EMPLOYMENT AGREEMENT
Exhibit 10.38
This
Employment Agreement ("Agreement") is made effective as of August 27 2008
(“Effective Date”), by and between PureDepth Inc. (“Company”) and
Xxxx Xxxx ("Employee”).
Company
extends an offer of employment to Employee pursuant to the terms of this
Agreement.
The
parties agree as follows:
1. Employment. Company
hereby employs Employee, and Employee hereby accepts employment upon the terms
and conditions set forth herein. Employee’s full-time employment with
the Company as its Chief Executive Officer (CEO) will commence on September 8,
2008 (“Employment Date”).
2. Duties.
2.1 Position. Employee
will be the Company’s CEO reporting to the Company’s Board of Directors
(“Board”) and shall have the duties and responsibilities commensurate with that
position. Employee shall perform faithfully and diligently all duties
assigned to Employee. In addition, at the first meeting of the Board
on or after the date hereof, the Company will recommend to the Board that
Employee be appointed to serve on the Company’s Board.
2.2 Full-time/Best
Efforts. Employee will expend Employee’s best efforts on
behalf of Company, and will abide by all policies and decisions made by Company,
as well as all applicable federal, state and local laws, regulations or
ordinances. In fulfilling his responsibilities to the Company,
Employee will initially be required to travel internationally including to New
Zealand. On or before the 90th day anniversary of the Employment
Date, the Employee will provide the Company with his recommendation as to
whether he should work on a more regular basis in New Zealand. If
Employee makes such a recommendation, such assignment will be as a secondment to
work in Auckland at the offices of PureDepth Incorporated Limited (PDIL)
pursuant to the terms of a secondment agreement between Employee and
PDIL. During the period of the secondment, if any, Employee’s
employment with the Company will continue but certain terms of this Agreement
will be suspended for the duration of the secondment as will be set forth in the
relevant secondment agreement. If Employee is seconded as described
herein, certain expenses related to housing and other such items will be
contained in the secondment agreement.
3. At-Will Employment
Relationship. Employee’s employment with Company is at-will
and not for any specified period and may be terminated at any time, with or
without cause or advance notice, by either Employee or Company subject to the
provisions regarding termination set forth below in section 8. No
representative of Company, other than the Board Chair, has the authority to
alter the at-will employment relationship. Any change to the at-will
employment relationship must be by specific, written agreement signed by
Employee and the Company’s Board Chair. Nothing in this Agreement is
intended to or should be construed to contradict, modify or alter this at-will
relationship.
4. Compensation.
4.1 Base
Salary. Beginning as of the
Employment Date, Employee shall receive a Base Salary of Two Hundred Fifty
Thousand Dollars ($250,000.) per year, payable in accordance with
the normal payroll practices of Company, less required deductions for state and
federal withholding tax, social security and all other employment taxes and
payroll deductions. In the event Employee’s employment under this
Agreement is terminated by either party, for any reason, Employee will earn the
Base Salary prorated to the date of termination and will be subject to the
provisions regarding termination set forth below in section
8.
4.2 Performance-Based
Compensation Bonus. Employee will be eligible to receive
performance-based compensation (“Bonus”), the criteria of such performance
objectives (the “Goals”) to be defined by Employee and the Compensation
Committee of the Board within the first month following Employee’s commencement
of employment. Employee’s performance will be reviewed on an on-going
basis by the Board. Although there is no minimum guaranteed bonus,
Employee will be eligible to earn an aggregate annual Bonus of up to One Hundred
Twenty Five Thousand Dollars ($125,000.), payable at the Employee’s election in
either cash, a common stock award under the Company’s 2006 Stock Incentive Plan
(the “Stock Plan”) or a combination of both, in connection with the achievement
of the Goals. The Board shall determine, in its sole and absolute
discretion, whether the relevant Goals for a period have been achieved and the
amount and payment of a Bonus in connection therewith. Any earned
bonus will be paid on the 45th day following the end of the most recently
completed fiscal quarter (or, if such quarter is the last quarter of the fiscal
year, on the 74th day following the end of such quarter), subject to applicable
withholding.
4.3 Options. Subject
to the approval of the Company’s Board at its next regularly scheduled meeting
on September 24 2008, Employee will be granted an option to purchase 3,400,000
shares of Company common stock (the “Option”) under the Company’s Stock
Plan. The Option will vest monthly over a four year period with the
measuring period beginning on the Employment Date so long as Employee continues
to be employed by the Company or any of its subsidiaries. The
exercise price of the Option granted will be the closing price of the Company’s
common stock on the date of grant as reported by the OTC Bulletin
Board.
5. Customary Fringe
Benefits. Employee will be eligible for all customary and
usual fringe benefits generally available to employees of Company subject to the
terms and conditions of Company’s benefit plan documents and
policies. In addition, Employee shall be entitled to accrue four (4)
weeks of paid vacation on an annual basis, subject to the Company’s vacation
policy. The Company reserves the right to change or eliminate the
fringe benefits on a prospective basis, at any time, effective upon notice to
Employee.
6. Business
Expenses. Employee will be reimbursed for all reasonable,
out-of-pocket business expenses incurred in the performance of Employee’s duties
on behalf of Company including but not limited to business travel expenses
incurred in the performance of work duties. To obtain reimbursement,
expenses must be submitted promptly with appropriate supporting documentation in
accordance with Company’s policies. Any reimbursement Employee is
entitled to receive shall (a) be paid no later than the last day of Employee’s
tax year following the tax year in which the expense was incurred, (b) not be
affected by any other expenses that are eligible for reimbursement in any tax
year and (c) not be subject to liquidation or exchange for another
benefit.
7. No Conflict of
Interest. During Employee’s employment with Company, Employee must not
engage in any work, paid or unpaid, that creates an actual conflict of interest
with Company. Such work shall include, but is not limited to,
directly or indirectly competing with Company in any way, or acting as an
officer, director, employee, consultant, stockholder, volunteer, lender, or
agent of any business enterprise of the same nature as, or which is in direct
competition with, the business in which Company is now engaged or in which
Company becomes engaged during Employee’s employment with Company, as may be
determined by Company in its sole discretion. If Company believes
such a conflict exists, Company may ask Employee to choose to discontinue the
other work or resign employment with Company. Notwithstanding the
above, Employee may continue to serve on the boards of directors of two entities
on which he currently serves so long as such service does not interfere with
Employee’s duties to the Company.
8. Termination of
Employment.
8.1 Death. If
Employee’s employment with the Company terminates by reason of Employee’s death,
the Company will pay to Employee’s estate the amount of any unpaid Base Salary
plus any unused, accrued vacation earned by Employee through the date of
Employee’s death.
8.2 Disability. If
the Company or Employee terminates Employee’s employment by reason of Employee’s
disability, Employee shall be entitled to Base Salary plus any unused, accrued
vacation earned by Employee through the date of Employee’s
termination. For purposes of this Agreement, disability shall mean
the Employee’s failure to perform the essential functions of Employee’s position
for 30 days, with or without reasonable accommodation, due to a mental or
physical disability.
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8.3 Termination by the Company
for Cause or Voluntary Termination by Employee. If the Company
terminates Employee’s employment for Cause (as defined in Section 8.6 below), or
Employee voluntarily terminates Employee’s employment, then Employee shall be
entitled to Base Salary plus any unused, accrued vacation earned by Employee
through the date of Employee’s termination.
8.4 Termination by the Company
Without Cause. If Employee’s employment is terminated by the
Company Without Cause (as defined in Section 8.6 below) and the Employee
executes a full general release in a form reasonably acceptable to the Board,
releasing all claims, known or unknown, that Employee may have against Company
and any of its subsidiaries or agents and such release has become effective in
accordance with its terms prior to the 30th day following the effective date of
such termination, then, the Company shall pay to Employee, in accordance with
the Company’s regular payroll schedule, commencing with the first payroll date
occurring at least 30 days following such effective date, an amount equal to
Employee’s then effective Base Salary for a period of six (6) months, payable to
Employee in equal installments (the “Severance Period”), and the Company and
Employee agree that for purposes of Section 409A, the payments pursuant to this
Section 8.4 shall be treated as a right to a series of separate
payments.
8.5 Termination Without Cause
Following a Change of Control. If Employee’s employment with
the Company is terminated Without Cause on or within twelve (12) months
following the effective date of a Change of Control (as defined below), then
subject to Employee’s execution of a full general release in a form reasonably
acceptable to the Board, releasing all claims, known or unknown, that Employee
may have against Company and any of its subsidiaries or agents, and such release
has become effective in accordance with its terms prior to the 30th day
following the effective date of such
termination, then: (a) the Company shall pay to Employee,
in accordance with the Company’s regular payroll schedule, commencing with the
first payroll date occurring at least 30 days following the Termination Date, an
amount equal to Employee’s then effective Base Salary for a period of six (6)
months, payable to Employee in equal installments for the Severance Period;
and (b) Employee shall become vested in 50% of the shares subject to
his Option and any subsequent options to purchase the Company’s common stock
granted to him.
8.6 Definition of Cause.
“Cause” shall be deemed to exist if Employee engages in the following:
(a) theft, dishonesty, misconduct or falsification of the Company’s (for
purposes of this definition shall include any of its subsidiaries) or its
successor’s records or property; (b) unauthorized use or disclosure of the
Company’s or its successor’s confidential or proprietary information or trade
secrets; (c) gross negligence or willful misconduct in the performance of
Employee’s duties to the Company; (d) failure to perform such assigned
duties and responsibilities as shall be consistent with the duties and
responsibilities of an employee of the Company in a similar job position after
receipt of a written notice of specific deficiencies and Employee has not cured
any such deficiencies within 15 days after the receipt of such notice;
(e) a material breach by Employee of any agreement between Employee and the
Company, and such breach has not been cured by Employee within 15 days after
written notice of breach by the Company; (f) conviction (including plea of
no contest) for any felony or act of fraud; or (g) the failure by Employee
to cooperate in good faith with a governmental investigation of the Company or
its directors, officers or employees, if the Company has requested Employee’s
cooperation.
8.7 Definition of Without
Cause. A termination of Employee’s employment shall be
“Without Cause” if the Company unilaterally terminates Employee’s employment
with the Company for any reason other than Cause; provided, however, that
termination of Employee’s employment shall not be “Without Cause” if it results
from the death or disability of Employee. A termination shall also be
“Without Cause” if (i) during Employee’s employment, the Company changes
Employee’s title or position without Employee's written permission, such that he
experiences a material diminution in his authority, duties or responsibilities
(a “Material Adverse Change”), (ii) within 10 days of the effective date of the
Material Adverse Change, Employee provides written notice to the Board of
Employee’s intent to voluntarily resign from employment with the Company due to
the Material Adverse Change if such Material Adverse Change is not cured within
fifteen days of the Board’s receipt of such notice, (iii) the Board does not
cure the Material Adverse Change within fifteen days of its receipt of such
notice, and (iv) Employee voluntarily resigns no later than the end of business
on the fifteenth day following the Board’s receipt of such notice.
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8.8 Definition of Change of
Control. “Change of Control” is defined as the occurrence of
any of the following events: (a) any
"person" (as defined in Section 13(d) and 14(d) of the Securities exchange Act
of 1934, as amended (the "Exchange Act")), excluding for this purpose,(i) the
Company or any subsidiary of the Company, or (ii) any employee benefit plan of
the Company or any subsidiary of the Company, or any person or entity organized,
appointed or established by the Company for or pursuant to the terms of any plan
which acquires beneficial ownership of voting securities of the Company, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly of securities of the Company representing more than
fifty percent (50%) of the combined voting power of the Company's then
outstanding securities; provided, however, that no Change of Control will be
deemed to have occurred as a result of a change in ownership percentage
resulting solely from an acquisition of securities by the Company, the grant or
exercise of any stock option, stock award, stock purchase right or similar
equity incentive, or the continued beneficial ownership by any party of voting
securities of the Company which such party beneficially owned as of
the date of this Agreement; or (b) consummation of a reorganization, merger
or consolidation or sale or other disposition of at least 80% of the assets
(other than cash and cash equivalents) of the Company (a "Business
Combination"), in each case, unless, following such Business Combination, all or
substantially all of the individuals and entities who were the beneficial owners
of outstanding voting securities of the Company immediately prior to such
Business Combination beneficially own, directly or indirectly, more than fifty
percent (50%) of the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the case
may be, of the company resulting from such Business Combination (including,
without limitation, a company which, as a result of such transaction, owns the
Company or all or substantially all of the Company's assets either directly or
through one or more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination, of the outstanding
voting securities of the Company; or (c) approval by the stockholders of the
Company of a complete liquidation or dissolution of the
Company.
9. Application of Section
409A.
(a) Notwithstanding
anything set forth in this Agreement to the contrary, no amount payable pursuant
to this Agreement which constitutes a “deferral of compensation” within the
meaning of the Treasury Regulations issued pursuant to Section 409A of the Code
(the “Section 409A Regulations”) shall be paid unless and until Employee has
incurred a “separation from service” within the meaning of the Section 409A
Regulations. Furthermore, to the extent that Employee is a “specified
employee” within the meaning of the Section 409A Regulations as of the date of
Employee’s separation from service, no amount that constitutes a deferral of
compensation which is payable on account of Employee’s separation from service
shall paid to Employee before the date (the “Delayed Payment Date”) which is
first day of the seventh month after the date of Employee’s separation from
service or, if earlier, the date of Employee’s death following such separation
from service. All such amounts that would, but for this Section,
become payable prior to the Delayed Payment Date will be accumulated and paid on
the Delayed Payment Date.
(b) The
Company intends that income provided to Employee pursuant to this Agreement will
not be subject to taxation under Section 409A of the Code. The
provisions of this Agreement shall be interpreted and construed in favor of
satisfying any applicable requirements of Section 409A of the
Code. However, the
Company does not guarantee any particular tax effect for income provided to
Employee pursuant to this Agreement. In any event, except for
the Company’s responsibility to withhold applicable income and employment taxes
from compensation paid or provided to Employee, the Company shall not be
responsible for the payment of any applicable taxes on compensation paid or
provided to Employee pursuant to this Agreement.
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10. Confidentiality and
Proprietary Rights. Employee agrees to read, sign and abide by
Company’s Employee Nondisclosure and Assignment Agreement (“Confidentiality
Agreement”), which is incorporated herein by reference.
11. Agreement to
Arbitrate. In the event of any dispute or claim relating to or arising
out of the employment relationship or the termination of that relationship
(including, but not limited to, any claims of wrongful termination or age, sex,
race, disability or other discrimination), Employee and Company agree that all
such disputes shall be fully and finally resolved by binding arbitration
conducted before a single neutral arbitrator pursuant to the rules for
arbitration of employment disputes by the American Arbitration Association
(available at xxx.xxx.xxx) in San
Mateo County, California. The arbitrator shall permit adequate
discovery and is empowered to award all remedies otherwise available in a court
of competent jurisdiction and any judgment rendered by the arbitrator may be
entered by any court of competent jurisdiction. The arbitrator shall
issue an award in writing and state the essential findings and conclusions on
which the award is based. By executing this letter, Employee and the
Company are both waiving the right to a jury trial with respect to any such
disputes. Company shall bear the costs of the arbitrator, forum and
filing fees. Each party shall bear its own respective attorney fees
and all other costs, unless otherwise provided by law and awarded by the
arbitrator.
12. General
Provisions.
12.1 Successors and
Assigns. The rights and obligations of Company under this
Agreement shall inure to the benefit of and shall be binding upon the successors
and assigns of Company. Employee shall not be entitled to assign any
of Employee’s rights or obligations under this Agreement.
12.2 Waiver. Either
party's failure to enforce any provision of this Agreement shall not in any way
be construed as a waiver of any such provision, or prevent that party thereafter
from enforcing each and every other provision of this Agreement.
12.3 Attorneys’
Fees. Each side will bear its own attorneys’ fees in any
dispute unless a statutory section at issue, if any, authorizes the award of
attorneys’ fees to the prevailing party.
12.4 Severability. In
the event any provision of this Agreement is found to be unenforceable by an
arbitrator or court of competent jurisdiction, such provision shall be deemed
modified to the extent necessary to allow enforceability of the provision as so
limited, it being intended that the parties shall receive the benefit
contemplated herein to the fullest extent permitted by law. If a
deemed modification is not satisfactory in the judgment of such arbitrator or
court, the unenforceable provision shall be deemed deleted, and the validity and
enforceability of the remaining provisions shall not be affected
thereby.
12.5 Interpretation;
Construction. The headings set forth in this Agreement are for
convenience only and shall not be used in interpreting this
Agreement. This Agreement has been drafted by legal counsel
representing Company, but Employee has participated in the negotiation of its
terms. Furthermore, Employee acknowledges that Employee has had an
opportunity to review and revise the Agreement and have it reviewed by legal
counsel, if desired, and, therefore, the normal rule of construction to the
effect that any ambiguities are to be resolved against the drafting party shall
not be employed in the interpretation of this Agreement.
12.6 Governing
Law. This Agreement will be governed by and construed in
accordance with the laws of the United States and the State of
California. Each party consents to the jurisdiction and venue of the
state or federal courts in San Mateo, California, if applicable, in any action,
suit, or proceeding arising out of or relating to this Agreement.
12.7 Notices. Any
notice required or permitted by this Agreement shall be in writing and shall be
delivered as follows with notice deemed given as indicated: (a) by
personal delivery when delivered personally; (b) by overnight courier upon
written verification of receipt; (c ) by telecopy or facsimile transmission upon
acknowledgment of receipt of electronic transmission; or (d) by certified or
registered mail, return receipt requested, upon verification of
receipt. Notice shall be sent to the addresses set forth below, or
such other address as either party may specify in writing.
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12.8 Survival. Sections
8 (“Termination of Employment”), 10 (“Confidentiality and Proprietary Rights”),
11 (“Agreement to Arbitrate”), 12 (“General Provisions”) and 13 (“Entire
Agreement”) of this Agreement shall survive Employee’s employment by
Company.
13. Entire
Agreement. This Agreement, including the Employee
Nondisclosure and Assignment Agreement incorporated herein by reference, the
Company’s 2006 Stock Incentive Plan and related option documents described in
section 4.3 of this Agreement, constitutes the entire agreement between the
parties relating to this subject matter and supersedes all prior or simultaneous
representations, discussions, negotiations, and agreements, whether written or
oral. This Agreement may be amended or modified only with the written
consent of Employee and the Board Chair of the Company. No oral
waiver, amendment or modification will be effective under any circumstances
whatsoever.
THE
PARTIES TO THIS AGREEMENT HAVE READ THE FOREGOING AGREEMENT AND FULLY UNDERSTAND
EACH AND EVERY PROVISION CONTAINED HEREIN. WHEREFORE, THE PARTIES HAVE EXECUTED
THIS AGREEMENT ON THE DATES SHOWN BELOW.
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Xxxx
Xxxx
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Dated:
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/s/ Xxxx Xxxx
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Mr.
Xxxx Xxxx
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PureDepth
Inc.
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Dated:
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By:
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/s/ Xxxx Xxxxx
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Xx.
Xxxx Xxxxx
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Director
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