1
EXHIBIT 10.2
------------
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT is dated as of May 31, 1996 (this
"Employment Agreement") between Influence, Inc., a Delaware corporation (the
"Company"), and Xxxxx X. Xxxx (the "Executive").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Executive has been employed by the Company prior to the
date hereof and has provided valuable services to the Company and its subsidiary
in the development and organization of its business and affairs;
WHEREAS, the Company has agreed to employ the Executive in an
executive capacity, and desires to be assured of his continued services as such,
on the terms and conditions set forth in this Agreement; and
WHEREAS, the Executive accepts such employment on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, and intending to be legally bound, the Company
and the Executive confirm the terms of the Executive's employment and agree as
follows:
2
1. EMPLOYMENT.
(a) Responsibilities. The Company employs the Executive as the President
and Chief Executive Officer of the Company and in such capacity the Executive
shall have such responsibilities and duties consistent with his executive
position and of such a nature as are usually associated with the position of an
executive officer as may be designated from time to time by the Board of
Directors of the Company (the "Board").
(b) Performance. The Executive accepts such employment and agrees to
discharge his duties hereunder faithfully and diligently and use his best
efforts to implement the policies established by the Board. The Executive shall
devote substantially his full business time to the business and affairs of the
Company and he will not, during the Employment Term, devote any of his business
time to the performance of services for remuneration to others than the Company,
except as expressly contemplated by this Section 1 below or with the prior
written consent of the Company. The Executive shall be entitled to fulfill his
teaching obligation through the end of 1996, to serve as an outside director of
no more than two companies (other
- 2 -
3
than the Company), which shall not be public companies, and to undertake such
other activities (not including the performance of services for remuneration to
others than the Company) that may entail an insubstantial portion of his
business time, provided that such services and other activities shall not
interfere or conflict in any material respect with the performance of any of the
Executive's duties as a director and employee of the Company and that the
Executive shall have disclosed such services and other activities to the Company
in advance.
(c) Location. The Executive shall be entitled to maintain his principal
office in the San Francisco Bay Area.
(d) Director. During the Employment Term, the Company agrees to use its
best efforts to cause the Executive to be appointed as a member of the Board.
2. TERM OF EMPLOYMENT. The Company employs the Executive, and the
Executive accepts such employment, for a term commencing on the date hereof and
ending on May 31, 1999 or such earlier date that
- 3 -
4
the employment of the Executive is sooner terminated pursuant to Section 4
hereof (the "Employment Term").
3. COMPENSATION; BENEFITS; EXPENSE REIMBURSEMENT.
(a) Base Salary. The Company shall pay to the Executive so long as he
shall be employed hereunder a base salary (subject to applicable withholding of
income taxes, social security taxes, and other deductions) at the annual rate of
one hundred and fifty thousand dollars ($150,000) or such greater amount as may
be approved by the Board in its sole discretion, payable in accordance with the
payroll policy of the Company as in effect from time to time.
(b) Bonus Compensation. The Company shall pay to the Executive so long
as he shall be employed hereunder an annual bonus (based on a percentage of the
Executive's annual base salary and earned based on the attainment of certain
performance criteria established from time to time by the Board and the
Executive). Such annual bonus shall be payable in accordance with the policies
established by the Board.
- 4 -
5
(c) Business Expenses. The Company shall pay or reimburse the Executive
for all reasonable expenses actually incurred or paid by him in the performance
of his services under this Agreement, upon presentation of expense statements or
vouchers or other supporting information as the Company may reasonably require.
(d) Automobile Allowance. During the Employment Term, the Executive
shall receive an automobile allowance of $400 per month (plus reimbursement of
parking costs at a parking garage located near the Executive's office), which
shall be paid in addition to the Executive's base salary.
(e) Vacation. The Executive shall be entitled to annual vacation of four
(4) weeks per year. Any unused vacation in one year may be carried over to the
next year unless the Company shall elect to pay the Executive (based on the
Executive's annual salary) for such unused vacation.
(f) Other Benefits. During the Employment Term, the Executive shall be
entitled to receive health and dental coverage for the Executive and his
immediate
- 5 -
6
family in accordance with the programs maintained by the Company and made
available to employees generally. The Company shall also maintain a term life
insurance policy in the benefit amount of $250,000 covering the Executive for
the benefit of the Executive or his designated beneficiaries. The Executive
shall also be entitled to participate in all employee benefit plans, practices
and programs maintained by the Company and made available to employees (or to
all executives) generally and which are of a character different than the plans,
practices and programs specifically contemplated for the Executive under this
Agreement. The Company also will provide to the Executive customary
indemnification rights to the fullest extent permitted under Delaware law and
may obtain officers and directors insurance in connection with any public
offering of securities of the Company provided that such insurance is available
to the Company on commercially reasonable terms.
4. TERMINATION.
(a) Termination for Cause. Notwithstanding the provisions of Section 2
hereof, the obligations of the Company hereunder and the employment of the
Executive
- 6 -
7
hereunder shall be (in the case of subparagraph (1) below) or may be (in the
case of subparagraphs (2) and (3) below) terminated by the Company on the
earliest of the following events:
1. Death. The date of the death of the Executive.
2. Incapacity. Thirty days (30) after the date on which the Company
shall have given the Executive notice of termination of his employment
hereunder by reason of his physical or mental incapacity on a permanent
basis. The Executive shall be deemed to be physically or mentally
incapacitated on a permanent basis if the Executive is unable, by reason
of any physical or mental incapacity, for a period of 90 days (whether
or not consecutive) during any 12-month period to perform his duties and
responsibilities hereunder in a reasonably satisfactory manner.
3. For Cause. Upon notice in writing to the Executive, "for cause",
which shall mean
(A) the commission by the Executive of a willfully wrongful act
or grossly negligent act (which may include, without limitation, a
breach of fiduciary duty) that is materially detrimental to the
Company or its subsidiaries;
(B) the commission or perpetration by the Executive of any
criminal act (other than a traffic offense) to which the Executive
has pled guilty, entered a nolo contendere plea or of which the
Executive has otherwise been convicted, and that is materially
detrimental to the Company or its subsidiaries;
(C) habitual absenteeism, or chronic alcoholism or other form of
substance addiction; or
- 7 -
8
(D) any material violation by the Executive of his obligations
under this Employment Agreement or any violation by the Executive of
his obligations under Section 6 hereof, which violation continues
uncured for ten days following written notice to the Executive.
(b) Compensation upon Termination for Cause. In the event that the
employment of the Executive is terminated pursuant to Section 4(a) hereof, (i)
the Executive shall thereupon be released from any further obligations under
Section 1 hereof, (ii) the Company shall thereupon be released from any further
obligations under this Employment Agreement other than those accruing under this
Agreement through the date of termination of the Executive's employment
hereunder, including accrued but unused vacation, and other than the Company's
obligations in respect of vested stock options described hereunder, and (iii)
all options to purchase shares of Common Stock that have not previously vested
shall be cancelled by the Company and the Executive shall not have any further
rights in such options or the underlying shares of Common Stock. Termination
pursuant to Section 4(a) shall in no way abrogate or relieve the Executive of
his obligations under Section 6 hereof.
- 8 -
9
(c) Termination Without Cause. The Company may terminate the
Executive's employment hereunder other than for the reasons set forth in
paragraph (a) at any time upon ten days prior written notice to Executive. In
consideration of such termination, the Company agrees (1) to pay to the
Executive the base salary payable to Executive for a period of six months, (2)
to pay the Executive the cost of continuing health coverage under COBRA for the
next succeeding six months, and (3) the next succeeding vesting date for stock
options granted under Section 5 shall be accelerated to the date of such
termination. For purposes of this Section (c), any breach by the Company of
Section 1(c) of this Agreement shall be deemed a termination of the Executive by
the Company without cause.
(d) Change in Control.
(i) Subject to Section 4(d)(iii) below and after taking into account any
vesting of options pursuant to Section 4(c) above, in the event of a "change in
control" of the Company (as defined in Section 4(d)(ii) below), any stock
options granted pursuant to Section 5 that have not yet vested will vest and
become immediately exercisable upon the earliest to occur of
- 9 -
10
the following: (A) termination of the Executive's employment at any time after
such change in control for any reason other than voluntary resignation or (B)
voluntary resignation by the Executive for any reason at any time within 13
months after such change in control.
(ii) For purposes of this Agreement a "change in control" shall have
occurred upon (1) the acquisition after the date hereof of fifty percent (50%)
or more of the Common Stock of the Company by any "person" or "group" (which
terms shall have the meanings set forth in Section 13(d) of the Securities
Exchange Act of 1934, as amended) that does not currently own at least (10%) of
the outstanding Common Stock of the Company, (2) the sale of substantially all
the assets of the Company and its subsidiaries to another company, the majority
shareholders of which do not constitute majority shareholders of the Company, or
(3) the consummation of a merger, consolidation or reorganization involving the
Company, unless the shareholders of the Company immediately before such merger,
consolidation or reorganization, own directly or indirectly immediately
following such merger,
- 10 -
11
consolidation or reorganization, at least 50% of the combined voting power of
the outstanding voting securities of the corporation resulting from such merger,
consolidation or reorganization.
(iii) The provisions of Section 4(d)(i) above will not be effective
until the earlier of: (A) the Company obtains approval of such Section 4(d)(i)
from the holders of at least 75% of the Company's outstanding voting stock in
accordance with Section 280G(b)(5) of the Internal Revenue Code or (B) the
Company has an initial public offering. The Company will use its best efforts
to obtain such stockholder approval as soon as reasonably practicable.
5. STOCK OPTIONS.
(a) Grant of Stock Options. As an inducement to the Executive to become
an employee of the Company and as an incentive for future performance by the
Executive of his duties hereunder, the Company grants the Executive stock
options for 190,000 shares of Common Stock, each such option exercisable at an
exercise price of $5.00 per share of Common Stock, subject to the vesting
schedule and on the other terms
- 11 -
12
and conditions described below. Stock options granted hereunder which have
vested in accordance with the terms of this Agreement prior to or on the date of
the termination of the Executive's employment hereunder shall expire upon the
earlier of (1) three months after the date of termination of the Executive's
employment with the Company for any reason, or (2) ten years after the date
hereof.
(b) Exercise of Stock Options. Subject to the vesting schedule
described below, vested stock options may be exercised at any time, in whole or
in part, by the Executive by delivering to the Company a notice of exercise in
form reasonably satisfactory to the Company accompanied by the payment of the
exercise price (together with any withholding taxes required to be withheld by
the Company) for the options covered by the notice of exercise. Payment of the
exercise price (and any applicable withholding taxes) shall be made in cash or,
from and after the completion of the Company's initial public offering, may be
made using a "cashless exercise" feature that enables the Executive to pay the
exercise price of vested stock options by directing the Company to withhold and
retain a number of the shares
- 12 -
13
of Common Stock issuable on exercise of the stock option with a value (based on
the Fair Market Value (as defined below) of the Common Stock at the time of
exercise)) equal to the aggregate exercise price of the options being exercised.
For purposes of this Section 5(b) the term "Fair Market Value" of a share of
Common Stock of the Company shall mean, as of any date of determination, the
last closing price for a share of the Company's Common Stock as quoted on the
NASDAQ National Market or otherwise in the over-the-counter market.
(c) Vesting Schedule. The stock options granted to the Executive under
paragraph (a) above shall be subject to the following vesting schedule (as the
same may be modified pursuant to Sections 4(c) and 4(d)): (1) 85,000 stock
options shall vest immediately, as of the date hereof; (2) 35,000 shall vest on
May 31, 1997; (3) 35,000 shall vest on May 31, 1998; and (4) 35,000 shall vest
on May 31, 1999. The stock options granted hereunder shall only become
exercisable upon vesting in accordance with the above schedule and in accordance
with Sections 4(c) or 4(d). Stock options that have not vested on or before the
- 13 -
14
date of the termination of the Executive's employment with the Company shall be
cancelled with no further rights associated therewith.
(d) Nontransferability. Stock options granted hereunder shall not be
transferable otherwise than (a) by will or the laws of descent and distribution,
(b) pursuant to a qualified domestic relations order as defined in Section
414(p) of the Internal Revenue Code of 1986, as amended, or (c) to the
Executive's spouse, children, parents, siblings, or any trust established for
the benefit of the Executive or such persons.
(e) Capital Adjustments. The number and class of shares of Common Stock
subject to each outstanding option granted hereunder, the option exercise price
and the aggregate number and class of shares of Common Stock for which the stock
option granted hereunder may be exercised shall be subject to such adjustment,
if any, as appropriate to reflect such events as stock dividends, stock splits
or recapitalizations by or of the Company.
- 14 -
15
(f) Restriction on Shares of Common Stock Issued Upon Exercise.
Notwithstanding any other provision of this Agreement, the Executive agrees, for
himself and his successors, that upon the issuance of any shares of Common Stock
upon the exercise of any stock options granted hereunder, the Executive will not
sell, pledge or otherwise dispose of such shares of Common Stock so issued
unless and until the Company is furnished with an opinion of counsel to the
effect that registration of such shares pursuant to the Securities Act of 1933,
as amended (the "Act"), is not required by that Act and the rules and
regulations thereunder. The Executive further agrees that the Company may place
a legend embodying such restriction on the certificates evidencing such shares.
In addition, the Executive agrees not to sell any shares of Common Stock
issuable on exercise of any stock options until the expiration of the "lock-up"
period agreed to by the Company with the underwriters in connection with the
initial public offering of the Company's Common Stock. In addition, the
Executive agrees that the Board may adopt from time to time reasonable
restrictions applicable to the sale of shares of Common Stock by officers and
directors of the Company, including the Executive.
- 15 -
16
(g) Rights as Stockholder. The Executive shall have no rights as a
stockholder with respect to any shares of Common Stock subject to the stock
options granted hereunder until and unless such options have been validly
exercised and the shares covered by such options are issued to the Executive
pursuant to this Agreement. Without limiting the generality of the foregoing,
no adjustment shall be made for dividends or other rights for which the record
date is prior to the issuance of shares on exercise of the stock options. The
Company will issue a certificate evidencing shares issuable upon exercise of the
stock options promptly following the valid exercise of stock options by the
Executive.
6. NON-COMPETITION; CONFIDENTIALITY; DISCLOSURE OF INFORMATION.
(a) Non-Competition. Without the prior written consent of the Board,
the Executive shall not, directly or indirectly, during the Employment Term and
until the second anniversary of the termination of the Employment Term.
1. render consulting, or advisory services to or financially support
in any manner, or be a proprietor, a director, an officer, an employee,
an agent, a partner, a shareholder (other than ownership of less than two
(2%) percent of the outstanding voting securities of any entity whose
voting securities are traded on a national
- 16 -
17
securities exchange (including NASDAQ); provided that any of the other
restrictions contained in this sentence are not applicable) or a lender
to, or otherwise promote, any business, enterprise, person, firm,
corporation, partnership, association or other entity that competes
anywhere in the world with the Company or any of its subsidiaries in the
business of the manufacture, distribution, design or sale of such
products of the general type that the Company (including its
predecessors) or its subsidiaries manufacture, distribute, design or sell
during the Employment Term or which the Company (including its
predecessors) or its subsidiaries is planning the manufacture,
distribution, design or sale;
2. interfere with, disrupt or attempt to disrupt existing or any
then existing relationship, contractual or otherwise, between the Company
or its subsidiaries and any of their customers, suppliers, clients,
executives, employees or other persons with whom the Company or its
subsidiaries deal; or
3. solicit for employment, attempt to employ or assist any other
entity in employing or soliciting for employment any employee or
executive who is at that time employed by the Company or its
subsidiaries.
(b) Confidentiality. The Executive shall not, directly or indirectly,
without the specific prior written consent of the Company, at any time after the
date hereof, divulge to any business, enterprise, person, firm, corporation,
partnership, association or other entity, or use for the Executive's own
benefit, (i) any confidential information concerning the businesses, affairs,
customers, suppliers or clients of
- 17 -
18
the Company or its subsidiaries or their affiliates, or (ii) any non-public data
or statistical information of the Company or its subsidiaries or their
affiliates, whether created or developed by the Company or its subsidiaries or
their affiliates or on their behalf or with respect to which the Executive may
have knowledge or access (including without limitation any of the foregoing
created or developed by the Executive), it being the intent of the Company and
the Executive to restrict the Executive from disseminating or using any data or
information which is at the time of such use or dissemination unpublished and
not readily available or generally known to persons involved or engaged in
businesses of the type engaged in from time to time by the Company or its
subsidiaries.
(c) Non-Disclosure. The Executive will promptly disclose to the Company
all processes, trademarks, inventions, improvements, discoveries and other
information related to the business of the Company, its subsidiaries or their
affiliates (collectively "developments") conceived, developed or acquired by
him alone or with others during the Employment Term, whether or not conceived
during regular working hours
- 18 -
19
or through the use of Company or subsidiary time, material or facilities or
otherwise. All such developments shall be the sole and exclusive property of
the Company, and upon request the Executive shall deliver to the Company all
drawings, sketches, models, codes, data and records relating to such
developments. In the event any such developments shall be deemed by the Company
to be patentable, the Executive shall, at the expense of the Company (which
shall, in the event the Executive shall no longer be employed hereunder, include
compensation to the Executive at a rate equal to his base salary prorated for
the time involved), assist the Company in obtaining a patent or patents thereon
and execute all documents and do all other things necessary or proper to obtain
letters patent and to vest the Company with full title and rights thereto.
(d) Restrictions on Scope of Agreement. Although the restrictions
contained in Section 6 hereof are considered by the parties hereto to be fair
and reasonable in the circumstances, it is recognized that restrictions of the
nature contained in Section 6 may fail for technical reasons, and accordingly if
any of such restrictions shall be adjudged by a court of
- 19 -
20
competent jurisdiction to be void or unenforceable for whatever reason, but
would be valid if part of the wording thereof were deleted, or the period
thereof reduced or the area dealt with thereby reduced in scope, the
restrictions contained in Section 6 shall apply, at the election of the Company,
with such modifications as may be necessary to make them valid, effective and
enforceable in the particular jurisdiction in which such restrictions are
adjudged to be void or unenforceable.
(e) Successors. The covenants contained in this Section 6 shall inure
to the benefit of the Company, any successor of the Company and each subsidiary
of the Company.
7. MISCELLANEOUS.
(a) Entire Agreement. This Employment Agreement contains the entire
agreement between the Company and the Executive with respect to the matters
covered by this Employment Agreement and supersedes all prior arrangements or
understandings with respect thereto.
- 20 -
21
(b) Assignment. This Employment Agreement may be assigned by the
Company to any business, enterprise, person, firm, corporation, partnership,
association or other entity acquiring (by purchase, merger or otherwise),
directly or indirectly, the business and substantially all of the assets of the
Company or of the subsidiaries of the Company. Notwithstanding the foregoing,
any assignment permitted under this Section 7(b) shall not affect the
acceleration of the stock options vesting schedule upon the occurrence of a
Change of Control.
(c) Governing Law. This Employment Agreement shall be governed by and
construed in accordance with the laws of the State of California without giving
effect to the conflict of law principles thereof.
(d) Headings. The descriptive headings used in this Employment
Agreement are for convenience only and shall not control or affect the meaning
or construction of any provision of this Employment Agreement.
(e) Notices. All notices or other communications which are required or
permitted pursuant
- 21 -
22
to this Employment Agreement shall be in writing and sufficient if delivered
personally or by telecopier (with a confirmation copy sent by mail) or sent by
registered or certified mail, postage prepaid, addressed as follows:
If to the Company:
Influence, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxx 000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxx
Telephone Number: (000) 000-0000
with a copy to:
Xxxx X. Xxxxxxx
Xxxxxx & Xxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
If to the Executive:
Xx. Xxxxx X. Xxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Any party may by written notice change the address to which notices to such
party are to be delivered or mailed.
(f) Waiver. Any waiver of any term or condition, or any amendment or
supplementation, of this Employment Agreement shall be effective only if in
writing and, in the case of any waiver by the Company
- 22 -
23
and any amendment or supplementation consented to by the Company, if approved by
the Chairman or the Board.
(g) Performance by Executive. The performance by the Executive of his
duties under this Employment Agreement is the personal obligation of the
Executive and may not be delegated by the Executive; however, the Executive may
delegate duties and responsibilities to other employees or agents of the Company
or its subsidiaries incident to normal and customary management practices.
(h) Remedies. If a violation by the Executive of any covenant contained
in this Employment Agreement occurs or is threatened, the Company and the
Executive agree and acknowledge that such violation or threatened violation will
cause irreparable injury to the Company and its subsidiaries, and the remedy at
law for any such violation or threatened violation shall be inadequate and that
the Company shall be entitled to temporary and permanent injunctive relief
without the necessity of proving actual damages.
- 23 -
24
(i) Legal Expenses. The Company shall reimburse the Executive for the
Executive's reasonable legal fees and expenses in negotiating and documenting
this Agreement.
* * * * *
- 24 -
25
IN WITNESS WHEREOF, the Company and the Executive have executed and
delivered this Employment Agreement on and as of the date first above written.
INFLUENCE, INC.
By: /s/ Xxxxx X. Xxxx
-----------------
Name: Xxxxx X. Xxxx
Title: Chairman of the Board
/s/ Xxxxx X. Xxxx
-----------------
Xxxxx X. Xxxx
- 25 -
