quick-service restaurants, hotels, movie theaters, concessions, convenience stores, coffee shops and bakeries. |
|
Ventless Cooking. During the
cooking process, air in our speed cook ovens is circulated through an air-scrubbing catalytic converter that breaks down fume and grease by-products of
food, enabling the ovens to operate without venting these by-products into the air. This ventless system eliminates the need for commercial kitchen
hood systems, allows our ovens to be installed in almost any location, and significantly reduces flavor transfer and odor transfer between different
products cooked together or consecutively in the oven. |
|
Ease of Use. Our layered logic
operating system allows for step-by-step, intuitive operation of our ovens via a digital touchpad, allowing users to easily specify one of up to as
many as 128 pre-preprogrammed cooking profiles, depending on the oven model. These memorized settings allow operators of varying culinary skill levels
to easily cook a variety of menu items in a consistent, high quality manner. In addition, our operating system allows users to program their own custom
cook settings. Our ChefComm technology offers users the ability to upload and download menus to/from their ovens through the use of readily available
memory devices, such as smart cards and USB drives, and our proprietary software application. This coupled with Smart Menu, our menu management system,
enables foodservice chains to easily make changes to their menus for promotions and/or new product offerings and have their new menus burned to low
cost memory media and mailed to the operators central location or to each individual location for a quick, consistent and cost-efficient
update. |
Hotels and
Resorts |
Hilton Hotels Corporation Starwood Hotels & Resorts Worldwide, Inc. |
|||||
Foodservice and
Concessions |
Subway Dunkin Donuts Starbucks Coffee Company Compass Group HMS Host Corporation |
|||||
Grocery and
Convenience Stores |
Whole
Foods 7-Eleven |
|||||
Movie
Theaters |
Loews
Cineplex Entertainment Corporation |
|||||
Theme
Parks |
The
Walt Disney Company |
|||||
Stadiums |
Lambeau Field (Green Bay, Wisconsin) Petco Park (San Diego, California) |
|
multi-functional, multi-tasking
equipment that fits in a small footprint, is easy to clean, and is fully mobile; |
|
energy efficient with minimal heat and
fume emission; |
|
programmable via integrated memory
storage devices or connected remotely by a modem; |
|
easy to train new employees to use,
given high industry turnover rates and increasing number of non-English speaking employees; |
|
improved quality of equipment service;
and |
|
accelerated cooking using specialized
heat concentration technology. |
|
consumer desire for speed and
convenience in food preparation at home; |
|
increased demand for higher-end kitchen
equipment driven by increases in the size of the average American home and remodeling trends; |
|
emergence of premium kitchen equipment
as a status symbol; and |
|
increasing consumer comfort with using
technology in virtually every part of their daily lives. |
|
Amana Commercial (Ali
S.p.A.); |
|
Duke Manufacturing
Company; |
|
Fujimak Corporation; |
|
Groen, Inc. (Dover
Corporation); |
|
MerryChef and Lincoln Foodservice
Products (Enodis, LLP); |
|
The Middleby Corporation;
and |
|
Vulcan-Hart Corporation (Illinois Tool
Works, Inc.). |
|
create and develop demand for and market
acceptance of our technologies in the residential oven market; |
|
market, promote and distribute our speed
cook ovens and establish public awareness of our brand in the residential oven market; |
|
compete with the numerous,
well-established manufacturers and suppliers of conventional and speed cook ovens already in the residential oven market; and |
|
establish and maintain sufficient
internal research and development, marketing, sales, production and customer service infrastructures to support these efforts. |
|
our lengthy, unpredictable sales cycle
for commercial ovens; |
|
the gain or loss of significant
customers; |
|
unexpected delays in new product
introductions; |
|
level of market acceptance of our
residential ovens and any new or enhanced versions of our products; |
|
unexpected changes in the levels of our
operating expenses including increased research and development and sales and marketing expenses associated with new product
introductions; |
|
competitive product offerings and
pricing actions; and |
|
general economic
conditions. |
|
variations in quarterly operating
results; |
|
potential initiation and subsequent
changes in financial estimates by securities analysts; |
|
changes in general conditions in the
economy or the financial markets; |
|
changes in accounting standards,
policies or interpretations; |
|
other developments affecting us, our
industry, clients or competitors; and; |
|
the operating and stock price
performance of companies that investors deem comparable to us. |
|
authorize the issuance of preferred
stock that can be created and issued by our board of directors without prior stockholder approval, commonly referred to as blank check
preferred stock, with rights senior to those of our common stock; |
|
limit the persons who can call special
stockholder meetings; |
|
do not provide for cumulative voting in
the election of directors; and |
|
provide for the filling of vacancies on
our board of directors by action of a majority of the directors then in office, although less than a quorum, or by the stockholders at a
meeting. |
Item
1B. |
Unresolved Staff
Comments |
Item
2. |
Properties |
Item
3. |
Legal
Proceedings |
Item
4. |
Submission of Matters to a Vote of
Security Holders |
Nominee |
For |
Withheld |
Abstain |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Richard E.
Perlman |
25,599,865 | 1,744,864 | 1,375,052 | |||||||||||
James K.
Price |
24,503,079 | 1,841,650 | 1,471,838 | |||||||||||
James W.
DeYoung |
24,047,582 | 2,297,147 | 1,927,335 | |||||||||||
Sir Anthony
Jolliffe |
23,985,102 | 2,359,627 | 1,989,815 | |||||||||||
J. Thomas
Presby |
25,934,520 | 410,479 | 40,667 | |||||||||||
William A.
Shutzer |
25,563,311 | 781,418 | 411,406 | |||||||||||
Raymond H.
Welsh |
25,564,454 | 780,275 | 410,463 |
For |
Withheld |
Abstain |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
26,097,207 | 228,554 | 18,978 |
Item
5. |
Market for Registrants Common
Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
Price Range of Common Stock |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Period |
High |
Low |
|||||||||
Year Ended
December 31, 2006 |
|||||||||||
First Quarter
|
$ | 15.37 | $ | 10.24 | |||||||
Second
Quarter |
13.35 | 10.50 | |||||||||
Third Quarter
|
13.90 | 7.84 | |||||||||
Fourth
Quarter |
17.10 | 12.33 | |||||||||
Year Ended
December 31, 2007 |
|||||||||||
First Quarter
|
$ | 16.36 | $ | 13.96 | |||||||
Second
Quarter |
15.50 | 11.69 | |||||||||
Third Quarter
|
15.28 | 11.96 | |||||||||
Fourth
Quarter |
17.00 | 13.61 |
Item
6. |
Selected Financial
Data |
Year Ended December 31, |
|||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2007 |
2006 |
2005 |
2004 (b) |
2003 |
|||||||||||||||||||
Revenues
|
$ | 108,106 | $ | 48,669 | $ | 52,249 | $ | 70,894 | $ | 3,690 | |||||||||||||
Costs and
expenses: |
|||||||||||||||||||||||
Cost of
product sales |
66,645 | 31,929 | 43,532 | 44,047 | 1,946 | ||||||||||||||||||
Research and
development expenses |
5,177 | 4,357 | 4,307 | 1,202 | 897 | ||||||||||||||||||
Purchased
research and development (a) |
| 7,665 | 6,285 | | | ||||||||||||||||||
Selling,
general and administrative expenses |
53,427 | 28,986 | 34,398 | 19,191 | 7,747 | ||||||||||||||||||
Compensation
and severance expenses related to termination of former officers and directors |
| | | | 7,585 | ||||||||||||||||||
Total costs
and expenses |
125,249 | 72,937 | 88,522 | 64,440 | 18,175 | ||||||||||||||||||
Operating
(loss) income |
(17,143 | ) | (24,268 | ) | (36,273 | ) | 6,454 | (14,485 | ) | ||||||||||||||
Interest
expense and other (c) |
(729 | ) | (436 | ) | (332 | ) | (8 | ) | (1,105 | ) | |||||||||||||
Interest
income |
638 | 1,300 | 1,536 | 169 | 17 | ||||||||||||||||||
Total other
income (expense) |
(91 | ) | 864 | 1,204 | 161 | (1,088 | ) | ||||||||||||||||
(Loss) income
before taxes |
(17,234 | ) | (23,404 | ) | (35,069 | ) | 6,615 | (15,573 | ) | ||||||||||||||
Provision for
income taxes |
| | | 301 | | ||||||||||||||||||
Net (loss)
income |
(17,234 | ) | (23,404 | ) | (35,069 | ) | 6,314 | (15,573 | ) | ||||||||||||||
Preferred
stock dividends |
| | | | (195 | ) | |||||||||||||||||
Beneficial
conversion feature of preferred stock (d) |
| | | | (12,605 | ) | |||||||||||||||||
Net (loss)
income applicable to common stockholders |
$ | (17,234 | ) | $ | (23,404 | ) | $ | (35,069 | ) | $ | 6,314 | $ | (28,373 | ) | |||||||||
Net (loss)
income per share applicable to common stockholders: |
|||||||||||||||||||||||
Basic
|
$ | (0.59 | ) | $ | (0.81 | ) | $ | (1.25 | ) | $ | 0.52 | $ | (4.17 | ) | |||||||||
Diluted
|
(0.59 | ) | (0.81 | ) | (1.25 | ) | 0.25 | (4.17 | ) | ||||||||||||||
Basic
|
29,294,596 | 28,834,821 | 28,034,103 | 12,256,686 | 6,797,575 | ||||||||||||||||||
Diluted
|
29,294,596 | 28,834,821 | 28,034,103 | 25,626,215 | 6,797,575 |
(a) |
During the year ended December 31, 2005,
we purchased the patents and technology assets of Global Appliance Technologies, Inc. (Global). The agreement provided for payment of additional
consideration contingent on filing a specific number of patent applications within 18 months of the closing date of the transaction. At the time of
closing, approximately $6.3 million of the purchase price was allocated to purchased research and development. In 2006, the contingencies were resolved
and an additional $7.7 million of the additional consideration payable was allocated to purchased research and development. |
(b) |
During the year ended December 31, 2004,
we completed the acquisition of Enersyst Development Center, L.L.C. in a transaction accounted for as a purchase. The results of operations of Enersyst
have been included in our consolidated results of operations since the May 21, 2004 purchase date. |
(c) |
Amount for 2003 primarily represents
$1.1 million of debt extinguishment costs incurred in 2003. |
(d) |
During 2003, we incurred a non-cash
charge of $12.6 million to record a deemed dividend in recognition of the beneficial conversion feature intrinsic in the terms of our Series D
Convertible Preferred Stock. The Series D Convertible Preferred Stock was considered redeemable until July 19, 2004 when shareholders approved an
amendment to increase the number of authorized shares of our common stock to 100,000,000 and a sufficient number of shares of common stock were
subsequently reserved to permit the conversion of all outstanding shares of our Series D Convertible Preferred Stock into shares of common stock. As of
October 28, 2004, all shares of Series D Convertible Preferred Stock had been converted to shares of common stock. |
As of December 31, |
|||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2007 |
2006 |
2005 (a) |
2004 |
2003 |
|||||||||||||||||||
Cash and cash
equivalents |
$ | 10,149 | $ | 19,675 | $ | 40,098 | $ | 12,942 | $ | 8,890 | |||||||||||||
Working
capital (deficit) |
11,358 | 25,677 | 43,745 | 17,399 | (5,685 | ) | |||||||||||||||||
Total assets
|
88,721 | 72,201 | 86,150 | 50,687 | 11,420 | ||||||||||||||||||
Total
liabilities, including mezzanine equity |
56,214 | 26,496 | 21,378 | 17,088 | 18,155 | ||||||||||||||||||
Accumulated
deficit |
(142,026 | ) | (124,792 | ) | (101,388 | ) | (66,319 | ) | (72,633 | ) | |||||||||||||
Total
stockholders equity (deficit) |
32,507 | 45,705 | 64,772 | 33,779 | (6,735 | ) |
(a) |
During the year ended December 31, 2005,
we purchased the patents and technology assets of Global Appliance Technologies, Inc. (Global). The agreement provided for payment of additional
consideration contingent on delivery of a specific number of patent applications within 18 months of the closing date of the transaction. At the time
of closing, approximately $6.3 million of the purchase price was allocated to purchased research and development. In 2006, the contingencies were
resolved and an additional $7.7 million of the additional consideration payable was allocated to purchased research and development. |
Item
7. |
Managements Discussion and
Analysis of Financial Condition and Results of Operations |
2007 |
2006 |
2005 |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Revenues
|
100 | % | 100 | % | 100 | % | ||||||||
Cost of
product sales |
62 | 66 | 83 | |||||||||||
Research and
development expenses |
5 | 9 | 8 | |||||||||||
Purchased
research and development |
| 16 | 12 | |||||||||||
Selling,
general and administrative expenses |
49 | 59 | 65 | |||||||||||
Restructuring
charges |
| | 1 | |||||||||||
Total costs
and expenses |
116 | 150 | 169 | |||||||||||
Operating
loss |
(16 | ) | (50 | ) | (69 | ) | ||||||||
Interest
income |
1 | 3 | 3 | |||||||||||
Interest
expense and other |
(1 | ) | (1 | ) | (1 | ) | ||||||||
Total other
income |
| 2 | 2 | |||||||||||
Net loss
|
(16 | )% | (48 | )% | (67 | )% |
|
During 2007, we grew our total revenue
by 122% over 2006. This was due to growth in sales to three contract customers totaling $44.0 million and growth in sales to non-contract customers
totaling $15.4 million. Contract customers are those commercial customers for whom we have an executed agreement addressing, among other items, service
requirements and purchase price. We generated 66%, 55%, and 60% of our revenue from three contract customers for each of the years ended 2007, 2006 and
2005, respectively. No other single customer accounted for more than 10% of our total 2007, 2006 or 2005 revenues. We expect our non-contract customer
revenue to continue to increase in 2008. As our customer base continues to grow, we expect our customer concentration levels to
decline. |
|
During 2007, we continued to experience
a decrease in our cost of product sales as a percentage of revenue (and an improvement in our gross profit percentage) as compared to 2006. The
improvement is primarily |
due to favorable sales mix resulting in
higher average selling prices per unit, offset by an increase of 4% in component pricing over 2006. In 2008, we expect gross profit percentages
consistent with 2007 levels. |
|
During 2007, we increased our research
and development expenditures primarily as the result of our residential oven initiative and new commercial projects. In 2008, we expect our research
and development expenditures to approximate the 2007 levels as we develop additional residential and commercial products. |
|
During 2007, we increased our selling,
general and administrative expenses and depreciation and amortization, by $24.4 million over 2006 primarily due to costs related to our residential
segment and expenses incurred in relation to the option review investigation. We expect a decrease in 2008 compared to 2007 primarily due to the
absence of $7.7 million in option investigation related costs incurred in 2007. |
|
increase our commercial revenue across
our customer base; |
|
manage costs related to the commercial
business segment; |
|
successfully launch our residential
product line; |
|
manage costs related to the residential
product launch; |
Increase (Decrease) in Research and Development Expenses |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
2007 to 2006 |
2006 to 2005 |
||||||||||
Design,
prototype and other related expenses |
$ | 394 | $ | (608 | ) | ||||||
Payroll and
related expenses |
250 | 612 | |||||||||
Engineering
related general and administrative expenses |
176 | 45 | |||||||||
Total
increase |
$ | 820 | $ | 49 |
Increase (Decrease) in General and Administrative Expenses |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
2007 to 2006 |
2006 to 2005 |
||||||||||
Selling,
marketing and related expenses |
$ | 9,751 | $ | 1,056 | |||||||
Legal and
professional fees |
8,047 | (2,912 | ) | ||||||||
Payroll and
related expenses |
4,129 | 2,194 | |||||||||
Non-cash
stock compensation |
1,394 | (6,824 | ) | ||||||||
Travel and
related expenses |
672 | 100 | |||||||||
Depreciation
and amortization |
216 | 1,058 | |||||||||
Rent and
occupancy costs |
191 | 544 | |||||||||
Other
|
| 34 | |||||||||
Total
(decrease) increase |
$ | 24,400 | $ | (4,750 | ) |
Payments Due By Period |
|||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Total |
2008 |
2009 |
2010 |
2011 |
2012 |
Thereafter |
|||||||||||||||||||||||||
Installment
Payments for Covenants Not-to-Compete |
$ | 1,330 | $ | 1,330 | $ | | $ | | $ | | $ | | $ | | |||||||||||||||||
Installment
Payments for Contingent Consideration Due Under Asset Purchase Agreement* |
2,665 | 2,665 | | | | | | ||||||||||||||||||||||||
Amounts
outstanding under credit facility |
9,000 | 9,000 | | | | | | ||||||||||||||||||||||||
Operating
Leases |
5,080 | 1,293 | 1,170 | 895 | 896 | 826 | | ||||||||||||||||||||||||
Total
|
$ | 18,075 | $ | 14,288 | $ | 1,170 | $ | 895 | $ | 896 | $ | 826 | $ | |
* |
62% of this obligation is to be settled
by issuance of common stock |
Item
7A. |
Quantitative and Qualitative
Disclosures about Market Risk |
Item
8. |
Financial Statements and Supplementary
Data |
Item
9. |
Changes In and Disagreements with
Accountants on Accounting and Financial Disclosure |
Item
9A. |
Controls and
Procedures |
Item
9B. |
Other
Information |
Item
10. |
Directors, Executive Officers and
Corporate Governance |
Name |
Age |
Position |
||||||||
---|---|---|---|---|---|---|---|---|---|---|
Richard E.
Perlman |
61 | Chairman of the Board of Directors |
||||||||
James K. Price
|
49 | President, Chief Executive Officer and Director |
||||||||
James A.
Cochran |
60 | Senior Vice President, Corporate Strategy and Investor Relations |
||||||||
Paul P. Lehr
|
61 | Vice President and Chief Operating Officer |
||||||||
Joseph T.
McGrain |
60 | Vice President and President, Residential Oven Division |
||||||||
Stephen J.
Beshara |
47 | Vice President and Chief Branding Officer |
||||||||
J. Miguel
Fernandez de Castro |
35 | Vice President and Chief Financial Officer |
||||||||
Dennis J.
Stockwell |
54 | Vice President and General Counsel |
||||||||
William A.
Shutzer |
60 | Director |
||||||||
Raymond H.
Welsh |
76 | Director |
||||||||
J. Thomas
Presby |
68 | Director |
||||||||
Sir Anthony
Jolliffe |
69 | Director |
||||||||
James W.
DeYoung |
64 | Director |
Item
11. |
Executive
Compensation |
$274,439, reflecting a $9,372 increase over 2007 under his CPI annual adjustment provision. The decision to renew these employment agreements was considered in April 2007, six months prior to the renewal date, as provided in the employment agreements. Under the amended agreements, the Compensation Committee will consider renewal of these agreements in June, six months prior to the amended January 1 renewal dates.
Name and Principal Position |
Year |
Salary |
Bonus |
Stock Awards(1) |
Non-Equity Incentive Plan Compensation |
All Other Compensation |
Total |
|||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Richard E.
Perlman |
2007 | $ | 399,770 | $ | 134,154 | $ | 220,057 | $ | 29,629 | (2) | $ | 783,610 | ||||||||||||||||||
Chairman |
2006 | $ | 393,608 | $ | 75,000 | $ | 35,862 | $ | 504,470 | |||||||||||||||||||||
James K.
Price |
2007 | $ | 474,770 | $ | 134,154 | $ | 220,157 | $ | 7,500 | $ | 836,481 | |||||||||||||||||||
Chief
Executive Officer |
2006 | $ | 393,608 | $ | 75,000 | $ | 23,130 | $ | 491,738 | |||||||||||||||||||||
J. Miguel
Fernandez de Castro |
2007 | $ | 159,038 | $ | 150,945 | (3) | $ | 83,912 | $ | 3,995 | $ | 397,890 | ||||||||||||||||||
Chief
Financial Officer |
2006 | $ | 135,000 | $ | 25,000 | $ | 3,995 | $ | 163,995 | |||||||||||||||||||||
James A.
Cochran |
2007 | $ | 266,148 | $ | 46,260 | $ | 70,571 | $ | 7,500 | $ | 390,479 | |||||||||||||||||||
Sr. Vice
President |
2006 | $ | 262,046 | $ | 25,000 | $ | 17,739 | $ | 304,785 | |||||||||||||||||||||
(former Chief
Financial Officer) |
||||||||||||||||||||||||||||||
Paul P. Lehr
|
2007 | $ | 296,154 | $ | 152,926 | (4) | $ | 520,376 | $ | 2,769 | $ | 972,225 | ||||||||||||||||||
Chief
Operating Officer |
2006 | $ | 200,000 | $ | 50,000 | $ | 19,682 | $ | 269,682 | |||||||||||||||||||||
Stephen J.
Beshara |
2007 | $ | 296,154 | $ | 524,613 | (5) | $ | 100,000 | $ | 6,000 | $ | 926,767 | ||||||||||||||||||
Chief
Branding Officer |
2006 | $ | 200,000 | $ | 50,000 | $ | 176,400 | $ | 6,000 | $ | 432,400 |
(1) |
The amount recognized for financial
statement reporting purposes under FAS 123R for restricted stock unit awards, including for certain named executives the effect of option amendments
(see footnotes 3, 4 and 5). Assumptions used in calculation of these amounts are included in Note 2 to the Companys audited financial statements
in this Annual Report on Form 10-K. |
(2) |
Includes amounts for automobile
allowance, life and disability insurance premiums, credit card fees and a matching grant under the Companys 401(k) plan. |
(3) |
Includes the incremental combined value
under FAS 123(R) of restricted stock units awarded to compensate for the aggregate difference in exercise prices of certain stock options that were
re-priced upwards to avoid adverse tax consequences under IRC Section 409A and the difference in value under FAS 123(R) of those re-priced options. The
RSUs awarded in connection with the options amendment are valued at $187,998 under FAS 123(R), but the newly-price options are valued under FAS 123(R)
at $106,443 less than they were pre-modification, netting $81,555 of incremental value. See footnote 4 to the Grants of Plan-Based Awards table
below. |
(4) |
Includes the incremental combined value
under FAS 123(R) of restricted stock units awarded to compensate for the aggregate difference in exercise prices of certain stock options that were
re-priced upwards to avoid adverse tax consequences under IRC Section 409A and the difference in value under FAS 123(R) of those re-priced options. The
RSUs awarded in connection with the options amendment are valued at $20,437 under FAS 123(R), but the newly-price options are valued under FAS 123(R)
at $20,169 less than they were pre-modification, netting $268 of incremental value. See footnote 4 to the Grants of Plan-Based Awards table
below. |
(5) |
Includes the incremental combined value
under FAS 123(R) of restricted stock units awarded to compensate for the aggregate difference in exercise prices of certain stock options that were
re-priced upwards to avoid adverse tax consequences under IRC Section 409A and the difference in value under FAS 123(R) of those re-priced options. The
RSUs awarded in connection with the options amendment are valued at $300,602 under FAS 123(R), but the newly-price options are valued under FAS 123(R)
at $193,247 less than they were pre-modification, netting $107,355 of incremental value. See footnote 4 to the Grants of Plan-Based Awards table
below. |
Name |
Grant Date |
Estimated Future Payouts Under Non-Equity Incentive Plan Awards |
Estimated Future Payouts Under Equity Incentive Plan Awards(1) |
All Other Stock Awards; Number of Shares of Stock Or Units (#) |
All Other Option Awards; Number of Securities Underlying Options (#) |
Exercise or Base Price of Option Awards ($/Sh) |
Grant Date Fair Value of Stock And Option Awards |
||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Target ($) | Maximum ($) | Target (#) | |||||||||||||||||||||||||||||||||
Richard E.
Perlman |
March 29, 2007 |
$ | 75,000 | (2 | ) | 58,000 | $ | 894,360 | |||||||||||||||||||||||||||
James K. Price
|
March 29, 2007 |
$ | 75,000 | (2 | ) | 58,000 | $ | 894,360 | |||||||||||||||||||||||||||
J. Miguel
Fernandez de Castro |
March 29, 2007 |
$ | 25,000 | (2 | ) | 30,000 | $ | 462,600 | |||||||||||||||||||||||||||
December 7, 2007 |
(5 | ) | 33,333 | $ | 14.58 | (5) | $ | 71,559 | (5) | ||||||||||||||||||||||||||
December 7, 2007 |
(5 | ) | 15,000 | $ | 11.95 | (5) | $ | 9,996 | (5) | ||||||||||||||||||||||||||
James A. Cochran
|
March 29, 2007 |
$ | 30,000 | (2 | ) | 20,000 | $ | 308,400 | |||||||||||||||||||||||||||
Paul P. Lehr
|
March 29, 2007 |
$ | 50,000 | (3 | ) | 66,000 | $ | 1,017,720 | |||||||||||||||||||||||||||
December 7, 2007 |
(5 | ) | 4,666 | $ | 14.58 | (5) | $ | 268 | (5) | ||||||||||||||||||||||||||
Stephen J.
Beshara |
March 29, 2007 |
$ | 50,000 | (4 | ) | 66,000 | $ | 1,017,720 | |||||||||||||||||||||||||||
December 7, 2007 |
(5 | ) | 46,667 | $ | 12.99 | (5) | $ | 80,698 | (5) | ||||||||||||||||||||||||||
December 7, 2007 |
(5 | ) | 40,000 | $ | 11.95 | (5) | $ | 26,657 | (5) |
(1) |
Restricted stock unit awards granted
under the 2007 Incentive-based Compensation Plan for retention purposes with time-based (not performance based) vesting. |
(2) |
Maximum cash bonuses under the 2007
Incentive-based Compensation Plan are determined by allocating a share of a pool comprised of 15% of the excess EBITDA, if EBITDA results are 15
25% better than budgeted, or 25% of the excess EBITDA, if EBITDA results are more than 25% better than budgeted. The additional bonus amounts are
calculated from the foregoing formula applied to each of four categories of results commercial, residential, marketing and consolidated
and weighing each at 25% of the total possible pool. Actual bonuses earned under this plan are set forth above in the Summary Compensation
Table. |
(3) |
Maximum cash bonus under the 2007
Incentive-based Compensation Plan is determined by allocating a share of a pool comprised of 15% of the excess EBITDA, if EBITDA results are 15
25% better than budgeted, or 25% of the excess EBITDA, if EBITDA results are more than 25% better than budgeted applied to commercial business results.
The actual bonus earned under this plan is set forth above in the Summary Compensation Table. |
(4) |
Maximum cash bonus under the 2007
Incentive-based Compensation Plan is determined under a subjective analysis by the Compensation Committee of qualitative and quantitative results for
residential business and marketing results, with 25% of additional EBITDA serving as a maximum measure of possible additional bonus. The actual bonus
earned under this plan is set forth above in the Summary Compensation Table. |
(5) |
Under transition rules of IRC Section
409A, options previously awarded to these named executive officers were amended to fair market value on their new measurement date, increasing the
exercise price, and the option holder was awarded restricted stock units under the Companys 2003 Stock Incentive Plan. The restricted stock units
are denominated in dollars (reflecting the aggregate difference in the exercise prices) and payable in shares on March 7, 2008. The number of shares
underlying the restricted stock units to match the dollar denomination will be determined from the closing price on the last trading day before March
7, 2008. The combination of the restricted stock unit award and amendment of the options to increase the exercise price compared to the
pre-modification stock options netted a positive incremental compensation value under FAS 123R, which is reported in this table. See footnotes 3, 4 and
5 to the Summary Compensation Table above. The amended exercise prices of the prior option awards are as follows: |
Old Price |
New Price |
|||||
---|---|---|---|---|---|---|
$ 7.92 |
$12.99 |
|||||
$ 9.66 |
$14.58 |
|||||
$10.35 |
$11.95 |
Name |
Base Salary |
|||||
---|---|---|---|---|---|---|
Richard E.
Perlman |
$ | 441,024 | ||||
James K.
Price |
$ | 439,324 | ||||
J. Miguel
Fernandez de Castro |
$ | 200,000 | ||||
James A.
Cochran |
$ | 274,439 | ||||
Paul P. Lehr
|
$ | 300,000 | ||||
Stephen J.
Beshara |
$ | 300,000 |
Option Awards |
Stock Awards |
||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name |
Number of Securities Underlying Unexercised Options (#) Exercisable (1) |
Option Exercise Price ($) |
Option Expiration Date |
Number of Shares or Units of Stock That Have Not Vested (#) |
Market Value of Shares or Units of Stock That Have Not Vested ($) |
||||||||||||||||||
Richard E.
Perlman |
416,633 | $ | 5.25 | October
29, 2013 |
58,000 | (3) | $ | 957,000 | |||||||||||||||
James K. Price
|
416,666 | $ | 5.25 | October
29, 2013 |
58,000 | (3) | $ | 957,000 | |||||||||||||||
J. Miguel
Fernandez de Castro |
33,333 | $ | 14.58 | April 19,
2014 |
30,000 | (3) | $ | 495,000 | |||||||||||||||
15,000 | (2) | $ | 11.95 | May 3,
2015 |
|||||||||||||||||||
James A.
Cochran |
133,333 | $ | 5.25 | October
29, 2013 |
20,000 | (3) | $ | 330,000 | |||||||||||||||
15,000 | (2) | $ | 10.35 | May 3,
2015 |
|||||||||||||||||||
Paul P. Lehr
|
40,000 | $ | 10.35 | May 3,
2015 |
66,000 | (3) | $ | 1,089,000 | |||||||||||||||
Stephen J.
Beshara |
46,676 | $ | 12.99 | November
21, 2013 |
106,000 | (4) | $ | 1,749,000 | |||||||||||||||
40,000 | (2) | $ | 11.95 | May 3,
2015 |
(1) |
The Company accelerated the vesting of
all outstanding stock options on December 31, 2005, so all options listed are fully vested. While the executive officer may exercise the options at any
time, each has agreed not to sell the underlying shares until the date the shares would have vested but for the Companys acceleration of vesting
at the end of 2005. The shares underlying options that are still subject to the purchase-and-hold provision of the stock option modification agreements
are indicated by footnote. |
(2) |
Shares are released from the
purchase-and-hold provision described in footnote (1) in equal amounts every three months over a three-year period beginning May 3,
2005. |
(3) |
The restricted stock units vest
one-fifth on March 10, 2008 and thereafter each of the remaining one-fifths on each of the next four anniversaries thereof. |
(4) |
13,200 of the restricted stock units
vest on March 10, 2008 and thereafter 13,200 units vest on each of the next four anniversaries thereof. 40,000 of the restricted stock units vest on
May 2, 2008. |
Option Awards |
Stock Awards |
||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name |
Number of Shares Acquired on Exercise (#) |
Value Realized on Exercise ($) |
Number of Shares Acquired on Vesting (#) |
Value Realized on Vesting ($) |
|||||||||||||||
Richard E.
Perlman |
0 | 0 | 0 | 0 | |||||||||||||||
James K. Price
|
0 | 0 | 0 | 0 | |||||||||||||||
J. Miguel
Fernandez de Castro |
0 | 0 | (1 | ) | $ | 187,998 | |||||||||||||
James A. Cochran
|
0 | 0 | 0 | 0 | |||||||||||||||
Paul P. Lehr
|
4,666 | $ | 8,819 | (1 | ) | $ | 20,437 | ||||||||||||
Stephen J.
Beshara |
0 | 0 | (1 | ) | $ | 300,602 |
(1) |
See footnotes 3, 4 and 5 to the Summary
Compensation Table and footnote 4 to the Grants of Plan-based Awards table above. |
Name |
Type of Severance Benefit |
Amount Payable |
|||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Richard E.
Perlman |
Base
Salary |
$ | 1,236,672 | ||||||||||||
Bonus |
225,000 | ||||||||||||||
Benefits |
24,681 | ||||||||||||||
IRC
Sec. 4999 Gross Up |
1,104,863 | ||||||||||||||
Total value: |
$ | 2,591,216 | |||||||||||||
James K. Price
|
Base
Salary |
$ | 1,236,672 | ||||||||||||
Bonus |
225,000 | ||||||||||||||
Benefits |
33,426 | ||||||||||||||
IRC
Sec. 4999 Gross Up |
1,085,261 | ||||||||||||||
Total value: |
$ | 2,580,359 | |||||||||||||
J. Miguel
Fernandez de Castro |
Base
Salary |
$ | 600,000 | ||||||||||||
Bonus |
75,000 | ||||||||||||||
Benefits |
32,712 | ||||||||||||||
IRC
Sec. 4999 Gross Up |
571,516 | ||||||||||||||
Total value: |
$ | 1,279,228 | |||||||||||||
James A.
Cochran |
Base
Salary |
$ | 823,317 | ||||||||||||
Bonus |
90,000 | ||||||||||||||
Benefits |
14,265 | ||||||||||||||
IRC
Sec. 4999 Gross Up |
536,403 | ||||||||||||||
Total value: |
$ | 1,463,985 | |||||||||||||
Paul P. Lehr
|
Base
Salary |
$ | 150,000 | ||||||||||||
IRC
Sec. 4999 Gross Up |
0 | ||||||||||||||
Total value: |
$ | 150,000 | |||||||||||||
Stephen J.
Beshara |
Base
Salary |
$ | 150,000 | ||||||||||||
IRC
Sec. 4999 Gross Up |
454,254 | ||||||||||||||
Total value: |
$ | 604,254 |
Name |
Fees Paid in Cash |
Restricted Stock Units Awards(1) |
All Other Compensation |
Total |
||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
J. Thomas
Presby(4) |
$ | 25,000 | $ | 53,836 | $ | 78,836 | ||||||||||||
William A.
Shutzer(5) |
$ | 25,000 | $ | 53,836 | $ | 78,836 | ||||||||||||
Raymond H.
Welsh(6) |
$ | 25,000 | $ | 38,454 | $ | 63,454 | ||||||||||||
James W.
DeYoung(7) |
$ | 25,000 | $ | 38,454 | $ | 49,959 | (2)(3) | $ | 113,413 | |||||||||
Sir Anthony
Jolliffe(8) |
$ | 25,000 | $ | 38,454 | $ | 24,961 | (2) | $ | 88,415 |
(1) |
The grant date fair value under SFAS
123R of the RSUs awarded on October 29, 2006 was $12.83 per share and $15.48 per share on October 29, 2007. |
(2) |
Compensation was in the form of 4,580
restricted stock units each, awarded on May 2, 2006 for consulting services, vesting monthly over one year, with a delayed payout until May 2, 2009.
The grant date fair value under SFAS 123R was $13.23 per share. |
(3) |
Compensation was in the form of 4,408
restricted stock units awarded on October 2, 2007 for consulting services, vesting monthly over one year. The grant date fair value under SFAS 123R was
$13.67 per share. Compensation also included $10,000 cash paid for consulting services. |
(4) |
At year end, Mr. Presby held stock
options on 68,332 shares, all of which were vested, and RSUs for 10,500 shares, none of which were vested. |
(5) |
At year end, Mr. Shutzer held stock
options on 68,332 shares, all of which were vested, and RSUs for 10,500 shares, none of which were vested. |
(6) |
At year end, Mr. Welsh held stock
options on 53,332 shares, all of which were vested, and RSUs for 7,500 shares, none of which were vested. |
(7) |
At year end, Mr. DeYoung held stock
options on 61,665 shares, all of which were vested, and RSUs for 16,488 shares, 4,580 of which were vested but not payable until May 2, 2009 and 1102
of which were vested but not payable until October 2, 2008. |
(8) |
At year end, Sir Anthony Jolliffe held
stock options on 89,998 shares, all of which were vested, and RSUs for 12,080 shares, 4,580 of which were vested but not payable until May 2,
2009. |
Item
12. |
Security Ownership of Certain
Beneficial Owners and Management and Related Stockholder Matters |
Title of Class |
Name and Address of Beneficial Owner of Class |
Amount of Beneficial Ownership |
Percent of Class (1) |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Common |
FMR
Corp. 82 Devonshire Street Boston, MA 02109 |
4,408,144 | (2) | 14.9 | % | |||||||||
Common |
Jack
Silver SIAR Capital LLC 660 Madison Avenue New York, NY 10021 |
3,249,401 | (3) | 10.9 | % | |||||||||
Common |
Jeffrey B. Bogatin 888 Park Avenue New York, NY 10021 |
1,479,164 | (4) | 5.0 | % |
(1) |
Based upon 29,570,854 shares outstanding
on March 1, 2008. |
(2) |
Based upon ownership reported in an
amended Schedule 13G filed on February 14, 2008. The amended Schedule 13G was filed by FMR Corp. as well as Edward C. Johnson 3d, Chairman of FMR
Corp. |
(3) |
Based upon ownership reported in an
amended Schedule 13G filed on February 13, 2008 by Jack Silver and affiliated entities. |
(4) |
Based upon ownership reported in an
amended Schedule 13D filed on December 21, 2006. |
|
each of TurboChefs
directors; |
|
each of TurboChefs named executive
officers; and |
|
all of TurboChefs directors and
executive officers as a group. |
Name of Beneficial Owner |
Amount and Nature of Beneficial Ownership (1) |
Percent of Class |
||||||||
---|---|---|---|---|---|---|---|---|---|---|
Richard E.
Perlman |
2,569,698 | (2) | 8.6 | % | ||||||
James K.
Price |
2,208,802 | (3) | 7.4 | % | ||||||
J. Thomas
Presby |
192,072 | (4) | * | |||||||
William A.
Shutzer |
1,889,561 | (5) | 6.4 | % | ||||||
Raymond H.
Welsh |
93,763 | (6) | * | |||||||
Sir Anthony
Jolliffe |
112,528 | (7) | * | |||||||
James W.
DeYoung |
368,038 | (8) | 1.2 | % | ||||||
James A.
Cochran |
312,287 | (9) | 1.1 | % | ||||||
Paul P. Lehr
|
53,200 | (10) | * | |||||||
J. Miguel
Fernandez de Castro |
64,999 | (11) | * | |||||||
Stephen J.
Beshara |
99,866 | (12) | * | |||||||
All current
directors and executive officers as a group (13 persons) |
8,179,798 | (2)(13) | 26.1 | % |
** |
Less than 1% |
(1) |
Unless otherwise indicated, the Company
believes that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by
them. Percentages herein assume a base of 29,570,854 shares of common stock outstanding as of March 1, 2008. |
(2) |
Includes 416,633 shares of common stock
issuable upon exercise of options, 11,600 shares issuable upon vesting of restricted stock units and 432,185 shares of common stock currently owned by
OvenWorks, LLLP, which is controlled by Mr. Perlman. Mr. Perlman has pledged 1,676,587 shares as security. Mr. Perlmans address is 655 Madison
Avenue, Suite 1500, New York, NY 10021. |
(3) |
Includes 416,666 shares of common stock
issuable upon exercise of options, 11,600 shares issuable upon vesting of restricted stock units and 71,257 shares of common stock currently owned by
OvenWorks, LLLP. Mr. Price has pledged 900,000 shares as security. Mr. Prices address is Six Concourse Parkway, Suite 1900, Atlanta, GA
30328. |
(4) |
Includes 68,333 shares of common stock
issuable upon exercise of options and 4,811 shares of common stock currently owned by OvenWorks, LLLP. |
(5) |
Includes 68,333 shares of common stock
issuable upon exercise of options and 72,746 shares of common stock currently owned by OvenWorks, LLLP. Mr. Shutzers address is 655 Madison
Avenue, Suite 1500, New York, NY 10021. |
(6) |
Includes 53,332 shares of common stock
issuable upon exercise of options. |
(7) |
Includes 89,998 shares of common stock
issuable upon exercise of options and 2,530 shares of common stock currently owned by OvenWorks, LLLP. |
(8) |
Includes 61,665 shares of common stock
issuable upon exercise of options and 8,333 shares of common stock currently owned by OvenWorks, LLLP. |
(9) |
Includes 148,333 shares of common stock
issuable upon exercise of options, 2,000 shares issuable upon vesting of restricted stock units and 10,802 shares of common stock currently owned by
OvenWorks, LLLP. Mr. Cochran has pledged 151,152 shares as security. |
(10) |
Includes 40,000 shares of common stock
issuable upon exercise of options and 13,200 shares issuable upon vesting of restricted stock units. |
(11) |
Includes 48,333 shares of common stock
issuable upon exercise of options and 6,000 shares issuable upon vesting of restricted stock units. |
(12) |
Includes 86,666 shares of common stock
issuable upon exercise of options and 13,200 shares issuable upon vesting of restricted stock units. |
(13) |
Includes 1,573,543 shares issuable upon
exercise of options, 40,400 shares issuable upon vesting of restricted stock units and 432,185 shares of common stock currently owned by OvenWorks,
LLLP. |
Plan category |
(b) Number of securities to be issued upon exercise of outstanding options, warrants and rights |
(a) Weighted-average exercise price of outstanding options, warrants and rights |
(b) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in first column) |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Equity
compensation plans approved by security holders |
3,694,239 | $ | 9.35 | 903,794 | ||||||||||
Equity
compensation plans not approved by security holders |
| | | |||||||||||
Total
|
3,694,239 | $ | 9.35 | 903,794 |
(a) |
The weighted-average exercise price does
not take into account the shares issuable upon vesting of outstanding restricted stock units which have no exercise price. |
(b) |
Includes an estimated 223,000 shares
issuable on March 7, 2008 pursuant to the vesting of restricted stock units, which estimate is based upon the closing price of the Common Stock on
February 27, 2008. The RSUs are denominated in dollars, aggregating $1.9 million, and the actual number of shares issuable will be determined from the
closing price of the Common Stock on March 6, 2008. |
Description |
Page |
|||||
---|---|---|---|---|---|---|
Reports of
Independent Registered Public Accounting Firm |
F-2 | |||||
Consolidated
Balance Sheets as of December 31, 2007 and 2006 |
F-4 | |||||
Consolidated
Statements of Operations for the years ended December 31, 2007, 2006 and 2005 |
F-5 | |||||
Consolidated
Statements of Changes in Stockholders Equity for the years ended December 31, 2007, 2006 and 2005 |
F-6 | |||||
Consolidated
Statements of Cash Flows for the years ended December 31, 2007, 2006 and 2005 |
F-8 | |||||
Notes to
Consolidated Financial Statements |
F-9 |
Description |
Page |
|||||
---|---|---|---|---|---|---|
Schedule
IIValuation and Qualifying Accounts |
S-1 |
Exhibit No. |
Description |
|||||
---|---|---|---|---|---|---|
2.1 |
Stock Purchase Agreement dated as of October 28, 2003 by and between the Registrant and OvenWorks, LLLP (incorporated by reference to Exhibit
2.1 to the Registrants Current Report on Form 8-K, filed with the Commission on November 10, 2003) |
|||||
2.2 |
Contribution Agreement, dated May 21, 2004 by and among the Registrant, Enersyst Development Center LLC and its members (incorporated by
reference to Exhibit 2.1 to the Registrants Current Report on Form 8-K, filed with the Commission on May 28, 2004) |
|||||
2.3 |
Asset Purchase Agreement, dated September 12, 2005, among TurboChef Technologies, Inc., Global Appliance Technologies, Inc. and stockholders
of Global Appliance Technologies (incorporated by reference to Exhibit 2.1 to the Registrants Current Report on Form 8-K, filed with the
Commission on September 13, 2005) |
|||||
3.1 |
Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1.2 to the Registrants Registration Statement on Form
SB-2, Registration No. 33-75008) |
|||||
3.2 |
Amendment to Certificate of IncorporationCertificate of Designation of Series A Convertible Preferred Stock (incorporated by reference
to Exhibit 3.1 to the Registrants Quarterly Report on Form 10-Q for the quarter ended September 30, 2000, filed with the Commission on November
14, 2000) |
Exhibit No. |
Description | |||||
---|---|---|---|---|---|---|
3.3 |
Amendment to Certificate of IncorporationCertificate of Designation of Series B Convertible Preferred Stock (incorporated by reference
to Exhibit 3.3 to the Registrants Annual Report on Form 10-K for the fiscal year ended December 31, 2000, filed with the Commission on April 16,
2001) |
|||||
3.4 |
Amendment to Certificate of IncorporationCertificate of Designation of Series C Convertible Preferred Stock (incorporated by reference
to Exhibit 3.1 to the Registrants Quarterly Report on Form 10-Q for the quarter ended March 31, 2002, filed with the Commission on May 15,
2002) |
|||||
3.5 |
Amendment to Certificate of IncorporationCertificate of Designation of Series D Convertible Preferred Stock (incorporated by reference
to Exhibit 3(i) to the Registrants Current Report on Form 8-K, filed with the Commission on November 10, 2003) |
|||||
3.6 |
Certificate of Amendment to the Restated Certificate of Incorporation of TurboChef Technologies, Inc., as amended (incorporated by reference
to Exhibit 99.1 to the Registrants Current Report on Form 8-K, filed with the Commission on July 20, 2004) |
|||||
3.7 |
Certificate of Amendment to the Restated Certificate of Incorporation of TurboChef Technologies, Inc., as amended (incorporated by reference
to Exhibit 99.1 to the Registrants Current Report on Form 8-K, filed with the Commission on December 23, 2004) |
|||||
3.8 |
Restated By-Laws (incorporated by reference to Exhibit 3.2.2 to the Registrants Registration Statement on Form SB-2, Registration No.
33-75008) |
|||||
3.9 |
Amendment to Bylaws (incorporated by reference to Item 5.03 of the Registrants Current Report on Form 8-K, filed with the Commission on
November 27, 2007) |
|||||
4.1 |
Specimen Common Stock certificate (incorporated by reference to Exhibit 4.2 to the Registrants Registration Statement on Form SB-2,
Registration No. 33-75008) |
|||||
4.2 |
Specimen Common Stock certificate (incorporated by reference to Exhibit 4.11 to the Registrants Registration Statement on Form S-3,
Registration No. 333-121818) |
|||||
4.3 |
See
Exhibits 3.1 through 3.9 for provisions of the Certificate of Incorporation and Bylaws of the Registrant defining the rights of holders of the
Registrants Common Stock |
|||||
10.1 |
1994
Stock Option Plan, as amended (incorporated by reference to Exhibit 10.14.2 to the Registrants Registration Statement on Form SB-2, Registration
No. 33-75008) |
|||||
10.2* |
Equipment Supplier Approval Agreement dated as of March 5, 2004 by and among the Registrant, Doctors Associates, Inc. and Independent
Purchasing Cooperative, Inc. (incorporated by reference to Exhibit 10.19 to the Registrants Annual Report on Form 10-K for the fiscal year ended
December 31, 2003, filed with the Commission on March 30, 2004) |
|||||
10.3 |
TurboChef Technologies, Inc. 2003 Stock Incentive Plan (incorporated by reference to Exhibit 10.21 to the Registrants Annual Report on
Form 10-K for the fiscal year ended December 31, 2003, filed with the Commission on March 30, 2004) |
|||||
10.4 |
Form
of Incentive Stock Option Agreement under the 2003 Stock Incentive Plan (incorporated by reference to Exhibit 10.22 to the Registrants Annual
Report on Form 10-K for the fiscal year ended December 31, 2003, filed with the Commission on March 30, 2004) |
|||||
10.5 |
Form
of Non-Qualified Stock Option Agreement under the 2003 Stock Incentive Plan (incorporated by reference to Exhibit 10.23 to the Registrants Annual
Report on Form 10-K for the fiscal year ended December 31, 2003, filed with the Commission on March 30, 2004) |
|||||
10.6 |
Form
of Non-Qualified Stock Option Agreement for Consultants under the 2003 Stock Incentive Plan (incorporated by reference to Exhibit 10.24 to the
Registrants Annual Report on Form 10-K for the fiscal year ended December 31, 2003, filed with the Commission on March 30,
2004) |
Exhibit No. |
Description | |||||
---|---|---|---|---|---|---|
10.7 |
Employment Agreement, dated as of February 9, 2004, by and between the Registrant and Richard E. Perlman (incorporated by reference to Exhibit
10.25 to the Registrants Annual Report on Form 10-K for the fiscal year ended December 31, 2003, filed with the Commission on March 30,
2004) |
|||||
10.8 |
Employment Agreement, dated as of February 9, 2004, by and between the Registrant and James K. Price (incorporated by reference to Exhibit
10.26 to the Registrants Annual Report on Form 10-K for the fiscal year ended December 31, 2003, filed with the Commission on March 30,
2004) |
|||||
10.9 |
Employment Agreement, dated as of February 9, 2004, by and between the Registrant and James A. Cochran (incorporated by reference to Exhibit
10.27 to the Registrants Annual Report on Form 10-K for the fiscal year ended December 31, 2003, filed with the Commission on March 30,
2004) |
|||||
10.10 |
Preferred Unit Exchange Agreement, dated May 21, 2004, by and among the Registrant and the members of Enersyst (incorporated by reference to
Exhibit 10.1 to the Registrants Current Report on Form 8-K, filed with the Commission on May 28, 2004) |
|||||
10.11 |
Amended and Restated Operating Agreement of Enersyst, dated May 21, 2004 (incorporated by reference to Exhibit 10.4 to the Registrants
Current Report on Form 8-K, filed with the Commission on May 28, 2004) |
|||||
10.12 |
Amendment to TurboChef Technologies, Inc. 2003 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the Registrants
Quarterly Report on Form 10-Q for the quarter ended March 31, 2004, filed with the Commission on May 12, 2004, as amended on November 22,
2004) |
|||||
10.13 |
Employment Agreement, dated as of September 14, 2004, by and between the Registrant and Paul P. Lehr (incorporated by reference to Exhibit
10.1 to the Registrants Current Report on Form 8-K, filed with the Commission on November 1, 2004) |
|||||
10.14 |
Credit Agreement dated as of February 28, 2005 among TurboChef Technologies, Inc., its subsidiaries and Bank of America, N.A. (incorporated by
reference to Exhibit 99.1 to the Registrants Current Report on Form 8-K, filed with the Commission on March 3, 2005) |
|||||
10.15 |
Employment Agreement, effective as of April 25, 2005, by and between TurboChef Technologies, Inc. and Joseph T. McGrain (incorporated by
reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K, filed with the Commission on May 5, 2005) |
|||||
10.16 |
Restrictive Covenant Agreement, dated September 12, 2005, between TurboChef Technologies, Inc. and David H. McFadden (incorporated by
reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K, filed with the Commission on September 13, 2005) |
|||||
10.17 |
Restrictive Covenant Agreement, dated September 12, 2005, between TurboChef Technologies, Inc. and David A. Bolton (incorporated by reference
to Exhibit 10.2 to the Registrants Current Report on Form 8-K, filed with the Commission on September 13, 2005) |
|||||
10.18 |
Second Amendment to TurboChef Technologies, Inc. 2003 Stock Incentive Plan (incorporated by reference to Exhibit 10.18 to the
Registrants Annual Report on Form 10-K for the fiscal year ended December 31, 2006, filed with the Commission on September 24,
2007) |
|||||
10.19 |
Third Amendment to TurboChef Technologies, Inc. 2003 Stock Incentive Plan (incorporated by reference to Exhibit 10.19 to the Registrants
Annual Report on Form 10-K for the fiscal year ended December 31, 2006, filed with the Commission on September 24, 2007) |
|||||
10.20 |
Form
of Restricted Stock Unit award agreement for employees under the 2003 Stock Incentive Plan (incorporated by reference to Exhibit 10.20 to the
Registrants Annual Report on Form 10-K for the fiscal year ended December 31, 2006, filed with the Commission on September 24,
2007) |
Exhibit No. |
Description | |||||
---|---|---|---|---|---|---|
10.21 |
Form
of Restricted Stock Unit award agreement for directors under the 2003 Stock Incentive Plan (incorporated by reference to Exhibit 10.21 to the
Registrants Annual Report on Form 10-K for the fiscal year ended December 31, 2006, filed with the Commission on September 24,
2007) |
|||||
10.22 |
Stock Option Modification Agreement (incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K, filed with
the Commission on December 30, 2005) and Schedule |
|||||
10.23* |
2007
Incentive-Based Compensation Plan (incorporated by reference to Exhibit 10.1 to the Registrants Quarterly Report on Form 10-Q for the quarter
ended March 31, 2007, filed with the Commission on September 24, 2007) |
|||||
10.24 |
Form
of Stock Options Amendment Agreement (incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K, filed with the
Commission on December 10, 2007) and Schedule |
|||||
10.25 |
Form
of Executive Stock Options Amendment Agreement and Schedule |
|||||
10.26 |
Amended and restated employment agreement, dated January 18, 2008, by and between TurboChef Technologies, Inc. and Richard E.
Perlman |
|||||
10.27 |
Amended and restated employment agreement, dated January 18, 2008, by and between TurboChef Technologies, Inc. and James K.
Price |
|||||
10.28 |
Amended and restated employment agreement, dated January 18, 2008, by and between TurboChef Technologies, Inc. and James A.
Cochran |
|||||
10.29 |
Amended and restated employment agreement, dated January 18, 2008, by and between TurboChef Technologies, Inc. and J. Miguel Fernandez de
Castro |
|||||
10.30 |
Amended and restated employment agreement, dated January 18, 2008, by and between TurboChef Technologies, Inc. and Paul P.
Lehr |
|||||
10.31 |
Amended and restated employment agreement, dated January 18, 2008, by and between TurboChef Technologies, Inc. and Stephen J.
Beshara |
|||||
10.32* |
2008
Incentive-Based Compensation Plan |
|||||
10.33 |
Amended and Restated Credit Agreement dated as of February 7, 2008 among TurboChef Technologies, Inc., its subsidiaries and Bank of America,
N.A. (incorporated by reference to Exhibit 99.1 to the Registrants Current Report on Form 8-K, filed with the Commission on February 8,
2008) |
|||||
23.1 |
Consent of Independent Registered Public Accounting Firm |
|||||
24.1 |
Power of Attorney (see signature page) |
|||||
31.1 |
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|||||
31.2 |
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|||||
32.1 |
Certification of the Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 |
* |
Portions of these documents have been
omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment of the omitted
portions. |
Balance at Beginning of Year |
Charged to Costs and Expenses |
Charged to Other Accounts |
Deductions |
Balance at End of Year |
|||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(In thousands) | |||||||||||||||||||||||
Allowance for
Doubtful Accounts |
|||||||||||||||||||||||
Year ended
December 31, 2007 |
$ | 162 | $ | 326 | $ | | $ | (293 | ) | $ | 195 | ||||||||||||
Year ended
December 31, 2006 |
177 | 147 | | (162 | ) | 162 | |||||||||||||||||
Year ended
December 31, 2005 |
197 | 98 | (48 | ) | (70 | ) | 177 | ||||||||||||||||
Deferred
Income Tax Asset Valuation Allowance |
|||||||||||||||||||||||
Year ended
December 31, 2007 |
40,867 | 7,523 | | | 48,390 | ||||||||||||||||||
Year ended
December 31, 2006 |
32,985 | 7,882 | | | 40,867 | ||||||||||||||||||
Year ended
December 31, 2005 |
19,645 | 12,344 | 996 | | 32,985 |
By: |
/s/ James K. Price James K. Price President and Chief Executive Officer |
Signature |
Title |
Date |
||||||||
---|---|---|---|---|---|---|---|---|---|---|
/s/ Richard E.
Perlman _______________________________ Richard E. Perlman |
Chairman of the Board and Director |
March 6, 2008 |
||||||||
/s/ James K.
Price _______________________________ James K. Price |
Chief
Executive Officer, President and Director (Principal Executive Officer) |
March 6, 2008 |
||||||||
/s/ J. Miguel
Fernandez de Castro _______________________________ J. Miguel Fernandez de Castro |
Vice
President and Chief Financial Officer (Principal Financial and Accounting Officer) |
March 6, 2008 |
||||||||
/s/ William A.
Shutzer _______________________________ William A. Shutzer |
Director |
March 6, 2008 |
||||||||
/s/ Raymond H.
Welsh _______________________________ Raymond H. Welsh |
Director |
March 6, 2008 |
||||||||
/s/ J. Thomas
Presby _______________________________ J. Thomas Presby |
Director |
March 6, 2008 |
||||||||
/s/ James W.
DeYoung _______________________________ James W. DeYoung |
Director |
March 6, 2008 |
||||||||
/s/ Anthony
Jolliffe _______________________________ Sir Anthony Jolliffe |
Director |
March 6, 2008 |
Reports of
Independent Registered Public Accounting Firm |
F-2 | |||||
Consolidated
Financial Statements: |
||||||
Balance
Sheets as of December 31, 2007 and 2006 |
F-4 | |||||
Statements of
Operations for the years ended December 31, 2007, 2006 and 2005 |
F-5 | |||||
Statements of
Changes in Stockholders Equity for the years ended December 31, 2007, 2006 and 2005 |
F-6 | |||||
Statements of
Cash Flows for the years ended December 31, 2007, 2006 and 2005 |
F-8 | |||||
Notes to
Financial Statements |
F-9 |
December 31, |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
2007 |
2006 |
||||||||||
Assets |
|||||||||||
Current
assets: |
|||||||||||
Cash and cash
equivalents |
$ | 10,149 | $ | 19,675 | |||||||
Accounts
receivable, net of allowance of $195 and $162 |
38,657 | 11,001 | |||||||||
Other
receivables |
2,502 | 2,771 | |||||||||
Inventory,
net |
11,883 | 11,737 | |||||||||
Prepaid
expenses |
3,307 | 2,128 | |||||||||
Total current
assets |
66,948 | 47,312 | |||||||||
Property and
equipment, net |
6,728 | 7,944 | |||||||||
Developed
technology, net of accumulated amortization of $2,914 and $2,107 |
5,156 | 5,963 | |||||||||
Goodwill
|
5,934 | 5,934 | |||||||||
Covenants
not-to-compete, net of accumulated amortization of $1,286 and $726 |
4,314 | 4,874 | |||||||||
Other assets
|
91 | 174 | |||||||||
Total assets
|
$ | 88,721 | $ | 72,201 | |||||||
Liabilities and Stockholders Equity |
|||||||||||
Current
liabilities: |
|||||||||||
Accounts
payable |
$ | 20,178 | $ | 9,200 | |||||||
Accrued
expenses |
9,894 | 3,103 | |||||||||
Future
installments due on covenants not-to-compete and additional consideration for assets acquired |
3,801 | 3,793 | |||||||||
Amounts
outstanding under credit facility |
9,000 | | |||||||||
Deferred
revenue |
9,554 | 3,403 | |||||||||
Accrued
warranty |
558 | 1,889 | |||||||||
Deferred rent
|
247 | 247 | |||||||||
Other current
liabilities |
1,908 | | |||||||||
Total current
liabilities |
55,140 | 21,635 | |||||||||
Future
installments due on covenants not-to-compete and additional consideration for assets acquired, non-current |
| 3,550 | |||||||||
Deferred
rent, non-current |
974 | 1,218 | |||||||||
Other
liabilities |
100 | 93 | |||||||||
Total
liabilities |
56,214 | 26,496 | |||||||||
Commitments
and contingencies |
|||||||||||
Stockholders equity: |
|||||||||||
Preferred
stock, $1 par value, authorized 5,000,000 shares, 0 shares issued |
| | |||||||||
Preferred
membership units exchangeable for shares of TurboChef common stock |
380 | 384 | |||||||||
Common stock,
$.01 par value, authorized 100,000,000 shares; issued 29,568,325 and 29,197,145 shares at December 31, 2007 and 2006, respectively |
296 | 292 | |||||||||
Additional
paid-in capital |
173,857 | 169,821 | |||||||||
Accumulated
deficit |
(142,026 | ) | (124,792 | ) | |||||||
Total
stockholders equity |
32,507 | 45,705 | |||||||||
Total
liabilities and stockholders equity |
$ | 88,721 | $ | 72,201 |
Years Ended December 31, |
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2007 |
2006 |
2005 |
|||||||||||||
Revenues: |
|||||||||||||||
Product
sales |
$ | 107,003 | $ | 47,403 | $ | 50,239 | |||||||||
Royalties |
1,103 | 1,266 | 2,010 | ||||||||||||
Total
revenues |
108,106 | 48,669 | 52,249 | ||||||||||||
Costs and
expenses: |
|||||||||||||||
Cost of
product sales |
66,645 | 31,929 | 43,532 | ||||||||||||
Research and
development |
5,177 | 4,357 | 4,307 | ||||||||||||
Purchased
research and development |
| 7,665 | 6,285 | ||||||||||||
Selling,
general and administrative |
53,427 | 29,027 | 33,777 | ||||||||||||
Restructuring
charges |
| (41 | ) | 621 | |||||||||||
Total costs
and expenses |
125,249 | 72,937 | 88,522 | ||||||||||||
Operating
loss |
(17,143 | ) | (24,268 | ) | (36,273 | ) | |||||||||
Other income
(expense): |
|||||||||||||||
Interest
income |
638 | 1,300 | 1,536 | ||||||||||||
Interest
expense and other |
(729 | ) | (436 | ) | (332 | ) | |||||||||
(91 | ) | 864 | 1,204 | ||||||||||||
Loss before
income taxes |
(17,234 | ) | (23,404 | ) | (35,069 | ) | |||||||||
Provision for
income taxes |
| | | ||||||||||||
Net
loss |
$ | (17,234 | ) | $ | (23,404 | ) | $ | (35,069 | ) | ||||||
Per share
data: |
|||||||||||||||
Net loss per
share: |
|||||||||||||||
Basic and
diluted |
$ | (0.59 | ) | $ | (0.81 | ) | $ | (1.25 | ) | ||||||
Weighted
average number of common shares outstanding: |
|||||||||||||||
Basic and
diluted |
29,294,596 | 28,834,821 | 28,034,103 |
Preferred Stock |
Common Stock |
|||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Shares |
Amount |
Preferred Membership Units |
Shares |
Amount |
Additional Paid-in Capital |
Accumulated Deficit |
||||||||||||||||||||||||
Balance,
January 1, 2005 |
| | 6,351 | 24,313,158 | $ | 243 | $ | 93,550 | $ | (66,319 | ) | |||||||||||||||||||
Net
loss |
| | | | | | (35,069 | ) | ||||||||||||||||||||||
Issuance of
common stock in public offering, net of issuance costs |
| | | 2,925,000 | 29 | 54,810 | | |||||||||||||||||||||||
Issuance of
common stock in exchange for Enersyst preferred membership units |
| | (5,384 | ) | 518,032 | 5 | 5,379 | | ||||||||||||||||||||||
Exercise of
options and warrants for common stock |
| | | 807,278 | 8 | 3,064 | | |||||||||||||||||||||||
Issuance of
common stock for acquisition of intangible assets |
| | | 60,838 | 1 | 992 | | |||||||||||||||||||||||
Proceeds from
notes receivable for stock issuances |
| | | | | | | |||||||||||||||||||||||
Compensation
expense, primarily related to stock options granted for services |
| | | | | 7,115 | | |||||||||||||||||||||||
Other |
| | | (59 | ) | | (3 | ) | | |||||||||||||||||||||
Balance,
December 31, 2005 |
| | 967 | 28,624,247 | 286 | 164,907 | (101,388 | ) | ||||||||||||||||||||||
Net
loss |
| | | | | | (23,404 | ) | ||||||||||||||||||||||
Issuance of
common stock in exchange for Enersyst preferred membership units |
| | (583 | ) | 56,093 | 1 | 582 | | ||||||||||||||||||||||
Exercise of
options and warrants for common stock |
| | | 342,106 | 3 | 2,171 | | |||||||||||||||||||||||
Issuance of
common stock for acquisition of intangible assets |
| | | 169,365 | 2 | 1,871 | | |||||||||||||||||||||||
Compensation
expense, primarily related to restricted stock granted for services |
| | | 5,334 | | 290 | | |||||||||||||||||||||||
Balance,
December 31, 2006 |
| | 384 | 29,197,145 | 292 | 169,821 | (124,792 | ) | ||||||||||||||||||||||
Net
loss |
| | | | | | (17,234 | ) | ||||||||||||||||||||||
Issuance of
common stock in exchange for Enersyst preferred membership units |
| | (4 | ) | 414 | | 4 | | ||||||||||||||||||||||
Exercise of
options and warrants for common stock |
| | | 225,307 | 2 | 2,018 | | |||||||||||||||||||||||
Issuance of
common stock for acquisition of intangible assets |
| | | 124,381 | 2 | 1,520 | | |||||||||||||||||||||||
Compensation
expense, primarily related to restricted stock granted for services |
| | | 21,078 | | 1,823 | | |||||||||||||||||||||||
Tender offer
and option amendments |
| | | | | (1,329 | ) | | ||||||||||||||||||||||
Balance,
December 31, 2007 |
| | 380 | 29,568,325 | $ | 296 | $ | 173,857 | $ | (142,026 | ) |
Notes Receivable For Stock Issuances |
Treasury Stock |
Total Stockholders Equity |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance,
January 1, 2005 |
$ | (46 | ) | $ | | $ | 33,779 | |||||||
Net loss
|
| | (35,069 | ) | ||||||||||
Issuance of
common stock in public offering, net of issuance costs |
| | 54,839 | |||||||||||
Issuance of
common stock in exchange for Enersyst preferred membership units |
| | | |||||||||||
Exercise of
options and warrants for common stock |
| | 3,072 | |||||||||||
Issuance of
common stock for acquisition of intangible assets |
| | 993 | |||||||||||
Proceeds from
notes receivable for stock issuances |
46 | | 46 | |||||||||||
Compensation
expense, primarily related to stock options granted for services |
| | 7,115 | |||||||||||
Other
|
| | (3 | ) | ||||||||||
Balance,
December 31, 2005 |
| | 64,772 | |||||||||||
Net loss
|
| | (23,404 | ) | ||||||||||
Issuance of
common stock in exchange for Enersyst preferred membership units |
| | | |||||||||||
Exercise of
options and warrants for common stock |
| | 2,174 | |||||||||||
Issuance of
common stock for acquisition of intangible assets |
| | 1,873 | |||||||||||
Compensation
expense, primarily related to restricted stock granted for services |
| | 290 | |||||||||||
Balance,
December 31, 2006 |
| | 45,705 | |||||||||||
Net loss
|
| | (17,234 | ) | ||||||||||
Issuance of
common stock in exchange for Enersyst preferred membership units |
| | | |||||||||||
Exercise of
options and warrants for common stock |
| | 2,020 | |||||||||||
Issuance of
common stock for acquisition of intangible assets |
| | 1,522 | |||||||||||
Compensation
expense, primarily related to restricted stock granted for services |
| | 1,823 | |||||||||||
Tender offer
and option amendments |
| | (1,329 | ) | ||||||||||
Balance,
December 31, 2007 |
$ | | $ | | $ | 32,507 |
Years Ended December 31, |
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2007 |
2006 |
2005 |
|||||||||||||
Cash flows from
operating activities: |
|||||||||||||||
Net loss
|
$ | (17,234 | ) | $ | (23,404 | ) | $ | (35,069 | ) | ||||||
Adjustments
to reconcile net loss to net cash used in operating activities: |
|||||||||||||||
Purchased
research and development |
| 7,665 | 6,285 | ||||||||||||
Depreciation
and amortization |
4,069 | 3,854 | 2,796 | ||||||||||||
Non-cash
interest |
470 | 391 | 203 | ||||||||||||
Non-cash
equity compensation expense |
2,402 | 290 | 7,115 | ||||||||||||
Amortization
of deferred rent |
(236 | ) | (244 | ) | (122 | ) | |||||||||
Non-cash
restructuring costs |
| | 125 | ||||||||||||
Provision for
doubtful accounts |
326 | 147 | 98 | ||||||||||||
Foreign
exchange loss (gain) |
(6 | ) | 8 | 76 | |||||||||||
Changes in
operating assets and liabilities, net of effects of acquisition: |
|||||||||||||||
Restricted
cash |
| | 3,196 | ||||||||||||
Accounts
receivable |
(27,976 | ) | (3,834 | ) | 2,196 | ||||||||||
Inventories
|
(729 | ) | (1,445 | ) | (3,590 | ) | |||||||||
Prepaid
expenses and other assets |
(954 | ) | (2,140 | ) | (2,342 | ) | |||||||||
Accounts
payable |
10,978 | 1,581 | (2,311 | ) | |||||||||||
Accrued
expenses and warranty |
5,460 | (1,023 | ) | 245 | |||||||||||
Deferred
revenue |
6,151 | 1,042 | 911 | ||||||||||||
Net cash used
in operating activities |
(17,279 | ) | (17,112 | ) | (20,188 | ) | |||||||||
Cash flows from
investing activities: |
|||||||||||||||
Acquisition
of business, net of cash acquired |
| | (192 | ) | |||||||||||
Acquisition
of intangible assets |
(2,349 | ) | (2,349 | ) | (7,292 | ) | |||||||||
Purchase of
property and equipment, net |
(768 | ) | (3,111 | ) | (3,098 | ) | |||||||||
Other
|
| | 128 | ||||||||||||
Net cash used
in investing activities |
(3,117 | ) | (5,460 | ) | (10,454 | ) | |||||||||
Cash flows from
financing activities: |
|||||||||||||||
Proceeds from
the sale of common stock, net |
| | 54,839 | ||||||||||||
Proceeds from
the exercise of stock options and warrants |
2,020 | 2,174 | 3,072 | ||||||||||||
Borrowings
under credit facility |
9,000 | | | ||||||||||||
Payment of
deferred loan costs |
(150 | ) | (25 | ) | (156 | ) | |||||||||
Other
|
| | 43 | ||||||||||||
Net cash
provided by financing activities |
10,870 | 2,149 | 57,798 | ||||||||||||
Net (decrease)
increase in cash and cash equivalents |
(9,526 | ) | (20,423 | ) | 27,156 | ||||||||||
Cash and cash
equivalents at beginning of year |
19,675 | 40,098 | 12,942 | ||||||||||||
Cash and cash
equivalents at end of year |
$ | 10,149 | $ | 19,675 | $ | 40,098 | |||||||||
Supplemental
disclosures of noncash activities: |
|||||||||||||||
Noncash
investing activitylandlord funded leasehold improvements |
$ | | $ | | $ | 1,832 | |||||||||
Noncash
investing and financing activity liability recorded in connection with intangible assets |
$ | | $ | 5,792 | $ | 3,600 | |||||||||
Noncash
investing activityissuance of common stock in exchange for intangible assets |
$ | 1,520 | $ | 1,873 | $ | 993 | |||||||||
Noncash
financing activitytender offer and option amendments |
$ | 1,908 | $ | | $ | | |||||||||
Noncash
financing activityissuance of common stock in exchange for preferred membership units |
$ | 4 | $ | 583 | $ | 5,384 | |||||||||
Supplemental
disclosures of cash flow information: |
|||||||||||||||
Cash paid for
income taxes |
$ | | $ | | $ | 236 | |||||||||
Cash paid for
interest |
228 | 38 | 50 |
2007 |
2006 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Finished
goods ovens |
$ | 3,835 | $ | 4,154 | ||||||
Demonstration
inventory, net |
595 | 224 | ||||||||
Parts
inventory, net |
6,734 | 6,933 | ||||||||
11,164 | 11,311 | |||||||||
Costs of
inventory subject to a deferred revenue relationship |
719 | 426 | ||||||||
$ | 11,883 | $ | 11,737 |
Net loss
applicable to common stockholders, as reported |
$ | (35,069 | ) | |||
Add:
Employee stock-based compensation expense |
(6,936 | ) | ||||
Deduct:
Employee stock-based compensation expense, net of forfeitures |
(19,882 | ) | ||||
Pro forma
net loss applicable to common stockholders |
$ | (48,015 | ) | |||
Net loss
applicable to common stockholders per share basic and diluted: |
||||||
As reported
|
$ | (1.25 | ) | |||
Pro forma
|
(1.71 | ) |
Expected
life (in years) |
23 | |||||
Volatility
|
63 | % | ||||
Risk free
interest rate options |
4.074.61% | |||||
Dividend
yield |
0.0 | % | ||||
Weighted
average fair value of option grants Black-Scholes model |
$ | 6.54 |
Expected
life (in years) |
1.64 | |||||
Volatility
|
44.43 | % | ||||
Risk free
interest rate options |
3.043.13% | |||||
Dividend
yield |
0.0 | % |
2007 |
2006 |
||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Estimated Useful Lives (years) |
(In thousands) |
||||||||||||||
Leasehold
improvements |
57.5 |
$ | 3,140 | $ | 3,044 | ||||||||||
Furniture and
fixtures |
5 |
1,458 | 1,369 | ||||||||||||
Equipment
|
37 |
6,921 | 6,471 | ||||||||||||
11,519 | 10,884 | ||||||||||||||
Less
accumulated depreciation |
(4,791 | ) | (2,940 | ) | |||||||||||
$ | 6,728 | $ | 7,944 |
2007 |
2006 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Accrued
compensation and benefits |
$ | 3,924 | $ | 1,378 | ||||||
Sales and
marketing |
3,487 | 907 | ||||||||
Professional
and accounting fees |
1,169 | 432 | ||||||||
Accrued taxes
and other |
1,314 | 386 | ||||||||
Total accrued
expenses |
$ | 9,894 | $ | 3,103 |
2007 |
2006 |
2005 |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance at
beginning of year |
$ | 1,889 | $ | 2,482 | $ | 2,586 | ||||||||
Provision for
warranties |
405 | 3,301 | 3,997 | |||||||||||
Warranty
expenditures |
(1,736 | ) | (3,894 | ) | (13,682 | ) | ||||||||
Other
adjustments to provision for warranties |
| | 9,581 | |||||||||||
Balance at
end of year |
$ | 558 | $ | 1,889 | $ | 2,482 |
2007 |
2006 |
2005 |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Current: |
||||||||||||||
Federal
|
$ | | $ | | $ | | ||||||||
State
|
| | | |||||||||||
Total
provision for income taxes |
$ | | $ | | $ | |
2007 |
2006 |
2005 |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Expected
income tax benefit |
$ | (5,859 | ) | $ | (7,957 | ) | $ | (11,923 | ) | |||||
State income
tax benefit, net of federal benefit |
(358 | ) | (489 | ) | (740 | ) | ||||||||
Other |
98 | (207 | ) | (89 | ) | |||||||||
Changes in
deferred income tax asset valuation allowance |
6,119 | 8,653 | 12,752 | |||||||||||
Provision for
income taxes |
$ | | $ | | $ | |
2007 |
2006 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Deferred
income tax assets: |
||||||||||
Warranty
reserves |
$ | 201 | $ | 682 | ||||||
Allowance for
doubtful accounts |
67 | 55 | ||||||||
Inventory
|
913 | 377 | ||||||||
Basis
difference of other current assets |
259 | 93 | ||||||||
Total current
deferred income tax assets |
1,440 | 1,207 | ||||||||
Net operating
loss carryforwards |
35,800 | 29,229 | ||||||||
Basis
difference of intangible assets |
5,972 | 6,279 | ||||||||
Basis
difference of stock- based compensation |
4,188 | 3,366 | ||||||||
Research and
development credit carryforwards |
1,144 | 832 | ||||||||
Federal
alternative minimum tax credit carryforwards |
121 | 121 | ||||||||
Basis
difference of other long-term assets |
6 | 57 | ||||||||
Total
non-current deferred income tax assets |
47,231 | 39,884 | ||||||||
Total gross
deferred income tax assets |
48,671 | 41,091 | ||||||||
Deferred
income tax liabilities: |
||||||||||
Basis
difference of other long-term assets |
(281 | ) | (224 | ) | ||||||
Total gross
deferred income tax liabilities |
(281 | ) | (224 | ) | ||||||
Net deferred
income tax asset |
48,390 | 40,867 | ||||||||
Less deferred
income tax asset valuation allowance |
(48,390 | ) | (40,867 | ) | ||||||
Net deferred
income tax assets |
$ | | $ | |
Number of Shares |
Weighted Average Exercise Price |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Options
outstanding at January 1, 2005 |
3,121,626 | $ | 6.97 | |||||||
Options
granted |
966,578 | 12.81 | ||||||||
Options
exercised |
(482,058 | ) | 4.38 | |||||||
Options
expired or canceled |
(82,219 | ) | 12.51 | |||||||
Options
outstanding at December 31, 2005 |
3,523,927 | 8.79 | ||||||||
Options
granted |
| | ||||||||
Options
exercised |
(342,106 | ) | 6.35 | |||||||
Options
expired or canceled |
(99,935 | ) | 19.66 | |||||||
Options
outstanding at December 31, 2006 |
3,081,886 | 8.71 | ||||||||
Options
granted |
| | ||||||||
Options
exercised |
(238,082 | ) | 8.94 | |||||||
Options
expired or canceled |
(6,206 | ) | 14.74 | |||||||
Options
outstanding at December 31, 2007 |
2,837,598 | 9.35 | ||||||||
Options
exercisable at December 31, 2005 |
3,523,927 | 8.79 | ||||||||
Options
exercisable at December 31, 2006 |
3,081,886 | 8.71 | ||||||||
Options
exercisable at December 31, 2007 |
2,837,598 | 9.35 |
Options Outstanding and
Exercisable |
||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Range of Exercise Prices |
Outstanding as of December 31, 2007 |
Weighted Average Remaining Contractual Life |
Weighted Average Exercise Price |
|||||||||||||
$2.58$5.25 |
1,264,564 | 5.79 | $ | 5.20 | ||||||||||||
$5.26$11.95 |
820,427 | 6.82 | 10.64 | |||||||||||||
$11.96$28.50 |
752,517 | 6.99 | 14.92 | |||||||||||||
2,837,508 | 6.41 | 9.35 |
Number of RSUs |
Weighted Average Grant-Date Fair Value |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Balance at
January 1, 2006 |
| $ | | |||||||
RSUs granted
|
83,160 | 12.84 | ||||||||
RSUs vested
|
(5,334 | ) | 13.08 | |||||||
RSUs
forfeited |
| | ||||||||
Balance at
December 31, 2006 |
77,826 | 12.82 | ||||||||
RSUs granted
|
578,408 | 15.41 | ||||||||
RSUs vested
|
(21,093 | ) | 12.77 | |||||||
RSUs
forfeited |
(8,500 | ) | 15.42 | |||||||
Balance at
December 31, 2007 |
626,641 | 15.18 |
Year |
||||||||||
---|---|---|---|---|---|---|---|---|---|---|
2008
|
$ | 1,293 | ||||||||
2009
|
1,170 | |||||||||
2010
|
895 | |||||||||
2011
|
896 | |||||||||
2012
|
826 | |||||||||
$ | 5,080 |
2007 |
First |
Second |
Third |
Fourth |
Fiscal Year |
|||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Total
revenues |
$ | 18,331 | $ | 22,968 | $ | 32,493 | $ | 34,314 | $ | 108,106 | ||||||||||||
Gross
profit |
6,798 | 9,037 | 12,914 | 12,712 | 41,461 | |||||||||||||||||
Net
loss |
(4,917 | ) | (6,518 | ) | (1,764 | ) | (4,035 | ) | (17,234 | ) | ||||||||||||
Basic and
diluted loss per share |
$ | (0.17 | ) | $ | (0.22 | ) | $ | (0.06 | ) | $ | (0.14 | ) | $ | (0.59 | ) | |||||||
Number of
shares used in the computation of basic and diluted loss per share |
29,223,104 | 29,247,657 | 29,274,530 | 29,427,538 | 29,294,596 |
2006 |
First |
Second |
Third |
Fourth |
Fiscal Year |
|||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Total
revenues |
$ | 9,536 | $ | 10,494 | $ | 13,401 | $ | 15,238 | $ | 48,669 | ||||||||||||
Gross
profit |
2,899 | 3,224 | 5,052 | 5,565 | 16,740 | |||||||||||||||||
Net
loss |
(4,932 | ) | (4,987 | ) | (10,668 | ) | (2,817 | ) | (23,404 | ) | ||||||||||||
Basic and
diluted loss per share |
$ | (0.17 | ) | $ | (0.17 | ) | $ | (0.37 | ) | $ | (0.10 | ) | $ | (0.81 | ) | |||||||
Number of
shares used in the computation of basic and diluted loss per share |
28,665,275 | 28,765,080 | 28,835,787 | 29,060,089 | 28,834,821 |
SEGMENT |
2007 |
2006 |
2005 |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Commercial: |
||||||||||||||
Revenues
|
$ | 107,602 | $ | 48,669 | $ | 52,249 | ||||||||
Depreciation
and amortization |
2,424 | 2,806 | 2,035 | |||||||||||
Net income
(loss) |
14,938 | (488 | ) | (9,433 | ) | |||||||||
Residential: |
||||||||||||||
Revenues
|
$ | 504 | $ | | $ | | ||||||||
Depreciation
and amortization |
798 | 240 | | |||||||||||
Net loss
|
(14,333 | ) | (7,030 | ) | (5,142 | ) | ||||||||
Corporate: |
||||||||||||||
Revenues
|
$ | | $ | | $ | | ||||||||
Depreciation
and amortization |
847 | 808 | 761 | |||||||||||
Net loss
|
(17,839 | ) | (15,886 | ) | (20,494 | ) | ||||||||
Totals: |
||||||||||||||
Revenues
|
$ | 108,106 | $ | 48,669 | $ | 52,249 | ||||||||
Depreciation
and amortization |
4,069 | 3,854 | 2,796 | |||||||||||
Net loss
|
(17,234 | ) | (23,404 | ) | (35,069 | ) |
REGION |
2007 |
2006 |
2005 |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
North
America |
||||||||||||||
Commercial:
|
$ | 94,395 | $ | 40,166 | $ | 41,031 | ||||||||
Residential:
|
504 | | | |||||||||||
Total North
America revenue: |
94,899 | 40,166 | 41,031 | |||||||||||
Europe and
Asia/Pacific |
||||||||||||||
Commercial:
|
13,207 | 8,503 | 11,218 | |||||||||||
Residential:
|
| | | |||||||||||
Total Europe
and Asia/Pacific revenue: |
13,207 | 8,503 | 11,218 | |||||||||||
Totals
|
$ | 108,106 | $ | 48,669 | $ | 52,249 |
Schedule to Exhibit 10.22
Stock Option Modification Agreement
The following executive officers named in this Annual Report on Form 10-K for the year ended December 31, 2007 were parties to a Stock Option Modification Agreement with TurboChef Technologies, Inc., the form of which was filed with the SEC and is listed as Exhibit 10.22 to this Report:
Officer |
Date of Grant |
Original Grant Price |
# of Options |
Richard E. Perlman |
10/29/03 |
$5.25 |
416,666 |
James K. Price |
10/29/03 |
$5.25 |
416,666 |
J. Miguel Fernandez |
4/19/04 |
$9.66 |
33,333 |
de Castro |
5/3/05 |
$10.35 |
15,000 |
James A. Cochran |
10/29/03 |
$5.25 |
133,333 |
|
5/3/05 |
$10.35 |
15,000 |
Paul P. Lehr |
10/29/03 |
$5.25 |
116,666 |
|
5/25/04 |
$10.20 |
16,666 |
|
5/3/05 |
$10.35 |
40,000 |
Stephen J. Beshara |
11/21/03 |
$7.92 |
133,333 |
|
5/3/05 |
$10.35 |
40,000 |
Schedule to Exhibit 10.24
Stock Options Amendment Agreement
The following executive officers named in this Annual Report on Form 10-K for the year ended December 31, 2007 were parties to a Stock Options Amendment Agreement with TurboChef Technologies, Inc., the form of which was filed with the SEC and is listed as Exhibit 10.24 to this Report:
Officer |
Date of Grant |
Amended Exercise Price |
# of Options |
J. Miguel Fernandez |
4/19/04 |
$14.58 |
33,333 |
de Castro |
5/3/05 |
$11.95 |
15,000 |
Paul P. Lehr |
5/25/04 |
$14.58 |
4,666 |
Stephen J. Beshara |
11/21/03 |
$12.99 |
46,667 |
|
5/3/05 |
$11.95 |
40,000 |
TURBOCHEF TECHNOLOGIES, INC.
STOCK OPTION FIXED EXERCISE
AMENDMENT AGREEMENT
|
|
|
|
|
|
|
Name: |
|
Richard E. Perlman |
|
Date of |
|
December 27, 2007 |
|
|
|
|
|
|
|
Option Grant(s) : |
277,778 shares from a grant dated 10/29/03 at exercise price of $5.25 |
|
|
|
|
|
|
PLEASE NOTE THAT BY YOUR SIGNATURE BELOW, YOU ARE ACKNOWLEDGING THAT YOU HAVE READ THIS ELECTION FORM AND AGREE TO THE AMENDMENT OF YOUR IDENTIFIED STOCK OPTION AGREEMENT(S) WITH RESPECT TO OPTIONS VESTED AFTER DECEMBER 31, 2004 (STOCK OPTION AGREEMENTS) AS DESCRIBED BELOW.
As a precaution to possible adverse tax consequences under Section 409A of the Internal Revenue Code and the regulations promulgated thereunder (409A) TurboChef Technologies, Inc. (the Company) is offering you an opportunity to amend your Stock Option Agreement(s) to commit to an exercise date or exercise period for your stock options. You may choose to exercise all or part of your stock options in one calendar year and some or the balance in another calendar year, and you may choose to exercise your options only in connection with the events of: change of control, termination of service or employment, death or disability or expiration of the options. If you are in agreement, you must decide whether you wish to exercise options in a given calendar year (select Annual Exercise Election below and complete the required information) or only at the Required Exercise Events (change of control, termination of service or employment, death or disability or expiration of the options). Even if you select the Annual Exercise Election, you may be required to exercise your options earlier if a Required Exercise Event occurs. If you make no election, then by default if you execute and return this agreement you will be deemed to have agreed to exercise all of your options as provided for under the Required Exercise Events. This agreement does not extend the expiration date of your stock options, which is 10 years from the original grant date. If you wish to accept this offer, please execute and return this agreement to the Company before the deadline below.
I agree with TurboChef Technologies, Inc. (the Company) to exercise my stock options under the Stock Option Agreements, if at all, on the dates indicated or during the periods and under the provisions set forth below. I agree at the time of exercise to proffer the amount of the exercise price and fulfill any and all obligations to provide the Company any amount required to cover the obligations for tax withholding on my behalf. I agree that my stock options shall expire and be forfeited if I do not complete the exercise of the options under the Stock Option Agreements consistent with this agreement and my elections and the associated timing set forth hereunder and in accordance with the reasonable policies and procedures of the Company. This agreement shall be interpreted as reasonably possible to comply with 409A to avoid the adverse tax consequences of 409A.
o |
|
Annual Exercise Election: I hereby elect to exercise my options under the Stock Option Agreements (those vesting after December 31, 2004), if at all, as indicated in the Annual Exercise Schedule below, or at a Required Exercise Event that earlier applies. I understand and agree that options not exercised within the scheduled period for exercise will expire and be forfeited at the end of the scheduled period. |
Annual Exercise Schedule | ||
Describe Option Grant to be Exercised in Whole or in Part |
Number of Shares |
Exercise Year (Must be after 2007) |
|
|
|
|
|
|
|
|
|
|
|
|
Required Exercise Events: Notwithstanding any annual exercise election above, the provisions of any other required exercise event described below otherwise providing a later exercise period, any provision of the Stock Option Agreements or the Companys 2003 Stock Incentive Plan or any other agreement with the Company to the contrary, I will exercise my options under the Stock Option Agreements (i.e., those options vested after December 31, 2004) as provided below within the earliest exercise period specified for the following exercise events, if I choose to exercise them at all, at the end of which period the options will expire if not exercised:
Death. If I die while employed or in service to the Company, my beneficiary or estate may exercise my options under the Stock Option Agreements only during the six-month period that commences on the January 1 or July 1 coincident with or next following my date of death.
Disability. If I incur a Disability while employed or in service to the Company (as determined by the Compensation Committee of the Companys Board of Directors and which meets the requirements of being considered disabled as defined in 409A(a)(2)(C)), my options under the Stock Option Agreements may be exercised only during the six-month period that commences on the January 1 or July 1 coincident with or next following the date on which I become disabled.
Change of Control. If the Company incurs a Change of Control, which qualifies as a change in the ownership or effective control of the Company under 409A, then all options under the Stock Option Agreements shall be exercisable immediately prior to the Change of Control and, to the extent not cancelled in connection with such Change of Control, the options will remain exercisable until the last day of the calendar year in which the Change of Control occurs.
Other Termination of Service or Employment. If I am not a specified employee (as defined in 409A(a)(2)(B)(i); e.g., a director) and my services are terminated other than due to my death or Disability, then my options under the Stock Option Agreements shall be exercisable beginning on the date of my termination of services and ending on (A) the date 30 days later, or (B) the December 31st coincident with or next following my termination of services, whichever is earlier. If I am a specified employee (as defined in 409A(a)(2)(B)(i); e.g., an officer) and my employment is terminated other than due to my death or Disability, then my options under the Stock Option Agreements shall be exercisable beginning on the day following the date six months after my termination of employment and ending on (A) the date 30 days later, or (B) the December 31st coincident with or next following such commencement date, whichever is earlier.
Expiration of Options. The options under the Stock Option Agreements shall be exercisable beginning on January 1 of the year in which the options expire under their terms (other than by reason of any provision of this amendment agreement) and ending on their expiration date.
I understand that the occurrence of a later required exercise event, such as termination of employment after a change of control, may result in a new and shorter exercise period applicable to my options under the Stock Option Agreements.
|
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|
TurboChef Technologies, Inc. | ||
|
|
|
|
|
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|
|
|
/s/Richard E. Perlman |
|
|
|
/s/Dennis J. Stockwell |
Signed: |
|
|
By: |
|
|
|
|
|
Name (printed): Richard E. Perlman |
|
Dennis J. Stockwell, VP & General Counsel | ||
|
| |||||
Date: |
|
12/27/07 |
|
Date: |
|
12/27/07 |
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IMPORTANT DEADLINE: You must ensure that this election agreement is received by TurboChef Technologies, Inc. at the contact information below no later than 12:00 pm (Noon) on December 28, 2007. If this agreement form is not received by then or is improperly completed, it may not be accepted by the Company. If, within 24 hours of you sending this form, you have not received an email confirmation that it was received and accepted, please call Dennis Stockwell at 678.987.1714 or Miguel Fernandez at 678.987.1704. If by 1:00 p.m. on December 28, 2007, you have not received an email confirmation that this agreement form was received and accepted, please call Dennis Stockwell at 678.987.1714 or Miguel Fernandez at 678.987.1704.
Schedule to Exhibit 10.25
Stock Option Fixed Exercise Amendment Agreement
The following directors and executive officers named in this Annual Report on Form 10-K for the year ended December 31, 2007 were parties to a Stock Option Fixed Exercise Amendment Agreement with TurboChef Technologies, Inc.:
Name |
Date of Agreement |
Options Subject to Amendment |
Richard E. Perlman |
12/27/07 |
277,778 shares, grant dated 10/29/03 at $5.25 |
James K. Price |
12/26/07 |
277,778 shares, grant dated 10/29/03 at $5.25 |
James A. Cochran |
12/26/07 |
88,889 shares, grant dated 10/29/03 at $5.25 |
|
15,000 shares, grant dated 5/3/05 at $10.35 |
Paul P. Lehr |
12/27/07 |
40,000 shares, grant dated 5/3/05 at $10.35* |
J. Thomas Presby |
12/26/07 |
22,500 shares, grant dated 10/29/03 at $5.25 |
William A. Shutzer |
12/26/07 |
22,500 shares, grant dated 10/29/03 at $5.25 |
Raymond H. Welsh |
12/26/07 |
18,333 shares, grant dated 10/29/03 at $5.25 |
James W. DeYoung |
12/27/07 |
18,333 shares grant dated 10/29/03 at $5.25 |
_______________________
*All elections above were under the default provisions of the agreement form except Mr. Lehr, who opted to exercise all of the options during the year 2008.
EMPLOYMENT AGREEMENT
(As Amended and Restated January 18, 2008)
TurboChef Technologies, Inc., a Delaware corporation, (TurboChef) and Richard E. Perlman (Executive) entered into an employment agreement (the Employment Agreement) effective October 28, 2003 (the Effective Date). TurboChef and Executive hereby amend and restate the Employment Agreement in its entirety in order to evidence formal compliance with Section 409A of the Internal Revenue Code of 1986, as amended (the Code), and the guidance thereunder (collectively Section 409A) and to make other desired changes and clarifications. This revised Employment Agreement is effective upon execution and has the following terms and conditions:
§ 1. |
TERM OF EMPLOYMENT |
The Employment Agreement had an initial term of three years commencing on the Effective Date and has been renewed twice for subsequent one-year terms such that the current one-year term will end October 28, 2008. The term of the Employment Agreement (the Term) currently shall extend to the end of the day, December 31, 2008 and shall automatically extend for one additional year beginning on January 1, 2009 and thereafter for an additional year on each subsequent anniversary of January 1, 2009 unless TurboChef or Executive notifies the other pursuant to § 6(a) that no such extension will be effected at least six months before January 1, 2009 or at least six months before any such subsequent anniversary date (January 1, 2009 and each subsequent anniversary date during the Term shall herein be referred to as a Renewal Date). Executives primary location of employment shall be at TurboChefs offices in New York City.
§ 2. |
POSITION and DUTIES AND RESPONSIBILITIES |
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(a) |
Position. Executive shall be the Chairman of the Board of TurboChef. |
(b) Duties and Responsibilities. Executives duties and responsibilities shall be those normally associated with Executives position as a chairman of the board plus any additional duties and responsibilities that TurboChefs Board of Directors from time to time may assign orally or in writing to Executive. Executive shall report to TurboChefs Board of Directors and shall have such powers as may be delegated to him by such board. Executive shall undertake to perform all Executives duties and responsibilities for TurboChef in good faith and on a full-time basis and shall at all times act in the course of Executives employment under this Employment Agreement in the best interest of TurboChef.
§ 3. |
COMPENSATION AND BENEFITS |
(a) Base Salary. Executives base salary shall remain unchanged through December 31, 2007 and as of January 1, 2008 shall be $441,024 per year, which base salary shall be payable in accordance with TurboChefs standard payroll practices and
policies for senior executives (but not less frequently than monthly) and shall be subject to such withholdings as required by law or as otherwise permissible under such practices or policies. Executives base salary shall be adjusted annually for any changes in the Consumer Price Index (CPI), with the adjustment applied effective as of the next Renewal Date. The adjustment will be directly proportional to the percent change in the CPI for All Urban Consumers (CPI-U) for the U.S. City Average for All Items, 1982-84=100, comparing the CPI for October for the current year against the CPI for October of the prior year. The Compensation Committee may, in its sole discretion, determine a reasonable adjustment if a major revision in the CPI occurs. The base salary also is subject to periodic adjustments as determined by the Compensation Committee of TurboChefs Board of Directors.
(b) Bonus. Executive shall be eligible to receive bonus compensation in excess of base salary and benefits for any year (or other period) during the Term pursuant to one or more executive or management compensation plans adopted or individual awards made from time to time by the Compensation Committee in its discretion. Executive need not be employed by TurboChef at the time of payment of a bonus. The bonus amount shall be payable in a lump sum in the following calendar year not later than the earlier of ten business days after TurboChefs financial results for the year are publicly released and March 15 of such calendar year. Executives bonus hereunder shall be prorated for any partial year of employment. The Compensation Committee shall reasonably decide any dispute over the amount of any bonus hereunder.
(c) Employee Benefit Plans. Executive shall be eligible to participate in the employee benefit plans, programs and policies maintained by TurboChef for similarly situated executives in accordance with the terms and conditions to participate in such plans, programs and policies as in effect from time to time.
(d) Option Grants. Unless provided otherwise by the Compensation Committee and set forth in the applicable award agreement, all options to purchase shares of the common stock of TurboChef (TurboChef Stock) that TurboChef grants to Executive shall vest over thirty six months in twelve equal quarterly installments of 8-1/3% on the calendar date of the grant in the third, sixth, ninth and twelfth months following the grant date and following each of the next two anniversaries of the grant date.
(e) Vacation. Executive shall accrue eight weeks of vacation during each successive one year period in the Term, which vacation time shall be taken at such time or times in each such one year period so as not to materially and adversely interfere with the business of TurboChef.
(f) Expenses. TurboChef shall reimburse Executive for, or pay directly, all reasonable business expenses incurred by Executive at the request of, or on behalf of, TurboChef in the performance of Executives duties under this Employment Agreement, provided that Executive incurs and accounts for such expenses in accordance with all of
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the policies and directives of TurboChef as in effect from time to time. Business expenses payable or reimbursable hereunder shall be referred to in this Employment Agreement as Business Expenses.
§ 4. |
TERMINATION OF EMPLOYMENT |
(a) Termination by TurboChef Other Than for Cause or Disability or by Executive for Good Reason.
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(1) |
TurboChef shall have the right to terminate Executives employment at any time, and Executive shall have the right to resign at any time. However, a notice under § 1 that no extension of Executives Term will be effected shall not constitute a termination of Executives employment by TurboChef or a resignation by Executive. If either TurboChef or Executive elects to give such notice, TurboChefs only obligation to Executive under this Employment Agreement after the expiration of the Term shall be to pay Executives earned but unpaid salary and benefits then in effect under § 3(a), if any, until the date the Term expired. |
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(2) |
If TurboChef terminates Executives employment other than for Cause or Disability or Executive resigns for Good Reason, TurboChef shall (in lieu of any other severance benefits under any of TurboChefs employee benefit plans, programs or policies) pay Executive, within five business days after the date Executives employment is terminated, in a lump sum an amount equal to $1,095,000 or three times Executive's base salary in effect immediately before Executives termination of employment, whichever is greater, plus an amount equal to three times Executives annual bonus and annual benefits. Annual bonus shall mean the higher of the last bonus paid to Executive under § 3(b) and the one-year average of the bonuses, if any, approved by the Compensation Committee and paid to Executive for the last two full calendar years prior to termination (including cash and the value of any non-cash bonus paid as reasonably determined by TurboChef). Annual benefits shall mean the dollar value of consideration paid by TurboChef for the last complete calendar year on behalf of the Executive, or to provide the Executive with, the following employee benefits (as reasonably determined by one or more officers of TurboChef other than Executive): medical insurance, dental insurance, vision insurance, short-term disability insurance, long-term disability insurance, life insurance and accidental death benefits. In addition, TurboChef shall make any Gross-Up Payment called for under § 4(f) to Executive within five business days after the date such excise tax is determined to be payable. Executive waives Executives rights, if any, to have such |
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payment taken into account in computing any other benefits payable to, or on behalf of, Executive by TurboChef. In addition, all outstanding stock options, restricted stock units or other equity awards shall immediately vest and become exercisable or paid out, and the agreements or certificates representing such awards shall be deemed amended as necessary to permit such accelerated vesting or pay out.
(b) Termination by TurboChef for Cause or by Executive Other Than for Good Reason.
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(1) |
TurboChef shall have the right to terminate Executives employment at any time for Cause, and Executive shall have the right to resign at any time other than for Good Reason. |
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(2) |
If TurboChef terminates Executives employment for Cause or Executive resigns other than for Good Reason, TurboChefs only obligation to Executive under this Employment Agreement shall be to pay Executives earned but unpaid base salary and benefits up to the date Executives employment terminates. Furthermore, if terminated for Cause, Executive shall forfeit any amount of a bonus that he may have earned in the year of termination and his right to exercise any outstanding options or other rights to purchase common stock of TurboChef, and all such outstanding options and other rights and unvested restricted stock or restricted stock units shall be immediately forfeited on his date of termination. |
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(c) |
Cause. The term Cause as used in this Employment Agreement means |
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(1) |
Executive has engaged in conduct which in the judgment of TurboChefs Board of Directors constitutes gross negligence, gross misconduct or gross neglect in the performance of Executives duties and responsibilities under this Employment Agreement, including conduct resulting or intending to result directly or indirectly in gain or personal enrichment for Executive at TurboChefs expense; |
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(2) |
Executive has been convicted of a felony for fraud, embezzlement or theft; or |
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(3) |
Executive has engaged in a breach of any provision of this Employment Agreement which Executive has failed to cure within thirty days after Executive has notice of such breach from TurboChefs Board of Directors; provided, however, |
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(4) |
No Cause shall exist under this Employment Agreement unless (i) Executive has been provided a detailed, written statement of the |
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basis for TurboChefs belief that Cause exists and an opportunity to meet with TurboChefs Board of Directors (together with Executives counsel (if Executive chooses to have Executives counsel present at such meeting)) after Executive has had a reasonable period in which to review such statement and (ii) TurboChefs Board of Directors determines (after such meeting, if Executive meets with TurboChefs Board of Directors) reasonably and in good faith and by the affirmative vote of not less than a majority of the members of TurboChefs Board of Directors then in office at a meeting called and held for such purpose that Cause does exist under this Employment Agreement.
(d) Good Reason. The term Good Reason means, in the absence of Executives specific agreement thereto,
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(1) |
Any material reduction in Executives base salary; |
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(2) |
A material reduction in Executive's authority, duties or responsibilities |
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(3) |
A material reduction in the authority, duties or responsibilities of the supervisor to whom the Executive reports; |
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(4) |
A relocation of Executives primary work site(s) more than one hundred miles from Executives current primary work site(s); or |
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(5) |
Any material breach of any of the terms of this Employment Agreement by TurboChef; |
provided, however, no Good Reason shall exist unless (i) within ninety (90) days of the initial existence of the event or condition that Executive believes constitutes Good Reason, Executive gives TurboChef a detailed, written statement of the basis for Executives belief that Good Reason exists and gives TurboChef a thirty-day period after the delivery of such statement to cure the basis for such belief and (ii) Executive actually submits Executives resignation to TurboChefs Board of Directors during the sixty day period which begins immediately after the end of such thirty-day period if Executive reasonably and in good faith determines that Good Reason continues to exist after the end of such thirty-day period.
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(e) |
Termination for Disability or Death. |
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(1) |
TurboChef shall have the right to terminate Executives employment on or after the date Executive has a Disability, and Executives employment shall terminate at Executives death. |
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(2) |
If Executives employment terminates under this § 4(e), TurboChefs only obligation under this Employment Agreement |
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shall be to pay Executive or, if Executive dies, Executives estate any earned but unpaid base salary then in effect under § 3(a), benefits, a pro-rated annual bonus (calculated as provided in § 4(a)(2)) and non-reimbursed Business Expenses through the date Executives employment terminates. The pro-rated annual bonus shall be paid within 60 days of the termination date.
The term Disability as used in this Employment Agreement means the suffering by Executive for at least a 180 consecutive day period of a physical or mental condition resulting from bodily injury, disease, or mental disorder which renders Executive incapable of continuing even with reasonable accommodation to perform the essential functions of Executives job. TurboChefs Board of Directors shall determine whether Executive has a Disability. If Executive disputes such determination, the issue shall be submitted to a panel consisting of three physicians who specialize in the physical or mental condition from which Executive suffers, one appointed and paid by TurboChef, one appointed and paid by Executive and the third appointed by these two physicians and paid one-half by TurboChef and one-half by Executive. The determination as to whether Executive has a Disability shall be made by such panel and shall be binding on TurboChef and on Executive.
(f) Change in Control. If there is a Change in Control, Executives right to exercise all outstanding stock options or other rights, his right to receive payment under all outstanding restricted stock units and any restrictions on alienation of restricted stock or other restricted rights which have been granted to Executive by TurboChef shall immediately become 100% vested and non-forfeitable, payable and freely transferable, as the case may be, and, further, Executive shall have the right in Executives sole discretion upon two weeks advance written notice to resign Executives employment as of any date within the shorter of the six month period immediately following the date of such Change in Control, and the period beginning on the date of the Change in Control and ending on March 1st of the year following the date of the Change in Control, in which event TurboChef shall pay to Executive within five days after the date of the termination of Executives employment, in a lump sum an amount equal to $1,095,000 or three times Executive's base salary in effect immediately before Executives termination of employment, whichever is greater, plus an amount equal to three times Executives annual bonus and annual benefits. Annual bonus and annual benefits shall have the meanings ascribed to those terms in § 4(a)(2). TurboChef thereafter shall make any Gross-Up Payment called for under this § 4(f) to Executive when such excise tax is determined to be payable. Executive waives Executives right, if any, to have any and all such options (to the extent an exercise right is accelerated under this § 4(f)) and payments taken into account in computing any other benefits payable to, or on behalf of, Executive by TurboChef. Notwithstanding anything to the contrary in the foregoing, if in connection with a Change of Control, holders of Common Stock of TurboChef receive in exchange for their shares cash, other securities or a combination thereof, then TurboChef may require that Executive accept in exchange for Executives stock options or other rights to receive or acquire shares of Common Stock of
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TurboChef comparable consideration for the net value of Executives stock options or other rights as if they had been immediately exercised or paid out.
The term Change in Control as used in this Employment Agreement means:
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(1) |
The acquisition at any time by any person, entity or group within the meaning of Sections 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (excluding, for this purpose, TurboChef, its affiliates, or any employee benefit plan of TurboChef or any of its affiliates) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under such securities law) of more than fifty percent of either the then outstanding shares of common stock of TurboChef or of the combined voting power of TurboChefs then outstanding voting securities or any such acquisition of more than fifty percent of either such common stock or voting securities of TurboChef or of the combined voting power of TurboChefs then outstanding voting securities except for an acquisition resulting from a disposition of such stock or securities effected by TurboChef or a public offering by TurboChef; |
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(2) |
The individuals who constitute the members of the Board of Directors of TurboChef, who shall be referred to as the Incumbent Members, cease for any reason to constitute at least a majority of such Board of Directors, provided that any individual becoming a member after the date of this Employment Agreement whose election, or nomination for election by TurboChefs stockholders, was approved by a vote of at least a majority of the then Incumbent Members shall be considered as though such individual was an Incumbent Member; provided, however, that any individual becoming a member of the Board of Directors in the aforesaid manner as part of a group whose membership after election constitutes a majority of the Board of Directors, or whose membership becomes a majority of the Board of Directors within a reasonably short period of time because of the resignation of Incumbent Members following the election of such group, will not be considered as an Incumbent Member; |
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(3) |
A merger, consolidation or other reorganization where, in each case, with respect to which persons who were the stockholders of TurboChef immediately prior to such merger, consolidation or other reorganization, immediately thereafter, they do not own more than fifty percent of the combined voting power of the merged, consolidated or reorganized TurboChefs then outstanding voting securities; or |
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(4) |
The sale of all or substantially all of the assets of TurboChef. |
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If TurboChef or TurboChefs accountants determine that the option exercise right and the severance payments called for under this § 4(f) plus any other payments or benefits made available to Executive by TurboChef upon a Change in Control will result in Executive being subject to an excise tax under Section 4999 of the Code, or if such an excise tax is assessed against Executive as a result of such option exercise right or payment or other benefits, TurboChef shall make a Gross Up Payment to or on behalf of Executive as and when each and any such determination or assessment, as applicable, is made, provided Executive takes such action (other than waiving Executives right to any payments or benefits otherwise due from TurboChef) as TurboChef reasonably requests under the circumstances to mitigate or challenge such tax; provided, however, if TurboChef or TurboChefs accountants determine that no Gross Up Payment would be payable under this § 4(f) if Executive waives Executives right to receive a part of such payments and such part does not exceed $10,000, Executive agrees to irrevocably waive Executives right to receive such part of such payments if an independent accountant or lawyer retained by Executive and paid by TurboChef agrees with the determination made by TurboChef or TurboChefs accountants.
The term Gross Up Payment as used in this Employment Agreement shall mean a payment to or on behalf of Executive which shall be sufficient to pay (i) any excise tax described in this § 4(f) in full, (ii) any federal, state and local income tax and social security or other employment tax on the payment made to pay such excise tax as well as any additional excise tax on such payment and (iii) any interest or penalties assessed by the Internal Revenue Service on Executive if such interest or penalties are attributable to TurboChefs failure to comply with its obligations under this §4(f) or applicable law. Any determination under this §4(f) by TurboChef or TurboChefs accountants shall be made in accordance with Section 280G of the Code and any applicable related regulations (whether proposed, temporary or final) and any related Internal Revenue Service rulings and any related case law and, if TurboChef reasonably requests that Executive take action to mitigate or challenge, or to mitigate and challenge, any such tax or assessment and Executive complies with such request, TurboChef shall provide Executive with such information and such expert advice and assistance from TurboChefs accountants, lawyers and other advisors as Executive may reasonably request and shall pay for all expenses incurred in effecting such compliance and any related fines, penalties, interest and other assessments.
Notwithstanding the foregoing, (i) each Gross Up Payment required to be made by TurboChef to Executive hereunder and any overpayment of a Gross Up Payment required to be repaid by Executive to TurboChef shall be paid no later than the end of the calendar year next following the calendar year in which Executive remits the corresponding taxes to the Internal Revenue Service, and (ii) any reimbursement of expenses related to a tax audit or litigation addressing the existence or amount of a tax liability required to be made by TurboChef to Executive hereunder shall be paid no later than the end of the calendar year next following the calendar year in which Executive remits to the Internal Revenue Service the taxes that are the subject of the audit or litigation or, where as a result of the audit or litigation no taxes are due or are remitted
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but other reimbursable costs and/or expenses have been incurred, the end of the calendar year following the calendar year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation.
(g) Benefits at Termination of Employment. Executive upon Executives termination of employment shall have the right to receive any benefits payable under TurboChefs employee benefit plans, programs and policies which Executive otherwise has a nonforfeitable right to receive under the terms of such plans, programs and policies (other than severance benefits) independent of Executives rights under this Employment Agreement in addition to any base salary under § 3(a) which accrued as of the termination date and are expressly payable under this § 4 without regard to the reason for such termination of employment.
§ 5. |
COVENANTS BY EXECUTIVE |
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(a) |
TurboChef Property. |
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(1) |
Executive upon the termination of Executives employment for any reason or, if earlier, upon TurboChefs request shall promptly return all Property which had been entrusted or made available to Executive by TurboChef. |
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(2) |
The term Property means all records, files, memoranda, reports, price lists, customer lists, drawings, plans, sketches, keys, codes, computer hardware and software, equipment and other property of any kind or description prepared, used or possessed by Executive during Executives employment by TurboChef and, if applicable, any of its affiliates (and any duplicates of any such property) together with any and all information, ideas, concepts, discoveries, and inventions and the like conceived, made, developed or acquired at any time by Executive individually or, with others during Executives employment which relate to TurboChef business, products or services. |
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(b) |
Trade Secrets. |
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(1) |
Executive agrees that Executive will hold in a fiduciary capacity for the benefit of TurboChef, and any of its affiliates, and will not directly or indirectly use or disclose, any Trade Secret that Executive may have acquired during the term of Executives employment by TurboChef or any of its affiliates for so long as such information remains a Trade Secret. |
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(2) |
The term Trade Secret means information, including, but not limited to, technical or nontechnical data, a formula, a pattern, a compilation, a program, a device, a method, a technique, a drawing, a process, financial data, financial plans, product plans, or |
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a list of actual or potential customers or suppliers that (a) derives economic value, actual or potential, from not being generally known to, and not being generally readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use and (b) is the subject of reasonable efforts by TurboChef and any of its affiliates to maintain its secrecy.
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(3) |
This § 5(b) and § 5(c) are intended to provide rights to TurboChef which are in addition to, not in lieu of, those rights TurboChef has under the common law or applicable statutes for the protection of trade secrets. |
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(c) |
Confidential Information. |
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(1) |
Executive while employed under this Employment Agreement and thereafter during the Restricted Period shall hold in a fiduciary capacity for the benefit of TurboChef and any of its affiliates, and shall not directly or indirectly use or disclose, any Confidential Information that Executive may have acquired (whether or not developed or compiled by Executive and whether or not Executive is authorized to have access to such information) during the term of, and in the course of, or as a result of Executives employment by TurboChef or any of its affiliates. |
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(2) |
The term Confidential Information means any secret, confidential or proprietary information possessed by TurboChef or any of its affiliates relating to their businesses, including, without limitation, trade secrets, customer lists, details of client or consultant contracts, current and anticipated customer requirements, pricing policies, price lists, market studies, business plans, operational methods, marketing plans or strategies, product development techniques or flaws, computer software programs (including object code and source code), data and documentation data, base technologies, systems, structures and architectures, inventions and ideas, past current and planned research and development, compilations, devices, methods, techniques, processes, financial information and data, business acquisition plans and new personnel acquisition plans (not otherwise included in the definition of a Trade Secret under this Employment Agreement) that has not become generally available to the public by the act of one who has the right to disclose such information without violating any right of TurboChef or any of its affiliates. Confidential Information may include, but not be limited to, future business plans, licensing strategies, advertising campaigns, information regarding customers, employees and independent contractors and the terms and conditions of this Employment Agreement. |
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(d) Restricted Period. The term Restricted Period as used in the Employment Agreement shall mean the twenty-four month period which starts on the date Executives employment terminates with TurboChef without regard to whether such termination comes before or after the end of the Term.
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(e) |
Nonsolicitation of Customers or Employees. |
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(1) |
Executive (i) while employed under this Employment Agreement shall not, on Executives own behalf or on behalf of any person, firm, partnership, association, corporation or business organization, entity or enterprise (other than TurboChef or one of its affiliates), solicit Competing Business of customers of TurboChef or any of its affiliates and (ii) during the Restricted Period shall not, on Executives own behalf or on behalf of any person, firm, partnership, association, corporation or business organization, entity or enterprise, solicit Competing Business of customers of TurboChef or any of its affiliates with whom Executive within the twenty-four month period immediately preceding the beginning of the Restricted Period had or made contact with in the course of Executives employment by TurboChef. |
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(2) |
Executive (i) while employed under this Employment Agreement shall not, either directly or indirectly, call on, solicit or attempt to induce any other officer, employee or independent contractor of TurboChef or any of its affiliates to terminate his or her employment with TurboChef or any of its affiliates and shall not assist any other person or entity in such a solicitation (regardless of whether any such officer, employee or independent contractor would commit a breach of contract by terminating his or her employment), and (ii) during the Restricted Period, shall not, either directly or indirectly, call on, solicit or attempt to induce any other officer, employee or independent contractor of TurboChef or any of its affiliates with whom Executive had contact, knowledge of, or association in the course of Executives employment with TurboChef or any of its affiliates as the case may be, during the twelve month period immediately preceding the beginning of the Restricted Period, to terminate his or her employment with TurboChef or any of its affiliates and shall not assist any other person or entity in such a solicitation (regardless of whether any such officer, employee or independent contractor would commit a breach of contract by terminating his or her employment). |
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(3) |
The term Competing Business as used in this Employment Agreement means the development, marketing, selling, licensing or servicing of appliances utilizing a combination of microwave and other heating source for cooking food rapidly. |
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(f) Noncompetition Obligation. Executive while employed under this Employment Agreement and thereafter during the Restricted Period and within the United States, shall not organize or form any other business that will conduct Competing Business and shall not engage in the executive management of, or provide consulting concerning the executive management of, Competing Business on behalf of any business other than TurboChef or its affiliates. Executive acknowledges and agrees that the territory identified in this § 5(f) are states in which Executive performs services for TurboChef by being actively engaged as a member of TurboChefs executive management team in TurboChefs operations in these states.
(g) Reasonable and Continuing Obligations. Executive agrees that Executives obligations under this § 5 are obligations which will continue beyond the date Executives employment terminates and that such obligations are reasonable and necessary to protect TurboChefs legitimate business interests. TurboChef in addition shall have the right to take such other action as TurboChef deems necessary or appropriate to compel compliance with the provisions of this § 5.
(h) Remedy for Breach. Executive agrees that the remedies at law of TurboChef for any actual or threatened breach by Executive of the covenants in this § 5 would be inadequate and that TurboChef shall be entitled to specific performance of the covenants in this § 5, including entry of an ex parte, temporary restraining order in state or federal court, preliminary and permanent injunctive relief against activities in violation of this § 5, or both, or other appropriate judicial remedy, writ or order, in addition to any damages and legal expenses which TurboChef may be legally entitled to recover. Executive acknowledges and agrees that the covenants in this § 5 shall be construed as agreements independent of any other provision of this or any other agreement between TurboChef and Executive, and that the existence of any claim or cause of action by Executive against TurboChef, whether predicated upon this Employment Agreement or any other agreement, shall not constitute a defense to the enforcement by TurboChef of such covenants.
§ 6. |
MISCELLANEOUS |
(a) Notices. Notices and all other communications shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by United States registered or certified mail. Notices to TurboChef shall be sent to TurboChef Technologies, Inc., Suite 1900, Six Concourse Parkway, Atlanta, GA 30328, Attention: Corporate Secretary. Notices and communications to Executive shall be sent to the address Executive most recently provided to TurboChef.
(b) No Waiver. Except for the notice described in § 6(a), no failure by either TurboChef or Executive at any time to give notice of any breach by the other of, or to require compliance with, any condition or provision of this Employment Agreement shall be deemed a waiver of any provisions or conditions of this Employment Agreement.
(c) Delaware Law and Georgia Courts. This Employment Agreement shall be governed by Delaware law without reference to the choice of law principles thereof.
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Any litigation that may be brought by either TurboChef or Executive involving the enforcement of this Employment Agreement or any rights, duties, or obligations under this Employment Agreement, shall be brought exclusively in either the state courts in and for Fulton County, Georgia or the United States District Court, Northern District of Georgia, Atlanta Division.
(d) Assignment. This Employment Agreement shall be binding upon and inure to the benefit of TurboChef and any successor to all or substantially all of the business or assets of TurboChef. TurboChef may assign this Employment Agreement to any affiliate or successor, and no such assignment shall be treated as a termination of Executives employment under this Employment Agreement. Executives rights and obligations under this Employment Agreement are personal and shall not be assigned or transferred.
(e) Other Agreements. This amended and restated Employment Agreement replaces and merges any and all previous agreements and understandings regarding all the terms and conditions of Executives employment relationship with TurboChef, and this Employment Agreement constitutes the entire agreement between TurboChef and Executive with respect to such terms and conditions. This Employment Agreement does not replace any previous agreement regarding ownership of inventions or other intellectual property.
(f) Amendment. No amendment to this Employment Agreement shall be effective unless it is in writing and signed by TurboChef and by Executive.
(g) Invalidity. If any part of this Employment Agreement is held by a court of competent jurisdiction to be invalid or otherwise unenforceable, the remaining part shall be unaffected and shall continue in full force and effect, and the invalid or otherwise unenforceable part shall be deemed not to be part of this Employment Agreement.
(h) Section 409A. It is the intent of TurboChef and the Executive that all payments payable to the Executive pursuant to this Employment Agreement shall comply with Section 409A or shall be exempt from Section 409A (as short-term deferrals or otherwise in accordance with Section 409A). Notwithstanding the foregoing, to the extent TurboChef determines in good faith that (a) one or more payments or benefits received or to be received by Executive pursuant to this Employment Agreement (including any Gross Up Payment) would constitute deferred compensation subject to the rules of Section 409A, and (b) that the Executive is a specified employee under Section 409A, then only to the extent required to avoid the Executives incurrence of any additional tax or interest or penalties under Section 409A, such payment or benefit will be delayed until the first business day after the date which is six (6) months after the Participants separation from service within the meaning of Section 409A. In addition, to the extent TurboChef determines in good faith that one or more payments or benefits received or to be received by the Executive upon a termination of employment pursuant to this Employment Agreement would constitute deferred compensation subject to the rules of Section 409A, a termination of
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employment shall be deemed to occur only if such termination of employment constitutes a separation from service as defined in Section 409A, as determined by TurboChef in accordance with such elections and policies adopted by it from time to time.
IN WITNESS WHEREOF, TurboChef and Executive have executed this Employment Agreement in multiple originals to be effective upon the date of the last signature hereto.
TURBOCHEF TECHNOLOGIES, INC. |
EXECUTIVE |
By: /s/James K. Price |
/s/Richard E. Perlman |
|
James K. Price |
Richard E. Perlman |
|
President |
|
Date: January 18, 2008 |
Date: January 17, 2008 |
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EMPLOYMENT AGREEMENT
(As Amended and Restated January 18, 2008)
TurboChef Technologies, Inc., a Delaware corporation, (TurboChef) and James K. Price (Executive) entered into an employment agreement (the Employment Agreement) effective October 28, 2003 (the Effective Date). TurboChef and Executive hereby amend and restate the Employment Agreement in its entirety in order to evidence formal compliance with Section 409A of the Internal Revenue Code of 1986, as amended (the Code), and the guidance thereunder (collectively Section 409A) and to make other desired changes and clarifications. This revised Employment Agreement is effective upon execution and has the following terms and conditions:
§ 1. |
TERM OF EMPLOYMENT |
The Employment Agreement had an initial term of three years commencing on the Effective Date and has been renewed twice for subsequent one-year terms such that the current one-year term will end October 28, 2008. The term of the Employment Agreement (the Term) currently shall extend to the end of the day, December 31, 2008 and shall automatically extend for one additional year beginning on January 1, 2009 and thereafter for an additional year on each subsequent anniversary of January 1, 2009 unless TurboChef or Executive notifies the other pursuant to § 6(a) that no such extension will be effected at least six months before January 1, 2009 or at least six months before any such subsequent anniversary date (January 1, 2009 and each subsequent anniversary date during the Term shall herein be referred to as a Renewal Date). Executives primary location of employment shall be at TurboChefs offices in Atlanta, Georgia.
§ 2. |
POSITION and DUTIES AND RESPONSIBILITIES |
(a) Position. Executive shall be the President and Chief Executive Officer of TurboChef.
(b) Duties and Responsibilities. Executives duties and responsibilities shall be those normally associated with Executives position as a president and chief executive officer of a corporation plus any additional duties and responsibilities that TurboChefs Board of Directors from time to time may assign orally or in writing to Executive. Executive shall report to TurboChefs Board of Directors and shall have such powers as may be delegated to him by such board. Executive shall undertake to perform all Executives duties and responsibilities for TurboChef in good faith and on a full-time basis and shall at all times act in the course of Executives employment under this Employment Agreement in the best interest of TurboChef.
§ 3. |
COMPENSATION AND BENEFITS |
(a) Base Salary. Executives base salary shall remain unchanged through December 31, 2007 and as of January 1, 2008 shall be $439,324 per year, which base
salary shall be payable in accordance with TurboChefs standard payroll practices and policies for senior executives (but not less frequently than monthly) and shall be subject to such withholdings as required by law or as otherwise permissible under such practices or policies. Executives base salary shall be adjusted annually for any changes in the Consumer Price Index (CPI), with the adjustment applied effective as of the next Renewal Date. The adjustment will be directly proportional to the percent change in the CPI for All Urban Consumers (CPI-U) for the U.S. City Average for All Items, 1982-84=100, comparing the CPI for October for the current year against the CPI for October of the prior year. The Compensation Committee may, in its sole discretion, determine a reasonable adjustment if a major revision in the CPI occurs. The base salary also is subject to periodic adjustments as determined by the Compensation Committee of TurboChefs Board of Directors.
(b) Bonus. Executive shall be eligible to receive bonus compensation in excess of base salary and benefits for any year (or other period) during the Term pursuant to one or more executive or management compensation plans adopted or individual awards made from time to time by the Compensation Committee in its discretion. Executive need not be employed by TurboChef at the time of payment of a bonus. The bonus amount shall be payable in a lump sum in the following calendar year not later than the earlier of ten business days after TurboChefs financial results for the year are publicly released and March 15 of such calendar year. Executives bonus hereunder shall be prorated for any partial year of employment. The Compensation Committee shall reasonably decide any dispute over the amount of any bonus hereunder.
(c) Employee Benefit Plans. Executive shall be eligible to participate in the employee benefit plans, programs and policies maintained by TurboChef for similarly situated executives in accordance with the terms and conditions to participate in such plans, programs and policies as in effect from time to time.
(d) Option Grants. Unless provided otherwise by the Compensation Committee and set forth in the applicable award agreement, all options to purchase shares of the common stock of TurboChef (TurboChef Stock) that TurboChef grants to Executive shall vest over thirty six months in twelve equal quarterly installments of 8-1/3% on the calendar date of the grant in the third, sixth, ninth and twelfth months following the grant date and following each of the next two anniversaries of the grant date.
(e) Vacation. Executive shall accrue eight weeks of vacation during each successive one year period in the Term, which vacation time shall be taken at such time or times in each such one year period so as not to materially and adversely interfere with the business of TurboChef.
(f) Expenses. TurboChef shall reimburse Executive for, or pay directly, all reasonable business expenses incurred by Executive at the request of, or on behalf of, TurboChef in the performance of Executives duties under this Employment Agreement,
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provided that Executive incurs and accounts for such expenses in accordance with all of the policies and directives of TurboChef as in effect from time to time. Business expenses payable or reimbursable hereunder shall be referred to in this Employment Agreement as Business Expenses.
§ 4. |
TERMINATION OF EMPLOYMENT |
(a) Termination by TurboChef Other Than for Cause or Disability or by Executive for Good Reason.
|
(1) |
TurboChef shall have the right to terminate Executives employment at any time, and Executive shall have the right to resign at any time. However, a notice under § 1 that no extension of Executives Term will be effected shall not constitute a termination of Executives employment by TurboChef or a resignation by Executive. If either TurboChef or Executive elects to give such notice, TurboChefs only obligation to Executive under this Employment Agreement after the expiration of the Term shall be to pay Executives earned but unpaid salary and benefits then in effect under § 3(a), if any, until the date the Term expired. |
|
(2) |
If TurboChef terminates Executives employment other than for Cause or Disability or Executive resigns for Good Reason, TurboChef shall (in lieu of any other severance benefits under any of TurboChefs employee benefit plans, programs or policies) pay Executive, within five business days after the date Executives employment is terminated, in a lump sum an amount equal to $1,095,000 or three times Executive's base salary in effect immediately before Executives termination of employment, whichever is greater, plus an amount equal to three times Executives annual bonus and annual benefits. Annual bonus shall mean the higher of the last bonus paid to Executive under § 3(b) and the one-year average of the bonuses, if any, approved by the Compensation Committee and paid to Executive for the last two full calendar years prior to termination (including cash and the value of any non-cash bonus paid as reasonably determined by TurboChef). Annual benefits shall mean the dollar value of consideration paid by TurboChef for the last complete calendar year on behalf of the Executive, or to provide the Executive with, the following employee benefits (as reasonably determined by one or more officers of TurboChef other than Executive): medical insurance, dental insurance, vision insurance, short-term disability insurance, long-term disability insurance, life insurance and accidental death benefits. In addition, TurboChef shall make any Gross-Up Payment called for under § 4(f) to Executive within five business days after the date such excise tax is determined to be |
- 3 -
payable. Executive waives Executives rights, if any, to have such payment taken into account in computing any other benefits payable to, or on behalf of, Executive by TurboChef. In addition, all outstanding stock options, restricted stock units or other equity awards shall immediately vest and become exercisable or paid out, and the agreements or certificates representing such awards shall be deemed amended as necessary to permit such accelerated vesting or pay out.
(b) Termination by TurboChef for Cause or by Executive Other Than for Good Reason.
|
(1) |
TurboChef shall have the right to terminate Executives employment at any time for Cause, and Executive shall have the right to resign at any time other than for Good Reason. |
|
(2) |
If TurboChef terminates Executives employment for Cause or Executive resigns other than for Good Reason, TurboChefs only obligation to Executive under this Employment Agreement shall be to pay Executives earned but unpaid base salary and benefits up to the date Executives employment terminates. Furthermore, if terminated for Cause, Executive shall forfeit any amount of a bonus that he may have earned in the year of termination and his right to exercise any outstanding options or other rights to purchase common stock of TurboChef, and all such outstanding options and other rights and unvested restricted stock or restricted stock units shall be immediately forfeited on his date of termination. |
|
(c) |
Cause. The term Cause as used in this Employment Agreement means |
|
(1) |
Executive has engaged in conduct which in the judgment of TurboChefs Board of Directors constitutes gross negligence, gross misconduct or gross neglect in the performance of Executives duties and responsibilities under this Employment Agreement, including conduct resulting or intending to result directly or indirectly in gain or personal enrichment for Executive at TurboChefs expense; |
|
(2) |
Executive has been convicted of a felony for fraud, embezzlement or theft; or |
|
(3) |
Executive has engaged in a breach of any provision of this Employment Agreement which Executive has failed to cure within thirty days after Executive has notice of such breach from TurboChefs Board of Directors; provided, however, |
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|
(4) |
No Cause shall exist under this Employment Agreement unless (i) Executive has been provided a detailed, written statement of the basis for TurboChefs belief that Cause exists and an opportunity to meet with TurboChefs Board of Directors (together with Executives counsel (if Executive chooses to have Executives counsel present at such meeting)) after Executive has had a reasonable period in which to review such statement and (ii) TurboChefs Board of Directors determines (after such meeting, if Executive meets with TurboChefs Board of Directors) reasonably and in good faith and by the affirmative vote of not less than a majority of the members of TurboChefs Board of Directors then in office at a meeting called and held for such purpose that Cause does exist under this Employment Agreement. |
(d) Good Reason. The term Good Reason means, in the absence of Executives specific agreement thereto,
|
(1) |
Any material reduction in Executives base salary; |
|
(2) |
A material reduction in Executive's authority, duties or responsibilities |
|
(3) |
A material reduction in the authority, duties or responsibilities of the supervisor to whom the Executive reports; |
|
(4) |
A relocation of Executives primary work site(s) more than one hundred miles from Executives current primary work site(s); or |
|
(5) |
Any material breach of any of the terms of this Employment Agreement by TurboChef; |
provided, however, no Good Reason shall exist unless (i) within ninety (90) days of the initial existence of the event or condition that Executive believes constitutes Good Reason, Executive gives TurboChef a detailed, written statement of the basis for Executives belief that Good Reason exists and gives TurboChef a thirty-day period after the delivery of such statement to cure the basis for such belief and (ii) Executive actually submits Executives resignation to TurboChefs Board of Directors during the sixty day period which begins immediately after the end of such thirty-day period if Executive reasonably and in good faith determines that Good Reason continues to exist after the end of such thirty-day period.
|
(e) |
Termination for Disability or Death. |
|
(1) |
TurboChef shall have the right to terminate Executives employment on or after the date Executive has a Disability, and Executives employment shall terminate at Executives death. |
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|
(2) |
If Executives employment terminates under this § 4(e), TurboChefs only obligation under this Employment Agreement shall be to pay Executive or, if Executive dies, Executives estate any earned but unpaid base salary then in effect under § 3(a), benefits, a pro-rated annual bonus (calculated as provided in § 4(a)(2)) and non-reimbursed Business Expenses through the date Executives employment terminates. The pro-rated annual bonus shall be paid within 60 days of the termination date. |
The term Disability as used in this Employment Agreement means the suffering by Executive for at least a 180 consecutive day period of a physical or mental condition resulting from bodily injury, disease, or mental disorder which renders Executive incapable of continuing even with reasonable accommodation to perform the essential functions of Executives job. TurboChefs Board of Directors shall determine whether Executive has a Disability. If Executive disputes such determination, the issue shall be submitted to a panel consisting of three physicians who specialize in the physical or mental condition from which Executive suffers, one appointed and paid by TurboChef, one appointed and paid by Executive and the third appointed by these two physicians and paid one-half by TurboChef and one-half by Executive. The determination as to whether Executive has a Disability shall be made by such panel and shall be binding on TurboChef and on Executive.
(f) Change in Control. If there is a Change in Control, Executives right to exercise all outstanding stock options or other rights, his right to receive payment under all outstanding restricted stock units and any restrictions on alienation of restricted stock or other restricted rights which have been granted to Executive by TurboChef shall immediately become 100% vested and non-forfeitable, payable and freely transferable, as the case may be, and, further, Executive shall have the right in Executives sole discretion upon two weeks advance written notice to resign Executives employment as of any date within the shorter of the six month period immediately following the date of such Change in Control, and the period beginning on the date of the Change in Control and ending on March 1st of the year following the date of the Change in Control, in which event TurboChef shall pay to Executive within five days after the date of the termination of Executives employment, in a lump sum an amount equal to $1,095,000 or three times Executive's base salary in effect immediately before Executives termination of employment, whichever is greater, plus an amount equal to three times Executives annual bonus and annual benefits. Annual bonus and annual benefits shall have the meanings ascribed to those terms in § 4(a)(2). TurboChef thereafter shall make any Gross-Up Payment called for under this § 4(f) to Executive when such excise tax is determined to be payable. Executive waives Executives right, if any, to have any and all such options (to the extent an exercise right is accelerated under this § 4(f)) and payments taken into account in computing any other benefits payable to, or on behalf of, Executive by TurboChef. Notwithstanding anything to the contrary in the foregoing, if in connection with a Change of Control, holders of Common Stock of TurboChef receive in exchange for their shares cash, other securities or a combination thereof, then TurboChef may require that Executive accept in exchange for Executives
- 6 -
stock options or other rights to receive or acquire shares of Common Stock of TurboChef comparable consideration for the net value of Executives stock options or other rights as if they had been immediately exercised or paid out.
The term Change in Control as used in this Employment Agreement means:
|
(1) |
The acquisition at any time by any person, entity or group within the meaning of Sections 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (excluding, for this purpose, TurboChef, its affiliates, or any employee benefit plan of TurboChef or any of its affiliates) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under such securities law) of more than fifty percent of either the then outstanding shares of common stock of TurboChef or of the combined voting power of TurboChefs then outstanding voting securities or any such acquisition of more than fifty percent of either such common stock or voting securities of TurboChef or of the combined voting power of TurboChefs then outstanding voting securities except for an acquisition resulting from a disposition of such stock or securities effected by TurboChef or a public offering by TurboChef; |
|
(2) |
The individuals who constitute the members of the Board of Directors of TurboChef, who shall be referred to as the Incumbent Members, cease for any reason to constitute at least a majority of such Board of Directors, provided that any individual becoming a member after the date of this Employment Agreement whose election, or nomination for election by TurboChefs stockholders, was approved by a vote of at least a majority of the then Incumbent Members shall be considered as though such individual was an Incumbent Member; provided, however, that any individual becoming a member of the Board of Directors in the aforesaid manner as part of a group whose membership after election constitutes a majority of the Board of Directors, or whose membership becomes a majority of the Board of Directors within a reasonably short period of time because of the resignation of Incumbent Members following the election of such group, will not be considered as an Incumbent Member; |
|
(3) |
A merger, consolidation or other reorganization where, in each case, with respect to which persons who were the stockholders of TurboChef immediately prior to such merger, consolidation or other reorganization, immediately thereafter, they do not own more than fifty percent of the combined voting power of the merged, consolidated or reorganized TurboChefs then outstanding voting securities; or |
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|
(4) |
The sale of all or substantially all of the assets of TurboChef. |
If TurboChef or TurboChefs accountants determine that the option exercise right and the severance payments called for under this § 4(f) plus any other payments or benefits made available to Executive by TurboChef upon a Change in Control will result in Executive being subject to an excise tax under Section 4999 of the Code, or if such an excise tax is assessed against Executive as a result of such option exercise right or payment or other benefits, TurboChef shall make a Gross Up Payment to or on behalf of Executive as and when each and any such determination or assessment, as applicable, is made, provided Executive takes such action (other than waiving Executives right to any payments or benefits otherwise due from TurboChef) as TurboChef reasonably requests under the circumstances to mitigate or challenge such tax; provided, however, if TurboChef or TurboChefs accountants determine that no Gross Up Payment would be payable under this § 4(f) if Executive waives Executives right to receive a part of such payments and such part does not exceed $10,000, Executive agrees to irrevocably waive Executives right to receive such part of such payments if an independent accountant or lawyer retained by Executive and paid by TurboChef agrees with the determination made by TurboChef or TurboChefs accountants.
The term Gross Up Payment as used in this Employment Agreement shall mean a payment to or on behalf of Executive which shall be sufficient to pay (i) any excise tax described in this § 4(f) in full, (ii) any federal, state and local income tax and social security or other employment tax on the payment made to pay such excise tax as well as any additional excise tax on such payment and (iii) any interest or penalties assessed by the Internal Revenue Service on Executive if such interest or penalties are attributable to TurboChefs failure to comply with its obligations under this §4(f) or applicable law. Any determination under this §4(f) by TurboChef or TurboChefs accountants shall be made in accordance with Section 280G of the Code and any applicable related regulations (whether proposed, temporary or final) and any related Internal Revenue Service rulings and any related case law and, if TurboChef reasonably requests that Executive take action to mitigate or challenge, or to mitigate and challenge, any such tax or assessment and Executive complies with such request, TurboChef shall provide Executive with such information and such expert advice and assistance from TurboChefs accountants, lawyers and other advisors as Executive may reasonably request and shall pay for all expenses incurred in effecting such compliance and any related fines, penalties, interest and other assessments.
Notwithstanding the foregoing, (i) each Gross Up Payment required to be made by TurboChef to Executive hereunder and any overpayment of a Gross Up Payment required to be repaid by Executive to TurboChef shall be paid no later than the end of the calendar year next following the calendar year in which Executive remits the corresponding taxes to the Internal Revenue Service, and (ii) any reimbursement of expenses related to a tax audit or litigation addressing the existence or amount of a tax liability required to be made by TurboChef to Executive hereunder shall be paid no later than the end of the calendar year next following the calendar year in which Executive
- 8 -
remits to the Internal Revenue Service the taxes that are the subject of the audit or litigation or, where as a result of the audit or litigation no taxes are due or are remitted but other reimbursable costs and/or expenses have been incurred, the end of the calendar year following the calendar year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation.
(g) Benefits at Termination of Employment. Executive upon Executives termination of employment shall have the right to receive any benefits payable under TurboChefs employee benefit plans, programs and policies which Executive otherwise has a nonforfeitable right to receive under the terms of such plans, programs and policies (other than severance benefits) independent of Executives rights under this Employment Agreement in addition to any base salary under § 3(a) which accrued as of the termination date and are expressly payable under this § 4 without regard to the reason for such termination of employment.
§ 5. |
COVENANTS BY EXECUTIVE |
|
(a) |
TurboChef Property. |
|
(1) |
Executive upon the termination of Executives employment for any reason or, if earlier, upon TurboChefs request shall promptly return all Property which had been entrusted or made available to Executive by TurboChef. |
|
(2) |
The term Property means all records, files, memoranda, reports, price lists, customer lists, drawings, plans, sketches, keys, codes, computer hardware and software, equipment and other property of any kind or description prepared, used or possessed by Executive during Executives employment by TurboChef and, if applicable, any of its affiliates (and any duplicates of any such property) together with any and all information, ideas, concepts, discoveries, and inventions and the like conceived, made, developed or acquired at any time by Executive individually or, with others during Executives employment which relate to TurboChef business, products or services. |
|
(b) |
Trade Secrets. |
|
(1) |
Executive agrees that Executive will hold in a fiduciary capacity for the benefit of TurboChef, and any of its affiliates, and will not directly or indirectly use or disclose, any Trade Secret that Executive may have acquired during the term of Executives employment by TurboChef or any of its affiliates for so long as such information remains a Trade Secret. |
|
(2) |
The term Trade Secret means information, including, but not limited to, technical or nontechnical data, a formula, a pattern, a |
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compilation, a program, a device, a method, a technique, a drawing, a process, financial data, financial plans, product plans, or a list of actual or potential customers or suppliers that (a) derives economic value, actual or potential, from not being generally known to, and not being generally readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use and (b) is the subject of reasonable efforts by TurboChef and any of its affiliates to maintain its secrecy.
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(3) |
This § 5(b) and § 5(c) are intended to provide rights to TurboChef which are in addition to, not in lieu of, those rights TurboChef has under the common law or applicable statutes for the protection of trade secrets. |
|
(c) |
Confidential Information. |
|
(1) |
Executive while employed under this Employment Agreement and thereafter during the Restricted Period shall hold in a fiduciary capacity for the benefit of TurboChef and any of its affiliates, and shall not directly or indirectly use or disclose, any Confidential Information that Executive may have acquired (whether or not developed or compiled by Executive and whether or not Executive is authorized to have access to such information) during the term of, and in the course of, or as a result of Executives employment by TurboChef or any of its affiliates. |
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(2) |
The term Confidential Information means any secret, confidential or proprietary information possessed by TurboChef or any of its affiliates relating to their businesses, including, without limitation, trade secrets, customer lists, details of client or consultant contracts, current and anticipated customer requirements, pricing policies, price lists, market studies, business plans, operational methods, marketing plans or strategies, product development techniques or flaws, computer software programs (including object code and source code), data and documentation data, base technologies, systems, structures and architectures, inventions and ideas, past current and planned research and development, compilations, devices, methods, techniques, processes, financial information and data, business acquisition plans and new personnel acquisition plans (not otherwise included in the definition of a Trade Secret under this Employment Agreement) that has not become generally available to the public by the act of one who has the right to disclose such information without violating any right of TurboChef or any of its affiliates. Confidential Information may include, but not be limited to, future business plans, licensing strategies, advertising campaigns, information regarding |
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customers, employees and independent contractors and the terms and conditions of this Employment Agreement.
(d) Restricted Period. The term Restricted Period as used in the Employment Agreement shall mean the twenty-four month period which starts on the date Executives employment terminates with TurboChef without regard to whether such termination comes before or after the end of the Term.
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(e) |
Nonsolicitation of Customers or Employees. |
|
(1) |
Executive (i) while employed under this Employment Agreement shall not, on Executives own behalf or on behalf of any person, firm, partnership, association, corporation or business organization, entity or enterprise (other than TurboChef or one of its affiliates), solicit Competing Business of customers of TurboChef or any of its affiliates and (ii) during the Restricted Period shall not, on Executives own behalf or on behalf of any person, firm, partnership, association, corporation or business organization, entity or enterprise, solicit Competing Business of customers of TurboChef or any of its affiliates with whom Executive within the twenty-four month period immediately preceding the beginning of the Restricted Period had or made contact with in the course of Executives employment by TurboChef. |
|
(2) |
Executive (i) while employed under this Employment Agreement shall not, either directly or indirectly, call on, solicit or attempt to induce any other officer, employee or independent contractor of TurboChef or any of its affiliates to terminate his or her employment with TurboChef or any of its affiliates and shall not assist any other person or entity in such a solicitation (regardless of whether any such officer, employee or independent contractor would commit a breach of contract by terminating his or her employment), and (ii) during the Restricted Period, shall not, either directly or indirectly, call on, solicit or attempt to induce any other officer, employee or independent contractor of TurboChef or any of its affiliates with whom Executive had contact, knowledge of, or association in the course of Executives employment with TurboChef or any of its affiliates as the case may be, during the twelve month period immediately preceding the beginning of the Restricted Period, to terminate his or her employment with TurboChef or any of its affiliates and shall not assist any other person or entity in such a solicitation (regardless of whether any such officer, employee or independent contractor would commit a breach of contract by terminating his or her employment). |
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|
(3) |
The term Competing Business as used in this Employment Agreement means the development, marketing, selling, licensing or servicing of appliances utilizing a combination of microwave and other heating source for cooking food rapidly. |
(f) Noncompetition Obligation. Executive while employed under this Employment Agreement and thereafter during the Restricted Period and within the United States, shall not organize or form any other business that will conduct Competing Business and shall not engage in the executive management of, or provide consulting concerning the executive management of, Competing Business on behalf of any business other than TurboChef or its affiliates. Executive acknowledges and agrees that the territory identified in this § 5(f) are states in which Executive performs services for TurboChef by being actively engaged as a member of TurboChefs executive management team in TurboChefs operations in these states.
(g) Reasonable and Continuing Obligations. Executive agrees that Executives obligations under this § 5 are obligations which will continue beyond the date Executives employment terminates and that such obligations are reasonable and necessary to protect TurboChefs legitimate business interests. TurboChef in addition shall have the right to take such other action as TurboChef deems necessary or appropriate to compel compliance with the provisions of this § 5.
(h) Remedy for Breach. Executive agrees that the remedies at law of TurboChef for any actual or threatened breach by Executive of the covenants in this § 5 would be inadequate and that TurboChef shall be entitled to specific performance of the covenants in this § 5, including entry of an ex parte, temporary restraining order in state or federal court, preliminary and permanent injunctive relief against activities in violation of this § 5, or both, or other appropriate judicial remedy, writ or order, in addition to any damages and legal expenses which TurboChef may be legally entitled to recover. Executive acknowledges and agrees that the covenants in this § 5 shall be construed as agreements independent of any other provision of this or any other agreement between TurboChef and Executive, and that the existence of any claim or cause of action by Executive against TurboChef, whether predicated upon this Employment Agreement or any other agreement, shall not constitute a defense to the enforcement by TurboChef of such covenants.
§ 6. |
MISCELLANEOUS |
(a) Notices. Notices and all other communications shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by United States registered or certified mail. Notices to TurboChef shall be sent to TurboChef Technologies, Inc., Suite 1900, Six Concourse Parkway, Atlanta, GA 30328, Attention: Corporate Secretary. Notices and communications to Executive shall be sent to the address Executive most recently provided to TurboChef.
(b) No Waiver. Except for the notice described in § 6(a), no failure by either TurboChef or Executive at any time to give notice of any breach by the other of, or to
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require compliance with, any condition or provision of this Employment Agreement shall be deemed a waiver of any provisions or conditions of this Employment Agreement.
(c) Delaware Law and Georgia Courts. This Employment Agreement shall be governed by Delaware law without reference to the choice of law principles thereof. Any litigation that may be brought by either TurboChef or Executive involving the enforcement of this Employment Agreement or any rights, duties, or obligations under this Employment Agreement, shall be brought exclusively in either the state courts in and for Fulton County, Georgia or the United States District Court, Northern District of Georgia, Atlanta Division.
(d) Assignment. This Employment Agreement shall be binding upon and inure to the benefit of TurboChef and any successor to all or substantially all of the business or assets of TurboChef. TurboChef may assign this Employment Agreement to any affiliate or successor, and no such assignment shall be treated as a termination of Executives employment under this Employment Agreement. Executives rights and obligations under this Employment Agreement are personal and shall not be assigned or transferred.
(e) Other Agreements. This amended and restated Employment Agreement replaces and merges any and all previous agreements and understandings regarding all the terms and conditions of Executives employment relationship with TurboChef, and this Employment Agreement constitutes the entire agreement between TurboChef and Executive with respect to such terms and conditions. This Employment Agreement does not replace any previous agreement regarding ownership of inventions or other intellectual property.
(f) Amendment. No amendment to this Employment Agreement shall be effective unless it is in writing and signed by TurboChef and by Executive.
(g) Invalidity. If any part of this Employment Agreement is held by a court of competent jurisdiction to be invalid or otherwise unenforceable, the remaining part shall be unaffected and shall continue in full force and effect, and the invalid or otherwise unenforceable part shall be deemed not to be part of this Employment Agreement.
(h) Section 409A. It is the intent of TurboChef and the Executive that all payments payable to the Executive pursuant to this Employment Agreement shall comply with Section 409A or shall be exempt from Section 409A (as short-term deferrals or otherwise in accordance with Section 409A). Notwithstanding the foregoing, to the extent TurboChef determines in good faith that (a) one or more payments or benefits received or to be received by Executive pursuant to this Employment Agreement (including any Gross Up Payment) would constitute deferred compensation subject to the rules of Section 409A, and (b) that the Executive is a specified employee under Section 409A, then only to the extent required to avoid the Executives incurrence of any additional tax or interest or penalties under Section 409A, such payment or benefit will be delayed until the first business day after the date which is six (6) months after the Participants separation from service within the meaning of
- 13 -
Section 409A. In addition, to the extent TurboChef determines in good faith that one or more payments or benefits received or to be received by the Executive upon a termination of employment pursuant to this Employment Agreement would constitute deferred compensation subject to the rules of Section 409A, a termination of employment shall be deemed to occur only if such termination of employment constitutes a separation from service as defined in Section 409A, as determined by TurboChef in accordance with such elections and policies adopted by it from time to time.
IN WITNESS WHEREOF, TurboChef and Executive have executed this Employment Agreement in multiple originals to be effective upon the date of the last signature hereto.
TURBOCHEF TECHNOLOGIES, INC. |
EXECUTIVE |
By: /s/Richard E. Perlman |
/s/James K. Price |
|
Richard E. Perlman |
James K. Price |
|
Chairman |
Date: January 18, 2008 |
Date: January 18, 2008 |
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EMPLOYMENT AGREEMENT
(As Amended and Restated January 18, 2008)
TurboChef Technologies, Inc., a Delaware corporation, (TurboChef) and James A. Cochran (Executive) entered into an employment agreement (the Employment Agreement) effective October 28, 2003 (the Effective Date). TurboChef and Executive hereby amend and restate the Employment Agreement in its entirety in order to evidence formal compliance with Section 409A of the Internal Revenue Code of 1986, as amended (the Code), and the guidance thereunder (collectively Section 409A) and to make other desired changes and clarifications. This revised Employment Agreement is effective upon execution and has the following terms and conditions:
§ 1. |
TERM OF EMPLOYMENT |
The Employment Agreement had an initial term of three years commencing on the Effective Date and has been renewed twice for subsequent one-year terms such that the current one-year term will end October 28, 2008. The term of the Employment Agreement (the Term) currently shall extend to the end of the day, December 31, 2008 and shall automatically extend for one additional year beginning on January 1, 2009 and thereafter for an additional year on each subsequent anniversary of January 1, 2009 unless TurboChef or Executive notifies the other pursuant to § 6(a) that no such extension will be effected at least six months before January 1, 2009 or at least six months before any such subsequent anniversary date (January 1, 2009 and each subsequent anniversary date during the Term shall herein be referred to as a Renewal Date). Executives primary location of employment shall be at TurboChefs offices in Atlanta, Georgia.
§ 2. |
POSITION and DUTIES AND RESPONSIBILITIES |
|
(a) |
Position. Executive shall be a Senior Vice President of TurboChef. |
(b) Duties and Responsibilities. Executives duties and responsibilities shall be those normally associated with Executives position as a vice president of a corporation plus any additional duties and responsibilities that TurboChefs Board of Directors from time to time may assign orally or in writing to Executive. Executive shall report to TurboChefs Board of Directors and shall have such powers as may be delegated to him by such board. Executive shall undertake to perform all Executives duties and responsibilities for TurboChef in good faith and on a full-time basis and shall at all times act in the course of Executives employment under this Employment Agreement in the best interest of TurboChef.
§ 3. |
COMPENSATION AND BENEFITS |
(a) Base Salary. Executives base salary shall remain unchanged through December 31, 2007 and as of January 1, 2008 shall be $274,439 per year, which base salary shall be payable in accordance with TurboChefs standard payroll practices and
policies for senior executives (but not less frequently than monthly) and shall be subject to such withholdings as required by law or as otherwise permissible under such practices or policies. Executives base salary shall be adjusted annually for any changes in the Consumer Price Index (CPI), with the adjustment applied effective as of the next Renewal Date. The adjustment will be directly proportional to the percent change in the CPI for All Urban Consumers (CPI-U) for the U.S. City Average for All Items, 1982-84=100, comparing the CPI for October for the current year against the CPI for October of the prior year. The Compensation Committee may, in its sole discretion, determine a reasonable adjustment if a major revision in the CPI occurs. The base salary also is subject to periodic adjustments as determined by the Compensation Committee of TurboChefs Board of Directors.
(b) Bonus. Executive shall be eligible to receive bonus compensation in excess of base salary and benefits for any year (or other period) during the Term pursuant to one or more executive or management compensation plans adopted or individual awards made from time to time by the Compensation Committee or the Chairman or Chief Executive Officer in their respective discretion. Executive need not be employed by TurboChef at the time of payment of a bonus. The bonus amount shall be payable in a lump sum in the following calendar year not later than the earlier of ten business days after TurboChefs financial results for the year are publicly released and March 15 of such calendar year. Executives bonus hereunder may be prorated for any partial year of employment. The Compensation Committee shall reasonably decide any dispute over the amount of any bonus hereunder.
(c) Employee Benefit Plans. Executive shall be eligible to participate in the employee benefit plans, programs and policies maintained by TurboChef for similarly situated executives in accordance with the terms and conditions to participate in such plans, programs and policies as in effect from time to time.
(d) Option Grants. Unless provided otherwise by the Compensation Committee and set forth in the applicable award agreement, all options to purchase shares of the common stock of TurboChef (TurboChef Stock) that TurboChef grants to Executive shall vest over thirty six months in twelve equal quarterly installments of 8-1/3% on the calendar date of the grant in the third, sixth, ninth and twelfth months following the grant date and following each of the next two anniversaries of the grant date.
(e) Vacation. Executive shall be entitled to vacation as provided under TurboChefs policies as described in the Employee Handbook, provided, however, that Executive shall accrue not less than six weeks of vacation during each successive one year period in the Term. Vacation time shall be taken at such time or times so as not to materially and adversely interfere with the business of TurboChef. Executive shall not have the right to carry over unused vacation from any such one year period to any other such one year period nor to receive additional compensation in lieu of taking Executives vacation time.
- 2 -
(f) Expenses. TurboChef shall reimburse Executive for, or pay directly, all reasonable business expenses incurred by Executive at the request of, or on behalf of, TurboChef in the performance of Executives duties under this Employment Agreement, provided that Executive incurs and accounts for such expenses in accordance with all of the policies and directives of TurboChef as in effect from time to time. Business expenses payable or reimbursable hereunder shall be referred to in this Employment Agreement as Business Expenses.
§ 4. |
TERMINATION OF EMPLOYMENT |
(a) Termination by TurboChef Other Than for Cause or Disability or by Executive for Good Reason.
|
(1) |
TurboChef shall have the right to terminate Executives employment at any time, and Executive shall have the right to resign at any time. However, a notice under § 1 that no extension of Executives Term will be effected shall not constitute a termination of Executives employment by TurboChef or a resignation by Executive. If either TurboChef or Executive elects to give such notice, TurboChefs only obligation to Executive under this Employment Agreement after the expiration of the Term shall be to pay Executives earned but unpaid salary and benefits then in effect under § 3(a), if any, until the date the Term expired. |
|
(2) |
If TurboChef terminates Executives employment other than for Cause or Disability or Executive resigns for Good Reason, TurboChef shall (in lieu of any other severance benefits under any of TurboChefs employee benefit plans, programs or policies) pay Executive, within five business days after the date Executives employment is terminated, in a lump sum an amount equal to $1,095,000 or three times Executive's base salary in effect immediately before Executives termination of employment, whichever is greater, plus an amount equal to three times Executives annual bonus and annual benefits. Annual bonus shall mean the higher of the last bonus paid to Executive under § 3(b) and the one-year average of the bonuses, if any, approved by the Compensation Committee and paid to Executive for the last two full calendar years prior to termination (including cash and the value of any non-cash bonus paid as reasonably determined by TurboChef). Annual benefits shall mean the dollar value of consideration paid by TurboChef for the last complete calendar year on behalf of the Executive, or to provide the Executive with, the following employee benefits (as reasonably determined by one or more officers of TurboChef other than Executive): medical insurance, dental insurance, vision insurance, short-term disability insurance, long-term disability insurance, life insurance and |
- 3 -
accidental death benefits. In addition, TurboChef shall make any Gross-Up Payment called for under § 4(f) to Executive within five business days after the date such excise tax is determined to be payable. Executive waives Executives rights, if any, to have such payment taken into account in computing any other benefits payable to, or on behalf of, Executive by TurboChef. In addition, all outstanding stock options, restricted stock units or other equity awards shall immediately vest and become exercisable or paid out, and the agreements or certificates representing such awards shall be deemed amended as necessary to permit such accelerated vesting or pay out.
(b) Termination by TurboChef for Cause or by Executive Other Than for Good Reason.
|
(1) |
TurboChef shall have the right to terminate Executives employment at any time for Cause, and Executive shall have the right to resign at any time other than for Good Reason. |
|
(2) |
If TurboChef terminates Executives employment for Cause or Executive resigns other than for Good Reason, TurboChefs only obligation to Executive under this Employment Agreement shall be to pay Executives earned but unpaid base salary and benefits up to the date Executives employment terminates. Furthermore, if terminated for Cause, Executive shall forfeit any amount of a bonus that he may have earned in the year of termination and his right to exercise any outstanding options or other rights to purchase common stock of TurboChef, and all such outstanding options and other rights and unvested restricted stock or restricted stock units shall be immediately forfeited on his date of termination. |
|
(c) |
Cause. The term Cause as used in this Employment Agreement means |
|
(1) |
Executive has engaged in conduct which in the judgment of TurboChefs Board of Directors constitutes gross negligence, gross misconduct or gross neglect in the performance of Executives duties and responsibilities under this Employment Agreement, including conduct resulting or intending to result directly or indirectly in gain or personal enrichment for Executive at TurboChefs expense; |
|
(2) |
Executive has been convicted of a felony for fraud, embezzlement or theft; or |
|
(3) |
Executive has engaged in a breach of any provision of this Employment Agreement which Executive has failed to cure within |
- 4 -
thirty days after Executive has notice of such breach from TurboChefs Board of Directors; provided, however,
|
(4) |
No Cause shall exist under this Employment Agreement unless (i) Executive has been provided a detailed, written statement of the basis for TurboChefs belief that Cause exists and an opportunity to meet with TurboChefs Board of Directors (together with Executives counsel (if Executive chooses to have Executives counsel present at such meeting)) after Executive has had a reasonable period in which to review such statement and (ii) TurboChefs Board of Directors determines (after such meeting, if Executive meets with TurboChefs Board of Directors) reasonably and in good faith and by the affirmative vote of not less than a majority of the members of TurboChefs Board of Directors then in office at a meeting called and held for such purpose that Cause does exist under this Employment Agreement. |
(d) Good Reason. The term Good Reason means, in the absence of Executives specific agreement thereto,
|
(1) |
Any material reduction in Executives base salary; |
|
(2) |
A material reduction in Executive's authority, duties or responsibilities |
|
(3) |
A material reduction in the authority, duties or responsibilities of the supervisor to whom the Executive reports; |
|
(4) |
A relocation of Executives primary work site(s) more than one hundred miles from Executives current primary work site(s); or |
|
(5) |
Any material breach of any of the terms of this Employment Agreement by TurboChef; |
provided, however, no Good Reason shall exist unless (i) within ninety (90) days of the initial existence of the event or condition that Executive believes constitutes Good Reason, Executive gives TurboChef a detailed, written statement of the basis for Executives belief that Good Reason exists and gives TurboChef a thirty-day period after the delivery of such statement to cure the basis for such belief and (ii) Executive actually submits Executives resignation to TurboChefs Board of Directors during the sixty day period which begins immediately after the end of such thirty-day period if Executive reasonably and in good faith determines that Good Reason continues to exist after the end of such thirty-day period.
|
(e) |
Termination for Disability or Death. |
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|
(1) |
TurboChef shall have the right to terminate Executives employment on or after the date Executive has a Disability, and Executives employment shall terminate at Executives death. |
|
(2) |
If Executives employment terminates under this § 4(e), TurboChefs only obligation under this Employment Agreement shall be to pay Executive or, if Executive dies, Executives estate any earned but unpaid base salary then in effect under § 3(a), benefits, a pro-rated annual bonus (calculated as provided in § 4(a)(2)) and non-reimbursed Business Expenses through the date Executives employment terminates. The pro-rated annual bonus shall be paid within 60 days of the termination date. |
The term Disability as used in this Employment Agreement means the suffering by Executive for at least a 180 consecutive day period of a physical or mental condition resulting from bodily injury, disease, or mental disorder which renders Executive incapable of continuing even with reasonable accommodation to perform the essential functions of Executives job. TurboChefs Board of Directors shall determine whether Executive has a Disability. If Executive disputes such determination, the issue shall be submitted to a panel consisting of three physicians who specialize in the physical or mental condition from which Executive suffers, one appointed and paid by TurboChef, one appointed and paid by Executive and the third appointed by these two physicians and paid one-half by TurboChef and one-half by Executive. The determination as to whether Executive has a Disability shall be made by such panel and shall be binding on TurboChef and on Executive.
(f) Change in Control. If there is a Change in Control, Executives right to exercise all outstanding stock options or other rights, his right to receive payment under all outstanding restricted stock units and any restrictions on alienation of restricted stock or other restricted rights which have been granted to Executive by TurboChef shall immediately become 100% vested and non-forfeitable, payable and freely transferable, as the case may be, and, further, Executive shall have the right in Executives sole discretion upon two weeks advance written notice to resign Executives employment as of any date within the shorter of the six month period immediately following the date of such Change in Control, and the period beginning on the date of the Change in Control and ending on March 1st of the year following the date of the Change in Control, in which event TurboChef shall pay to Executive within five days after the date of the termination of Executives employment, in a lump sum an amount equal to $729,000 or three times Executive's base salary in effect immediately before Executives termination of employment, whichever is greater, plus an amount equal to three times Executives annual bonus and annual benefits. Annual bonus and annual benefits shall have the meanings ascribed to those terms in § 4(a)(2). TurboChef thereafter shall make any Gross-Up Payment called for under this § 4(f) to Executive when such excise tax is determined to be payable. Executive waives Executives right, if any, to have any and all such options (to the extent an exercise right is accelerated under this § 4(f)) and payments taken into account in computing any other benefits payable to, or on behalf
- 6 -
of, Executive by TurboChef. Notwithstanding anything to the contrary in the foregoing, if in connection with a Change of Control, holders of Common Stock of TurboChef receive in exchange for their shares cash, other securities or a combination thereof, then TurboChef may require that Executive accept in exchange for Executives stock options or other rights to receive or acquire shares of Common Stock of TurboChef comparable consideration for the net value of Executives stock options or other rights as if they had been immediately exercised or paid out.
The term Change in Control as used in this Employment Agreement means:
|
(1) |
The acquisition at any time by any person, entity or group within the meaning of Sections 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (excluding, for this purpose, TurboChef, its affiliates, or any employee benefit plan of TurboChef or any of its affiliates) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under such securities law) of more than fifty percent of either the then outstanding shares of common stock of TurboChef or of the combined voting power of TurboChefs then outstanding voting securities or any such acquisition of more than fifty percent of either such common stock or voting securities of TurboChef or of the combined voting power of TurboChefs then outstanding voting securities except for an acquisition resulting from a disposition of such stock or securities effected by TurboChef or a public offering by TurboChef; |
|
(2) |
The individuals who constitute the members of the Board of Directors of TurboChef, who shall be referred to as the Incumbent Members, cease for any reason to constitute at least a majority of such Board of Directors, provided that any individual becoming a member after the date of this Employment Agreement whose election, or nomination for election by TurboChefs stockholders, was approved by a vote of at least a majority of the then Incumbent Members shall be considered as though such individual was an Incumbent Member; provided, however, that any individual becoming a member of the Board of Directors in the aforesaid manner as part of a group whose membership after election constitutes a majority of the Board of Directors, or whose membership becomes a majority of the Board of Directors within a reasonably short period of time because of the resignation of Incumbent Members following the election of such group, will not be considered as an Incumbent Member; |
|
(3) |
A merger, consolidation or other reorganization where, in each case, with respect to which persons who were the stockholders of TurboChef immediately prior to such merger, consolidation or other reorganization, immediately thereafter, they do not own more than |
- 7 -
fifty percent of the combined voting power of the merged, consolidated or reorganized TurboChefs then outstanding voting securities; or
|
(4) |
The sale of all or substantially all of the assets of TurboChef. |
If TurboChef or TurboChefs accountants determine that the option exercise right and the severance payments called for under this § 4(f) plus any other payments or benefits made available to Executive by TurboChef upon a Change in Control will result in Executive being subject to an excise tax under Section 4999 of the Code, or if such an excise tax is assessed against Executive as a result of such option exercise right or payment or other benefits, TurboChef shall make a Gross Up Payment to or on behalf of Executive as and when each and any such determination or assessment, as applicable, is made, provided Executive takes such action (other than waiving Executives right to any payments or benefits otherwise due from TurboChef) as TurboChef reasonably requests under the circumstances to mitigate or challenge such tax; provided, however, if TurboChef or TurboChefs accountants determine that no Gross Up Payment would be payable under this § 4(f) if Executive waives Executives right to receive a part of such payments and such part does not exceed $10,000, Executive agrees to irrevocably waive Executives right to receive such part of such payments if an independent accountant or lawyer retained by Executive and paid by TurboChef agrees with the determination made by TurboChef or TurboChefs accountants.
The term Gross Up Payment as used in this Employment Agreement shall mean a payment to or on behalf of Executive which shall be sufficient to pay (i) any excise tax described in this § 4(f) in full, (ii) any federal, state and local income tax and social security or other employment tax on the payment made to pay such excise tax as well as any additional excise tax on such payment and (iii) any interest or penalties assessed by the Internal Revenue Service on Executive if such interest or penalties are attributable to TurboChefs failure to comply with its obligations under this §4(f) or applicable law. Any determination under this §4(f) by TurboChef or TurboChefs accountants shall be made in accordance with Section 280G of the Code and any applicable related regulations (whether proposed, temporary or final) and any related Internal Revenue Service rulings and any related case law and, if TurboChef reasonably requests that Executive take action to mitigate or challenge, or to mitigate and challenge, any such tax or assessment and Executive complies with such request, TurboChef shall provide Executive with such information and such expert advice and assistance from TurboChefs accountants, lawyers and other advisors as Executive may reasonably request and shall pay for all expenses incurred in effecting such compliance and any related fines, penalties, interest and other assessments.
Notwithstanding the foregoing, (i) each Gross Up Payment required to be made by TurboChef to Executive hereunder and any overpayment of a Gross Up Payment required to be repaid by Executive to TurboChef shall be paid no later than the end of the calendar year next following the calendar year in which Executive remits the
- 8 -
corresponding taxes to the Internal Revenue Service, and (ii) any reimbursement of expenses related to a tax audit or litigation addressing the existence or amount of a tax liability required to be made by TurboChef to Executive hereunder shall be paid no later than the end of the calendar year next following the calendar year in which Executive remits to the Internal Revenue Service the taxes that are the subject of the audit or litigation or, where as a result of the audit or litigation no taxes are due or are remitted but other reimbursable costs and/or expenses have been incurred, the end of the calendar year following the calendar year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation.
(g) Benefits at Termination of Employment. Executive upon Executives termination of employment shall have the right to receive any benefits payable under TurboChefs employee benefit plans, programs and policies which Executive otherwise has a nonforfeitable right to receive under the terms of such plans, programs and policies (other than severance benefits) independent of Executives rights under this Employment Agreement in addition to any base salary under § 3(a) which accrued as of the termination date and are expressly payable under this § 4 without regard to the reason for such termination of employment.
§ 5. |
COVENANTS BY EXECUTIVE |
|
(a) |
TurboChef Property. |
|
(1) |
Executive upon the termination of Executives employment for any reason or, if earlier, upon TurboChefs request shall promptly return all Property which had been entrusted or made available to Executive by TurboChef. |
|
(2) |
The term Property means all records, files, memoranda, reports, price lists, customer lists, drawings, plans, sketches, keys, codes, computer hardware and software, equipment and other property of any kind or description prepared, used or possessed by Executive during Executives employment by TurboChef and, if applicable, any of its affiliates (and any duplicates of any such property) together with any and all information, ideas, concepts, discoveries, and inventions and the like conceived, made, developed or acquired at any time by Executive individually or, with others during Executives employment which relate to TurboChef business, products or services. |
|
(b) |
Trade Secrets. |
|
(1) |
Executive agrees that Executive will hold in a fiduciary capacity for the benefit of TurboChef, and any of its affiliates, and will not directly or indirectly use or disclose, any Trade Secret that Executive may have acquired during the term of Executives |
- 9 -
employment by TurboChef or any of its affiliates for so long as such information remains a Trade Secret.
|
(2) |
The term Trade Secret means information, including, but not limited to, technical or nontechnical data, a formula, a pattern, a compilation, a program, a device, a method, a technique, a drawing, a process, financial data, financial plans, product plans, or a list of actual or potential customers or suppliers that (a) derives economic value, actual or potential, from not being generally known to, and not being generally readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use and (b) is the subject of reasonable efforts by TurboChef and any of its affiliates to maintain its secrecy. |
|
(3) |
This § 5(b) and § 5(c) are intended to provide rights to TurboChef which are in addition to, not in lieu of, those rights TurboChef has under the common law or applicable statutes for the protection of trade secrets. |
|
(c) |
Confidential Information. |
|
(1) |
Executive while employed under this Employment Agreement and thereafter during the Restricted Period shall hold in a fiduciary capacity for the benefit of TurboChef and any of its affiliates, and shall not directly or indirectly use or disclose, any Confidential Information that Executive may have acquired (whether or not developed or compiled by Executive and whether or not Executive is authorized to have access to such information) during the term of, and in the course of, or as a result of Executives employment by TurboChef or any of its affiliates. |
|
(2) |
The term Confidential Information means any secret, confidential or proprietary information possessed by TurboChef or any of its affiliates relating to their businesses, including, without limitation, trade secrets, customer lists, details of client or consultant contracts, current and anticipated customer requirements, pricing policies, price lists, market studies, business plans, operational methods, marketing plans or strategies, product development techniques or flaws, computer software programs (including object code and source code), data and documentation data, base technologies, systems, structures and architectures, inventions and ideas, past current and planned research and development, compilations, devices, methods, techniques, processes, financial information and data, business acquisition plans and new personnel acquisition plans (not otherwise included in the definition of a Trade Secret under this Employment Agreement) that has not |
- 10 -
become generally available to the public by the act of one who has the right to disclose such information without violating any right of TurboChef or any of its affiliates. Confidential Information may include, but not be limited to, future business plans, licensing strategies, advertising campaigns, information regarding customers, employees and independent contractors and the terms and conditions of this Employment Agreement.
(d) Restricted Period. The term Restricted Period as used in the Employment Agreement shall mean the twenty-four month period which starts on the date Executives employment terminates with TurboChef without regard to whether such termination comes before or after the end of the Term.
|
(e) |
Nonsolicitation of Customers or Employees. |
|
(1) |
Executive (i) while employed under this Employment Agreement shall not, on Executives own behalf or on behalf of any person, firm, partnership, association, corporation or business organization, entity or enterprise (other than TurboChef or one of its affiliates), solicit Competing Business of customers of TurboChef or any of its affiliates and (ii) during the Restricted Period shall not, on Executives own behalf or on behalf of any person, firm, partnership, association, corporation or business organization, entity or enterprise, solicit Competing Business of customers of TurboChef or any of its affiliates with whom Executive within the twenty-four month period immediately preceding the beginning of the Restricted Period had or made contact with in the course of Executives employment by TurboChef. |
|
(2) |
Executive (i) while employed under this Employment Agreement shall not, either directly or indirectly, call on, solicit or attempt to induce any other officer, employee or independent contractor of TurboChef or any of its affiliates to terminate his or her employment with TurboChef or any of its affiliates and shall not assist any other person or entity in such a solicitation (regardless of whether any such officer, employee or independent contractor would commit a breach of contract by terminating his or her employment), and (ii) during the Restricted Period, shall not, either directly or indirectly, call on, solicit or attempt to induce any other officer, employee or independent contractor of TurboChef or any of its affiliates with whom Executive had contact, knowledge of, or association in the course of Executives employment with TurboChef or any of its affiliates as the case may be, during the twelve month period immediately preceding the beginning of the Restricted Period, to terminate his or her employment with TurboChef or any of its affiliates and shall not assist any other |
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person or entity in such a solicitation (regardless of whether any such officer, employee or independent contractor would commit a breach of contract by terminating his or her employment).
|
(3) |
The term Competing Business as used in this Employment Agreement means the development, marketing, selling, licensing or servicing of appliances utilizing a combination of microwave and other heating source for cooking food rapidly. |
(f) Noncompetition Obligation. Executive while employed under this Employment Agreement and thereafter during the Restricted Period and within the United States, shall not organize or form any other business that will conduct Competing Business and shall not engage in the executive management of, or provide consulting concerning the executive management of, Competing Business on behalf of any business other than TurboChef or its affiliates. Executive acknowledges and agrees that the territory identified in this § 5(f) are states in which Executive performs services for TurboChef by being actively engaged as a member of TurboChefs executive management team in TurboChefs operations in these states.
(g) Reasonable and Continuing Obligations. Executive agrees that Executives obligations under this § 5 are obligations which will continue beyond the date Executives employment terminates and that such obligations are reasonable and necessary to protect TurboChefs legitimate business interests. TurboChef in addition shall have the right to take such other action as TurboChef deems necessary or appropriate to compel compliance with the provisions of this § 5.
(h) Remedy for Breach. Executive agrees that the remedies at law of TurboChef for any actual or threatened breach by Executive of the covenants in this § 5 would be inadequate and that TurboChef shall be entitled to specific performance of the covenants in this § 5, including entry of an ex parte, temporary restraining order in state or federal court, preliminary and permanent injunctive relief against activities in violation of this § 5, or both, or other appropriate judicial remedy, writ or order, in addition to any damages and legal expenses which TurboChef may be legally entitled to recover. Executive acknowledges and agrees that the covenants in this § 5 shall be construed as agreements independent of any other provision of this or any other agreement between TurboChef and Executive, and that the existence of any claim or cause of action by Executive against TurboChef, whether predicated upon this Employment Agreement or any other agreement, shall not constitute a defense to the enforcement by TurboChef of such covenants.
§ 6. |
MISCELLANEOUS |
(a) Notices. Notices and all other communications shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by United States registered or certified mail. Notices to TurboChef shall be sent to TurboChef Technologies, Inc., Suite 1900, Six Concourse Parkway, Atlanta, GA 30328,
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Attention: Corporate Secretary. Notices and communications to Executive shall be sent to the address Executive most recently provided to TurboChef.
(b) No Waiver. Except for the notice described in § 6(a), no failure by either TurboChef or Executive at any time to give notice of any breach by the other of, or to require compliance with, any condition or provision of this Employment Agreement shall be deemed a waiver of any provisions or conditions of this Employment Agreement.
(c) Delaware Law and Georgia Courts. This Employment Agreement shall be governed by Delaware law without reference to the choice of law principles thereof. Any litigation that may be brought by either TurboChef or Executive involving the enforcement of this Employment Agreement or any rights, duties, or obligations under this Employment Agreement, shall be brought exclusively in either the state courts in and for Fulton County, Georgia or the United States District Court, Northern District of Georgia, Atlanta Division.
(d) Assignment. This Employment Agreement shall be binding upon and inure to the benefit of TurboChef and any successor to all or substantially all of the business or assets of TurboChef. TurboChef may assign this Employment Agreement to any affiliate or successor, and no such assignment shall be treated as a termination of Executives employment under this Employment Agreement. Executives rights and obligations under this Employment Agreement are personal and shall not be assigned or transferred.
(e) Other Agreements. This amended and restated Employment Agreement replaces and merges any and all previous agreements and understandings regarding all the terms and conditions of Executives employment relationship with TurboChef, and this Employment Agreement constitutes the entire agreement between TurboChef and Executive with respect to such terms and conditions. This Employment Agreement does not replace any previous agreement regarding ownership of inventions or other intellectual property.
(f) Amendment. No amendment to this Employment Agreement shall be effective unless it is in writing and signed by TurboChef and by Executive.
(g) Invalidity. If any part of this Employment Agreement is held by a court of competent jurisdiction to be invalid or otherwise unenforceable, the remaining part shall be unaffected and shall continue in full force and effect, and the invalid or otherwise unenforceable part shall be deemed not to be part of this Employment Agreement.
(h) Section 409A. It is the intent of TurboChef and the Executive that all payments payable to the Executive pursuant to this Employment Agreement shall comply with Section 409A or shall be exempt from Section 409A (as short-term deferrals or otherwise in accordance with Section 409A). Notwithstanding the foregoing, to the extent TurboChef determines in good faith that (a) one or more payments or benefits received or to be received by Executive pursuant to this Employment Agreement (including any Gross Up Payment) would constitute deferred
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compensation subject to the rules of Section 409A, and (b) that the Executive is a specified employee under Section 409A, then only to the extent required to avoid the Executives incurrence of any additional tax or interest or penalties under Section 409A, such payment or benefit will be delayed until the first business day after the date which is six (6) months after the Participants separation from service within the meaning of Section 409A. In addition, to the extent TurboChef determines in good faith that one or more payments or benefits received or to be received by the Executive upon a termination of employment pursuant to this Employment Agreement would constitute deferred compensation subject to the rules of Section 409A, a termination of employment shall be deemed to occur only if such termination of employment constitutes a separation from service as defined in Section 409A, as determined by TurboChef in accordance with such elections and policies adopted by it from time to time.
IN WITNESS WHEREOF, TurboChef and Executive have executed this Employment Agreement in multiple originals to be effective upon the date of the last signature hereto.
TURBOCHEF TECHNOLOGIES, INC. |
EXECUTIVE |
By: /s/James K. Price |
/s/ James A. Cochran |
Name: James K. Price |
James A. Cochran |
Title: CEO |
Date: January 18, 2008 |
Date: January 18, 2008 |
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EMPLOYMENT AGREEMENT
(As Amended and Restated January 18, 2008)
TurboChef Technologies, Inc., a Delaware corporation, (TurboChef) and Jose Miguel Fernandez de Castro (Executive) entered into an amended and restated employment agreement (the Employment Agreement) effective October 17, 2007 (the Effective Date). TurboChef and Executive hereby amend and restate the Employment Agreement in its entirety in order to evidence formal compliance with Section 409A of the Internal Revenue Code of 1986, as amended (the Code), and the guidance thereunder (collectively Section 409A) and to make other desired changes and clarifications. This revised Employment Agreement is effective upon execution and has the following terms and conditions:
§ 1. |
TERM OF EMPLOYMENT |
The Employment Agreement had an initial term of approximately three years commencing on the Effective Date and ending immediately prior to January 1, 2010. The term of the Employment Agreement (the Term) shall automatically extend for one additional year beginning on January 1, 2010 and thereafter for an additional year on each subsequent anniversary of January 1, 2010 unless TurboChef or Executive notifies the other pursuant to § 6(a) that no such extension will be effected at least six months before January 1, 2010 or at least six months before any such subsequent anniversary date (January 1, 2010 and each subsequent anniversary date during the Term shall herein be referred to as a Renewal Date). Executives primary location of employment shall be at TurboChefs offices in Atlanta, Georgia.
§ 2. |
POSITION and DUTIES AND RESPONSIBILITIES |
(a) Position. Executive shall be a Vice President and the Chief Financial Officer of TurboChef.
(b) Duties and Responsibilities. Executives duties and responsibilities shall be those normally associated with Executives position as a vice president and the Chief Financial Officer and principal accounting and financial officer of a corporation plus any additional duties and responsibilities that TurboChefs Board of Directors from time to time may assign orally or in writing to Executive. Executive shall report to TurboChefs Board of Directors and shall have such powers as may be delegated to him by such board. Executive shall undertake to perform all Executives duties and responsibilities for TurboChef in good faith and on a full-time basis and shall at all times act in the course of Executives employment under this Employment Agreement in the best interest of TurboChef.
§ 3. |
COMPENSATION AND BENEFITS |
(a) Base Salary. Executives base salary shall remain unchanged through December 31, 2007 and as of January 1, 2008 shall be $200,000 per year, which base
salary shall be payable in accordance with TurboChefs standard payroll practices and policies for senior executives (but not less frequently than monthly) and shall be subject to such withholdings as required by law or as otherwise permissible under such practices or policies. Executives base salary shall be adjusted annually for any changes in the Consumer Price Index (CPI), with the adjustment applied effective as of January 1, 2009 and thereafter as of the next Renewal Date. The adjustment will be directly proportional to the percent change in the CPI for All Urban Consumers (CPI-U) for the U.S. City Average for All Items, 1982-84=100, comparing the CPI for November for the current year against the CPI for November of the prior year. The Compensation Committee may, in its sole discretion, determine a reasonable adjustment if a major revision in the CPI occurs. The base salary also is subject to periodic adjustments as determined by the Compensation Committee of TurboChefs Board of Directors.
(b) Bonus. Executive shall be eligible to receive bonus compensation in excess of base salary and benefits for any year (or other period) during the Term pursuant to one or more executive or management compensation plans adopted or individual awards made from time to time by the Compensation Committee or the Chairman or Chief Executive Officer in their respective discretion. Executive need not be employed by TurboChef at the time of payment of a bonus. The bonus amount shall be payable in a lump sum in the following calendar year not later than the earlier of ten business days after TurboChefs financial results for the year are publicly released and March 15 of such calendar year. Executives bonus hereunder may be prorated for any partial year of employment. The Compensation Committee shall reasonably decide any dispute over the amount of any bonus hereunder.
(c) Employee Benefit Plans. Executive shall be eligible to participate in the employee benefit plans, programs and policies maintained by TurboChef for similarly situated executives in accordance with the terms and conditions to participate in such plans, programs and policies as in effect from time to time.
(d) Option Grants. Unless provided otherwise by the Compensation Committee and set forth in the applicable award agreement, all options to purchase shares of the common stock of TurboChef (TurboChef Stock) that TurboChef grants to Executive shall vest over thirty six months in twelve equal quarterly installments of 8-1/3% on the calendar date of the grant in the third, sixth, ninth and twelfth months following the grant date and following each of the next two anniversaries of the grant date.
(e) Vacation. Executive shall be entitled to vacation as provided under TurboChefs policies as described in the Employee Handbook, provided, however, that Executive shall accrue not less than four weeks of vacation during each successive one year period in the Term. Vacation time shall be taken at such time or times so as not to materially and adversely interfere with the business of TurboChef. Executive shall not have the right to carry over unused vacation from any such one year period to any other such one year period nor to receive additional compensation in lieu of taking Executives vacation time.
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(f) Expenses. TurboChef shall reimburse Executive for, or pay directly, all reasonable business expenses incurred by Executive at the request of, or on behalf of, TurboChef in the performance of Executives duties under this Employment Agreement, provided that Executive incurs and accounts for such expenses in accordance with all of the policies and directives of TurboChef as in effect from time to time. Business expenses payable or reimbursable hereunder shall be referred to in this Employment Agreement as Business Expenses.
§ 4. |
TERMINATION OF EMPLOYMENT |
(a) Termination by TurboChef Other Than for Cause or Disability or by Executive for Good Reason.
|
(1) |
TurboChef shall have the right to terminate Executives employment at any time, and Executive shall have the right to resign at any time. However, a notice under § 1 that no extension of Executives Term will be effected shall not constitute a termination of Executives employment by TurboChef or a resignation by Executive. If either TurboChef or Executive elects to give such notice, TurboChefs only obligation to Executive under this Employment Agreement after the expiration of the Term shall be to pay Executives earned but unpaid salary and benefits then in effect under § 3(a), if any, until the date the Term expired. |
|
(2) |
If TurboChef terminates Executives employment other than for Cause or Disability or Executive resigns for Good Reason, TurboChef shall (in lieu of any other severance benefits under any of TurboChefs employee benefit plans, programs or policies) pay Executive, within five business days after the date Executives employment is terminated, in a lump sum an amount equal to $200,000 or Executive's base salary in effect immediately before Executives termination of employment, whichever is greater, plus an amount equal to Executives annual bonus and annual benefits. Annual bonus shall mean the higher of the last bonus paid to Executive under § 3(b) and the one-year average of the bonuses, if any, approved by the Compensation Committee and paid to Executive for the last two full calendar years prior to termination (including cash and the value of any non-cash bonus paid as reasonably determined by TurboChef). Annual benefits shall mean the dollar value of consideration paid by TurboChef for the last complete calendar year on behalf of the Executive, or to provide the Executive with, the following employee benefits (as reasonably determined by one or more officers of TurboChef other than Executive): medical insurance, dental insurance, vision insurance, short-term disability insurance, long-term disability insurance, life insurance and accidental death benefits. In |
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addition, TurboChef shall make any Gross-Up Payment called for under § 4(f) to Executive within five business days after the date such excise tax is determined to be payable. Executive waives Executives rights, if any, to have such payment taken into account in computing any other benefits payable to, or on behalf of, Executive by TurboChef. In addition, all outstanding stock options, restricted stock units or other equity awards shall immediately vest and become exercisable or paid out, and the agreements or certificates representing such awards shall be deemed amended as necessary to permit such accelerated vesting or pay out.
(b) Termination by TurboChef for Cause or by Executive Other Than for Good Reason.
|
(1) |
TurboChef shall have the right to terminate Executives employment at any time for Cause, and Executive shall have the right to resign at any time other than for Good Reason. |
|
(2) |
If TurboChef terminates Executives employment for Cause or Executive resigns other than for Good Reason, TurboChefs only obligation to Executive under this Employment Agreement shall be to pay Executives earned but unpaid base salary and benefits up to the date Executives employment terminates. Furthermore, if terminated for Cause, Executive shall forfeit any amount of a bonus that he may have earned in the year of termination and his right to exercise any outstanding options or other rights to purchase common stock of TurboChef, and all such outstanding options and other rights and unvested restricted stock or restricted stock units shall be immediately forfeited on his date of termination. |
|
(c) |
Cause. The term Cause as used in this Employment Agreement means |
|
(1) |
Executive has engaged in conduct which in the judgment of TurboChefs Board of Directors constitutes gross negligence, gross misconduct or gross neglect in the performance of Executives duties and responsibilities under this Employment Agreement, including conduct resulting or intending to result directly or indirectly in gain or personal enrichment for Executive at TurboChefs expense; |
|
(2) |
Executive has been convicted of a felony for fraud, embezzlement or theft; or |
|
(3) |
Executive has engaged in a breach of any provision of this Employment Agreement which Executive has failed to cure within thirty days after Executive has notice of such breach from TurboChefs Board of Directors; provided, however, |
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|
(4) |
No Cause shall exist under this Employment Agreement unless (i) Executive has been provided a detailed, written statement of the basis for TurboChefs belief that Cause exists and an opportunity to meet with TurboChefs Board of Directors (together with Executives counsel (if Executive chooses to have Executives counsel present at such meeting)) after Executive has had a reasonable period in which to review such statement and (ii) TurboChefs Board of Directors determines (after such meeting, if Executive meets with TurboChefs Board of Directors) reasonably and in good faith and by the affirmative vote of not less than a majority of the members of TurboChefs Board of Directors then in office at a meeting called and held for such purpose that Cause does exist under this Employment Agreement. |
(d) Good Reason. The term Good Reason means, in the absence of Executives specific agreement thereto,
|
(1) |
Any material reduction in Executives base salary; |
|
(2) |
A material reduction in Executive's authority, duties or responsibilities |
|
(3) |
A material reduction in the authority, duties or responsibilities of the supervisor to whom the Executive reports; |
|
(4) |
A relocation of Executives primary work site(s) more than one hundred miles from Executives current primary work site(s); or |
|
(5) |
Any material breach of any of the terms of this Employment Agreement by TurboChef; |
provided, however, no Good Reason shall exist unless (i) within ninety (90) days of the initial existence of the event or condition that Executive believes constitutes Good Reason, Executive gives TurboChef a detailed, written statement of the basis for Executives belief that Good Reason exists and gives TurboChef a thirty-day period after the delivery of such statement to cure the basis for such belief and (ii) Executive actually submits Executives resignation to TurboChefs Board of Directors during the sixty day period which begins immediately after the end of such thirty-day period if Executive reasonably and in good faith determines that Good Reason continues to exist after the end of such thirty-day period.
|
(e) |
Termination for Disability or Death. |
|
(1) |
TurboChef shall have the right to terminate Executives employment on or after the date Executive has a Disability, and Executives employment shall terminate at Executives death. |
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|
(2) |
If Executives employment terminates under this § 4(e), TurboChefs only obligation under this Employment Agreement shall be to pay Executive or, if Executive dies, Executives estate any earned but unpaid base salary then in effect under § 3(a), benefits, a pro-rated annual bonus (calculated as provided in § 4(a)(2)) and non-reimbursed Business Expenses through the date Executives employment terminates. The pro-rated annual bonus shall be paid within 60 days of the termination date. |
The term Disability as used in this Employment Agreement means the suffering by Executive for at least a 180 consecutive day period of a physical or mental condition resulting from bodily injury, disease, or mental disorder which renders Executive incapable of continuing even with reasonable accommodation to perform the essential functions of Executives job. TurboChefs Board of Directors shall determine whether Executive has a Disability. If Executive disputes such determination, the issue shall be submitted to a panel consisting of three physicians who specialize in the physical or mental condition from which Executive suffers, one appointed and paid by TurboChef, one appointed and paid by Executive and the third appointed by these two physicians and paid one-half by TurboChef and one-half by Executive. The determination as to whether Executive has a Disability shall be made by such panel and shall be binding on TurboChef and on Executive.
(f) Change in Control. If there is a Change in Control, Executives right to exercise all outstanding stock options or other rights, his right to receive payment under all outstanding restricted stock units and any restrictions on alienation of restricted stock or other restricted rights which have been granted to Executive by TurboChef shall immediately become 100% vested and non-forfeitable, payable and freely transferable, as the case may be, and, further, Executive shall have the right in Executives sole discretion upon two weeks advance written notice to resign Executives employment as of any date within the shorter of the six month period immediately following the date of such Change in Control, and the period beginning on the date of the Change in Control and ending on March 1st of the year following the date of the Change in Control, in which event TurboChef shall pay to Executive within five days after the date of the termination of Executives employment, in a lump sum an amount equal to $600,000 or three times Executive's base salary in effect immediately before Executives termination of employment, whichever is greater, plus an amount equal to three times Executives annual bonus and annual benefits. Annual bonus and annual benefits shall have the meanings ascribed to those terms in § 4(a)(2). TurboChef thereafter shall make any Gross-Up Payment called for under this § 4(f) to Executive when such excise tax is determined to be payable. Executive waives Executives right, if any, to have any and all such options (to the extent an exercise right is accelerated under this § 4(f)) and payments taken into account in computing any other benefits payable to, or on behalf of, Executive by TurboChef. Notwithstanding anything to the contrary in the foregoing, if in connection with a Change of Control, holders of Common Stock of TurboChef receive in exchange for their shares cash, other securities or a combination thereof, then TurboChef may require that Executive accept in exchange for Executives stock options
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or other rights to receive or acquire shares of Common Stock of TurboChef comparable consideration for the net value of Executives stock options or other rights as if they had been immediately exercised or paid out.
The term Change in Control as used in this Employment Agreement means:
|
(1) |
The acquisition at any time by any person, entity or group within the meaning of Sections 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (excluding, for this purpose, TurboChef, its affiliates, or any employee benefit plan of TurboChef or any of its affiliates) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under such securities law) of more than fifty percent of either the then outstanding shares of common stock of TurboChef or of the combined voting power of TurboChefs then outstanding voting securities or any such acquisition of more than fifty percent of either such common stock or voting securities of TurboChef or of the combined voting power of TurboChefs then outstanding voting securities except for an acquisition resulting from a disposition of such stock or securities effected by TurboChef or a public offering by TurboChef; |
|
(2) |
The individuals who constitute the members of the Board of Directors of TurboChef, who shall be referred to as the Incumbent Members, cease for any reason to constitute at least a majority of such Board of Directors, provided that any individual becoming a member after the date of this Employment Agreement whose election, or nomination for election by TurboChefs stockholders, was approved by a vote of at least a majority of the then Incumbent Members shall be considered as though such individual was an Incumbent Member; provided, however, that any individual becoming a member of the Board of Directors in the aforesaid manner as part of a group whose membership after election constitutes a majority of the Board of Directors, or whose membership becomes a majority of the Board of Directors within a reasonably short period of time because of the resignation of Incumbent Members following the election of such group, will not be considered as an Incumbent Member; |
|
(3) |
A merger, consolidation or other reorganization where, in each case, with respect to which persons who were the stockholders of TurboChef immediately prior to such merger, consolidation or other reorganization, immediately thereafter, they do not own more than fifty percent of the combined voting power of the merged, consolidated or reorganized TurboChefs then outstanding voting securities; or |
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|
(4) |
The sale of all or substantially all of the assets of TurboChef. |
If TurboChef or TurboChefs accountants determine that the option exercise right and the severance payments called for under this § 4(f) plus any other payments or benefits made available to Executive by TurboChef upon a Change in Control will result in Executive being subject to an excise tax under Section 4999 of the Code, or if such an excise tax is assessed against Executive as a result of such option exercise right or payment or other benefits, TurboChef shall make a Gross Up Payment to or on behalf of Executive as and when each and any such determination or assessment, as applicable, is made, provided Executive takes such action (other than waiving Executives right to any payments or benefits otherwise due from TurboChef) as TurboChef reasonably requests under the circumstances to mitigate or challenge such tax; provided, however, if TurboChef or TurboChefs accountants determine that no Gross Up Payment would be payable under this § 4(f) if Executive waives Executives right to receive a part of such payments and such part does not exceed $10,000, Executive agrees to irrevocably waive Executives right to receive such part of such payments if an independent accountant or lawyer retained by Executive and paid by TurboChef agrees with the determination made by TurboChef or TurboChefs accountants.
The term Gross Up Payment as used in this Employment Agreement shall mean a payment to or on behalf of Executive which shall be sufficient to pay (i) any excise tax described in this § 4(f) in full, (ii) any federal, state and local income tax and social security or other employment tax on the payment made to pay such excise tax as well as any additional excise tax on such payment and (iii) any interest or penalties assessed by the Internal Revenue Service on Executive if such interest or penalties are attributable to TurboChefs failure to comply with its obligations under this §4(f) or applicable law. Any determination under this §4(f) by TurboChef or TurboChefs accountants shall be made in accordance with Section 280G of the Code and any applicable related regulations (whether proposed, temporary or final) and any related Internal Revenue Service rulings and any related case law and, if TurboChef reasonably requests that Executive take action to mitigate or challenge, or to mitigate and challenge, any such tax or assessment and Executive complies with such request, TurboChef shall provide Executive with such information and such expert advice and assistance from TurboChefs accountants, lawyers and other advisors as Executive may reasonably request and shall pay for all expenses incurred in effecting such compliance and any related fines, penalties, interest and other assessments.
Notwithstanding the foregoing, (i) each Gross Up Payment required to be made by TurboChef to Executive hereunder and any overpayment of a Gross Up Payment required to be repaid by Executive to TurboChef shall be paid no later than the end of the calendar year next following the calendar year in which Executive remits the corresponding taxes to the Internal Revenue Service, and (ii) any reimbursement of expenses related to a tax audit or litigation addressing the existence or amount of a tax liability required to be made by TurboChef to Executive hereunder shall be paid no later than the end of the calendar year next following the calendar year in which Executive
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remits to the Internal Revenue Service the taxes that are the subject of the audit or litigation or, where as a result of the audit or litigation no taxes are due or are remitted but other reimbursable costs and/or expenses have been incurred, the end of the calendar year following the calendar year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation.
(g) Benefits at Termination of Employment. Executive upon Executives termination of employment shall have the right to receive any benefits payable under TurboChefs employee benefit plans, programs and policies which Executive otherwise has a nonforfeitable right to receive under the terms of such plans, programs and policies (other than severance benefits) independent of Executives rights under this Employment Agreement in addition to any base salary under § 3(a) which accrued as of the termination date and are expressly payable under this § 4 without regard to the reason for such termination of employment.
§ 5. |
COVENANTS BY EXECUTIVE |
|
(a) |
TurboChef Property. |
|
(1) |
Executive upon the termination of Executives employment for any reason or, if earlier, upon TurboChefs request shall promptly return all Property which had been entrusted or made available to Executive by TurboChef. |
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(2) |
The term Property means all records, files, memoranda, reports, price lists, customer lists, drawings, plans, sketches, keys, codes, computer hardware and software, equipment and other property of any kind or description prepared, used or possessed by Executive during Executives employment by TurboChef and, if applicable, any of its affiliates (and any duplicates of any such property) together with any and all information, ideas, concepts, discoveries, and inventions and the like conceived, made, developed or acquired at any time by Executive individually or, with others during Executives employment which relate to TurboChef business, products or services. |
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(b) |
Trade Secrets. |
|
(1) |
Executive agrees that Executive will hold in a fiduciary capacity for the benefit of TurboChef, and any of its affiliates, and will not directly or indirectly use or disclose, any Trade Secret that Executive may have acquired during the term of Executives employment by TurboChef or any of its affiliates for so long as such information remains a Trade Secret. |
|
(2) |
The term Trade Secret means information, including, but not limited to, technical or nontechnical data, a formula, a pattern, a |
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compilation, a program, a device, a method, a technique, a drawing, a process, financial data, financial plans, product plans, or a list of actual or potential customers or suppliers that (a) derives economic value, actual or potential, from not being generally known to, and not being generally readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use and (b) is the subject of reasonable efforts by TurboChef and any of its affiliates to maintain its secrecy.
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(3) |
This § 5(b) and § 5(c) are intended to provide rights to TurboChef which are in addition to, not in lieu of, those rights TurboChef has under the common law or applicable statutes for the protection of trade secrets. |
|
(c) |
Confidential Information. |
|
(1) |
Executive while employed under this Employment Agreement and thereafter during the Restricted Period shall hold in a fiduciary capacity for the benefit of TurboChef and any of its affiliates, and shall not directly or indirectly use or disclose, any Confidential Information that Executive may have acquired (whether or not developed or compiled by Executive and whether or not Executive is authorized to have access to such information) during the term of, and in the course of, or as a result of Executives employment by TurboChef or any of its affiliates. |
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(2) |
The term Confidential Information means any secret, confidential or proprietary information possessed by TurboChef or any of its affiliates relating to their businesses, including, without limitation, trade secrets, customer lists, details of client or consultant contracts, current and anticipated customer requirements, pricing policies, price lists, market studies, business plans, operational methods, marketing plans or strategies, product development techniques or flaws, computer software programs (including object code and source code), data and documentation data, base technologies, systems, structures and architectures, inventions and ideas, past current and planned research and development, compilations, devices, methods, techniques, processes, financial information and data, business acquisition plans and new personnel acquisition plans (not otherwise included in the definition of a Trade Secret under this Employment Agreement) that has not become generally available to the public by the act of one who has the right to disclose such information without violating any right of TurboChef or any of its affiliates. Confidential Information may include, but not be limited to, future business plans, licensing strategies, advertising campaigns, information regarding |
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customers, employees and independent contractors and the terms and conditions of this Employment Agreement.
(d) Restricted Period. The term Restricted Period as used in the Employment Agreement shall mean the twenty-four month period which starts on the date Executives employment terminates with TurboChef without regard to whether such termination comes before or after the end of the Term.
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(e) |
Nonsolicitation of Customers or Employees. |
|
(1) |
Executive (i) while employed under this Employment Agreement shall not, on Executives own behalf or on behalf of any person, firm, partnership, association, corporation or business organization, entity or enterprise (other than TurboChef or one of its affiliates), solicit Competing Business of customers of TurboChef or any of its affiliates and (ii) during the Restricted Period shall not, on Executives own behalf or on behalf of any person, firm, partnership, association, corporation or business organization, entity or enterprise, solicit Competing Business of customers of TurboChef or any of its affiliates with whom Executive within the twenty-four month period immediately preceding the beginning of the Restricted Period had or made contact with in the course of Executives employment by TurboChef. |
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(2) |
Executive (i) while employed under this Employment Agreement shall not, either directly or indirectly, call on, solicit or attempt to induce any other officer, employee or independent contractor of TurboChef or any of its affiliates to terminate his or her employment with TurboChef or any of its affiliates and shall not assist any other person or entity in such a solicitation (regardless of whether any such officer, employee or independent contractor would commit a breach of contract by terminating his or her employment), and (ii) during the Restricted Period, shall not, either directly or indirectly, call on, solicit or attempt to induce any other officer, employee or independent contractor of TurboChef or any of its affiliates with whom Executive had contact, knowledge of, or association in the course of Executives employment with TurboChef or any of its affiliates as the case may be, during the twelve month period immediately preceding the beginning of the Restricted Period, to terminate his or her employment with TurboChef or any of its affiliates and shall not assist any other person or entity in such a solicitation (regardless of whether any such officer, employee or independent contractor would commit a breach of contract by terminating his or her employment). |
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|
(3) |
The term Competing Business as used in this Employment Agreement means the design, development, manufacture, marketing, selling, licensing or servicing of appliances utilizing Speed Cook Technology. For this purpose Speed Cook Technology shall mean technology that allows the cooking of foods at speeds greater than three times conventional cooking speeds other than through the use of microwave technology alone. |
(f) Noncompetition Obligation. Executive while employed under this Employment Agreement and thereafter during the Restricted Period and within the United States, shall not organize or form any other business that will conduct Competing Business and shall not engage in the executive management of, or provide consulting concerning the executive management of, Competing Business on behalf of any business other than TurboChef or its affiliates. Executive acknowledges and agrees that the territory identified in this § 5(f) are states in which Executive performs services for TurboChef by being actively engaged as a member of TurboChefs executive management team in TurboChefs operations in these states.
(g) Reasonable and Continuing Obligations. Executive agrees that Executives obligations under this § 5 are obligations which will continue beyond the date Executives employment terminates and that such obligations are reasonable and necessary to protect TurboChefs legitimate business interests. TurboChef in addition shall have the right to take such other action as TurboChef deems necessary or appropriate to compel compliance with the provisions of this § 5.
(h) Remedy for Breach. Executive agrees that the remedies at law of TurboChef for any actual or threatened breach by Executive of the covenants in this § 5 would be inadequate and that TurboChef shall be entitled to specific performance of the covenants in this § 5, including entry of an ex parte, temporary restraining order in state or federal court, preliminary and permanent injunctive relief against activities in violation of this § 5, or both, or other appropriate judicial remedy, writ or order, in addition to any damages and legal expenses which TurboChef may be legally entitled to recover. Executive acknowledges and agrees that the covenants in this § 5 shall be construed as agreements independent of any other provision of this or any other agreement between TurboChef and Executive, and that the existence of any claim or cause of action by Executive against TurboChef, whether predicated upon this Employment Agreement or any other agreement, shall not constitute a defense to the enforcement by TurboChef of such covenants.
§ 6. |
MISCELLANEOUS |
(a) Notices. Notices and all other communications shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by United States registered or certified mail. Notices to TurboChef shall be sent to TurboChef Technologies, Inc., Suite 1900, Six Concourse Parkway, Atlanta, GA 30328,
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Attention: Corporate Secretary. Notices and communications to Executive shall be sent to the address Executive most recently provided to TurboChef.
(b) No Waiver. Except for the notice described in § 6(a), no failure by either TurboChef or Executive at any time to give notice of any breach by the other of, or to require compliance with, any condition or provision of this Employment Agreement shall be deemed a waiver of any provisions or conditions of this Employment Agreement.
(c) Delaware Law and Georgia Courts. This Employment Agreement shall be governed by Delaware law without reference to the choice of law principles thereof. Any litigation that may be brought by either TurboChef or Executive involving the enforcement of this Employment Agreement or any rights, duties, or obligations under this Employment Agreement, shall be brought exclusively in either the state courts in and for Fulton County, Georgia or the United States District Court, Northern District of Georgia, Atlanta Division.
(d) Assignment. This Employment Agreement shall be binding upon and inure to the benefit of TurboChef and any successor to all or substantially all of the business or assets of TurboChef. TurboChef may assign this Employment Agreement to any affiliate or successor, and no such assignment shall be treated as a termination of Executives employment under this Employment Agreement. Executives rights and obligations under this Employment Agreement are personal and shall not be assigned or transferred.
(e) Other Agreements. This amended and restated Employment Agreement replaces and merges any and all previous agreements and understandings regarding all the terms and conditions of Executives employment relationship with TurboChef, and this Employment Agreement constitutes the entire agreement between TurboChef and Executive with respect to such terms and conditions. This Employment Agreement does not replace any previous agreement regarding ownership of inventions or other intellectual property.
(f) Amendment. No amendment to this Employment Agreement shall be effective unless it is in writing and signed by TurboChef and by Executive.
(g) Invalidity. If any part of this Employment Agreement is held by a court of competent jurisdiction to be invalid or otherwise unenforceable, the remaining part shall be unaffected and shall continue in full force and effect, and the invalid or otherwise unenforceable part shall be deemed not to be part of this Employment Agreement.
(h) Section 409A. It is the intent of TurboChef and the Executive that all payments payable to the Executive pursuant to this Employment Agreement shall comply with Section 409A or shall be exempt from Section 409A (as short-term deferrals or otherwise in accordance with Section 409A). Notwithstanding the foregoing, to the extent TurboChef determines in good faith that (a) one or more payments or benefits received or to be received by Executive pursuant to this Employment Agreement (including any Gross Up Payment) would constitute deferred
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compensation subject to the rules of Section 409A, and (b) that the Executive is a specified employee under Section 409A, then only to the extent required to avoid the Executives incurrence of any additional tax or interest or penalties under Section 409A, such payment or benefit will be delayed until the first business day after the date which is six (6) months after the Participants separation from service within the meaning of Section 409A. In addition, to the extent TurboChef determines in good faith that one or more payments or benefits received or to be received by the Executive upon a termination of employment pursuant to this Employment Agreement would constitute deferred compensation subject to the rules of Section 409A, a termination of employment shall be deemed to occur only if such termination of employment constitutes a separation from service as defined in Section 409A, as determined by TurboChef in accordance with such elections and policies adopted by it from time to time.
IN WITNESS WHEREOF, TurboChef and Executive have executed this Employment Agreement in multiple originals to be effective upon the date of the last signature hereto.
TURBOCHEF TECHNOLOGIES, INC. |
EXECUTIVE |
By: /s/James K. Price |
/s/ Jose Miguel Fernandez de Castro |
Name: James K. Price |
Jose Miguel Fernandez de Castro |
Title: CEO |
Date: January 18, 2008 |
Date: January 18, 2008 |
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EMPLOYMENT AGREEMENT
(As Amended and Restated January 18, 2008)
TurboChef Technologies, Inc., a Delaware corporation, (TurboChef) and Paul Lehr (Executive) entered into an employment agreement (the Employment Agreement) effective October 29, 2003 (the Effective Date). TurboChef and Executive hereby amend and restate the Employment Agreement in its entirety in order to evidence formal compliance with Section 409A of the Internal Revenue Code of 1986, as amended (the Code), and the guidance thereunder (collectively Section 409A) and to make other desired changes and clarifications. This revised Employment Agreement is effective upon execution and has the following terms and conditions:
§ 1. |
TERM OF EMPLOYMENT |
The Employment Agreement had an initial term of two years commencing on the Effective Date and has been renewed three times for subsequent one-year terms such that the current one-year term will end October 29, 2008. The term of the Employment Agreement (the Term) currently shall extend to the end of the day, December 31, 2008 and shall automatically extend for one additional year beginning on January 1, 2009 and thereafter for an additional year on each subsequent anniversary of January 1, 2009 unless TurboChef or Executive notifies the other pursuant to § 6(a) that no such extension will be effected at least six months before January 1, 2009 or at least six months before any such subsequent anniversary date (January 1, 2009 and each subsequent anniversary date during the Term shall herein be referred to as a Renewal Date). Executives primary location of employment shall be at TurboChefs offices in Carrollton, Texas.
§ 2. |
POSITION and DUTIES AND RESPONSIBILITIES |
(a) Position. Executive shall be a Vice President and the Chief Operating Officer of TurboChef.
(b) Duties and Responsibilities. Executives duties and responsibilities shall be those normally associated with Executives position as a vice president and the chief operating officer of a corporation plus any additional duties and responsibilities that TurboChefs Board of Directors, Chairman or Chief Executive Officer from time to time may assign orally or in writing to Executive. Executive shall report to TurboChefs Chief Executive Officer and shall have such powers as may be delegated to him by such board or officer. Executive shall undertake to perform all Executives duties and responsibilities for TurboChef in good faith and on a full-time basis and shall at all times act in the course of Executives employment under this Employment Agreement in the best interest of TurboChef.
§ 3. |
COMPENSATION AND BENEFITS |
(a) Base Salary. Executives base salary shall be $300,000 per year, which base salary shall be payable in accordance with TurboChefs standard payroll practices and policies for executives (but not less frequently than monthly) and shall be subject to such withholdings as required by law or as otherwise permissible under such practices or policies. Executives base salary shall be subject to periodic adjustments as determined by the Compensation Committee of TurboChefs Board of Directors.
(b) Bonus. Executive shall be eligible to receive bonus compensation in excess of base salary and benefits for any year (or other period) during the Term pursuant to one or more executive or management compensation plans adopted or individual awards made from time to time by the Compensation Committee or the Chairman or Chief Executive Officer in their respective discretion. Executive need not be employed by TurboChef at the time of payment of a bonus. The bonus amount shall be payable in a lump sum in the following calendar year not later than the earlier of ten business days after TurboChefs financial results for the year are publicly released and March 15 of such calendar year. Executives bonus hereunder may be prorated for any partial year of employment. The Compensation Committee shall reasonably decide any dispute over the amount of any bonus hereunder.
(c) Employee Benefit Plans. Executive shall be eligible to participate in the employee benefit plans, programs and policies maintained by TurboChef for similarly situated executives in accordance with the terms and conditions to participate in such plans, programs and policies as in effect from time to time.
(d) Option Grants. Unless provided otherwise by the Compensation Committee and set forth in the applicable award agreement, all options to purchase shares of the common stock of TurboChef (TurboChef Stock) that TurboChef grants to Executive shall vest over thirty six months in twelve equal quarterly installments of 8-1/3% on the calendar date of the grant in the third, sixth, ninth and twelfth months following the grant date and following each of the next two anniversaries of the grant date.
(e) Vacation. Executive shall be entitled to vacation as provided under TurboChefs policies as described in the Employee Handbook, provided, however, that Executive shall accrue not less than four weeks of vacation during each successive one year period in the Term. Vacation time shall be taken at such time or times so as not to materially and adversely interfere with the business of TurboChef. Executive shall not have the right to carry over unused vacation from any such one year period to any other such one year period nor to receive additional compensation in lieu of taking Executives vacation time.
(f) Expenses. TurboChef shall reimburse Executive for, or pay directly, all reasonable business expenses incurred by Executive at the request of, or on behalf of, TurboChef in the performance of Executives duties under this Employment Agreement, provided that Executive incurs and accounts for such expenses in accordance with all of
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the policies and directives of TurboChef as in effect from time to time. Business expenses payable or reimbursable hereunder shall be referred to in this Employment Agreement as Business Expenses.
§ 4. |
TERMINATION OF EMPLOYMENT |
(a) Termination by TurboChef Other Than for Cause or Disability or by Executive for Good Reason.
|
(1) |
TurboChef shall have the right to terminate Executives employment at any time, and Executive shall have the right to resign at any time. However, a notice under § 1 that no extension of Executives Term will be effected shall not constitute a termination of Executives employment by TurboChef or a resignation by Executive. If either TurboChef or Executive elects to give such notice, TurboChefs only obligation to Executive under this Employment Agreement after the expiration of the Term shall be to pay Executives earned but unpaid salary and benefits then in effect under § 3(a), if any, until the date the Term expired. |
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(2) |
If TurboChef terminates Executives employment other than for Cause or Disability or Executive resigns for Good Reason, TurboChef shall (in lieu of any other severance benefits under any of TurboChefs employee benefit plans, programs or policies) pay Executive, within five business days after the date Executives employment is terminated, in a lump sum an amount equal to $150,000 or one half times Executive's base salary in effect immediately before Executives termination of employment, whichever is greater. In addition, TurboChef shall make any Gross-Up Payment called for under § 4(f) to Executive within five business days after the date such excise tax is determined to be payable. Executive waives Executives rights, if any, to have such payment taken into account in computing any other benefits payable to, or on behalf of, Executive by TurboChef. In addition, all outstanding stock options, restricted stock units or other equity awards shall immediately vest and become exercisable or paid out, and the agreements or certificates representing such awards shall be deemed amended as necessary to permit such accelerated vesting or pay out. |
(b) Termination by TurboChef for Cause or by Executive Other Than for Good Reason.
|
(1) |
TurboChef shall have the right to terminate Executives employment at any time for Cause, and Executive shall have the right to resign at any time other than for Good Reason. |
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|
(2) |
If TurboChef terminates Executives employment for Cause or Executive resigns other than for Good Reason, TurboChefs only obligation to Executive under this Employment Agreement shall be to pay Executives earned but unpaid base salary and benefits up to the date Executives employment terminates. Furthermore, if terminated for Cause, Executive shall forfeit any amount of a bonus that he may have earned in the year of termination and his right to exercise any outstanding options or other rights to purchase common stock of TurboChef, and all such outstanding options and other rights and unvested restricted stock or restricted stock units shall be immediately forfeited on his date of termination. |
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(c) |
Cause. The term Cause as used in this Employment Agreement means |
|
(1) |
Executive has engaged in conduct which in the judgment of TurboChefs Board of Directors constitutes gross negligence, gross misconduct or gross neglect in the performance of Executives duties and responsibilities under this Employment Agreement, including conduct resulting or intending to result directly or indirectly in gain or personal enrichment for Executive at TurboChefs expense; |
|
(2) |
Executive has been convicted of a felony for fraud, embezzlement or theft; or |
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(3) |
Executive has engaged in a breach of any provision of this Employment Agreement which Executive has failed to cure within thirty days after Executive has notice of such breach from TurboChefs Board of Directors; provided, however, |
|
(4) |
No Cause shall exist under this Employment Agreement unless (i) Executive has been provided a detailed, written statement of the basis for TurboChefs belief that Cause exists and an opportunity to meet with TurboChefs Board of Directors (together with Executives counsel (if Executive chooses to have Executives counsel present at such meeting)) after Executive has had a reasonable period in which to review such statement and (ii) TurboChefs Board of Directors determines (after such meeting, if Executive meets with TurboChefs Board of Directors) reasonably and in good faith and by the affirmative vote of not less than a majority of the members of TurboChefs Board of Directors then in office at a meeting called and held for such purpose that Cause does exist under this Employment Agreement. |
(d) Good Reason. The term Good Reason means, in the absence of Executives specific agreement thereto,
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|
(1) |
Any material reduction in Executives base salary; |
|
(2) |
A material reduction in Executive's authority, duties or responsibilities |
|
(3) |
A material reduction in the authority, duties or responsibilities of the supervisor to whom the Executive reports; |
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(4) |
A relocation of Executives primary work site(s) more than one hundred miles from Executives current primary work site(s); or |
|
(5) |
Any material breach of any of the terms of this Employment Agreement by TurboChef; |
provided, however, no Good Reason shall exist unless (i) within ninety (90) days of the initial existence of the event or condition that Executive believes constitutes Good Reason, Executive gives TurboChef a detailed, written statement of the basis for Executives belief that Good Reason exists and gives TurboChef a thirty-day period after the delivery of such statement to cure the basis for such belief and (ii) Executive actually submits Executives resignation to TurboChefs Board of Directors during the sixty day period which begins immediately after the end of such thirty-day period if Executive reasonably and in good faith determines that Good Reason continues to exist after the end of such thirty-day period.
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(e) |
Termination for Disability or Death. |
|
(1) |
TurboChef shall have the right to terminate Executives employment on or after the date Executive has a Disability, and Executives employment shall terminate at Executives death. |
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(2) |
If Executives employment terminates under this § 4(e), TurboChefs only obligation under this Employment Agreement shall be to pay Executive or, if Executive dies, Executives estate any earned but unpaid base salary then in effect under § 3(a), benefits, earned but unpaid bonus under § 3(b) pro-rated for any partial year, and non-reimbursed Business Expenses through the date Executives employment terminates. The pro-rated annual bonus shall be paid within 60 days of the termination date. |
The term Disability as used in this Employment Agreement means the suffering by Executive for at least a 180 consecutive day period of a physical or mental condition resulting from bodily injury, disease, or mental disorder which renders Executive incapable of continuing even with reasonable accommodation to perform the essential functions of Executives job. TurboChefs Board of Directors shall determine whether Executive has a Disability. If Executive disputes such determination, the issue shall be submitted to a panel consisting of three physicians who specialize in the physical or mental condition from which Executive suffers, one appointed and paid by TurboChef,
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one appointed and paid by Executive and the third appointed by these two physicians and paid one-half by TurboChef and one-half by Executive. The determination as to whether Executive has a Disability shall be made by such panel and shall be binding on TurboChef and on Executive.
(f) Change in Control. If there is a Change in Control, Executives right to exercise all outstanding stock options or other rights, his right to receive payment under all outstanding restricted stock units and any restrictions on alienation of restricted stock or other restricted rights which have been granted to Executive by TurboChef shall immediately become 100% vested and non-forfeitable, payable and freely transferable, as the case may be, and, further, Executive shall have the right in Executives sole discretion upon two weeks advance written notice to resign Executives employment as of any date within the shorter of the six month period immediately following the date of such Change in Control, and the period beginning on the date of the Change in Control and ending on March 1st of the year following the date of the Change in Control, in which event TurboChef shall pay to Executive within five days after the date of the termination of Executives employment, in a lump sum an amount equal to $150,000 or one half times Executive's base salary in effect immediately before Executives termination of employment, whichever is greater. TurboChef thereafter shall make any Gross-Up Payment called for under this § 4(f) to Executive when such excise tax is determined to be payable. Executive waives Executives right, if any, to have any and all such options (to the extent an exercise right is accelerated under this § 4(f)) and payments taken into account in computing any other benefits payable to, or on behalf of, Executive by TurboChef. Notwithstanding anything to the contrary in the foregoing, if in connection with a Change of Control, holders of Common Stock of TurboChef receive in exchange for their shares cash, other securities or a combination thereof, then TurboChef may require that Executive accept in exchange for Executives stock options or other rights to receive or acquire shares of Common Stock of TurboChef comparable consideration for the net value of Executives stock options or other rights as if they had been immediately exercised or paid out.
The term Change in Control as used in this Employment Agreement means:
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(1) |
The acquisition at any time by any person, entity or group within the meaning of Sections 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (excluding, for this purpose, TurboChef, its affiliates, or any employee benefit plan of TurboChef or any of its affiliates) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under such securities law) of more than fifty percent of either the then outstanding shares of common stock of TurboChef or of the combined voting power of TurboChefs then outstanding voting securities or any such acquisition of more than fifty percent of either such common stock or voting securities of TurboChef or of the combined voting power of TurboChefs then outstanding voting securities except for an acquisition resulting from a disposition of |
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such stock or securities effected by TurboChef or a public offering by TurboChef;
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(2) |
The individuals who constitute the members of the Board of Directors of TurboChef, who shall be referred to as the Incumbent Members, cease for any reason to constitute at least a majority of such Board of Directors, provided that any individual becoming a member after the date of this Employment Agreement whose election, or nomination for election by TurboChefs stockholders, was approved by a vote of at least a majority of the then Incumbent Members shall be considered as though such individual was an Incumbent Member; provided, however, that any individual becoming a member of the Board of Directors in the aforesaid manner as part of a group whose membership after election constitutes a majority of the Board of Directors, or whose membership becomes a majority of the Board of Directors within a reasonably short period of time because of the resignation of Incumbent Members following the election of such group, will not be considered as an Incumbent Member; |
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(3) |
A merger, consolidation or other reorganization where, in each case, with respect to which persons who were the stockholders of TurboChef immediately prior to such merger, consolidation or other reorganization, immediately thereafter, they do not own more than fifty percent of the combined voting power of the merged, consolidated or reorganized TurboChefs then outstanding voting securities; or |
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(4) |
The sale of all or substantially all of the assets of TurboChef. |
If TurboChef or TurboChefs accountants determine that the option exercise right and the severance payments called for under this § 4(f) plus any other payments or benefits made available to Executive by TurboChef upon a Change in Control will result in Executive being subject to an excise tax under Section 4999 of the Code, or if such an excise tax is assessed against Executive as a result of such option exercise right or payment or other benefits, TurboChef shall make a Gross Up Payment to or on behalf of Executive as and when each and any such determination or assessment, as applicable, is made, provided Executive takes such action (other than waiving Executives right to any payments or benefits otherwise due from TurboChef) as TurboChef reasonably requests under the circumstances to mitigate or challenge such tax; provided, however, if TurboChef or TurboChefs accountants determine that no Gross Up Payment would be payable under this § 4(f) if Executive waives Executives right to receive a part of such payments and such part does not exceed $10,000, Executive agrees to irrevocably waive Executives right to receive such part of such payments if an independent accountant or lawyer retained by Executive and paid by
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TurboChef agrees with the determination made by TurboChef or TurboChefs accountants.
The term Gross Up Payment as used in this Employment Agreement shall mean a payment to or on behalf of Executive which shall be sufficient to pay (i) any excise tax described in this § 4(f) in full, (ii) any federal, state and local income tax and social security or other employment tax on the payment made to pay such excise tax as well as any additional excise tax on such payment and (iii) any interest or penalties assessed by the Internal Revenue Service on Executive if such interest or penalties are attributable to TurboChefs failure to comply with its obligations under this §4(f) or applicable law. Any determination under this §4(f) by TurboChef or TurboChefs accountants shall be made in accordance with Section 280G of the Code and any applicable related regulations (whether proposed, temporary or final) and any related Internal Revenue Service rulings and any related case law and, if TurboChef reasonably requests that Executive take action to mitigate or challenge, or to mitigate and challenge, any such tax or assessment and Executive complies with such request, TurboChef shall provide Executive with such information and such expert advice and assistance from TurboChefs accountants, lawyers and other advisors as Executive may reasonably request and shall pay for all expenses incurred in effecting such compliance and any related fines, penalties, interest and other assessments.
Notwithstanding the foregoing, (i) each Gross Up Payment required to be made by TurboChef to Executive hereunder and any overpayment of a Gross Up Payment required to be repaid by Executive to TurboChef shall be paid no later than the end of the calendar year next following the calendar year in which Executive remits the corresponding taxes to the Internal Revenue Service, and (ii) any reimbursement of expenses related to a tax audit or litigation addressing the existence or amount of a tax liability required to be made by TurboChef to Executive hereunder shall be paid no later than the end of the calendar year next following the calendar year in which Executive remits to the Internal Revenue Service the taxes that are the subject of the audit or litigation or, where as a result of the audit or litigation no taxes are due or are remitted but other reimbursable costs and/or expenses have been incurred, the end of the calendar year following the calendar year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation.
(g) Benefits at Termination of Employment. Executive upon Executives termination of employment shall have the right to receive any benefits payable under TurboChefs employee benefit plans, programs and policies which Executive otherwise has a nonforfeitable right to receive under the terms of such plans, programs and policies (other than severance benefits) independent of Executives rights under this Employment Agreement in addition to any base salary under § 3(a) which accrued as of the termination date and are expressly payable under this § 4 without regard to the reason for such termination of employment.
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§ 5. |
COVENANTS BY EXECUTIVE |
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(a) |
TurboChef Property. |
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(1) |
Executive upon the termination of Executives employment for any reason or, if earlier, upon TurboChefs request shall promptly return all Property which had been entrusted or made available to Executive by TurboChef. |
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(2) |
The term Property means all records, files, memoranda, reports, price lists, customer lists, drawings, plans, sketches, keys, codes, computer hardware and software, equipment and other property of any kind or description prepared, used or possessed by Executive during Executives employment by TurboChef and, if applicable, any of its affiliates (and any duplicates of any such property) together with any and all information, ideas, concepts, discoveries, and inventions and the like conceived, made, developed or acquired at any time by Executive individually or, with others during Executives employment which relate to TurboChef business, products or services. |
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(b) |
Trade Secrets. |
|
(1) |
Executive agrees that Executive will hold in a fiduciary capacity for the benefit of TurboChef, and any of its affiliates, and will not directly or indirectly use or disclose, any Trade Secret that Executive may have acquired during the term of Executives employment by TurboChef or any of its affiliates for so long as such information remains a Trade Secret. |
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(2) |
The term Trade Secret means information, including, but not limited to, technical or nontechnical data, a formula, a pattern, a compilation, a program, a device, a method, a technique, a drawing, a process, financial data, financial plans, product plans, or a list of actual or potential customers or suppliers that (a) derives economic value, actual or potential, from not being generally known to, and not being generally readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use and (b) is the subject of reasonable efforts by TurboChef and any of its affiliates to maintain its secrecy. |
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(3) |
This § 5(b) and § 5(c) are intended to provide rights to TurboChef which are in addition to, not in lieu of, those rights TurboChef has under the common law or applicable statutes for the protection of trade secrets. |
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(c) |
Confidential Information. |
|
(1) |
Executive while employed under this Employment Agreement and thereafter during the Restricted Period shall hold in a fiduciary capacity for the benefit of TurboChef and any of its affiliates, and shall not directly or indirectly use or disclose, any Confidential Information that Executive may have acquired (whether or not developed or compiled by Executive and whether or not Executive is authorized to have access to such information) during the term of, and in the course of, or as a result of Executives employment by TurboChef or any of its affiliates. |
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(2) |
The term Confidential Information means any secret, confidential or proprietary information possessed by TurboChef or any of its affiliates relating to their businesses, including, without limitation, trade secrets, customer lists, details of client or consultant contracts, current and anticipated customer requirements, pricing policies, price lists, market studies, business plans, operational methods, marketing plans or strategies, product development techniques or flaws, computer software programs (including object code and source code), data and documentation data, base technologies, systems, structures and architectures, inventions and ideas, past current and planned research and development, compilations, devices, methods, techniques, processes, financial information and data, business acquisition plans and new personnel acquisition plans (not otherwise included in the definition of a Trade Secret under this Employment Agreement) that has not become generally available to the public by the act of one who has the right to disclose such information without violating any right of TurboChef or any of its affiliates. Confidential Information may include, but not be limited to, future business plans, licensing strategies, advertising campaigns, information regarding customers, employees and independent contractors and the terms and conditions of this Employment Agreement. |
(d) Restricted Period. The term Restricted Period as used in the Employment Agreement shall mean the twenty-four month period which starts on the date Executives employment terminates with TurboChef without regard to whether such termination comes before or after the end of the Term.
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(e) |
Nonsolicitation of Customers or Employees. |
|
(1) |
Executive (i) while employed under this Employment Agreement shall not, on Executives own behalf or on behalf of any person, firm, partnership, association, corporation or business organization, entity or enterprise (other than TurboChef or one of its affiliates), |
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solicit Competing Business of customers of TurboChef or any of its affiliates and (ii) during the Restricted Period shall not, on Executives own behalf or on behalf of any person, firm, partnership, association, corporation or business organization, entity or enterprise, solicit Competing Business of customers of TurboChef or any of its affiliates with whom Executive within the twenty-four month period immediately preceding the beginning of the Restricted Period had or made contact with in the course of Executives employment by TurboChef.
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(2) |
Executive (i) while employed under this Employment Agreement shall not, either directly or indirectly, call on, solicit or attempt to induce any other officer, employee or independent contractor of TurboChef or any of its affiliates to terminate his or her employment with TurboChef or any of its affiliates and shall not assist any other person or entity in such a solicitation (regardless of whether any such officer, employee or independent contractor would commit a breach of contract by terminating his or her employment), and (ii) during the Restricted Period, shall not, either directly or indirectly, call on, solicit or attempt to induce any other officer, employee or independent contractor of TurboChef or any of its affiliates with whom Executive had contact, knowledge of, or association in the course of Executives employment with TurboChef or any of its affiliates as the case may be, during the twelve month period immediately preceding the beginning of the Restricted Period, to terminate his or her employment with TurboChef or any of its affiliates and shall not assist any other person or entity in such a solicitation (regardless of whether any such officer, employee or independent contractor would commit a breach of contract by terminating his or her employment). |
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(3) |
The term Competing Business as used in this Employment Agreement means the design, development, manufacture, marketing, selling, licensing or servicing of appliances utilizing Speed Cook Technology. For this purpose Speed Cook Technology shall mean technology that allows the cooking of foods at speeds greater than three times conventional cooking speeds other than through the use of microwave technology alone. |
(f) Noncompetition Obligation. Executive while employed under this Employment Agreement and thereafter during the Restricted Period and within the United States, shall not organize or form any other business that will conduct Competing Business and shall not engage in the management of, or provide consulting concerning the management of, Competing Business on behalf of any business other than TurboChef or its affiliates. Executive acknowledges and agrees that the territory identified in this § 5(f) are states in which Executive performs services for TurboChef by
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being actively engaged as a member of TurboChefs executive management team in TurboChefs operations in these states.
(g) Reasonable and Continuing Obligations. Executive agrees that Executives obligations under this § 5 are obligations which will continue beyond the date Executives employment terminates and that such obligations are reasonable and necessary to protect TurboChefs legitimate business interests. TurboChef in addition shall have the right to take such other action as TurboChef deems necessary or appropriate to compel compliance with the provisions of this § 5.
(h) Remedy for Breach. Executive agrees that the remedies at law of TurboChef for any actual or threatened breach by Executive of the covenants in this § 5 would be inadequate and that TurboChef shall be entitled to specific performance of the covenants in this § 5, including entry of an ex parte, temporary restraining order in state or federal court, preliminary and permanent injunctive relief against activities in violation of this § 5, or both, or other appropriate judicial remedy, writ or order, in addition to any damages and legal expenses which TurboChef may be legally entitled to recover. Executive acknowledges and agrees that the covenants in this § 5 shall be construed as agreements independent of any other provision of this or any other agreement between TurboChef and Executive, and that the existence of any claim or cause of action by Executive against TurboChef, whether predicated upon this Employment Agreement or any other agreement, shall not constitute a defense to the enforcement by TurboChef of such covenants.
§ 6. |
MISCELLANEOUS |
(a) Notices. Notices and all other communications shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by United States registered or certified mail. Notices to TurboChef shall be sent to TurboChef Technologies, Inc., Suite 1900, Six Concourse Parkway, Atlanta, GA 30328, Attention: Corporate Secretary. Notices and communications to Executive shall be sent to the address Executive most recently provided to TurboChef.
(b) No Waiver. Except for the notice described in § 6(a), no failure by either TurboChef or Executive at any time to give notice of any breach by the other of, or to require compliance with, any condition or provision of this Employment Agreement shall be deemed a waiver of any provisions or conditions of this Employment Agreement.
(c) Delaware Law and Georgia Courts. This Employment Agreement shall be governed by Delaware law without reference to the choice of law principles thereof. Any litigation that may be brought by either TurboChef or Executive involving the enforcement of this Employment Agreement or any rights, duties, or obligations under this Employment Agreement, shall be brought exclusively in either the state courts in and for Fulton County, Georgia or the United States District Court, Northern District of Georgia, Atlanta Division.
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(d) Assignment. This Employment Agreement shall be binding upon and inure to the benefit of TurboChef and any successor to all or substantially all of the business or assets of TurboChef. TurboChef may assign this Employment Agreement to any affiliate or successor, and no such assignment shall be treated as a termination of Executives employment under this Employment Agreement. Executives rights and obligations under this Employment Agreement are personal and shall not be assigned or transferred.
(e) Other Agreements. This amended and restated Employment Agreement replaces and merges any and all previous agreements and understandings regarding all the terms and conditions of Executives employment relationship with TurboChef, and this Employment Agreement constitutes the entire agreement between TurboChef and Executive with respect to such terms and conditions. This Employment Agreement does not replace any previous agreement regarding ownership of inventions or other intellectual property.
(f) Amendment. No amendment to this Employment Agreement shall be effective unless it is in writing and signed by TurboChef and by Executive.
(g) Invalidity. If any part of this Employment Agreement is held by a court of competent jurisdiction to be invalid or otherwise unenforceable, the remaining part shall be unaffected and shall continue in full force and effect, and the invalid or otherwise unenforceable part shall be deemed not to be part of this Employment Agreement.
(h) Section 409A. It is the intent of TurboChef and the Executive that all payments payable to the Executive pursuant to this Employment Agreement shall comply with Section 409A or shall be exempt from Section 409A (as short-term deferrals or otherwise in accordance with Section 409A). Notwithstanding the foregoing, to the extent TurboChef determines in good faith that (a) one or more payments or benefits received or to be received by Executive pursuant to this Employment Agreement (including any Gross Up Payment) would constitute deferred compensation subject to the rules of Section 409A, and (b) that the Executive is a specified employee under Section 409A, then only to the extent required to avoid the Executives incurrence of any additional tax or interest or penalties under Section 409A, such payment or benefit will be delayed until the first business day after the date which is six (6) months after the Participants separation from service within the meaning of Section 409A. In addition, to the extent TurboChef determines in good faith that one or more payments or benefits received or to be received by the Executive upon a termination of employment pursuant to this Employment Agreement would constitute deferred compensation subject to the rules of Section 409A, a termination of employment shall be deemed to occur only if such termination of employment
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constitutes a separation from service as defined in Section 409A, as determined by TurboChef in accordance with such elections and policies adopted by it from time to time.
IN WITNESS WHEREOF, TurboChef and Executive have executed this Employment Agreement in multiple originals to be effective upon the date of the last signature hereto.
TURBOCHEF TECHNOLOGIES, INC. |
EXECUTIVE |
By: /s/James K. Price |
/s/Paul Lehr |
Name: James K. Price |
Paul Lehr |
Title: CEO |
Date: January 18, 2008 |
Date: January 17, 2008 |
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EMPLOYMENT AGREEMENT
(As Amended and Restated January 18, 2008)
TurboChef Technologies, Inc., a Delaware corporation, (TurboChef) and Steve Beshara (Executive) entered into an employment agreement (the Employment Agreement) effective November 21, 2003 (the Effective Date). TurboChef and Executive hereby amend and restate the Employment Agreement in its entirety in order to evidence formal compliance with Section 409A of the Internal Revenue Code of 1986, as amended (the Code), and the guidance thereunder (collectively Section 409A) and to make other desired changes and clarifications. This revised Employment Agreement is effective upon execution and has the following terms and conditions:
§ 1. |
TERM OF EMPLOYMENT |
The Employment Agreement had an initial term of three years commencing on the Effective Date and has been renewed twice for subsequent one-year terms such that the current one-year term will end November 21, 2008. The term of the Employment Agreement (the Term) currently shall extend to the end of the day, December 31, 2008 and shall automatically extend for one additional year beginning on January 1, 2009 and thereafter for an additional year on each subsequent anniversary of January 1, 2009 unless TurboChef or Executive notifies the other pursuant to § 6(a) that no such extension will be effected at least six months before January 1, 2009 or at least six months before any such subsequent anniversary date (January 1, 2009 and each subsequent anniversary date during the Term shall herein be referred to as a Renewal Date). Executives primary location of employment shall be at TurboChefs offices in Atlanta, Georgia.
§ 2. |
POSITION and DUTIES AND RESPONSIBILITIES |
(a) Position. Executive shall be Vice President of Marketing and the Chief Branding Officer of TurboChef.
(b) Duties and Responsibilities. Executives duties and responsibilities shall be those normally associated with Executives position as a vice president of a corporation responsible for branding and marketing plus any additional duties and responsibilities that TurboChefs Board of Directors, Chairman or Chief Executive Officer from time to time may assign orally or in writing to Executive. Executive shall report to TurboChefs Chief Executive Officer and shall have such powers as may be delegated to him by such board or officer. Executive shall undertake to perform all Executives duties and responsibilities for TurboChef in good faith and on a full-time basis and shall at all times act in the course of Executives employment under this Employment Agreement in the best interest of TurboChef.
§ 3. |
COMPENSATION AND BENEFITS |
(a) Base Salary. Executives base salary shall be $300,000 per year, which base salary shall be payable in accordance with TurboChefs standard payroll practices and policies for executives (but not less frequently than monthly) and shall be subject to such withholdings as required by law or as otherwise permissible under such practices or policies. Executives base salary shall be subject to periodic adjustments as determined by the Compensation Committee of TurboChefs Board of Directors.
(b) Bonus. Executive shall be eligible to receive bonus compensation in excess of base salary and benefits for any year (or other period) during the Term pursuant to one or more executive or management compensation plans adopted or individual awards made from time to time by the Compensation Committee or the Chairman or Chief Executive Officer in their respective discretion. Executive need not be employed by TurboChef at the time of payment of a bonus. The bonus amount shall be payable in a lump sum in the following calendar year not later than the earlier of ten business days after TurboChefs financial results for the year are publicly released and March 15 of such calendar year. Executives bonus hereunder may be prorated for any partial year of employment. The Compensation Committee shall reasonably decide any dispute over the amount of any bonus hereunder.
(c) Employee Benefit Plans. Executive shall be eligible to participate in the employee benefit plans, programs and policies maintained by TurboChef for similarly situated executives in accordance with the terms and conditions to participate in such plans, programs and policies as in effect from time to time.
(d) Option Grants. Unless provided otherwise by the Compensation Committee and set forth in the applicable award agreement, all options to purchase shares of the common stock of TurboChef (TurboChef Stock) that TurboChef grants to Executive shall vest over thirty six months in twelve equal quarterly installments of 8-1/3% on the calendar date of the grant in the third, sixth, ninth and twelfth months following the grant date and following each of the next two anniversaries of the grant date.
(e) Vacation. Executive shall be entitled to vacation as provided under TurboChefs policies as described in the Employee Handbook, provided, however, that Executive shall accrue not less than four weeks of vacation during each successive one year period in the Term. Vacation time shall be taken at such time or times so as not to materially and adversely interfere with the business of TurboChef. Executive shall not have the right to carry over unused vacation from any such one year period to any other such one year period nor to receive additional compensation in lieu of taking Executives vacation time.
(f) Expenses. TurboChef shall reimburse Executive for, or pay directly, all reasonable business expenses incurred by Executive at the request of, or on behalf of, TurboChef in the performance of Executives duties under this Employment Agreement, provided that Executive incurs and accounts for such expenses in accordance with all of
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the policies and directives of TurboChef as in effect from time to time. Business expenses payable or reimbursable hereunder shall be referred to in this Employment Agreement as Business Expenses.
§ 4. |
TERMINATION OF EMPLOYMENT |
(a) Termination by TurboChef Other Than for Cause or Disability or by Executive for Good Reason.
|
(1) |
TurboChef shall have the right to terminate Executives employment at any time, and Executive shall have the right to resign at any time. However, a notice under § 1 that no extension of Executives Term will be effected shall not constitute a termination of Executives employment by TurboChef or a resignation by Executive. If either TurboChef or Executive elects to give such notice, TurboChefs only obligation to Executive under this Employment Agreement after the expiration of the Term shall be to pay Executives earned but unpaid salary and benefits then in effect under § 3(a), if any, until the date the Term expired. |
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(2) |
If TurboChef terminates Executives employment other than for Cause or Disability or Executive resigns for Good Reason, TurboChef shall (in lieu of any other severance benefits under any of TurboChefs employee benefit plans, programs or policies) pay Executive, within five business days after the date Executives employment is terminated, in a lump sum an amount equal to $150,000 or one half times Executive's base salary in effect immediately before Executives termination of employment, whichever is greater. In addition, TurboChef shall make any Gross-Up Payment called for under § 4(f) to Executive within five business days after the date such excise tax is determined to be payable. Executive waives Executives rights, if any, to have such payment taken into account in computing any other benefits payable to, or on behalf of, Executive by TurboChef. In addition, all outstanding stock options, restricted stock units or other equity awards shall immediately vest and become exercisable or paid out, and the agreements or certificates representing such awards shall be deemed amended as necessary to permit such accelerated vesting or pay out. |
(b) Termination by TurboChef for Cause or by Executive Other Than for Good Reason.
|
(1) |
TurboChef shall have the right to terminate Executives employment at any time for Cause, and Executive shall have the right to resign at any time other than for Good Reason. |
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|
(2) |
If TurboChef terminates Executives employment for Cause or Executive resigns other than for Good Reason, TurboChefs only obligation to Executive under this Employment Agreement shall be to pay Executives earned but unpaid base salary and benefits up to the date Executives employment terminates. Furthermore, if terminated for Cause, Executive shall forfeit any amount of a bonus that he may have earned in the year of termination and his right to exercise any outstanding options or other rights to purchase common stock of TurboChef, and all such outstanding options and other rights and unvested restricted stock or restricted stock units shall be immediately forfeited on his date of termination. |
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(c) |
Cause. The term Cause as used in this Employment Agreement means |
|
(1) |
Executive has engaged in conduct which in the judgment of TurboChefs Board of Directors constitutes gross negligence, gross misconduct or gross neglect in the performance of Executives duties and responsibilities under this Employment Agreement, including conduct resulting or intending to result directly or indirectly in gain or personal enrichment for Executive at TurboChefs expense; |
|
(2) |
Executive has been convicted of a felony for fraud, embezzlement or theft; or |
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(3) |
Executive has engaged in a breach of any provision of this Employment Agreement which Executive has failed to cure within thirty days after Executive has notice of such breach from TurboChefs Board of Directors; provided, however, |
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(4) |
No Cause shall exist under this Employment Agreement unless (i) Executive has been provided a detailed, written statement of the basis for TurboChefs belief that Cause exists and an opportunity to meet with TurboChefs Board of Directors (together with Executives counsel (if Executive chooses to have Executives counsel present at such meeting)) after Executive has had a reasonable period in which to review such statement and (ii) TurboChefs Board of Directors determines (after such meeting, if Executive meets with TurboChefs Board of Directors) reasonably and in good faith and by the affirmative vote of not less than a majority of the members of TurboChefs Board of Directors then in office at a meeting called and held for such purpose that Cause does exist under this Employment Agreement. |
(d) Good Reason. The term Good Reason means, in the absence of Executives specific agreement thereto,
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|
(1) |
Any material reduction in Executives base salary; |
|
(2) |
A material reduction in Executive's authority, duties or responsibilities |
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(3) |
A material reduction in the authority, duties or responsibilities of the supervisor to whom the Executive reports; |
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(4) |
A relocation of Executives primary work site(s) more than one hundred miles from Executives current primary work site(s); or |
|
(5) |
Any material breach of any of the terms of this Employment Agreement by TurboChef; |
provided, however, no Good Reason shall exist unless (i) within ninety (90) days of the initial existence of the event or condition that Executive believes constitutes Good Reason, Executive gives TurboChef a detailed, written statement of the basis for Executives belief that Good Reason exists and gives TurboChef a thirty-day period after the delivery of such statement to cure the basis for such belief and (ii) Executive actually submits Executives resignation to TurboChefs Board of Directors during the sixty day period which begins immediately after the end of such thirty-day period if Executive reasonably and in good faith determines that Good Reason continues to exist after the end of such thirty-day period.
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(e) |
Termination for Disability or Death. |
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(1) |
TurboChef shall have the right to terminate Executives employment on or after the date Executive has a Disability, and Executives employment shall terminate at Executives death. |
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(2) |
If Executives employment terminates under this § 4(e), TurboChefs only obligation under this Employment Agreement shall be to pay Executive or, if Executive dies, Executives estate any earned but unpaid base salary then in effect under § 3(a), benefits, earned but unpaid bonus under § 3(b) pro-rated for any partial year, and non-reimbursed Business Expenses through the date Executives employment terminates. The pro-rated annual bonus shall be paid within 60 days of the termination date. |
The term Disability as used in this Employment Agreement means the suffering by Executive for at least a 180 consecutive day period of a physical or mental condition resulting from bodily injury, disease, or mental disorder which renders Executive incapable of continuing even with reasonable accommodation to perform the essential functions of Executives job. TurboChefs Board of Directors shall determine whether Executive has a Disability. If Executive disputes such determination, the issue shall be submitted to a panel consisting of three physicians who specialize in the physical or mental condition from which Executive suffers, one appointed and paid by TurboChef,
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one appointed and paid by Executive and the third appointed by these two physicians and paid one-half by TurboChef and one-half by Executive. The determination as to whether Executive has a Disability shall be made by such panel and shall be binding on TurboChef and on Executive.
(f) Change in Control. If there is a Change in Control, Executives right to exercise all outstanding stock options or other rights, his right to receive payment under all outstanding restricted stock units and any restrictions on alienation of restricted stock or other restricted rights which have been granted to Executive by TurboChef shall immediately become 100% vested and non-forfeitable, payable and freely transferable, as the case may be, and, further, Executive shall have the right in Executives sole discretion upon two weeks advance written notice to resign Executives employment as of any date within the shorter of the six month period immediately following the date of such Change in Control, and the period beginning on the date of the Change in Control and ending on March 1st of the year following the date of the Change in Control, in which event TurboChef shall pay to Executive within five days after the date of the termination of Executives employment, in a lump sum an amount equal to $150,000 or one half times Executive's base salary in effect immediately before Executives termination of employment, whichever is greater. TurboChef thereafter shall make any Gross-Up Payment called for under this § 4(f) to Executive when such excise tax is determined to be payable. Executive waives Executives right, if any, to have any and all such options (to the extent an exercise right is accelerated under this § 4(f)) and payments taken into account in computing any other benefits payable to, or on behalf of, Executive by TurboChef. Notwithstanding anything to the contrary in the foregoing, if in connection with a Change of Control, holders of Common Stock of TurboChef receive in exchange for their shares cash, other securities or a combination thereof, then TurboChef may require that Executive accept in exchange for Executives stock options or other rights to receive or acquire shares of Common Stock of TurboChef comparable consideration for the net value of Executives stock options or other rights as if they had been immediately exercised or paid out.
The term Change in Control as used in this Employment Agreement means:
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(1) |
The acquisition at any time by any person, entity or group within the meaning of Sections 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (excluding, for this purpose, TurboChef, its affiliates, or any employee benefit plan of TurboChef or any of its affiliates) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under such securities law) of more than fifty percent of either the then outstanding shares of common stock of TurboChef or of the combined voting power of TurboChefs then outstanding voting securities or any such acquisition of more than fifty percent of either such common stock or voting securities of TurboChef or of the combined voting power of TurboChefs then outstanding voting securities except for an acquisition resulting from a disposition of |
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such stock or securities effected by TurboChef or a public offering by TurboChef;
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(2) |
The individuals who constitute the members of the Board of Directors of TurboChef, who shall be referred to as the Incumbent Members, cease for any reason to constitute at least a majority of such Board of Directors, provided that any individual becoming a member after the date of this Employment Agreement whose election, or nomination for election by TurboChefs stockholders, was approved by a vote of at least a majority of the then Incumbent Members shall be considered as though such individual was an Incumbent Member; provided, however, that any individual becoming a member of the Board of Directors in the aforesaid manner as part of a group whose membership after election constitutes a majority of the Board of Directors, or whose membership becomes a majority of the Board of Directors within a reasonably short period of time because of the resignation of Incumbent Members following the election of such group, will not be considered as an Incumbent Member; |
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(3) |
A merger, consolidation or other reorganization where, in each case, with respect to which persons who were the stockholders of TurboChef immediately prior to such merger, consolidation or other reorganization, immediately thereafter, they do not own more than fifty percent of the combined voting power of the merged, consolidated or reorganized TurboChefs then outstanding voting securities; or |
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(4) |
The sale of all or substantially all of the assets of TurboChef. |
If TurboChef or TurboChefs accountants determine that the option exercise right and the severance payments called for under this § 4(f) plus any other payments or benefits made available to Executive by TurboChef upon a Change in Control will result in Executive being subject to an excise tax under Section 4999 of the Code, or if such an excise tax is assessed against Executive as a result of such option exercise right or payment or other benefits, TurboChef shall make a Gross Up Payment to or on behalf of Executive as and when each and any such determination or assessment, as applicable, is made, provided Executive takes such action (other than waiving Executives right to any payments or benefits otherwise due from TurboChef) as TurboChef reasonably requests under the circumstances to mitigate or challenge such tax; provided, however, if TurboChef or TurboChefs accountants determine that no Gross Up Payment would be payable under this § 4(f) if Executive waives Executives right to receive a part of such payments and such part does not exceed $10,000, Executive agrees to irrevocably waive Executives right to receive such part of such payments if an independent accountant or lawyer retained by Executive and paid by
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TurboChef agrees with the determination made by TurboChef or TurboChefs accountants.
The term Gross Up Payment as used in this Employment Agreement shall mean a payment to or on behalf of Executive which shall be sufficient to pay (i) any excise tax described in this § 4(f) in full, (ii) any federal, state and local income tax and social security or other employment tax on the payment made to pay such excise tax as well as any additional excise tax on such payment and (iii) any interest or penalties assessed by the Internal Revenue Service on Executive if such interest or penalties are attributable to TurboChefs failure to comply with its obligations under this §4(f) or applicable law. Any determination under this §4(f) by TurboChef or TurboChefs accountants shall be made in accordance with Section 280G of the Code and any applicable related regulations (whether proposed, temporary or final) and any related Internal Revenue Service rulings and any related case law and, if TurboChef reasonably requests that Executive take action to mitigate or challenge, or to mitigate and challenge, any such tax or assessment and Executive complies with such request, TurboChef shall provide Executive with such information and such expert advice and assistance from TurboChefs accountants, lawyers and other advisors as Executive may reasonably request and shall pay for all expenses incurred in effecting such compliance and any related fines, penalties, interest and other assessments.
Notwithstanding the foregoing, (i) each Gross Up Payment required to be made by TurboChef to Executive hereunder and any overpayment of a Gross Up Payment required to be repaid by Executive to TurboChef shall be paid no later than the end of the calendar year next following the calendar year in which Executive remits the corresponding taxes to the Internal Revenue Service, and (ii) any reimbursement of expenses related to a tax audit or litigation addressing the existence or amount of a tax liability required to be made by TurboChef to Executive hereunder shall be paid no later than the end of the calendar year next following the calendar year in which Executive remits to the Internal Revenue Service the taxes that are the subject of the audit or litigation or, where as a result of the audit or litigation no taxes are due or are remitted but other reimbursable costs and/or expenses have been incurred, the end of the calendar year following the calendar year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation.
(g) Benefits at Termination of Employment. Executive upon Executives termination of employment shall have the right to receive any benefits payable under TurboChefs employee benefit plans, programs and policies which Executive otherwise has a nonforfeitable right to receive under the terms of such plans, programs and policies (other than severance benefits) independent of Executives rights under this Employment Agreement in addition to any base salary under § 3(a) which accrued as of the termination date and are expressly payable under this § 4 without regard to the reason for such termination of employment.
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§ 5. |
COVENANTS BY EXECUTIVE |
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(a) |
TurboChef Property. |
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(1) |
Executive upon the termination of Executives employment for any reason or, if earlier, upon TurboChefs request shall promptly return all Property which had been entrusted or made available to Executive by TurboChef. |
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(2) |
The term Property means all records, files, memoranda, reports, price lists, customer lists, drawings, plans, sketches, keys, codes, computer hardware and software, equipment and other property of any kind or description prepared, used or possessed by Executive during Executives employment by TurboChef and, if applicable, any of its affiliates (and any duplicates of any such property) together with any and all information, ideas, concepts, discoveries, and inventions and the like conceived, made, developed or acquired at any time by Executive individually or, with others during Executives employment which relate to TurboChef business, products or services. |
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(b) |
Trade Secrets. |
|
(1) |
Executive agrees that Executive will hold in a fiduciary capacity for the benefit of TurboChef, and any of its affiliates, and will not directly or indirectly use or disclose, any Trade Secret that Executive may have acquired during the term of Executives employment by TurboChef or any of its affiliates for so long as such information remains a Trade Secret. |
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(2) |
The term Trade Secret means information, including, but not limited to, technical or nontechnical data, a formula, a pattern, a compilation, a program, a device, a method, a technique, a drawing, a process, financial data, financial plans, product plans, or a list of actual or potential customers or suppliers that (a) derives economic value, actual or potential, from not being generally known to, and not being generally readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use and (b) is the subject of reasonable efforts by TurboChef and any of its affiliates to maintain its secrecy. |
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(3) |
This § 5(b) and § 5(c) are intended to provide rights to TurboChef which are in addition to, not in lieu of, those rights TurboChef has under the common law or applicable statutes for the protection of trade secrets. |
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(c) |
Confidential Information. |
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(1) |
Executive while employed under this Employment Agreement and thereafter during the Restricted Period shall hold in a fiduciary capacity for the benefit of TurboChef and any of its affiliates, and shall not directly or indirectly use or disclose, any Confidential Information that Executive may have acquired (whether or not developed or compiled by Executive and whether or not Executive is authorized to have access to such information) during the term of, and in the course of, or as a result of Executives employment by TurboChef or any of its affiliates. |
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(2) |
The term Confidential Information means any secret, confidential or proprietary information possessed by TurboChef or any of its affiliates relating to their businesses, including, without limitation, trade secrets, customer lists, details of client or consultant contracts, current and anticipated customer requirements, pricing policies, price lists, market studies, business plans, operational methods, marketing plans or strategies, product development techniques or flaws, computer software programs (including object code and source code), data and documentation data, base technologies, systems, structures and architectures, inventions and ideas, past current and planned research and development, compilations, devices, methods, techniques, processes, financial information and data, business acquisition plans and new personnel acquisition plans (not otherwise included in the definition of a Trade Secret under this Employment Agreement) that has not become generally available to the public by the act of one who has the right to disclose such information without violating any right of TurboChef or any of its affiliates. Confidential Information may include, but not be limited to, future business plans, licensing strategies, advertising campaigns, information regarding customers, employees and independent contractors and the terms and conditions of this Employment Agreement. |
(d) Restricted Period. The term Restricted Period as used in the Employment Agreement shall mean the twenty-four month period which starts on the date Executives employment terminates with TurboChef without regard to whether such termination comes before or after the end of the Term.
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(e) |
Nonsolicitation of Customers or Employees. |
|
(1) |
Executive (i) while employed under this Employment Agreement shall not, on Executives own behalf or on behalf of any person, firm, partnership, association, corporation or business organization, entity or enterprise (other than TurboChef or one of its affiliates), |
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solicit Competing Business of customers of TurboChef or any of its affiliates and (ii) during the Restricted Period shall not, on Executives own behalf or on behalf of any person, firm, partnership, association, corporation or business organization, entity or enterprise, solicit Competing Business of customers of TurboChef or any of its affiliates with whom Executive within the twenty-four month period immediately preceding the beginning of the Restricted Period had or made contact with in the course of Executives employment by TurboChef.
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(2) |
Executive (i) while employed under this Employment Agreement shall not, either directly or indirectly, call on, solicit or attempt to induce any other officer, employee or independent contractor of TurboChef or any of its affiliates to terminate his or her employment with TurboChef or any of its affiliates and shall not assist any other person or entity in such a solicitation (regardless of whether any such officer, employee or independent contractor would commit a breach of contract by terminating his or her employment), and (ii) during the Restricted Period, shall not, either directly or indirectly, call on, solicit or attempt to induce any other officer, employee or independent contractor of TurboChef or any of its affiliates with whom Executive had contact, knowledge of, or association in the course of Executives employment with TurboChef or any of its affiliates as the case may be, during the twelve month period immediately preceding the beginning of the Restricted Period, to terminate his or her employment with TurboChef or any of its affiliates and shall not assist any other person or entity in such a solicitation (regardless of whether any such officer, employee or independent contractor would commit a breach of contract by terminating his or her employment). |
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(3) |
The term Competing Business as used in this Employment Agreement means the design, development, manufacture, marketing, selling, licensing or servicing of appliances utilizing Speed Cook Technology. For this purpose Speed Cook Technology shall mean technology that allows the cooking of foods at speeds greater than three times conventional cooking speeds other than through the use of microwave technology alone. |
(f) Noncompetition Obligation. Executive while employed under this Employment Agreement and thereafter during the Restricted Period and within the United States, shall not organize or form any other business that will conduct Competing Business and shall not engage in the management of, or provide consulting concerning the management of, Competing Business on behalf of any business other than TurboChef or its affiliates. Executive acknowledges and agrees that the territory identified in this § 5(f) are states in which Executive performs services for TurboChef by
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being actively engaged as a member of TurboChefs executive management team in TurboChefs operations in these states.
(g) Reasonable and Continuing Obligations. Executive agrees that Executives obligations under this § 5 are obligations which will continue beyond the date Executives employment terminates and that such obligations are reasonable and necessary to protect TurboChefs legitimate business interests. TurboChef in addition shall have the right to take such other action as TurboChef deems necessary or appropriate to compel compliance with the provisions of this § 5.
(h) Remedy for Breach. Executive agrees that the remedies at law of TurboChef for any actual or threatened breach by Executive of the covenants in this § 5 would be inadequate and that TurboChef shall be entitled to specific performance of the covenants in this § 5, including entry of an ex parte, temporary restraining order in state or federal court, preliminary and permanent injunctive relief against activities in violation of this § 5, or both, or other appropriate judicial remedy, writ or order, in addition to any damages and legal expenses which TurboChef may be legally entitled to recover. Executive acknowledges and agrees that the covenants in this § 5 shall be construed as agreements independent of any other provision of this or any other agreement between TurboChef and Executive, and that the existence of any claim or cause of action by Executive against TurboChef, whether predicated upon this Employment Agreement or any other agreement, shall not constitute a defense to the enforcement by TurboChef of such covenants.
§ 6. |
MISCELLANEOUS |
(a) Notices. Notices and all other communications shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by United States registered or certified mail. Notices to TurboChef shall be sent to TurboChef Technologies, Inc., Suite 1900, Six Concourse Parkway, Atlanta, GA 30328, Attention: Corporate Secretary. Notices and communications to Executive shall be sent to the address Executive most recently provided to TurboChef.
(b) No Waiver. Except for the notice described in § 6(a), no failure by either TurboChef or Executive at any time to give notice of any breach by the other of, or to require compliance with, any condition or provision of this Employment Agreement shall be deemed a waiver of any provisions or conditions of this Employment Agreement.
(c) Delaware Law and Georgia Courts. This Employment Agreement shall be governed by Delaware law without reference to the choice of law principles thereof. Any litigation that may be brought by either TurboChef or Executive involving the enforcement of this Employment Agreement or any rights, duties, or obligations under this Employment Agreement, shall be brought exclusively in either the state courts in and for Fulton County, Georgia or the United States District Court, Northern District of Georgia, Atlanta Division.
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(d) Assignment. This Employment Agreement shall be binding upon and inure to the benefit of TurboChef and any successor to all or substantially all of the business or assets of TurboChef. TurboChef may assign this Employment Agreement to any affiliate or successor, and no such assignment shall be treated as a termination of Executives employment under this Employment Agreement. Executives rights and obligations under this Employment Agreement are personal and shall not be assigned or transferred.
(e) Other Agreements. This amended and restated Employment Agreement replaces and merges any and all previous agreements and understandings regarding all the terms and conditions of Executives employment relationship with TurboChef, and this Employment Agreement constitutes the entire agreement between TurboChef and Executive with respect to such terms and conditions. This Employment Agreement does not replace any previous agreement regarding ownership of inventions or other intellectual property.
(f) Amendment. No amendment to this Employment Agreement shall be effective unless it is in writing and signed by TurboChef and by Executive.
(g) Invalidity. If any part of this Employment Agreement is held by a court of competent jurisdiction to be invalid or otherwise unenforceable, the remaining part shall be unaffected and shall continue in full force and effect, and the invalid or otherwise unenforceable part shall be deemed not to be part of this Employment Agreement.
(h) Section 409A. It is the intent of TurboChef and the Executive that all payments payable to the Executive pursuant to this Employment Agreement shall comply with Section 409A or shall be exempt from Section 409A (as short-term deferrals or otherwise in accordance with Section 409A). Notwithstanding the foregoing, to the extent TurboChef determines in good faith that (a) one or more payments or benefits received or to be received by Executive pursuant to this Employment Agreement (including any Gross Up Payment) would constitute deferred compensation subject to the rules of Section 409A, and (b) that the Executive is a specified employee under Section 409A, then only to the extent required to avoid the Executives incurrence of any additional tax or interest or penalties under Section 409A, such payment or benefit will be delayed until the first business day after the date which is six (6) months after the Participants separation from service within the meaning of Section 409A. In addition, to the extent TurboChef determines in good faith that one or more payments or benefits received or to be received by the Executive upon a termination of employment pursuant to this Employment Agreement would constitute deferred compensation subject to the rules of Section 409A, a termination of employment shall be deemed to occur only if such termination of employment
- 13 -
constitutes a separation from service as defined in Section 409A, as determined by TurboChef in accordance with such elections and policies adopted by it from time to time.
IN WITNESS WHEREOF, TurboChef and Executive have executed this Employment Agreement in multiple originals to be effective upon the date of the last signature hereto.
TURBOCHEF TECHNOLOGIES, INC. |
EXECUTIVE |
By: /s/ James K. Price |
/s/ Steve Beshara |
Name: James K. Price |
Steve Beshara |
Title:CEO |
Date: January 18, 2008 |
Date: January 16, 2008 |
- 14 -
TurboChef Technologies, Inc
2008 Incentive-Based Compensation Plan
The fundamental objectives of TurboChefs 2008 Incentive-Based Compensation Plan are to ensure that employees are compensated and provided incentives in a way that advances both the short- & long-term interests of the shareholders while also ensuring we are able to attract and retain qualified employees.
TurboChef approaches this objective with four key components:
|
|
Base salary |
|
|
Performance-based annual bonus payable in cash or stock |
|
|
Performance-based additional annual bonus that is achieved by exceeding forecasted results or other qualitative measures, which may be payable in cash, stock or stock equivalent units. |
|
|
Periodic (generally annual) grants of long-term stock-based compensation which may be granted in the form of restricted stock units which are subject to time based vesting requirements. |
All bonuses are payable between January 1 and March 15 of the year following the performance year. Under this Plan, to be a paid a bonus, an employee must be actively employed by the Company at the time the bonus is paid.
Performance-based Annual Bonus
The primary objective of the Performance-based Annual Bonus (Base Annual Bonus) is to reward an employees contribution to the achievement of performance related goals. Base Annual Bonuses are earned under different criteria, depending upon which bonus category an employee is assigned to. Eligibility categories are Dallas Operations, Residential Sales and Marketing, and Corporate. Bonus eligible employees assigned to each category are detailed in Exhibits A, B or C.
Bonus-eligible employees shall be eligible for Base Annual Bonuses under a formula based upon the Company attaining certain financial metrics as set forth in Exhibits A, B or C. If specific financial metrics within eligible categories are not attained, the Compensation Committee will consider for approval an alternative proposal management may offer for bonuses within each of these eligible categories, but only if the proposal is based upon actual financial results compared to the targets as well as other qualitative and quantitative factors that would reasonably support such approval.
Performance-based Additional Annual Bonus, Achieved by Exceeding Budgeted Results or other Measures
[***.] Material omitted pursuant to a request for confidential treatment under Rule 24b-2 of the Exchange Act of 1934; filed separately with the Securities and Exchange Commission
The Company realizes the importance of recognizing employees whose contribution has been essential in creating business or financial results that exceeded the Companys expectations and projections. In an effort to recognize those individuals the Company will disburse a Performance-based Additional Annual Bonus (Excess Bonus) that is in addition to the Base Annual Bonus discussed above. This Bonus will be payable in cash, stock or stock equivalent units as determined by the Compensation Committee.
Like the Base Annual Bonuses, the Excess Bonus may be earned by employees assigned to the Eligible categories through attainment of certain specific measurable targets as set forth in Exhibits A, B or C, and it may be earned by employees not so assigned, who, in managements view materially contributed to the results.
Long-Term stock-based Compensation
The primary objective of annual grants of long-term stock-based Compensation is retention of key employees. Restricted Stock Units will be granted to employees who are identified as key employees. The list of key employees and recommended vesting schedule as determined by management is attached in Exhibit D.
[***.] Material omitted pursuant to a request for confidential treatment under Rule 24b-2 of the Exchange Act of 1934; filed separately with the Securities and Exchange Commission
EXHIBIT A
Dallas Operations
Dallas Operations employees, consisting of the Commercial management team, the Dallas based Residential management team and certain Atlanta team members that are instrumental in the Dallas Operations results, will be eligible to participate in the Incentive Plan. All non-Plan eligible employees will continue to be eligible to participate in the quarterly bonus pool as determined by their manager.
Performance-based Annual Bonus Calculation
The pool for the Base Annual Bonus for Dallas Operations is $[***] in cash and is earned as follows:
|
1. |
[***]% ($[***]) upon achievement of all of the Commercial Segment Base Metrics only; |
|
2. |
[***]% ($ [***]) upon the achievement of all of the Commercial Segment Base Metrics AND the achievement of the Residential Goals by the Base Target Date. Each Residential Goal has a Percentage of Bonus that will be applied to the Base Annual Bonus. If one or more of the Residential Goals are NOT met by the Base Target Date, this portion of the Base Annual Bonus pool will be at the discretion of the Compensation Committee. |
For 2008, the Commercial Segment Base Metrics and the Residential Goals are as follows:
Commercial Segment Base Metrics
Metric |
Base |
Revenue |
$ [***] |
Gross Margin % |
[***]% |
EBITDA % |
[***]% |
Residential Goals:
Goal |
Excess Bonus Target Date |
Base Target Date |
% of Bonus |
Allocation of Bonus % (if applicable) |
Comments | |
[***] |
05/01/2008 |
05/01/2008 |
[***]% |
|
| |
[***] |
02/21/2008 |
03/07/2008 |
[***]% |
|
| |
[***] |
03/20/2008 |
04/04/2008 |
[***]% |
|
[***] | |
[***] |
04/15/2008 |
04/30/2008 |
[***]% |
|
| |
[***] |
03/20/2008 |
04/04/2008 |
[***]% |
|
[***] | |
[***] |
04/15/2008 |
04/30/2008 |
[***]% |
|
| |
[***] |
[***]% |
|
[***] | |||
[***]% BOM reduction = [***]% of [***]% |
| |||||
[***]% BOM reduction = [***]% of [***]% | ||||||
[***]% BOM reduction = [***]% of [***]% | ||||||
[***]% BOM reduction = [***]% of [***]% | ||||||
[***] |
06/24/2008 |
07/24/2008 |
[***]% |
|
| |
[***.] Material omitted pursuant to a request for confidential treatment under Rule 24b-2 of the Exchange Act of 1934; filed separately with the Securities and Exchange Commission
[***] |
11/21/2008 |
12/21/2008 |
[***]% |
|
|
[***] |
11/15/2008 |
11/15/2008 |
[***]% |
|
|
[***] |
11/15/2008 |
11/15/2008 |
[***]% |
|
|
[***] |
Ongoing measured at each qtr end |
Ongoing measured at each qtr end |
[***]% |
|
|
Performance-based Additional Annual Bonus
Cash bonus eligible employees are also eligible for an Excess Bonus. Additionally, it may be earned by employees not so assigned, who, in managements view materially contributed to the results. The triggers for the Excess Bonus calculation are based on two tiers. Tier 1 is attained when Commercial segment revenue is greater than $[***] and Gross Margin Percentage is greater than or equal to [***]%. Tier 2 is attained when Commercial segment revenue is greater than $[***] and Gross Margin Percentage is greater than or equal to [***]%. The Excess Bonus pool is determined as follows:
|
Excess Tier 1 |
Excess Tier 2 |
Revenue |
>= $[***] |
>= $[***] |
Gross Margin % |
>= [***]% |
>= [***]% |
EBITDA Percentage |
>= [***]% |
>= [***]% |
Excess Bonus Pool %* |
[***]% |
[***]% |
*Excess Bonus Pool calculation - If Excess Revenue target and Gross Margin target are met or exceeded the excess pool is calculated as follows ((Actual EBITDA % minus Base EBITDA %) * Total Revenue * Excess Bonus Pool %)).
The Excess Bonus Pool will be earned as follows:
|
1. |
[***]% of Excess Bonus pool is earned upon attainment of Commercial segment financial results as detailed in Tier 1 or Tier 2 above; |
|
2. |
[***]% of Excess Bonus pool (the balance) is earned if the Commercial segment financial results as detailed in Tier 1 or Tier 2 above are achieved AND the Residential Goals are achieved by the Excess Bonus Target Date. Each Residential Goal has a Percentage of Bonus that will be applied to this portion of the Excess Annual Bonus. If one or more of the Residential Goals are NOT met by the Excess Bonus Target Date, this portion of the Excess Bonus pool will be at the discretion of the Compensation Committee. |
Bonus Eligible Employees:
Last Name First Name |
Division |
2008 Base Annual Bonus |
2008 Excess Bonus |
Lehr, Paul |
Commercial |
$150,000 |
35%*** |
[***] |
[***] |
$[***] |
[***]% |
[***] |
[***] |
$[***] |
[***]% |
[***] |
[***] |
$[***] |
[***]% |
[***] |
[***] |
$[***] |
[***]% |
[***.] Material omitted pursuant to a request for confidential treatment under Rule 24b-2 of the Exchange Act of 1934; filed separately with the Securities and Exchange Commission
[***] |
[***] |
$[***] |
[***]% |
[***] |
[***] |
$[***] |
[***]% |
[***] |
[***] |
$[***] |
[***]% |
[***] |
[***] |
$[***] |
[***]% |
[***] |
[***] |
$[***] |
[***]% |
[***] |
[***] |
$[***] |
[***]% |
[***] |
[***] |
$[***] |
[***]% |
|
|
|
|
Total |
|
$[***] |
[***]% |
*Final percentage allocation will not exceed 100%.
** Eligible for 50% of the Excess Bonus Allocation percentage due to contribution being limited to either the Commercial financial metrics or to the Residential Goals.
***100% of Pauls excess bonus is discretionary and will be determined at the end of the year by the CEO & Chairman. Paul will not only be evaluated for Commercial financial results and achievement of Residential Goals but also for his efforts to improve operational relationships company wide.
The Excess Bonus allocation percentage will be determined at the end of the year by Paul Lehr, Jim Price and Richard Perlman, within the above ranges, and subject to final approval by the Compensation Committee.
[***.] Material omitted pursuant to a request for confidential treatment under Rule 24b-2 of the Exchange Act of 1934; filed separately with the Securities and Exchange Commission
EXHIBIT B
Residential Sales and Marketing
Residential sales and marketing will be shifting to a compensation model similar to the Commercial Segment. All non-bonus Plan eligible employees will be eligible to participate in a quarterly bonus pool calculated at [***]% of net residential oven sales. Management will recommend distribution of the quarterly pool among all Residential Sales and Marketing employees not eligible for the Annual Performance based Bonus with final approval given by Steve Beshara and Jim Price.*
*[***] is a participant in both the Performance Bonus and the Quarterly Pool.
Performance-based Annual Bonus Calculation
The Base Annual Bonus pool is $[***] and is earned 100% by achieving base Revenue and Gross Margin percentage metrics. The base metrics are as follows:
Metric |
Base |
Revenue |
$[***] |
Gross Margin % |
[***]% |
Performance-based Additional Annual Bonus
Cash bonus eligible employees are also eligible for an Excess Bonus. Additionally, it may be earned by employees not so assigned, who, in managements view materially contributed to the results. The triggers for the Excess Bonus calculation are based on two tiers. Tier 1 is attained when the Residential segment revenue is greater than $[***] and Gross Margin Percentage is greater than or equal to [***]%. Tier 2 is attained when Residential segment revenue is greater than $[***] and Gross Margin Percentage is greater than or equal to [***]%. The Excess Bonus pool is determined as follows:
|
Excess Tier 1 |
Excess Tier 2 |
Revenue |
>$[***] |
>$[***] |
Gross Margin % |
>= [***]% |
>=[***]% |
Excess Bonus Pool %* |
[***]% |
[***]% |
* Excess Bonus Pool calculation - If Excess Revenue target is exceed and Gross Margin target is met or exceeded the excess pool is calculated as follows (Total Revenue * Excess Bonus pool %).
Bonus Eligible Employees:
Last Name First Name |
Division |
2008 Base Annual Bonus |
2008 Excess Bonus |
Beshara, Steve |
Marketing |
$75,000 |
35-50% |
[***] |
[***] |
$[***] |
[***]% |
[***] |
[***] |
$[***] |
[***]% |
[***] |
[***] |
$[***] |
[***]% |
[***] |
[***] |
$[***] |
[***]% |
[***] |
[***] |
$[***] |
[***]% |
|
|
|
|
Total |
|
$[***] |
[***]% |
*Final percentage allocation will not exceed 100%.
[***.] Material omitted pursuant to a request for confidential treatment under Rule 24b-2 of the Exchange Act of 1934; filed separately with the Securities and Exchange Commission
The Excess Bonus allocation percentage will be determined at the end of the year by Jim Price and Richard Perlman, within the above parameters, and subject to final approval by the Compensation Committee.
[***.] Material omitted pursuant to a request for confidential treatment under Rule 24b-2 of the Exchange Act of 1934; filed separately with the Securities and Exchange Commission
EXHIBIT C
Corporate
Corporate employees, as detailed below, are eligible to participate in the Incentive Plan. All non-bonus plan eligible employees will be eligible to participate in a quarterly bonus pool as determined by their manager.
Performance-based Annual Bonus Calculation
The Base Annual Bonus pool is $[***] and is earned as follows:
|
1. |
[***] upon the attainment of the Commercial segment base financial metrics as detailed in Exhibit A; |
|
2. |
[***] upon the attainment of the Residential segment base financial metrics as detailed in Exhibit B; and |
|
3. |
[***] upon the attainment of the Consolidated segment base financial metrics as detailed below. |
Consolidated Segment Base Metrics
|
Base |
Consolidated Revenue |
$[***] |
Consolidated Gross Margin % |
[***]% |
Consolidated EBITDA* |
$[***] |
*Includes income and/or expenses related to [***] litigation. Excludes non-recurring charges (for example, [***] agreement costs)
Performance-based Additional Annual Bonus
Cash bonus eligible employees are also eligible for an Excess Bonus. Additionally, it may be earned by employees not so assigned, who, in managements view materially contributed to the results. Corporate Excess Bonus will equal [***]% of each of the Excess Bonus pools earned by Dallas Operations (Exhibit A) and Residential Sales and Marketing (Exhibit B).
Bonus Eligible Employees:
Last Name First Name |
Division |
2008 Base Annual Bonus |
2008 Excess Bonus |
Perlman, Richard |
Corporate |
$120,000 |
* |
Price, Jim |
Corporate |
$120,000 |
* |
Cochran, Al |
Corporate |
$70,000 |
* |
Fernandez de Castro, Miguel |
Corporate |
$85,000 |
* |
[***] |
Corporate |
$[***] |
* |
[***] |
Corporate |
$[***] |
* |
[***] |
Corporate |
$[***] |
* |
[***] |
Corporate |
$[***] |
* |
[***] |
Corporate |
$[***] |
* |
[***] |
Corporate |
$[***] |
* |
|
|
|
|
Total |
|
$[***] |
100% |
*Excess Bonus Allocation to be determined at year end by Jim Price and Richard Perlman subject to Compensation Committee Approval
[***.] Material omitted pursuant to a request for confidential treatment under Rule 24b-2 of the Exchange Act of 1934; filed separately with the Securities and Exchange Commission
The Excess Bonus allocation percentage will be determined at year end by Jim Price and Richard Perlman, within the above parameters, and subject to final approval by the Compensation Committee.
[***.] Material omitted pursuant to a request for confidential treatment under Rule 24b-2 of the Exchange Act of 1934; filed separately with the Securities and Exchange Commission
EXHIBIT D
None
[***.] Material omitted pursuant to a request for confidential treatment under Rule 24b-2 of the Exchange Act of 1934; filed separately with the Securities and Exchange Commission
(1) |
Registration Statement (Form S-3 No. 333-82518) of TurboChef Technologies, Inc., |
(2) |
Registration Statement (Form S-3 No. 333-117806) of TurboChef Technologies, Inc., |
(3) |
Registration Statement (Form S-3 No. 333-121818) of TurboChef Technologies, Inc., |
(4) |
Registration Statement (Form S-8 No. 333-76662) pertaining to the 1994 Stock Option Plan, |
(5) |
Registration Statement (Form S-8 No. 333-81571) pertaining to the 1994 Stock Option Plan, |
(6) |
Registration Statement (Form S-8 No. 333-116225) pertaining to TurboChef Technologies, Inc. 2003 Stock Incentive Plan, and |
(7) |
Registration Statement (Form S-8 No. 333-128442) pertaining to TurboChef Technologies, Inc. 2003 Stock Incentive Plan |
1. |
I have reviewed this annual report on Form 10-K of TurboChef Technologies, Inc.; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a 15(f) and 15d-15(f)) for the registrant and we have: |
a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) |
Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) |
Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. |
The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) |
All significant deficiencies and material weaknesses in the design or operation of the internal control over financial reporting, which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
1. |
I have reviewed this annual report on Form 10-K of TurboChef Technologies, Inc.; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a 15(f) and 15d-15(f)) for the registrant and we have: |
a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) |
Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) |
Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. |
The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) |
All significant deficiencies and material weaknesses in the design or operation of the internal control over financial reporting, which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
(1) |
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ J.
Miguel Fernandez de Castro J. Miguel Fernandez de Castro Chief Financial Officer |
March 6, 2008