EX-10.16 6 ex1016.htm Exhibit 99.1 change in control

Mr. Stephen Kelly

 

 

 

Dear Stephen:

This letter sets forth the terms and conditions of your employment with Chordiant Software, Inc. (the "Company" or "Chordiant") as its President and Chief Executive Officer reporting directly to the Board of Directors (the "Board").  Upon execution by the parties, this letter agreement shall be deemed effective January 1, 2002

1.         As President and CEO of Chordiant, you will perform the duties customarily associated with this position, and such duties as may be assigned to you by the Board. 

2.         During the 2002 calendar year, your annual base salary will be $250,000, less standard deductions and withholdings, paid on the Company's regular payroll dates.  During the 2003 calendar year, your annual base salary will increase to $350,000, less standard deductions and withholdings, paid on the Company's regular payroll dates.

3.         You will receive a $350,000 bonus for the third calendar quarter of 2002, to be paid by the end of Q4 of 2002.    You will also be eligible to receive a $200,000 bonus for the fourth calendar quarter of 2002 if the Company achieves an earnings per share loss no greater than $.05.  If earned, this bonus will be paid by the end of the Q1 2003.

During the 2003 calendar year, you will be eligible for quarterly MBO bonuses of up to $50,000 per quarter based upon the Board's determination that you have achieved certain mutually agreeable objectives.  You will also be eligible for a bonus of up to 20% of your salary, to be paid at the end of the 2003 calendar year, at the discretion of the Board and based upon your achievement of annualized objectives to be established by the Board for your position.  As with all executives, receipt of MBO bonuses and year-end bonuses will be subject to the achievement of the Company's annual financial plan and both Company and individual management objectives. 

4.         Any stock options or shares of restricted stock granted to you by the Company shall be subject to the terms and conditions specified in the applicable plan documents and stock option/restricted share agreements between you and the Company.

5.         You are also eligible for standard Company benefits, including paid vacation and medical and dental coverage, as well as the following non-standard benefits: a life insurance policy in the amount of $500,000 (with the premiums to be paid by the Company) and reimbursement for tax services up to $5,000 per year.  The Company reserves the right to modify your compensation and benefits from time to time, as it deems necessary.

6.         You will be expected to continue to abide by the Company's policies and procedures, and to continue to comply with your Proprietary Information and Inventions Agreement. 

7.         Either you or the Company may terminate your employment relationship at any time with or without cause or advance notice.  If the Company terminates your employment without cause at any time, then: (a) the Company will make severance payments to you in the form of continuation of your base salary in effect on the termination date for 12 months following the termination date, payable on the Company's ordinary payroll dates, subject to standard payroll deductions and withholdings; and (b) the vesting of your restricted shares and/or options will be accelerated so that you will immediately vest in 50% of the then unvested shares.  As a condition to receiving any of these severance benefits, you agree that you shall provide the Company with a full and effective release and waiver of any claims or rights against the Company or related parties in a form acceptable to the Company.

If you resign or your employment is terminated for cause, all compensation and benefits will cease immediately, and you will receive no further compensation or benefits from the Company, including (without limitation) the items listed in the preceding paragraph.  For purposes of this letter agreement, "cause" means: (a) conviction of any felony or crime involving moral turpitude or dishonesty; (b) participation in a fraud or act of dishonesty against the Company; (c) willful breach of the Company's policies; (d) intentional damage to the Company's property; (e) material breach of this Agreement or your Proprietary Information and Inventions Agreement; or (f) conduct by you that, in the good faith and reasonable determination of the Board, demonstrates gross unfitness to serve.  Physical or mental disability will not constitute cause.

8.         This letter, together with any applicable stock option agreements or restricted share agreements, your Proprietary Information and Inventions Agreement, your Indemnification Agreement, your Change in Control Agreement, and the Promissory Note, constitute the complete, final and exclusive embodiment of the entire agreement between you and Chordiant with respect to the terms and conditions of your employment.  In entering into this agreement, neither party is relying upon any promise or representation, written or oral, other than those expressly contained herein, and this Agreement supersedes any other such promises, representations or agreements.  It may not be amended or modified except in a written agreement signed by you and a duly authorized Company officer.  As required by law, this offer of employment is subject to proof of your right to work in the United States.

If you agree to the terms as described above, please sign below and return this letter to me. 

                                                                        Very truly yours,

 

                                                                        /s/ Samuel T. Spadafora

                                                                        Sam Spadafora

                                                                        Chairman

Agreed and Accepted:

By:  _/s/ Stephen Kelly___________________________

        Stephen Kelly

Date:  November 14, 2002________________________

 

 

 

CHANGE OF CONTROL AGREEMENT

This Change Of Control Agreement ("Agreement") is made by and between Chordiant Software, Inc. (the "Company") and Stephen Kelly ("Executive"). This Agreement will become effective upon its execution by both parties hereto (the "Effective Date").

RECITALS

Whereas Executive is employed by the Company pursuant to the terms of Executive's offer letter from the Company dated October 2, 2000 (the "Offer Letter");

Whereas Executive has been granted option(s) to purchase shares of the Company's Common Stock pursuant to the applicable stock option agreement(s) and stock option plan(s) ("Prior Grants");

Whereas in the future, Executive may be granted additional options to purchase the Company's Common Stock, subject to the Board's sole discretion (together with Prior Grants, "Options"); and

Whereas the Company believes it is imperative to provide Executive with accelerated vesting of the Options, as well as other severance benefits, in the event that Executive is terminated without Cause (as defined herein) or resigns for Good Reason (as defined herein) in connection with a Change of Control (as defined herein).

Now, Therefore, in consideration of the foregoing, the mutual covenants contained herein, and other good and valuable consideration, the parties hereto hereby agree as follows:

    1. Termination of Employment.
      1. At-Will Employment. Executive's employment is at-will, which means that the Company may terminate Executive's employment at any time, with or without advance notice, and with or without Cause. Similarly, Executive may resign his employment at any time, with or without advance notice or Good Reason. Executive shall not receive any compensation of any kind, including, without limitation, severance benefits, following Executive's last day of employment with the Company (the "Termination Date"), except as expressly provided herein, as otherwise agreed in writing between Executive and the Chief Executive Officer of the Company, or as provided in any plan documents governing the Options. Executive shall devote all reasonable efforts to the performance of Executive's duties, and shall perform such duties in good faith.
      2. Termination Related to a Change of Control. If Executive's employment is terminated without Cause or Executive resigns for Good Reason within ninety (90) days prior to or twelve (12) months after a Change of Control, and Executive signs a release substantially in the form (whichever is applicable) attached hereto as Exhibit A (the "Release"), then the Company shall provide Executive with the severance benefits described below in subparagraphs (i) through (vi). The severance benefits described in subparagraphs (i) through (vi) are in lieu of the severance benefits provided for in paragraph 5 of Executive's Offer Letter if Executive is terminated without Cause within ninety (90) days prior to or twelve (12) months after a Change of Control. Executive shall only receive the severance benefits described in paragraph 5 of the Offer Letter if Executive is terminated without cause (as that term is defined in the Offer Letter) unrelated to a Change of Control.
        1. The Company shall make severance payments to Executive in the form of continuation of Executive's base salary in effect on the Termination Date for twelve (12) months following the Termination Date (the "Severance Period"). These payments will be made on the Company's ordinary payroll dates and will be subject to standard payroll deductions and withholdings.
        2. The Company will pay Executive an amount equal to Executive's annual bonus. The bonus will be calculated at one of the following rates, whichever is higher: (1) as if both Executive and the Company achieved one hundred (100) percent of their specified performance objectives; or (2) the actual performance of the Company and Executive as measured against the specified performance objectives. This amount will be paid over the entire Severance Period on the Company's ordinary payroll dates, in equal installments, and will be subject to standard payroll deductions and withholdings.
        3. The Company will pay the premiums necessary to continue Executive 's life and health insurance during the Severance Period.
        4. The time period in which Executive is required to repay any promissory note, loan or other indebtedness to the Company shall be extended by sixty (60) months.
        5. The Company will accelerate the vesting of the Options such that the greater of the following shall vest within ten (10) days after the date Executive signs the Release: (a) 50% of the unvested shares as of the Termination Date subject to the Options (after taking into account any additional acceleration of vesting Executive may be receiving under any plan document(s) governing the Options instituted prior to or after this Agreement is executed); or (b) all such shares that would have vested if Executive had worked for the Company for twelve (12) additional months beyond the Termination Date. This acceleration of vesting will be in addition to any acceleration of vesting that the Executive would otherwise receive under the Company's 2000 Nonstatutory Equity Incentive Plan, the Company's 1999 Equity Incentive Plan, or any other plan document(s) governing the Options. Executive shall have sixty (60) months to exercise any vested Options in addition to any time specified in the plan document(s) governing the Options. The Options shall continue to be governed by the terms of the applicable stock option agreements and stock option plan documents.
        6. With respect to any Prior Grant intended to be an incentive stock option, the acceleration of the vesting of the Prior Grant and the extension of the time that Executive shall have to exercise the Prior Grant as provided in Paragraph 1(b)(iv) of this Agreement are deemed to be a modification of the Prior Grant within the meaning of Section 424(h) of the Internal Revenue Code ("Code"). Such modification shall result in the granting of a new option as of the date of execution of this Agreement, including providing a new grant date for purposes of starting the holding period specified in Section 422(a)(1) of the Code and for purposes of the provision that the option price be not less than the fair market value of the stock at the time such option is granted as specified in Section 422(b)(4) of the Code. If Executive and the Company agree that the Prior Grant shall remain an incentive stock option and if the new option meets the requirements for incentive stock options specified in Section 422(b) of the Code, and the $100,000 per year limitation specified in Section 422(d) of the Code as of the date of execution of this Agreement, then the unexercised portion of the Prior Grant shall be appropriately modified as to the date of grant and the option price; provided, however, that the option price shall be the greater of the original option price of the Prior Grant or the fair market value of the stock on the date of execution of this Agreement. If Executive and the Company do not agree that such Prior Grant shall remain an incentive stock option, then the Prior Grant shall be deemed to be a nonstatutory stock option as of the date of execution of this Agreement, and the Prior Grant shall be appropriately modified to reflect such changed status.
      3. Termination For Cause Procedure. The Company may not terminate Executive's employment for Cause within ninety (90) days prior to or twelve (12) months after a Change of Control unless and until Executive receives a copy of a resolution duly adopted by the affirmative vote of at least a majority of the Board of Directors of the Company ("Board") finding that in the good faith opinion of the Board, Executive was guilty of the conduct constituting "Cause" and specifying the particulars thereof in detail. The Company shall provide Executive with reasonable notice of the Board vote and an opportunity for Executive, together with Executive's counsel, to be heard before the Board.

Termination Unrelated to a Change of Control. In the event that, at any time other than within ninety (90) days prior to or twelve (12) months after a Change of Control, Executive's employment with the Company is terminated, then the only severance benefits provided to Executive by the Company will be as set forth in Executive's Offer Letter.

      1. Change of Control Benefits in Executive's Offer Letter. The severance benefits described above in subparagraphs (i) through (vi) are in addition to any benefits Executive may receive pursuant to paragraph 2 of Executive's Offer Letter upon a change of control (as that term is defined in Executive's Offer Letter).
    1. Definitions.
      1. Definition of Cause. For purposes of this Agreement, "Cause" shall mean that Executive has committed, or there has occurred, one or more of the following events: (1) conviction of any felony or misdemeanor involving moral turpitude, fraud or act of dishonesty against the Company; (2) a finding by the Board, after a good faith and reasonable factual investigation, that Executive has engaged in gross misconduct; or (3) material violation or material breach of any Company policy or statutory, fiduciary, or contractual duty of Executive to the Company; provided, however, that in the event that any of the foregoing events occurs, the Company shall provide notice to Executive describing the nature of such event and Executive shall thereafter have ten (10) days to cure such event if such event is capable of being cured.
      2. Definition of Good Reason. For purposes of this Agreement, "Good Reason" shall mean that any one of the following events occurs during the Executive's employment with the Company without Executive's consent: (i) any reduction of Executive's annual base salary (including bonus) as of the time period immediately preceding the Change of Control, except to the extent that the annual base salary (including bonus) of all other officers of the Company is similarly reduced; (ii) any material reduction in the package of benefits and incentives provided to the Executive, or any action by the Company which would materially and adversely affect the Executive's participation or reduce the Executive's benefits under any such plans, except to the extent that such benefits and incentives of all other officers of the Company are similarly reduced; (iii) any material change in Executive's position or responsibilities (including the person or persons to whom Executive has reporting responsibilities) that represents an adverse change from Executive's position or responsibilities as in effect at any time within ninety (90) days preceding the date of the Change of Control or at any time thereafter, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith that is remedied by the Company promptly after notice thereof is given by Executive; (iv) the Company's requiring Executive to relocate to any place outside of a twenty-five (25) mile driving distance of Executive's current work site, except for reasonably required travel on the business of the Company or its affiliates that is not materially greater than such travel requirements prior to the Change in Control or unless Executive accepts such relocation opportunity; or (v) any failure to pay Executive any compensation or benefits to which Executive is entitled within fifteen (15) days of the date due. Executive may terminate his employment for Good Reason so long as Executive tenders his resignation to the Company within thirty (30) days after the occurrence of the event which forms the basis for his resignation for Good Reason. Executive shall provide written notice to the Company describing the nature of the event which forms the basis for Executive's resignation for Good Reason, and the Company shall thereafter have ten (10) days to cure such event.
      3. Definition of Change of Control. For purposes of this Agreement, a "Change of Control" means: (i) a dissolution, liquidation or sale of all or substantially all of the assets of the Company; (ii) a merger or consolidation in which the Company is not the surviving corporation; (iii) a reverse merger in which the Company is the surviving corporation but the shares of the Company's common stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise; (iv) the acquisition by any person, entity or group within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any comparable successor provisions (excluding any employee benefit plan, or related trust, sponsored or maintained by the Company or any Affiliate of the Company) of the beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act, or comparable successor rule) of securities of the Company representing at least fifty percent (50%) of the combined voting power entitled to vote in the election of directors; or (v) an acquisition by the Company of an unaffiliated company, for cash or stock of the Company, in which some or all of the members of senior management of the acquired company are retained by the Company for employment by the acquired company or the Company.
    2. Gross Up Provision.
      1. In the event that any payment and the value of any benefit (collectively, "Payments"), or any portion thereof, received or to be received by Executive under this Agreement would otherwise be subject to excise tax under Section 4999 of the Code, then the Company or the acquiring or successor entity to the Company shall pay to Executive within ninety (90) days of the date Executive becomes subject to the Excise Tax, an additional amount (the "Excise Tax Gross-Up Payment") such that the net amount retained by the Executive, after deduction of (i) any Excise Tax on the Payments and (ii) any federal, state and local income or employment tax and Excise Tax upon the payment provided for by this section 3, shall be equal to the Payments, reduced by the amount of any United States federal, state and local income or employment tax liability of the Executive if the Payments were not subject to the Excise Tax.
      2. For purposes of determining whether any of the Payments will be subject to the Excise Tax and the amount of such Excise Tax:
        1. Any other payments or benefits received or to be received by Executive in connection with transactions contemplated by a Change in Control or Executive's termination of employment (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company), shall be treated as "parachute payments" within the meaning of Section 280G of the Code or any similar or successor provision, and all "excess parachute payments" within the meaning of Section 280G or any similar or successor provision shall be treated as subject to the Excise Tax, unless in the opinion of tax counsel selected by the Company such other payments or benefits (in whole or in part) do not constitute parachute payments, or such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered within the meaning of Section 280G (or any similar or successor provision of the Code) in excess of the base amount within the meaning of Section 280G (or any similar or successor provision of the Code), or are otherwise not subject to the Excise Tax.
        2. The amount of the Payments which shall be treated as subject to the Excise Tax shall be equal to the lesser of (i) the total amount of the Payments or (ii) the amount of the excess parachute payments within the meaning of Section 280G.
        3. The value of any non-cash benefits or any deferred payment or benefit shall be determined by the accounting firm that is the Company's outside auditor at the time of such determination, which firm must be reasonably acceptable to Executive (the "Accounting Firm") in accordance with the principles of Section 280G of the Code.
      3. For purposes of determining the amount of the Excise Tax Gross-Up Payment, Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Excise Tax Gross-Up Payment is to be made and state and local income taxes at the highest marginal rate of taxation in the state and locality of Executive's residence on the date the Excise Tax Gross-Up Payment is to be made, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
      4. In the event that the Excise Tax is subsequently determined to be less than the amount taken into account under this section 3, Executive shall repay to the Company at the time that the amount of such reduction in Excise Tax is finally determined the portion of the Excise Tax Gross-Up Payment attributable to such reduction (plus the portion of the Excise Tax Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed on the Excise Tax Gross-Up Payment being repaid by Executive if such repayment results in a reduction in Excise Tax and/or a federal, state or local income tax deduction) plus interest on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the Code.
      5. In the event that the Excise Tax is determined to exceed the amount taken into account under this section 3 (including by reason of any payment the existence or amount of which cannot be determined at the time of the Excise Tax Gross-Up Payment), the Company shall make an additional Excise Tax Gross-Up Payment in respect of such excess (plus any interest payable with respect to such excess) at the time that the amount of such excess is finally determined in accordance with the principles set forth in this section 3.
      6. All determinations required to be made under this section 3 shall be made by the Accounting Firm. The Company shall cause the Accounting Firm to provide detailed supporting calculations of its determinations to the Company and Executive. Notice must be given to the Accounting Firm within fifteen (15) business days after an event entitling Executive to any Payments under this Agreement. All fees and expenses of the Accounting Firm shall be borne solely by the Company. The Accounting Firm's determinations must be made with substantial authority (within the meaning of Section 6662 of the Code).
    3. Other Employment Terms and Conditions. The employment relationship between the parties shall be governed by the general employment policies and procedures of the Company, including those relating to the protection of confidential information and assignment of inventions; provided, however, that when the terms of this Agreement differ from or are in conflict with the Company's general employment policies or procedures, this Agreement shall control.
    4. General Provisions.
      1. This Agreement, including all exhibits hereto, constitutes the complete, final and exclusive embodiment of the entire agreement between the parties with regard to the subject matter hereof. It is entered into without reliance on any promise or representation, written or oral, other than those expressly contained herein, and it supersedes any other such promises or representations. Notwithstanding the foregoing, nothing in this Agreement shall affect the parties' obligations under the Stock Agreements or the Executive's Employee Proprietary Information and Inventions Agreement. Furthermore, as set forth in paragraphs 1(d) and 1(e) of this Agreement, Executive's Offer Letter is not superseded by this Agreement except to the extent described in paragraph 1(b) of the Agreement. This Agreement cannot be modified except in a writing signed by Executive and a duly-authorized member of the Board.
      2. Whenever possible, each provision of this Agreement will be interpreted in such a manner as to be effective under applicable law. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. Any invalid or unenforceable provision shall be modified so as to be rendered valid and enforceable in a manner consistent with the intent of the parties insofar as possible.
      3. The Executive's or the Company's failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.
      4. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. Facsimile signatures shall be deemed as effective as originals.
      5. This Agreement is intended to bind and inure to the benefit of and be enforceable by Executive, the Company and their respective successors, assigns, heirs, executives and administrators, except that Executive may not assign any of his duties hereunder and he may not assign any of his rights hereunder without the written consent of the Company.
      6. If either party hereto bring any action to enforce such party's rights hereunder, the prevailing party in any such action shall be entitled to recover such party's reasonable attorneys' fees and costs incurred in connection with such action.
      7. For purposes of construction, this Agreement shall be deemed to have been drafted by the Company, and the rule of construction of contracts that ambiguities are construed against the drafting party shall be applied against the Company.
      8. Any notice required to be given or delivered to the Company under the terms of this Agreement shall be in writing and addressed to the Corporate Secretary of the Company at its principal corporate offices. Any notice required to be given or delivered to Executive shall be in writing and addressed to Executive at the address indicated herein or to the last known address provided by Executive to the Company. All notices shall be deemed to have been given or delivered upon: personal delivery; three (3) days after deposit in the United States mail by certified or registered mail (return receipt requested); one (1) business day after deposit with any return receipt express courier (prepaid); or one (1) business day after transmission by facsimile.

 

In Witness Whereof, the parties have executed this Agreement as of the day and year written below.

                                                                                                                                                    Date:4/27/01

                                                                                                                                                     /s/ Stephen Kelly

Stephen Kelly

Address:

________________________________

Chordiant software, inc.

                                                                                                                                                        Date:4/27/01

                                                                                                                                                    /s/ Sam Spadafora

                            Name: Sam Spadafora
                            Title: Chairman and Chief Executive Officer

Exhibit A - Release Agreements

Exhibit A

RELEASE AGREEMENT FOR EMPLOYEES UNDER 40 YEARS OF AGE

In exchange for the severance benefits I am receiving to which I would not otherwise be entitled, I hereby release, acquit and forever discharge the Company, and its officers, directors, agents, servants, employees, attorneys, shareholders, successors, assigns and affiliates, of and from any and all claims, liabilities, demands, causes of action, costs, expenses, attorneys' fees, damages, indemnities and obligations of every kind and nature, in law, equity, or otherwise, known and unknown, suspected and unsuspected, disclosed and undisclosed, arising out of or in any way related to agreements, events, acts or conduct at any time prior to and including the execution date of this Release Agreement, including but not limited to: all such claims and demands directly or indirectly arising out of or in any way connected with my employment with the Company or the termination of that employment; claims or demands related to salary, bonuses, commissions, stock, stock options, or any other ownership interests in the Company, vacation pay, fringe benefits, expense reimbursements, severance pay, or any other form of compensation; claims pursuant to any federal, state or local law, statute, or cause of action including, but not limited to, the federal Civil Rights Act of 1964, as amended; the federal Americans with Disabilities Act of 1990; the California Fair Employment and Housing Act, as amended; tort law; contract law; wrongful discharge; discrimination; harassment; fraud; defamation; emotional distress; and breach of the implied covenant of good faith and fair dealing.

I UNDERSTAND THAT THIS RELEASE INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS. In giving this release, which includes claims which may be unknown to me at present, I acknowledge that I have read and understand Section 1542 of the California Civil Code which reads as follows: "A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor." I hereby expressly waive and relinquish all rights and benefits under that section and any law of any jurisdiction of similar effect with respect to my release of any unknown or unsuspected claims I may have against the Company.

Dated: Agreed:

Stephen Kelly

RELEASE AGREEMENT FOR EMPLOYEES 40 YEARS OF AGE OR OLDER

In exchange for the severance benefits I am receiving to which I would not otherwise be entitled, I hereby release, acquit and forever discharge the Company, and its officers, directors, agents, servants, employees, attorneys, shareholders, successors, assigns and affiliates, of and from any and all claims, liabilities, demands, causes of action, costs, expenses, attorneys' fees, damages, indemnities and obligations of every kind and nature, in law, equity, or otherwise, known and unknown, suspected and unsuspected, disclosed and undisclosed, arising out of or in any way related to agreements, events, acts or conduct at any time prior to and including the execution date of this Release Agreement, including but not limited to: all such claims and demands directly or indirectly arising out of or in any way connected with my employment with the Company or the termination of that employment; claims or demands related to salary, bonuses, commissions, stock, stock options, or any other ownership interests in the Company, vacation pay, fringe benefits, expense reimbursements, severance pay, or any other form of compensation; claims pursuant to any federal, state or local law, statute, or cause of action including, but not limited to, the federal Civil Rights Act of 1964, as amended; the federal Americans with Disabilities Act of 1990; the federal Age Discrimination in Employment Act of 1967, as amended ("ADEA"); the California Fair Employment and Housing Act, as amended; tort law; contract law; wrongful discharge; discrimination; harassment; fraud; defamation; emotional distress; and breach of the implied covenant of good faith and fair dealing.

I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have under the ADEA, as amended. I also acknowledge that the consideration given for the waiver and release in the preceding paragraph hereof is in addition to anything of value to which I was already entitled. I further acknowledge that I have been advised by this writing, as required by the ADEA, that: (a) my waiver and release do not apply to any rights or claims that may arise after the execution date of this Release; (b) I have been advised hereby that I have the right to consult with an attorney prior to executing this Release; (c) I have twenty-one (21) days to consider this Release (although I may choose to voluntarily execute this release earlier); (d) I have seven (7) days following my execution of this Release to revoke my agreement to it; and (e) this Release will not be effective until the date upon which the revocation period has expired, which will be the eighth day after this Release is executed by me.

I UNDERSTAND THAT THIS RELEASE INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS. In giving this release, which includes claims which may be unknown to me at present, I acknowledge that I have read and understand Section 1542 of the California Civil Code which reads as follows: "A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor." I hereby expressly waive and relinquish all rights and benefits under that section and any law of any jurisdiction of similar effect with respect to my release of any unknown or unsuspected claims I may have against the Company.

Dated: Agreed:

Stephen Kelly