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EXHIBIT 10.13
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into by and between
Xxx Xxxxxxx ("Xxxxxxx") and Spectra Diode Laboratories, Inc. (the "Company"),
and is effective as of the 17th day of July, 1992.
The parties hereby agree as follows:
1. Period of Employment.
The company will employ Xxxxxxx to render services to the company
in the position and with the duties and responsibilities described in Section 2,
for the compensation specified in Sections 3 and 4 and for the period commencing
on the effective date of this Agreement and ending on termination as provided in
Section 5.
2. Position and Duties.
Xxxxxxx accepts employment with the Company as its President,
Chief Executive Officer and Chairman of the Board of Directors. As such, Xxxxxxx
shall have overall responsibility for the management and operations of the
Company, subject to the supervision and responsibilities of the Board of
Directors. In addition, Xxxxxxx shall have the duties and responsibilities of
the foregoing positions as set forth in the Bylaws of the Company. Any change in
Xxxxxxx' position and/or duties hereunder or a change in the location at which
he is to perform services hereunder which results in a commute for Xxxxxxx from
his current residence in excess of 25 miles shall constitute a termination of
this Agreement by the Company. Xxxxxxx shall report directly to the Board of
Directors.
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3. Compensation.
(a) Base Salary. Xxxxxxx shall receive a base salary of
$170,684 per year, payable in equal installments in
accordance with the Company's current practices. The
foregoing base salary shall be subject to annual increases
on January 1 of each year during the term of this
Agreement, as determined by the Board of Directors in its
sole discretion.
(b) Bonuses. The Board of Directors shall approve an annual
operating plan for the Company. Xxxxxxx shall receive cash
bonuses in connection with each audit of the Company's
results of operations conducted by the Company's
independent certified public accountants. Such audits
shall be conducted at least annually. Xxxxxxx' bonuses
shall be computed as follows, adjusted pro rata to reflect
any audit period less than twelve (12) months (provided
that the first audit conducted after the effective date of
this Agreement shall be deemed to exclude the period
October 1, 1991 0 December 31, 1991):
(i) 18.75% of Xxxxxxx' then-current base salary if the
Company achieves at least 100% of the revenues
specified in the operating plan(s) for the fiscal
period covered by the audit;
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(ii) 18.75% of his then-current base salary if the
Company achieves at least 100% of the operating
income before interest and taxes (excluding
extraordinary items) specified in the operating
plan(s) for the fiscal period covered by the audit;
(iii) 12.5% of his then-current base salary in the sole
discretion of the Board of Directors. The Company's
results of operations shall be determined by the
Company's independent certified public accountants
in accordance with generally accepted accounting
principles applied consistent with the practice for
prior periods and shall be accompanied by an audit
report of such accountants, which shall be
reasonably acceptable to the Company's Board of
Directors. Such bonuses shall be calculated and
paid within thirty (30 days following delivery of
the audit report. If the Company achieves revenues
and/or net income before taxes (excluding
extraordinary items) of at least 70% of the levels
specified in the operating plan(s) for the fiscal
period covered by the audit, the foregoing bonuses
shall be paid, reduced on a straight-line basis to
a zero bonus at 70% of plan. Bonuses shall be
deemed earned with respect to each fiscal year (or
portion thereof) during which Xxxxxxx has been
employed hereunder as of the end of the fiscal
period covered by the audit; such bonuses shall
thereafter be paid on the dates set forth above,
subject only to the determination of the Company's
results of operations, whether or not employment
hereunder has terminated.
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(c) Stock Option Grants. Xxxxxxx will be granted stock options
under the Company's 1992 Stock Option Plan as follows: options for 183,550
shares of Common Stock vesting in equal monthly installments over one year from
the date of consummation of the transaction described in Section 5(d); and
options for 100,000 shares of Common Stock vesting in equal monthly installments
over four years from such date; provided, however, that the number or four-year
options shall be increased, in the event all one-year options budgeted by the
Company (487,320 shares) are not awarded, by an amount (rounded to the nearest
whole share) equal to 24.61% of the one-year options not awarded, up to a
maximum of 22,500 additional shares. The foregoing options will have an exercise
price of an exercise price of $1.75 per share and will otherwise have the terms
and conditions prescribed under the Company's 1992 Stock Option Plan.
4. Benefits.
(a) General. Xxxxxxx will continue to receive all employee
benefits to which he is currently entitled, consisting of (i) those benefits
made generally available to the Company's employees, and (ii) the benefits
described in the attachments to the letter dated January 3, 1991 from Xxxxxxx to
Xxxxx Xxxxxxx (a copy of which is attached hereto). In addition, Xxxxxxx shall
receive in the future any and all benefits generally made available to the
Company's executive personnel. The foregoing shall include, without limitation,
stock purchase and stock option plan grants, with the number of shares, if any,
covered by such grants determined by the Board of Directors in its sole
discretion. The Company shall reimburse Xxxxxxx for reasonable travel and other
business expenses incurred by him in the performance of his duties hereunder in
accordance with the Company's policies in this regard.
(b) Life Insurance. During the term of this Agreement and for
a period of twenty-four (24) months thereafter (subject to reduction as provided
in section 5), the Company will maintain an insurance policy on Xxxxxxx' life in
an
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amount equal to two (2) times his then-current base salary. The proceeds of the
foregoing insurance policy shall be payable to such beneficiaries as Xxxxxxx may
designate from time to time or, in the absence of a designation, to his estate.
(c) Board Seat. During the term of Xxxxxxx' employment
hereunder, Xxxxxxx shall be entitled to serve as a member of the Company's Board
of Directors pursuant to the terms of the Voting Agreement of even date
herewith.
(d) Post-Termination. For a period of twenty-four (24) months
(subject to reduction as provided in Section 5) following the termination of
Xxxxxxx' employment pursuant to this Agreement: (i) during the COBRA period, the
Company will reimburse Xxxxxxx (including a gross-up to compensate Xxxxxxx for
any taxes payable with respect to such reimbursement) for all amounts payable by
Xxxxxxx to retain medical benefits under COBRA, provided that during the COBRA
period Xxxxxxx will (as defined below), Xxxxxxx shall be entitled to the
following benefits (subject to reduction as provided below):
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(i) A lump sum payment (payable within thirty (30) days
of termination) of twenty-four (24) months' salary based on his then-current
base salary;
(ii) Acceleration of vesting, by twenty-four (24)
additional months from such date of termination, under all outstanding stock
options and stock purchase, stock appreciation and similar rights then held by
Xxxxxxx; and
(iii) An amount, payable for twenty-four (24) months
commencing on the effective date of termination of Xxxxxxx' employment, equal to
4.1666% of his then-current base salary.
For each full month occurring after the effective date of this
Agreement and prior to the first anniversary thereof, the time periods in
clauses (i), (ii) and (iii) above and in Sections 4(b) and 4(d) shall each be
reduced by one (1) month. As a result of this Agreement, the time periods in
clauses (i), (ii) and (iii) above and in Sections 4(b) and 4(d) shall be reduced
to twelve (12) months. The reduction in the time periods set forth in the
preceding sentence to twelve (12) months shall also come effect as of the
closing of the Company's initial underwritten offering of shares of its Common
Stock to the general public.
(c) Subsequent to the termination of Xxxxxxx' employment
thereunder, the payments and benefits provided for in
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Sections 4 (b) and 4 (d) and subsection 5 (b) (iii) shall terminate at such
time, if any, as Xxxxxxx commences full-time employment whereby he can obtain
group health and disability benefits (including coverage for preexisting
conditions) and life insurance benefits comparable to those to which he is
entitled hereunder. The Company's obligations and Xxxxxxx' rights under
subsections 5 (b) (i) and 5 (b) (ii) shall not be affected by Xxxxxxx'
commencement of new employment.
(d) In the event the Company terminates Xxxxxxx' employment
pursuant to subsection (a) above for cause, the Company's repurchase rights
under the stock option (183,550 shares) with a one-year vesting period
referenced in Section 3 (c) shall lapse in full. "Cause" shall be limited solely
to (i) Xxxxxxx' gross abdication of his duties hereunder (other than due to
illness or personal family problems), which conduct remains uncured for a period
of at least 30 days following written notice thereof to Xxxxxxx.
(e) This Agreement shall terminate upon Xxxxxxx' death or
permanent disability. In such event, and in addition to all other benefits to
which Xxxxxxx is then entitled under this Agreement or the Company's benefits
plans, Xxxxxxx (or his estate) shall be entitled to receive the benefits
provided for under Section 5 (b).
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(f) In the event there is a "change of control" of the
Company, and if Xxxxxxx shall thereafter terminate this Agreement, Xxxxxxx shall
be entitled to receive the benefits provided for under Section 5 (b). For
purposes of this Section 5 (d), a "change of control" of the Company shall be
deemed to have occurred if, after the effective date of this Agreement, any
person or entity, including a "group" as defined in Section 13 (d) (3) of the
Securities Exchange Act of 1934, as amended, becomes the beneficial owner of
more than 50% of the securities of the Company having the right to vote for the
election of directors. Neither (a) the acquisition by Sprout Group and/or
Xxxxxxx Partnars, Inc., or their affiliates or entities managed or advised by
them (the "Investors"), of securities of the Company in accordance with the
Letter of Intent dated June 22, 1992, nor (b) the transfer of such shares to the
limited or general partners or shareholders, as applicable, of any of the
Investors shall be deemed to be a "change of control" of the Company. The
provisions of this section 5 (f) shall terminate on the closing of the Company's
initial underwritten offering of shares of its Common Stock to the general
public.
6. Miscellaneous.
(a) Notices under this Agreement shall be in writing and shall be
deemed given when delivered in person or three (3) days following
deposit in the United States Mail, postage prepaid, certified or
return receipt requested, and addressed as follows:
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If to Xxxxxxx: XXXXXXXXXXX
If to the Company: 00 Xxxx Xxxxxxx Xxx
Xxx Xxxx, Xxxxxxxxxx 00000
Attention: Corporate Secretary
The foregoing addresses may be changed by notice in accordance with this
subsection (a).
(b) The prevailing party in any action to enforce the terms of this
Agreement shall be entitled to reimbursement from the other party
for its costs and expenses (including reasonable attorneys' fees)
in connection therewith.
(c) The terms of this Agreement are intended by the parties to be the
final expression of their agreement with respect to the employment
of Xxxxxxx by the Company and may not be contradicted by evidence
of any prior or contemporaneous agreement. The offer letter dated
June 13, 1983 is superseded by this Agreement and shall be of no
further force or effect. The parties further intend that this
Agreement shall constitute the complete and exclusive statement of
its terms (except that Xxxxxxx shall be bound by his Invention and
Confidential Information Agreement with the Company in accordance
with its terms) and that no extrinsic evidence whatsoever may be
produced in any legal proceeding involving this Agreement. This
Agreement may be amended, and the observance of any of its terms
may be waived, only by a writing signed by the party to be charged
with such amendment or waiver.
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(d) If any prevision of this Agreement, or the application thereof to
any person, place or circumstance, shall be held by a court of
competent jurisdiction to be invalid, unenforceable or void, the
remainder of this Agreement and such provisions as applied to other
persons, places and circumstances shall remain in full force and
effect.
(e) The validity, interpretation, enforceability and performance of
this Agreement shall be governed by and construed in accordance
with the laws of the State of California, without regard to its
rules regarding conflicts of laws.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first set forth above.
EMPLOYEE SPECTRA DIODE LABORATORIES, INC.
By /S/ Xxx Xxxxxxx By /S/ Xxxx Xxxxxx
--------------------------- ------------------------------
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AMENDMENT
TO
EMPLOYMENT AGREEMENT
THIS AMENDMENT ("Amendment") is entered into with respect to the
Employment Agreement by and between Xxx Xxxxxxx and Spectra Diode Laboratories,
Inc., dated as of July 17, 1992 (the "Agreement").
The parties hereby agree as follows:
A. Amendment. There is added to Section 3 (c) of the Agreement the
following:
"In the event that the accelerated venting of Xxxxxxx' option
shares in connection with a change in the control of the
company (as defined in Section 5 (f) below), results in the
imposition of excise taxes on Xxxxxxx under Section 4999 of
the Internal Revenue Code ("Code") (and corresponding
provisions of applicable state tax law), the Company agrees to
pay Xxxxxxx a cash bonus calculated as follows: (a) if more
than 75% of the voting power of all outstanding stock of the
Company is held, as of the record date on which the approval
of the Company's shareholders is solicited with respect to
such transaction, by the Investors (as defined in Section 5
(f) below), then the cash bonus shall equal the excise taxes
imposed on Xxxxxxx under Section 4999 of Code (and
corresponding provisions of applicable state tax law) as a
result of the accelerated vesting of the option shares and
other "parachute payments" (as that term is defined by Code
Section 280G (b) (2)) received by Xxxxxxx in connection with
such change in control (including, without limitation, the
bonus provided for in this Section 3 (c)), or (b) if the
Investors hold 75% or less of the voting powers of all
outstanding stock of the company at that time, then the cash
bonus shall equal the lesser of (i) the amount determined
under clauses (a), or (ii) $100,000.
2. Continuing Effect. Except as provide in this Amendment, the
Agreement shall continue in full force and effect in accordance with its terms.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed as of February 17, 1993.
SPECTRA DIODE LABORATORIES, INC.
By: /s/ Xxxx X. Xxxxxx
-----------------------------------
/s/ Xxx Xxxxxxx
----------------------------------------
Xxx Xxxxxxx
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SECOND AMENDMENT
TO
EMPLOYMENT AGREEMENT
THIS SECOND AMENDMENT ("Amendment") is entered into with respect to the
Employment Agreement by and between Xxx Xxxxxxx and SDL, Inc., dated as of July
17, 1992, as amended as of February 1993 (as amended, the "Agreement").
The parties hereby agree as follows:
1. Amendment. Section 3(b) of the Agreement is amended to read in its
entirety as follows:
"Bonuses. The Board of Directors shall approve an annual operating
plan for the Company. Xxxxxxx has shall receive cash bonuses in
connection with each audit of the Company's results of operations
conducted by the Company's independent certified public accountants.
Such audits shall be conducted at least annually. Xxxxxxx' bonuses
shall be computed as provided in the matrix attached to this
Amendment as Exhibit A, provided that (i) such bonuses shall be
adjusted pro rata to reflect any audit period less than twelve (12)
months, and (ii) with respect to Note 3 of Exhibit A, Xxxxxxx' bonus
will be 50% of his then current base salary times the matrix factor.
The Company's results of operations shall be determined by the
Company's independent certified public accountants in accordance
with general accepted accounting principles applied consistent with
the practice for prior periods and shall be accompanied by an audit
report of such accountants, which shall be reasonably acceptable to
the Company's Board of Directors. Such bonuses shall be calculated
and paid within thirty (30) days following delivery of the audit
report. Bonuses shall be deemed earned with respect to each fiscal
year (or portion thereof) during which Xxxxxxx has been employed
hereunder as of the end of the fiscal period covered by the audit;
such bonuses shall thereafter be paid on the dates set forth above,
subject only to the determination of the company's results of
operations, whether or not employment hereunder has terminated."
2. Effectiveness. The foregoing amendment of the Agreement shall be
effective as of January 1, 1994.
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3. Continuing Effect. Except as provided in this Amendment, the
Agreement shall continue in full force and effect in accordance with
its terms.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of July 29, 1994.
SDL, INC.
BY /S/ Xxxx X. Xxxxxx
----------------------------------
Xxx Xxxxxxx
/S/ Xxx Xxxxxxx
--------------------------------------
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80 84 88 92 96 100 104 108 112 116 120 124 128
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70 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.7 0.7 0.7 0.7 0.7
------------------------------------------------------------------------------------------
76 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 0.9 0.9 0.9 0.9
------------------------------------------------------------------------------------------
82 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 1.1 1.1 1.1 1.1
------------------------------------------------------------------------------------------
88 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 1.1 1.2 1.3 1.3 1.3
------------------------------------------------------------------------------------------
94 0.4 0.5 0.6 0.7 0.8 0.9 1.0 1.1 1.2 1.3 1.4 1.5 1.6
------------------------------------------------------------------------------------------
100 0.5 0.6 0.7 0.8 0.9 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7
------------------------------------------------------------------------------------------
106 0.6 0.7 0.8 0.9 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8
------------------------------------------------------------------------------------------
112 0.7 0.8 0.9 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9
------------------------------------------------------------------------------------------
118 0.7 0.9 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 2.0
------------------------------------------------------------------------------------------
124 0.7 0.9 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 2.0 2.1
------------------------------------------------------------------------------------------
130 0.7 0.9 1.1 1.3 1.4 1.5 1.6 1.7 1.8 1.9 2.0 2.1 2.2
------------------------------------------------------------------------------------------
136 0.7 0.9 1.1 1.3 1.5 1.6 1.7 1.8 1.9 2.0 2.1 2.2 2.3
------------------------------------------------------------------------------------------
142 0.7 0.9 1.1 1.3 1.5 1.7 1.8 1.9 2.0 2.1 2.2 2.3 2.4
------------------------------------------------------------------------------------------
148 0.7 0.9 1.1 1.3 1.5 1.7 1.9 2.0 2.1 2.2 2.3 2.4 2.5
------------------------------------------------------------------------------------------
154 0.7 0.9 1.1 1.5 1.5 1.7 1.9 2.1 2.2 2.3 2.4 2.5 2.6
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NOTE
1. Payments will be made on a continuous linear scale between points to avoid
trying to meet arbitrary increments in the above matrix.
2. Operating income is defined as "Income Before Interest and Taxes" as Xxxx
Xxxxxxxx has provided in the past (excluding non-operating expense, e.g.,
stock option extension, comp. expense).
3. Vice Presidents' bonus will be 15% of salary times the matrix factor and up
to 10% of salary at the discretion of the Board.
