Contract
EXHIBIT
10.33
HI/FN,
INC.
XXXXXX
X. XXXXX EMPLOYMENT AGREEMENT
This
Employment Agreement (the “Agreement”) is entered into as of November 16, 2006,
by and between Hi/fn, Inc. (the “Company”) and Xxxxxx X. Xxxxx
(“Executive”).
1. Duties
and Scope of Employment.
(a) Positions
and Duties.
As of
November 9, 2006 (the “Effective Date”), Executive will serve as the Company’s
Interim Chief Executive Officer. Executive will report to the Company’s Board of
Directors (the “Board”) and will continue in his role as Chairman of the Board.
As of the Effective Date, Executive will render such business and professional
services in the performance of his duties, consistent with Executive’s position
within the Company, as will reasonably be assigned to him by the Board.
The
period Executive is employed by the Company under this Agreement is referred
to
herein as the “Employment Term”.
Subject
to the termination and notice provisions herein, Executive agrees to remain
employed with the Company until the date upon which a successor Chief Executive
Officer commences employment with the Company. However, in the event that
the
Company desires to retain Executive as its regular Chief Executive Officer,
then
this Agreement will be terminated and the parties hereto will negotiate
a new
employment agreement covering the terms and conditions of Executive’s ongoing
role.
(b) Board
Membership.
Executive was appointed to serve as a member of the Board prior to the
Effective
Date and was appointed Chairman of the Board on the Effective Date. During
the
Employment Term, at each annual meeting of the Company’s stockholders at which
Executive’s term as a member of the Board has otherwise expired, the Company
will nominate Executive to serve as a member of the Board. Executive’s service
as a member of the Board will be subject to any required stockholder approval.
Upon the termination of Executive’s employment for any reason, unless otherwise
requested by the Board, Executive will be deemed to have resigned from
all
positions held at the Company and its affiliates, except that of Chairman
of the
Board, voluntarily, without any further required action by Executive, as
of the
end of Executive’s employment and Executive, at the Board’s request, will
execute any documents necessary to reflect his resignation.
(c) Obligations.
During
the Employment Term, Executive will devote Executive’s full business efforts and
time to the Company and will use good faith efforts to discharge Executive’s
obligations under this Agreement to the best of Executive’s ability and in
accordance with each of the Company’s corporate guidance and ethics guidelines,
conflict of interests policies and code of conduct. For the duration of
the
Employment Term, Executive agrees not to actively engage in any other
employment, occupation, or consulting activity for any direct or indirect
remuneration without the prior approval of the Board (which approval will
not be
unreasonably withheld); provided, however, that Executive may, without
the
approval of the Board, serve in any capacity with any civic, educational,
or
charitable organization, provided such services do not interfere with
Executive’s obligations to Company. Executive expects to serve as a member of
the Board of Directors of Digital Signal Corporation, Tulip Ego Lifestyle,
and
Validity Sensors, Inc. and such service will not constitute a violation
of this
section 1(c).
Executive
hereby represents and warrants to the Company that Executive is not party
to any
contract, understanding, agreement or policy, written or otherwise, that
would
be breached by Executive’s entering into, or performing services under, this
Agreement. Executive further represents that he has disclosed to the Company
in
writing all threatened, pending, or actual claims that are unresolved and
still
outstanding as of the Effective Date, in each case, against Executive of
which
he is aware, if any, as a result of his employment with his current employer
(or
any other previous employer) or his membership on any boards of directors.
(d) Other
Entities.
Executive agrees to serve and will be appointed, without additional
compensation, as an officer and director for each of the Company’s subsidiaries,
partnerships, joint ventures, limited liability companies and other affiliates,
including entities in which the Company has a significant investment as
determined by the Company. As used in this Agreement, the term “affiliates” will
include any entity controlled by, controlling, or under common control
of the
Company.
2. At-Will
Employment.
Executive and the Company agree that Executive’s employment with the Company
constitutes “at-will” employment. Executive and the Company acknowledge that
this employment relationship may be terminated at any time, upon written
notice
to the other party, with or without good cause or for any or no cause,
at the
option either of the Company or Executive.
3. Compensation.
(a) Base
Salary.
As of
the Effective Date, the Company will pay Executive an annual salary of
$350,000
as compensation for his services (such annual salary, as is then effective,
to
be referred to herein as “Base Salary”). The Base Salary will be paid
periodically in accordance with the Company’s normal payroll practices and be
subject to the usual, required withholdings.
(b) Annual
Incentive.
Executive will be eligible to receive annual cash incentives payable for
the
achievement of performance goals established by the Board or by the Compensation
Committee of the Board (the “Committee”). During the Employment Term,
Executive’s
target annual incentive (“Target Annual Incentive”) will equal 65% of
Executive’s Base Salary. The actual earned annual cash incentive, if any,
payable to Executive for any performance period will depend upon the extent
to
which the applicable performance goal(s) specified by the Committee are
achieved
or exceeded and will be adjusted for under- or over-performance.
(c) Stock
Options.
(i) Following
the Effective Date, the Committee will grant an
option
to
purchase 225,000 shares of Company common stock at a per share exercise
price
equal to the closing price per share on the Nasdaq Global Market (“Nasdaq”) for
the common stock of the Company on the date of grant (the “Option”). The Option
will be granted under and subject to the terms, definitions and provisions
of
the Company’s Amended and Restated 1996 Equity Incentive Plan (the “Plan”) and
will be scheduled to vest 1/36th
of the
shares subject to the Option each month following the Effective Date, subject
to
Executive’s continued employment with the Company as its Chief Executive Officer
(whether on an interim basis or otherwise) through each scheduled vesting
date.
Upon Executive ceasing to be the Company’s Chief Executive Officer (whether on
an interim
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basis
or
otherwise), all vesting of the Option will terminate immediately and the
unvested portion of the Option will immediately terminate. Notwithstanding
the
foregoing vesting schedule, if during the first year of the Employment
Term
while Executive is acting as the Company’s Chief Executive Officer, the Company
hires a successor Chief Executive Officer other than Executive, the Option
will
immediately vest and become exercisable as to 75,000 shares in addition
to the
number of shares subject to the Option that have vested as of such date.
Except
as provided in this Agreement, the Option will be subject to the Company’s
standard terms and conditions for options granted under the Plan.
(ii) Following
the Effective Date, the Committee will grant Executive 75,000 shares of
restricted stock (the “Stock Grant”). The Stock Grant will be granted under and
subject to the terms, definitions and provisions of the Plan, and will
vest six
(6) months from the Effective Date, subject to Executive’s continued employment
with the Company as its Chief Executive Officer on such date. Subject to
the
provisions of Section 7 of this Agreement, upon Executive’s termination as the
Company’s Chief Executive Officer, all further vesting of the Stock Grant will
terminate immediately and such shares will be forfeited to the Company
at no
cost to the Company. Notwithstanding the foregoing, if during the first
six (6)
months of the Employment Term, the Company hires a successor Chief Executive
Officer other than Executive, the Stock Grant will fully vest. Except as
provided in this Agreement, the Stock Grant will be subject to the Company’s
standard terms and conditions for restricted stock granted under the
Plan.
4. Employee
Benefits.
(a) Generally.
Executive will be eligible to participate in accordance with the terms
of all
Company employee benefit plans, policies and arrangements that are applicable
to
other executive officers of the Company, as such plans, policies and
arrangements may exist from time to time.
(b) Vacation.
Executive will be entitled to receive paid annual vacation in accordance
with
Company policy for other senior executive officers.
5. Expenses.
The
Company will reimburse Executive for reasonable travel, entertainment and
other
expenses incurred by Executive in the furtherance of the performance of
Executive’s duties hereunder, in accordance with the Company’s expense
reimbursement policy as in effect from time to time.
6. Termination
of Employment.
In the
event Executive’s employment with the Company terminates for any reason,
Executive will be entitled to any (a) unpaid Base Salary accrued up to the
effective date of termination; (b) unpaid, but earned and accrued annual
incentive for any completed fiscal year as of his termination of employment;
(c) pay for accrued but unused vacation; (d) benefits or compensation
as provided under the terms of any employee benefit and compensation agreements
or plans applicable to Executive (e) unreimbursed business expenses
required to be reimbursed to Executive, and (f) rights to indemnification
Executive may have under the Company’s Articles of Incorporation, Bylaws, the
Agreement, or separate indemnification agreement, as applicable.
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7. Severance.
If
Executive’s employment with the Company is terminated by the Company without
Cause or by Executive for Good Reason, and the termination is in Connection
with
a Change of Control, then, subject to Executive signing and not revoking
a
separation agreement and release of claims in a form acceptable to the
Company,
the Stock Grant will vest in full.
(a) For
purposes of this Agreement, “Cause” means:
(i) A
failure
by Executive to substantially perform Executive’s duties as an employee, other
than a failure resulting from the Executive’s complete or partial incapacity due
to physical or mental illness or impairment;
(ii) A
willful
act by Executive that constitutes misconduct;
(iii) Circumstances
where Executive intentionally or negligently imparts material confidential
information relating to the Company or its business to competitors or to
other
third parties other than in the course of carrying out Executive’s
duties;
(iv) A
material violation by Executive of a federal or state law or regulation
applicable to the business of the Company;
(v) A
willful
violation of a material Company employment policy or the Company’s xxxxxxx
xxxxxxx policy;
(vi)
Any act
or omission by Executive constituting dishonesty (other than a good faith
expense account dispute) or fraud, with respect to the Company or any of
its
affiliates, or any other misconduct which is injurious to the financial
condition of the Company or any of its affiliates or is injurious to the
business reputation of the Company or any of its affiliates;
(vii)
Executive’s
failure to cooperate with the Company in connection with any actions, suits,
claims, disputes or grievances against the Company or any of its officers,
directors, employees, shareholders, affiliates, divisions, subsidiaries,
predecessor and successor corporations, and assigns, whether or not such
cooperation would be adverse to Executive’s own interest; or
(viii)
Executive’s
conviction or plea of guilty or no contest to a felony.
(b) Change
of Control.
For
purposes of this Agreement, “Change of Control” will mean the occurrence of any
of the following events:
(i) The
sale,
lease, conveyance or other disposition of all or substantially all of the
Company’s assets to any “person” (as such term is used in Section 13(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)), entity or
group of persons acting in concert;
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(ii) Any
person or group of persons becoming the “beneficial owner” (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of
the
Company representing 50% or more of the total voting power represented
by the
Company’s then outstanding voting securities;
(iii) A
merger
or consolidation of the Company with any other corporation, other than
a merger
or consolidation that would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity or its controlling entity) at least 50% of the total voting
power represented by the voting securities of the Company or such surviving
entity (or its controlling entity) outstanding immediately after such merger
or
consolidation; or
(iv) A
contest
for the election or removal of members of the Board that results in the
removal
from the Board of at least 50% of the incumbent members of the
Board.
(c) Good
Reason.
For
purposes of this Agreement, “Good Reason” means (without Executive’s
consent):
(i) A
material reduction in Executive’s title, authority, status, or responsibilities,
unless Executive is provided with a comparable position (i.e. a position
of
equal or greater organizational level, duties, authority, compensation
and
status);
(ii) The
reduction of Executive’s aggregate Base Salary and Target Annual Incentive as in
effect immediately prior to such reduction (other than a reduction applicable
to
executives generally); or
(iii) A
relocation of Executive’s principal place of employment by more than fifty (50)
miles.
(d) In
Connection with a Change of Control.
For
purposes of this Agreement, a termination of Executive’s employment with the
Company is “in Connection with a Change of Control” if Executive’s employment is
terminated within twelve (12) months following a Change of Control
8. Indemnification.
Subject
to applicable law, Executive will be provided indemnification to the maximum
extent permitted by the Company’s Articles of Incorporation or Bylaws,
including, if applicable, any directors and officers insurance policies,
with
such indemnification to be on terms determined by the Board or any of its
committees, but on terms no less favorable than provided to any other Company
executive officer or director and subject to the terms of any separate
written
indemnification agreement.
9. Confidential
Information.
As a
condition of employment with the Company, Executive will execute the Company’s
standard form of Proprietary Information
and Inventions Agreement
(the
“Confidential Information Agreement”).
10. Assignment.
This
Agreement will be binding upon and inure to the benefit of (a) the heirs,
executors and legal representatives of Executive upon Executive’s death, and
(b) any
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successor
of the Company. Any such successor of the Company will be deemed substituted
for
the Company under the terms of this Agreement for all purposes. For this
purpose, “successor” means any person, firm, corporation, or other business
entity which at any time, whether by purchase, merger, or otherwise, directly
or
indirectly acquires all or substantially all of the assets or business
of the
Company. None of the rights of Executive to receive any form of compensation
payable pursuant to this Agreement may be assigned or transferred except
by will
or the laws of descent and distribution. Any other attempted assignment,
transfer, conveyance, or other disposition of Executive’s right to compensation
or other benefits will be null and void.
11. Notices.
All
notices, requests, demands and other communications called for hereunder
will be
in writing and will be deemed given (a) on the date of delivery if
delivered personally; (b) one (1) day after being sent overnight by a
well-established commercial overnight service, or (c) four (4) days after
being mailed by registered or certified mail, return receipt requested,
prepaid
and addressed to the parties or their successors at the following addresses,
or
at such other addresses as the parties may later designate in
writing:
If
to the
Company:
Attn:
Chairman of the Compensation Committee
c/o
Corporate Secretary
000
Xxxxxxxxxx Xxxxxx
Xxx
Xxxxx, XX 00000
If
to
Executive:
at
the
last residential address known by the Company.
12. Severability.
If any
provision hereof becomes or is declared by a court of competent jurisdiction
to
be illegal, unenforceable, or void, this Agreement will continue in full
force
and effect without said provision.
13. Arbitration.
The
Parties agree that any and all disputes arising out of the terms of this
Agreement, their interpretation, and any of the matters herein released,
will be
subject to arbitration in Santa Xxxxx County before JAMS, pursuant to its
Employment Arbitration Rules & Procedures (“JAMS Rules”). The Arbitrator
will administer and conduct any arbitration in accordance with California
law,
including the California Code of Civil Procedure, and the Arbitrator will
apply
substantive and procedural California law to any dispute or claim, without
reference to any conflict-of-law provisions of any jurisdiction. To the
extent
that the JAMS rules conflict with California law, California law will take
precedence. The Arbitrator may grant injunctions and other relief in such
disputes. The decision of the Arbitrator will be final, conclusive, and
binding
on the parties to the arbitration. The Parties agree that the prevailing
party
in any arbitration will be entitled to injunctive relief in any court of
competent jurisdiction to enforce the arbitration award. The
Arbitrator will award
attorneys’ fees and costs to the prevailing party, except as prohibited by law.
The
Parties hereby agree to waive their right to have any dispute between them
resolved in a court of law by a judge or jury.
This
paragraph will not prevent either party from seeking injunctive relief
(or any
other provisional remedy) from any court having jurisdiction over the Parties
and the subject matter
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of
their
dispute relating to Executive’s obligations under this Agreement and the
Confidential Information Agreement.
14. Integration.
This
Agreement, together with the Confidential Information Agreement and the
standard
forms of equity award grant that describe Executive’s outstanding equity awards,
represents the entire agreement and understanding between the parties as
to the
subject matter herein and supersedes all prior or contemporaneous agreements
whether written or oral. No waiver, alteration, or modification of any
of the
provisions of this Agreement will be binding unless in a writing and signed
by
duly authorized representatives of the parties hereto. In entering into
this
Agreement, no party has relied on or made any representation, warranty,
inducement, promise, or understanding that is not in this Agreement. To
the
extent that any provisions of this Agreement conflict with those of any
other
agreement to be signed upon Executive’s hire, the terms in this Agreement will
prevail.
15. Waiver
of Breach.
The
waiver of a breach of any term or provision of this Agreement, which must
be in
writing, will not operate as or be construed to be a waiver of any other
previous or subsequent breach of this Agreement.
16. Survival.
The
Confidential Information Agreement will survive the termination of this
Agreement.
17. Headings.
All
captions and Section headings used in this Agreement are for convenient
reference only and do not form a part of this Agreement.
18. Tax
Withholding.
All
payments made pursuant to this Agreement will be subject to withholding
of
applicable taxes.
19. Governing
Law.
This
Agreement will be governed by the laws of the state of California without
regard
to its conflict of laws provisions.
20. Code
Section 409A.
The
Company and the Executive agree to work together in good faith to consider
amendments to this Agreement necessary or appropriate to avoid imposition
of any
additional tax or income recognition prior to actual payment to Executive
under
Internal Revenue Code Section 409A and any temporary or final Treasury
Regulations and Internal Revenue Service guidance thereunder.
21. Acknowledgment.
Executive acknowledges that he has had the opportunity to discuss this
matter
with and obtain advice from his private attorney, has had sufficient time
to,
and has carefully read and fully understands all the provisions of this
Agreement, and is knowingly and voluntarily entering into this
Agreement.
22. Counterparts.
This
Agreement may be executed in counterparts, and each counterpart will have
the
same force and effect as an original and will constitute an effective,
binding
agreement on the part of each of the undersigned.
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IN
WITNESS WHEREOF, each of the parties has executed this Agreement, in the
case of
the Company by a duly authorized officer, as of the day and year written
below.
COMPANY:
HI/FN,
INC.
| /s/ Xxxxxxx X. Xxxxxx |
Date:
November 16, 2006
|
|
|
Xxxxxxx
X. Xxxxxx
Vice
President of Finance, Chief Financial Officer
and
Secretary
|
EXECUTIVE:
| /s/ Xxxxxx X. Xxxxx |
Date:
November 16, 2006
|
|
|
XXXXXX
X. XXXXX
|
