Exhibit 10.24
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Employment Agreement"), dated as of this
27th day of September, 2002, is entered into by and between Packeteer, Inc., a
Delaware corporation, (the "Company"), and Xxxxx Xxxx ("Executive"). In
consideration of the mutual covenants and agreements hereinafter set forth, the
parties agree as follows:
1. EMPLOYMENT.
1.1 Position. Effective as of October 7, 2002 (the "Commencement Date"),
and subject to the terms and conditions set forth herein, the Company agrees to
employ Executive as its Chief Executive Officer and President reporting directly
to the board of directors (the "Board"). Executive shall also be appointed to
serve on the Company's board of directors by the Board.
1.2 Duties. As Chief Executive Officer and President of the Company,
Executive shall be responsible for managing the operations of the Company,
including finance, general administration, sales and marketing, the development
and delivery of products, and the implementation of the overall strategy of the
Company. As an executive officer of the Company, Executive will be expected to
enforce the rules and regulations of the Company. Executive shall diligently,
and to the best of his ability, perform all such duties and use his best efforts
to promote the interests of the Company.
1.3 Time to be Devoted to Employment. While employed by the Company,
Executive shall devote his full time and energy to the business of the Company.
Executive hereby represents that he is not a party to any agreement that would
be an impediment to entering into this Employment Agreement and that he is
permitted to enter into this Employment Agreement and perform the obligations
hereunder.
2. COMPENSATION AND BENEFITS.
2.1 Annual Salary. In consideration of and as compensation for the
services agreed to be performed by Executive hereunder, the Company agrees to
pay Executive a starting annual base salary of $300,000.00 ($25,000.00 per
month), payable in accordance with the Company's regular payroll schedule ("Base
Salary"), less applicable withholdings and deductions. The Base Salary will be
subject to change at the sole discretion of the Board or the Compensation
Committee of the Board (the "Compensation Committee").
2.2 Bonus. Executive will be eligible to receive an annual bonus payment
of up to 60% of Executive's annualized Base Salary. Payment of the bonus will be
at the sole discretion of the Board and will be based on the achievement of
performance goals to be determined by the Board or the Compensation Committee.
2.3 Stock Options. Effective upon the Commencement Date, the Board has
granted Executive a stock option (the "Option") to purchase 600,000 shares of
Common Stock
under the Company's 1999 Stock Incentive Plan (the "Plan"). The Option shares
will have an exercise price equal to the closing price on NASDAQ for the
Company's Common Stock on Executive's first full day of employment. The Option
shares will become vested shares as follows: 25% on the first anniversary of the
Commencement Date and the remaining shares shall vest in equal monthly
installments over the course of thirty-six (36) months. The grant is contingent
upon Executive executing the Company's standard form of stock option agreement
and the Proprietary Information and Inventions Agreement. The Option will expire
ten years from the date of grant, subject to earlier expiration in the event of
Executive's termination of employment. The grant of this stock option shall be
subject to the other terms and conditions set forth in the Plan and in the
Company's standard form of stock option agreement.
2.4 Participation in Benefit Plans. Executive shall be entitled to
participate in the Company's standard health insurance, life insurance,
disability insurance plans, and any other benefits to the extent permitted by
law, that may from time to time be available to other executives of the Company.
The Company reserves the right to amend, modify or terminate any employee
benefits at any time for any reason. To the extent Executive is not eligible to
participate in such plans as of the Commencement Date, the Company shall
reimburse Executive for his COBRA payments until he is eligible for coverage
under the Company's standard health plans.
2.5 Vacation. Executive will be entitled to paid vacation based on the
Company's standard vacation policies.
3. TERMINATION OF EMPLOYMENT.
3.1 Basic Rule. The Company agrees to continue Executive's employment, and
the Executive agrees to remain in employment with the Company, from the
Commencement Date until the date when Executive's employment terminates pursuant
to Section 3.2 below. Executive's employment with the Company shall be "at
will," and either the Executive or the Company may terminate Executive's
Employment at any time, for any reason, with or without Cause. Any contrary
representations which may have been made to the Executive shall be superceded by
this Agreement. This Agreement shall constitute the full and complete agreement
between Executive and the Company on the "at will" nature of Executive's
employment, which may be changed only in an express written agreement signed by
Executive and a duly authorized representative of the Board or the Compensation
Committee.
3.2 Method of Termination. Executive's employment pursuant to this
Employment Agreement shall terminate upon the first of the following to occur:
(i) Executive's death;
(ii) Date that written notice is deemed given or made by the Company
to Executive that as a result of any physical or mental injury or disability, he
is unable to perform the essential functions of his job, with or without
reasonable accommodation. Such notice may be issued when the Board has
reasonably determined that Executive has become unable to perform substantially
his services and duties hereunder with or without reasonable accommodation for a
period of ninety (90) consecutive days because of any physical or mental
2
injury or disability, and that it is reasonably likely that he will not be able
to resume substantially performing his services and duties on substantially the
terms and conditions as set forth in this Employment Agreement;
(iii) Date that written notice is deemed given or made by the
Company to Executive of termination for "Cause." For purposes of this Employment
Agreement, "Cause" shall mean any one of the following:
(A) Repeated failure by Executive to perform his duties and
responsibilities hereunder to the reasonable satisfaction of the Board;
(B) Any breach by Executive of his fiduciary duties to the
Company or any material terms of this Employment Agreement;
(C) Executive's engagement in misconduct (including, without
limitation, embezzlement, fraud or unlawful harassment); or
(D) The conviction of Executive for a felony;
(iv) Date that written notice is deemed given or made by Executive
of his resignation as an employee of the Company or voluntary departure from the
Company;
(v) Date that written notice is deemed given or made by the Company
to Executive of termination without Cause.
Nothing herein alters Executive and the Company's separate right to
terminate the employment relationship at any time, for any reason, with or
without Cause.
3.3 Termination without Cause. If Executive is terminated without Cause
prior to a Change of Control (as defined below) and on or prior to the 12-month
anniversary of the Commencement Date, Executive will be entitled to have his
monthly salary continue for a six (6) month period as a severance payment. If
Executive is terminated without Cause prior to a Change of Control and after the
12-month anniversary of the Commencement Date, Executive will be entitled to
have his monthly salary continue for a twelve (12) month period as a severance
payment. Any payments made pursuant to this Section 3.3 shall be made in equal
amounts on the Company's regular payroll dates following Executive's termination
of employment
3.4 Notice of Termination. Any termination of Executive's employment
either by the Company or by Executive shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 7.1 hereof.
4. CHANGE OF CONTROL.
4.1 Definitions. For purposes of this Agreement:
(i) Change of Control. A Change of Control shall be defined as a
merger or other form of corporate reorganization in which the Stockholders of
the Company do
3
not own at least fifty percent of the outstanding voting equity securities of
the surviving entity following such a transaction, or a sale of all or
substantially all of the assets of the Company.
(ii) Good Reason. If Executive resigns his employment from the
surviving entity within thirty (30) days of the following events: (a) a
substantial diminution of duties or title; (b) a requirement to relocate more
than fifty (50) miles from the Company's location prior to such Change of
Control; (c) a change in Executive's title as President and Chief Executive
Officer; or (d) any material reduction in Executive's Base Salary (other than in
connection with a similar reduction applicable to all executives of the
Company); then in such event such resignation shall be deemed to have occurred
for Good Reason. Any other such voluntary resignation by Executive would be
"Without Good Reason."
4.2 Effect of Termination Without Cause or Voluntary Termination for Good
Reason, Following a Change of Control. In the event of (i) a termination of
Executive's employment without Cause within 12 months following a Change of
Control or (ii) a termination of Executive's employment for Good Reason within
12 months following a Change of Control; then Executive shall be entitled to
have payment of his then current base salary continue as a severance payment for
a period of 12 months following such termination.
4.3 Stock Options. In the event of a Change of Control following which
Executive is not the Chief Executive Officer and President of the surviving
entity of such transaction, any unvested Option shares then held by Executive
would accelerate and become vested in the following increments: (i) 25% of any
unvested Option shares then held by Executive and granted to Executive within 12
months of the closing date of such a Change of Control transaction, shall become
vested and exercisable; (ii) 50% of any unvested Option shares then held by
Executive and granted to Executive within the period beginning 24 months prior
to the closing date of such a Change of Control transaction and ending 12 months
prior to such date, shall become vested and exercisable; and (iii) 100% of any
unvested Option shares then held by Executive and granted to Executive during
any period more than 24 months prior to the closing date of such a Change of
Control transaction, shall become vested and exercisable.
5. GENERAL RELEASE.
Any other provision of this Agreement notwithstanding, Sections 3.3, 4.2
and 4.3 shall not apply and the Company shall have no obligations thereunder
unless Executive (i) has executed a general release (in a form prescribed by the
Company) of all known and unknown claims that he may then have against the
Company or persons affiliated with the Company, and (ii) has agreed not to
prosecute any legal action or other proceeding based upon any of such claims.
6. RESTRICTIVE COVENANT.
During the period of his employment with the Company:
6.1 Executive shall devote substantially all of his time and energy to the
performance of Executive's duties described herein, except during periods of
illness or vacation.
4
6.2 Executive shall not directly or indirectly provide services to or
through any person, firm or other entity other than the Company, unless
otherwise authorized by a duly authorized representative of the Board or the
Compensation Committee.
6.3 Notwithstanding the foregoing, Executive shall have the right to
perform such incidental services as are necessary in connection with (i) his
private passive investments, but only if Executive is not obligated or required
to (and shall not in fact) devote any managerial efforts which interfere with
the services required to be performed by him hereunder, (ii) his charitable or
community activities, (iii) participation in trade or professional organizations
but only if such incidental services do not significantly interfere with the
performance of Executive's services hereunder.
7. MISCELLANEOUS.
7.1 Notices. All notices, demands and requests required by this Employment
Agreement shall be in writing and shall be deemed to have been given or made for
all purposes (i) upon personal delivery, (ii) one day after being sent, when
sent by professional overnight courier service, (iii) five days after posting
when sent by registered or certified mail, or (iv) on the date of transmission
when sent by telegraph, telegram, telex, or other form of "hard copy"
transmission, to either party hereto at the address set forth below or at such
other address as either party may designate by notice pursuant to this Section
7.
If to the Company, to: Packeteer, Inc.
00000 Xxxxx Xx Xxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000
Attn: Chief Financial Officer
And a copy to: Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
0000 Xxxxxxxxxx Xxxxxx
Xxxx Xxxx Xxxx, XX 00000
Attn: Xxxxxxx Xxxxxx
If to Executive, to: _____________________________
_____________________________
_____________________________
7.2 Assignment. This Employment Agreement shall be binding on, and shall
inure to the benefit of, the parties hereto and their respective heirs, legal
representatives, successors and assigns; provided, however, that Executive may
not assign, transfer or delegate his rights or obligations hereunder and any
attempt to do so shall be void.
7.3 Deductions. All amounts paid to Executive hereunder are subject to all
withholdings and deductions required by law, as authorized under this Employment
Agreement and as authorized from time to time.
7.4 Entire Agreement. This Employment Agreement and the related stock
option agreement and Proprietary Information and Inventions Agreement contain
the entire
5
agreement of the parties with respect to the subject matter hereof and supercede
the terms of any other agreements or understandings regarding the subject matter
hereof, including, without limitation, the offer letter dated September __,
2002.
7.5 Amendment. This Employment Agreement may be modified or amended only
by a written agreement signed by Executive and a duly authorized representative
of the Board or the Compensation Committee.
7.6 Waivers. No waiver of any term or provision of this Employment
Agreement will be valid unless such waiver is in writing signed by the party
against whom enforcement of the waiver is sought. The waiver of any term or
provision of this Employment Agreement shall not apply to any subsequent breach
of this Employment Agreement.
7.7 Counterparts. This Employment Agreement may be executed in several
counterparts, each of which shall be deemed an original, but together they shall
constitute one and the same instrument.
7.8 Severability. The provisions of this Employment Agreement shall be
deemed severable, and if any part of any provision is held illegal, void or
invalid under applicable law, such provision may be changed to the extent
reasonably necessary to make the provision, as so changed, legal, valid and
binding. If any provision of this Employment Agreement is held illegal, void or
invalid in its entirety, the remaining provisions of this Employment Agreement
shall not in any way be affected or impaired but shall remain binding in
accordance with their terms.
7.9 Governing Law. This Agreement and the rights and obligations of the
Company and Executive hereunder shall be determined under, governed by and
construed in accordance with the laws of the State of California as applied to
agreements among California residents entered into and to be performed entirely
within California.
7.10 Arbitration. Each party agrees that any and all disputes which arise
out of or relate to the Executive's employment, the termination of the
Executive's employment, or the terms of this Agreement shall be resolved through
final and binding arbitration. Such arbitration shall be in lieu of any trial
before a judge and/or jury, and the Executive and Company expressly waive all
rights to have such disputes resolved via trial before a judge and/or jury. Such
disputes shall include, without limitation, claims for breach of contract or of
the covenant of good faith and fair dealing, claims of discrimination, claims
under any federal, state or local law or regulation now in existence or
hereinafter enacted and as amended from time to time concerning in any way the
subject of the Executive's employment with the Company or its termination. The
only claims not covered by this Agreement to arbitrate disputes are: (i) claims
for benefits under the unemployment insurance benefits; (ii) claims for workers'
compensation benefits under any of the Company's workers' compensation insurance
policy or fund; (iii) claims arising from or relating to the non-competition
provisions of this Agreement; and (iv) claims concerning the validity,
infringement, ownership, or enforceability of any trade secret, patent right,
copyright, trademark or any other intellectual property right, and any claim
pursuant to or under any existing confidential/proprietary/trade secrets
information and inventions agreement(s) such as, but not limited to, the
Proprietary Information and Inventions Agreement. With respect to such
6
disputes, they shall not be subject to arbitration; rather, they will be
resolved pursuant to applicable law.
Arbitration shall be conducted in accordance with the National Rules for
the Resolution of Employment Disputes of the American Arbitration Association
("AAA Rules"), provided, however, that the arbitrator shall allow the discovery
authorized by California Code of Civil Procedure section 1282, et seq., or any
other discovery required by applicable law in arbitration proceedings,
including, but not limited to, discovery available under the applicable state
and/or federal arbitration statutes. Also, to the extent that any of the AAA
Rules or anything in this arbitration section conflicts with any arbitration
procedures required by applicable law, the arbitration procedures required by
applicable law shall govern.
Arbitration will be conducted in Santa Xxxxx County, California or, if the
Executive does not reside within 100 miles of Santa Xxxxx County at the time the
dispute arises, then the arbitration may take place in the largest metropolitan
area within 50 miles of the Executive's place of residence when the dispute
arises.
During the course of the arbitration, the Executive and the Company will
each bear equally the arbitrator's fee and any other type of expense or cost of
arbitration, unless applicable law requires otherwise, and each shall bear their
own respective attorneys' fees incurred in connection with the arbitration. The
arbitrator will not have authority to award attorneys' fees unless a statute or
contract at issue in the dispute authorizes the award of attorneys' fees to the
prevailing party. In such case, the arbitrator shall have the authority to make
an award of attorneys' fees as required or permitted by the applicable statute
or contract. If there is a dispute as to whether the Executive or the Company is
the prevailing party in the arbitration, the arbitrator will decide this issue.
The arbitrator shall issue a written award that sets forth the essential
findings of fact and conclusions of law on which the award is based. The
arbitrator shall have the authority to award any relief authorized by law in
connection with the asserted claims or disputes. The arbitrator's award shall be
subject to correction, confirmation, or vacation, as provided by applicable law
setting forth the standard of judicial review of arbitration awards. Judgment
upon the arbitrator's award may be entered in any court having jurisdiction
thereof.
7
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first above written.
PACKETEER, INC.
By:
----------------------------------
Title: Acting CEO
EXECUTIVE
---------------------------------------
Xxxxx Xxxx
8
