EMPLOYMENT AGREEMENT
This Agreement is made and entered into by and between Network
Peripherals Inc., a Delaware Corporation (the "Company"), and ▇▇▇▇▇ ▇. ▇▇▇▇▇
("▇▇▇▇▇") as September 12, 2000 (the "Effective Date").
1. Position and Duties. Regel shall be employed by the Company as its
President and Co-Chief Executive Officer, reporting to the Company's Board of
Directors (the "Board"). As its President and Co-Chief Executive Officer, Regel
agrees to devote his full business time, energy and skill to his duties at the
Company. These duties shall include all those duties customarily performed by
the President and Chief Executive Officer, as well as any other reasonable
duties that may be assigned from time to time by Board. In addition, Regel has
been elected to the Board for a term expiring at the annual meeting of the
stockholders of the Company to be held in 2001.
2. Term of Employment. Regel's employment with the Company will be for
no specified term, and may be terminated by Regel or the Company at any time,
with or without cause. Upon the termination of Regel's employment with the
Company for any reason, neither Regel nor the Company shall have any further
obligation or liability under this Employment Agreement to the other, except as
set forth in paragraphs 5, 6, 10 and 11 below.
3. Compensation. Regel shall be compensated by the Company for his
services as follows:
(a) Base Salary. Regel shall be paid a monthly base salary of
$20,833.33 per month ($250,000 on an annualized basis), subject to applicable
withholding, in accordance with the Company's normal payroll procedures.
(b) Benefits. Regel shall have the right, on the same basis as
other members senior management of the Company, to participate in and to receive
benefits under any of the Company's employee benefit plans, as such plans may be
modified from time to time. In addition, Regel shall be entitled to the benefits
afforded to other members of senior management under the Company's vacation,
holiday and business expense reimbursement policies.
(c) Performance Bonus. Regel shall be eligible to earn an
annual bonus of $100,000 based on the attainment of MBOs as approved by the
Compensation Committee. For the first 12 months of his employment, $75,000 or
75% of the total eligible bonus is guaranteed, and is paid in equal amounts over
the first twelve months of his employment. This guaranteed bonus will be paid
consistent with the Company's normal payroll procedure, with the remaining 25%
of the eligible bonus to be determined by attainment of the MBOs as evaluated by
the Compensation Committee and paid in the quarter following Regel's first
twelve months of employment.
4. Stock Option. Regel shall be granted the option to purchase up to
375,000 shares of the Common Stock of the Company (the "Option"). Subject to
Regel's continued employment with the Company, the shares subject to the Option
(the "Optioned Shares") shall
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become vested and exercisable at the rate of 93,750 Optioned Shares on August 1,
2001 and an additional 7,812 Optioned Shares for each full month of Regel's
employment with the Company thereafter. Provided that Regel's employment with
the Company has not terminated prior to the date of the consummation of a Change
in Control (as defined in paragraph 7 below), the vesting and exercisability of
the Optioned Shares shall be accelerated effective as of the date ten (10) days
prior to the date of the Change in Control as to:
(a) 50% of the Optioned Shares that would otherwise remain
unvested as of the date of the Change in Control, provided that the Change in
Control is consummated on or before February 1, 2001; or
(b) 75% of the Optioned Shares that would otherwise remain
unvested as of the dated of the Change in Control, provided that the Change in
Control is consummated after February 1, 2001 and on or before August 1, 2001;
or
(c) 100% of the Optioned Shares that would otherwise remain
unvested as of the date of the Change in Control, provided that the Change in
Control is consummated after August 1, 2001.
Except as otherwise provided herein, the Option shall be subject to the terms of
the Company's 1997 and 1999 Stock Plan and the appropriate standard form Company
stock option agreement, which Regel shall be required to sign as a condition of
the issuance of the Option.
5. Benefits Upon Voluntary Termination, Permanent Disability or Death.
In the event that Regel voluntarily terminates his employment relationship with
the Company at any time and such termination is not deemed a Constructive
Termination Following a Change in Control (as defined in paragraph 7 below), or
in the event that Regel's employment terminates as a result of his death or
Permanent Disability (as defined in paragraph 7 below) other that within one (1)
year after a Change in Control, Regel shall be entitled to no compensation or
benefits from the Company other that those earned under paragraphs 3 and 4 above
through the date of his termination of employment. In the event that Regel
voluntarily resigns from his employment with the Company, he shall
simultaneously resign from his membership on the Board.
6. Benefits Upon Other Termination. Regel agrees that his employment
may be terminated by the Company at any time, with or without cause. In the
event of the termination of Regel's employment by the Company for the reasons
set forth below, he shall be entitled to the following:
(a) Termination for Cause. If Regel's employment is terminated
by the Company for Cause (as defined in paragraph 7 below), Regel shall be
entitled to no compensation or benefits from the Company other than those earned
under paragraph 3 and 4 above through the date of his termination of employment.
In the event that Regel's employment is terminated by the Company for Cause,
Regel shall immediately resign from his membership on the Board.
(b) Termination Without Cause: Resignation Upon Constructive
Termination Following a Change in Control: Death or Permanent Disability
Following a Change in Control.
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(i) If Regel's employment is terminated by the Company for any
reason other than for Cause (as defined in paragraph 7 below), or if Regel
resigns from all capacities in which he is then rendering service to the Company
(including services as a member of the Board) within a reasonable period of time
following an event constituting Constructive Termination Following a Change in
Control (as defined in paragraph 7 below) as a result of his death or Permanent
Disability following such Change in Control, Regel shall be entitled to the
following separation benefits:
(A) Compensation and benefits earned under paragraphs 3 and 4
through the date of Regel's termination;
(B) Regel's employment as an officer of the Company shall
terminate immediately; however, the Company shall continue Regel's employment as
a non-officer employee of the Company for a period of one (1) year following the
date of his termination (the "Severance Period"). During the Severance Period,
Regel shall be entitled to the greater of (1) his then current base salary or
(2) his base salary as provide in paragraph 3 of this Employment Agreement, less
applicable withholding, payable in accordance with the Company's normal payroll
practices;
(C) Within ten (10) days of submission of proper expense
reports by Regel, the Company shall reimburse Regel for all expenses he has
reasonably and necessarily incurred in connection with the business of the
Company prior to his termination of employment;
(D) Continued provision of the Company's standard employee
medical insurance coverages through the Severance Period; thereafter, Regel
shall be entitled to elect continued medical insurance coverage in accordance
with the applicable provisions of federal law (COBRA); provided, however, that
in the event Regel becomes covered under another employer's group health plan
during the period provided for herein, the Company shall cease provision of
continued group health insurance for Regel; and
(E) Notwithstanding any provisions to the contrary contained in
any stock option agreement between the Company and Regel, if termination of
Regel's employment with the Company as contemplated by this paragraph 6(b)
occurs within one (1) year following a Change in Control, then
(1) All stock options grated by the Company to Regel
prior to the Change in Control, which are not accelerated pursuant to the
provisions of paragraph 4 shall become immediately exercisable and vested in
full as of the time of such termination; and
(2) All such stock options shall remain exercisable
for a period of at least one (1) year following Regel's termination of
employment, subject to any longer periods for exercise of such options set forth
in the particular option agreements.
This paragraph 6(b)(i)(E) shall apply to all stock option agreements entered
into between the Company and Regel, whether heretofore or hereafter enter into.
(ii) Regel's entitlement to any benefits under paragraph 6(b)
is
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conditioned upon Regel's execution and delivery to the Company of (A) a general
release of claims in a form satisfactory to the Company and (B) Regel's
resignation from all of his positions with the Company (with the exception of
any continued employment for the purposes set forth in paragraph 6(b), including
from the Board, in a form satisfactory of the Company.
(iii) In the event that Regel accepts employment with, or
provides any services to (whether as a partner, consultant, joint venture or
otherwise), any person or entity which offers products or services that are
competitive with any products or services offered by the Company or with any
products or services that Regel is aware the Company intends to offer, Regel
shall be deemed to have resigned from his employment with the Company effective
immediately upon such acceptance of employment or provision of services. Upon
such resignation, Regel shall not be entitled to any further payments or
benefits as provided under paragraph 6(b).
(iv) In the event that Regel accepts employment with, or
provides any services to (whether as a partner, consultant, joint venture or
otherwise), any person or entity while Regel continues to receive any separation
benefits pursuant to this paragraph 6(b), Regel shall immediately notify the
Company of such acceptance and provide to the Company information with respect
to such person or entity as the Company may reasonably request in order to
determine if that person's or entity's products or services are competitive with
the Company's.
7. Definitions. As used in this Employment Agreement, the following
terms shall have the meaning set forth below:
(a) "Acquiring Corporation" means, in connection with a Change
in Control, the surviving, continuing, successor, or purchasing corporation or
parent corporation thereof, as the cause may be.
(b) "Cause" means Regel's:
(i) theft, material act of dishonesty, fraud,
falsification of any employment or Company records or the commission of any
criminal act which impairs his ability to perform his duties under this
Employment Agreement;
(ii) improper disclosures of the Company's
confidential, business or proprietary information;
(iii) action which the Board reasonably believes has
had or will have a material detrimental effect on the Company's reputation or
business; or
(iv) persistent failure to perform the lawful duties
and responsibilities assigned by the Company to him which is not cured within a
reasonable time following his receipt of written notice of such failure from the
Company.
(c) "Change in Control" means an Ownership Change Event (as
defined below) or a series of related Ownership Change Events (collectively, the
"Transaction") wherein the stockholders of the Company immediately before the
Transaction, direct or indirect
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beneficial ownership of more that fifty percent (50%) of the total combined
voting power of the outstanding voting stock of the Company or the corporation
or corporations to which the assets of the Company were transferred (the
"Transferee Corporation(s), as the case may be. For purposes of the preceding
sentence, indirect beneficial ownership shall include, without limitation, an
interact resulting from ownership of the voting stock of one or more
corporations which, as a result of the Transaction, own the Company or the
Transferee Corporation(s), as the case may be, either directly or through one or
more subsidiary corporations. The Board shall have the right to determine
whether multiple sales or exchanges of the voting stock of the Company or
multiply Ownership Change Events are related, and its determination shall be
final, binding and conclusive.
For purposes of this Agreement, "Ownership Change Event" means the occurrence of
any of the following with respect to the Company: (i) the direct or indirect
sale or exchange in a single or series or related transactions by the
stockholders of the Company of more that fifty percent (50%) of the voting stock
of the Company; (ii) a merger or consolidation in which the Company is a party;
(iii) the sale, exchange, or transfer of all or substantially all of the assets
of the Company; or (iv) a liquidation or dissolution of the Company.
(d) "Constructive Termination Following a Change in Control"
means one or more of the following events that occurs within one (1) year after
the occurrence of any Change in Control: (i) without Regel's express written
consent, the assignment to Regel of any duties, or any limitation of Regel's
responsibilities, substantially inconsistent with his positions, duties,
responsibilities and status with the Company immediately prior to the date of
the Change in Control;
(ii) without Regel's express written consent, the
removal of Regel from his position with the Company as held by him immediately
prior to the Change in Control, except in connection with the termination of
Regel's employment with the Company for Cause;
(iii) without Regel's express written consent, the
relocation of the principal place of Regel's employment to a location that is
more that fifty (50) miles from his principal place of employment immediately
prior to the date of the Change in Control, or the imposition of travel
requirements on Regel substantially inconsistent with such travel requirement
existing immediately prior to the date of the Change in Control;
(iv) any failure by the company to pay, or any
reduction by the Company of (A) Regel's base salary in effect immediately prior
to the date of the Change in Control (unless reductions comparable in amount and
duration are concurrently made for all other employees of the Company with
responsibilities, organizational level and title comparable to Regel), or (B)
Regel's bonus compensation in effect immediately prior to the date of the Change
in Control (subject to applicable performance requirements with respect to the
actual amount of bonus compensation earned by Regel and all other participants
in the bonus program);
(v) any failure by the Company to (A) continue to
provide Regel with the opportunity to participate, on term no less favorable
than those in effect for the benefit of any executive, management or
administrative group which customarily includes a person holding the employment
position or a comparable position with the company then held by Regel any
benefit
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or compensation plans and programs, including, but not limited to, the Company's
life, disability, health, dental, medical, saving, profit sharing, stock
purchase and retirement plans which Regel was participating immediately prior to
the date of change in Control, or their equivalent (provided, that any changes
or terminations of such existing benefit or compensation plans or program shall
not be a Constructive Termination within the meaning of this paragraph if the
changed plan or program or replacement plan or program provides equivalent or
more favorable benefit or compensation to Regel), or (B) provide Regel with all
other fringe benefit (or their equivalent) from time to time in effect for the
benefit of any executive, management or administrative group which customarily
includes a person holding the employment position with the Company then held by
Regel; or
(vi) any failure or refuse of a successor company to
assume the Company's obligation under this Employment Agreement as required by
paragraph 15;
provided, however, that Regel's resignation as a result of any of the foregoing
events shall be a voluntary resignation, and not a resignation following
Constructive Termination Following a change in Control, unless Regel gives
written notice of any such event(s) to the Board and allows the Company at least
ten days thereafter to correct such condition(s).
(e) "Permanent Disability" mean that:
(i) Regel has been incapacitated by bodily injury or disease so
as to be prevented thereby from engaging in the performance of his duties
following reasonable accommodations on behalf of the Company;
(ii) such total incapacity shall have continued for a period of
six (6) consecutive months; and
(iii) such incapacity will, in the opinion of a qualified
physician, be permanent and continuous during the remainder of Regel's life.
8. Parachute Payments. In the event that any payment or benefit
received or to be received by Regel pursuant to this Employment Agreement or
otherwise (collectively, the "payments") would result in a "parachute payment"
as described in section 280G of the Internal Revenue Code of 1986, as amended,
notwithstanding the other provisions of this Employment Agreement, the amount of
such Payments will not exceed the amount which produces the greatest after-tax
benefit to Regel. For purposes of the foregoing, the greatest after-tax benefit
will be determined within thirty (30) days of the occurrence of such payment to
Regel, in his sole and absolute discretion. If no such determination is made by
Regel within thirty (30) days of the occurrence of such payment, the Company
will promptly make such determination in a fair and equitable manner.
9. Confidential and Proprietary Information. Regel agrees to abide by
the terms and conditions of the Company's standard form of employee
confidentiality and assignment of inventions agreement as executed by Regel and
attached hereto as Exhibit A.
10. Agreement Not To Compete Unfairly. Employee agrees that in the
event of his termination at any time and for any reason, he shall not compete
with the Company in any unfair
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manner, including, without limitation, using any confidential or proprietary
information of the Company to compete with the Company in any way.
11. None-Solicitation. Employee agrees that for a period of one year
after date of the termination of his employment for any reason, he shall not,
either directly or indirectly, solicit the services, or attempt to solicit the
services, of any employee of the Company to any other person or entity.
12. Dispute Resolution. In the event of any dispute or claim relating
to or arising out of this Employment Agreement (including, but not limited to,
any claim of breach of contract, wrongful termination or age, sex, race or other
discrimination), Regel and the Company agree that all such disputes shall be
fully and finally resolved by binding arbitration conducted by the American
Arbitration Association in Santa ▇▇▇▇▇ County, California in accordance with its
National Employment Dispute Resolution rules, as those rules are currently in
effect (and not as they may be modified in the future). Employee acknowledges
that by accepting this arbitration provision he is waiving any right to a jury
trail in the event of such dispute. Provided, however, that this arbitration
provision shall not apply to any disputes or claims relation to or arising out
of the misuse or misappropriation of trade secrets or proprietary information.
13. Attorney's Fees. The prevailing party shall be entitled to recover
from the losing party its attorney's fees and costs incurred in any action
brought to enforce any right arising out of this Employment Agreement.
14. Interpretation. Regel and the Company agree that this Employment
Agreement shall be interpreted in accordance with and governed by the laws of
the State of California.
15. Successors and Assigns.
(a) Successors of the Company. The Company will require any
successor or assign (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company, expressly, absolutely and unconditionally to assume and
agree to perform this Employment Agreement in the same manner and to the same
extent that the Company would be require to perform it if no such succession or
assignment had taken place. Failure of the Company to obtain such agreement
prior to the effectiveness of any such succession transaction shall be a breach
of this Employment Agreement and shall entitle the Employee to terminate his
employment with the Company within three (3) months thereafter and to receive
the benefits provided under Section 6(b) of this Employment Agreement in the
event of Constructive Termination Following a Change in Control. As used in the
Employment Agreement, "Company" shall mean the Company as defined above and any
successor or assign to its business and/or assets as aforesaid which executes
and delivers the agreement provided for in this paragraph 15 or which otherwise
becomes bound by all the terms and provisions of this Employment Agreement by
operation of law.
(b) Heirs of Employee. In view of the personal nature of the
service to be performed under this Employment Agreement by Regel, he shall not
have the right to assign or transfer any of his rights, obligations or benefits
under this Employment Agreement, except as otherwise noted herein. This
Employment Agreement shall inure to the benefit of and be
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enforceable by Regel's personal and legal representatives, executors,
administrators, successors, heirs, distributes, devises and legatees. If Regel
should die after the conditions to payment of benefits set forth herein have
been met and any amounts are still payable to him hereunder, all such amounts,
unless otherwise provide herein, shall be paid in accordance with the terms of
this Employment Agreement to Regel's Beneficiary, successor, devisee, legatee or
other designee or, if there be no such designee, to Regel's estate. Until a
contrary designation is made to the Company, Regel hereby designates as his
beneficiary under this Employment Agreement the person whose name appears below
his signature on this Employment Agreement.
16. Entire Agreement. This Employment Agreement constitutes the entire
employment agreement between Regel and the Company regarding the terms and
conditions of his employment, with the exception of (a) the agreement described
in paragraph 9 and (b) any stock option agreements between Regel and the
Company. This Employment Agreement (including the documents described in clauses
(a) and (b) above) supersedes all prior negotiations, representations or
agreements between Regel and the Company, whether written or oral, concerning
Regel's employment by the Company.
17. Notices. For purposes of this Employment Agreement, notices and all
other communications provided for in the Employment Agreement shall be in
writing and shall be deemed to have been duly given when delivered or mailed by
United States certified mail, return receipt requested, postage prepaid, as
follows;
If to the Company: Network Peripherals, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Corporate Secretary
And if to Regel, at the address specified at the end of this Employment
Agreement. Notice may also be given at such other address as either party may
have furnished to the other in writing in accordance herewith, except that
notices of change of address shall be effective only upon receipt.
18. Validity. If any one or more of the provisions (or any part
thereof) of this Employment Agreement shall be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions (or any part thereof) shall not in any way be affected or
impaired thereby.
19. Modification. This Employment Agreement may only modified or
amended by a supplemental written agreement signed by Regel and the Company.
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IN WITNESS WHEREOF, the parties have executed this Employment Agreement as
of the date and year written below.
NETWORK PERIPERALS INC.
Date: September 14, 2000 By: \s\ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
--------------------- -------------------------------
Its: Chief Executive Officer
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Date: September 14, 2000 \s\ ▇▇▇▇▇ ▇▇▇▇▇
--------------------- -------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
Address for Notice to Regel:
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-------------------------------
Name of Designated Beneficiary: Address of Designated Beneficiary:
▇▇▇▇ ▇▇▇▇▇
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