EXHIBIT 10.81
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into effective as
of November __, 2002 between Wherify Wireless, Inc. (the "Company") and Xxxxxxx
X. Xxxxx ("Xxxxx") (or collectively referred to as the "Parties"). The Company
desires to retain Xxxxx in the position of President and Chief Executive Officer
to have the benefits of his expertise and knowledge. Xxxxx, in turn, desires to
be employed by the Company as its President and Chief Executive Officer. The
Parties, therefore, enter into this Agreement to establish the terms and
conditions of Xxxxx'x employment as President and Chief Executive Officer of the
Company.
In consideration of the mutual covenants and representations contained in
this Agreement, the Company and Xxxxx agree as follows:
1. Employment of Xxxxx; Duties. The Company agrees to employ Xxxxx, and
Xxxxx agrees to be employed by the Company, as the Chief Executive Officer
("CEO") of the Company. In his role as President and CEO of the Company, Xxxxx
shall report to the Company's Board of Directors (the "Board"). As the CEO and
President, Xxxxx'x key duties will include the normal and customary duties of
such positions and such other duties as the Company and Xxxxx shall agree from
time to time. Xxxxx will use his specialized expertise, independent judgment and
discretion in executing his job duties. Xxxxx shall devote all of his time,
interest and efforts reasonably necessary to the fulfillment of his duties and
responsibilities under this Agreement.
2. Employment Period. Xxxxx shall serve as President and CEO of the
Company for a period of five years, and this Agreement shall thereafter renew
automatically for successive one-year periods, unless his employment is
otherwise terminated pursuant to the terms set forth in this Agreement.
3. Place of Employment. Xxxxx and the Company agree that during the
Employment Period, his services will be performed at the Company's principal
offices currently in Redwood Shores, California, subject to any necessary travel
requirements of his position and duties hereunder.
4. Base Salary. During the Employment Period, the Company shall pay Xxxxx
at the rate of $180,000 per year, to be paid at the times and subject to the
Company's standard payroll practices, subject to applicable withholding. Base
salary shall be reviewed at least annually, and increased as determined by the
Board. In addition, upon completion of a financing with gross proceeds to the
Company of at least $30,000,000, base salary shall increase to at least $200,000
per year, and upon completion of an initial public offering of the Company's
securities with gross proceeds to the Company of at least $30,000,000 , base
salary shall increase to the compensation of similarly placed executives in the
Company's industry, as determined in good faith by the Board.
5. Bonus Compensation. So long as Xxxxx has not been terminated for Cause,
as defined in Section 10.2 below, Xxxxx will be eligible for bonus compensation,
payable immediately following completion of the Company's financial statements
for each full fiscal year, commencing with the 2003 fiscal year. Xxxxx'x annual
bonus target shall be 100% of his base salary, as adjusted from time to time,
based upon the Company's achieving 120% of certain financial metrics ("Plan
Targets") to be determined by the Board. Such bonus will be payable on a sliding
scale between 0 and 100% of such target bonus based upon the Company's achieving
between 100% and 120% of such Plan Targets, as determined in good faith by the
Board based on a report from the Company's Chief Financial Officer. The
Company's achieving substantially in excess of 120% of Plan Targets shall result
in additional bonus accelerators as agreed between Xxxxx and the Board up to a
potential maximum bonus of 200% of Xxxxx'x base salary.
6. Equity Compensation. As soon as practicable following the date hereof,
Xxxxx shall be granted an option to purchase 250,000 shares of the Company's
Common Stock at an exercise price of 110% of the fair market value of the
Company's Common Stock as of the date of grant, pursuant to the terms and
conditions of the Company's 1999 Stock Option Plan. Subject to Xxxxx'x continued
employment by the Company at each applicable vesting date, such option shall be
immediately vested with respect to 50,000 shares, and shall vest with respect to
the remaining 200,000 shares ratably monthly over four years commencing as of
the date hereof.
7. Employee Benefits.
a. For so long as Xxxxx is employed by the Company, Xxxxx will
be entitled to participate in the same employee benefits plans generally
available to the Company's other executive and managerial employees, subject to
the terms of the applicable plans, including: (i) all health insurance benefits
provided to the Company's exempt employees; (ii) paid vacation in accordance
with the Company's policies and procedures in effect with respect to the
Company's other senior officers (for which the days selected for Xxxxx'x
vacations shall be scheduled at a mutually agreeable time for the Company and
Xxxxx), provided, that Xxxxx shall receive not less than 20 days of paid
vacation per year and such days shall accrue if not used pursuant to the
Company's standard vacation policies; and (iii) eligibility to participate in
any profit sharing or other retirement plan maintained by the Company for its
executive employees.
b. The Company shall obtain and maintain coverage for Xxxxx
under a director and officer insurance policy during the term of his employment
that is equal to or comparable to the same coverage provided to the Company's
other executive officers.
c. The Company shall provide Xxxxx with a leased vehicle of
Xxxxx'x choice, subject to a maximum monthly payment of $2,000. If Xxxxx is
terminated, he shall have the option to assume the lease obligation.
8. Indemnification by the Company. To the fullest extent required by law,
the Company agrees to indemnify and hold Xxxxx harmless for any actions made in
good faith while performing his duties under this Agreement.
9. Non-Disclosure of Confidential and Proprietary Information. Xxxxx
confirms that he has previously executed and delivered to the Company the
Company's standard form of Employee Confidential Information and Inventions
Agreement. Xxxxx acknowledges and agrees that such Agreement remains in full
force and effect and that he is not in breach thereof.
-2-
10. Termination.
10.1 Severance. If Xxxxx'x employment is terminated other than for
"Cause" or if he resigns as a result of a "Constructive Termination," then Xxxxx
shall be offered, in exchange for a release of all claims, a lump sum severance
payment equal to 12 months base salary, as then determined, plus 50% of his
prior year's bonus, if any. In addition, employee benefits pursuant to Section
7(a) of this Agreement shall continue for a period of one year after
termination, and Xxxxx will receive accelerated vesting with respect to 50,000
shares purchasable upon exercise of the option granted to him by the Company
pursuant to Section 6 hereof.
10.2 For purposes of this Agreement, "Cause" means:
a. Commission of an act (i) which is a felony, involving moral
turpitude or dishonesty, or constituting common law fraud, (ii) having a
material adverse effect on the business or affairs of the Company or its
affiliates or shareholders, or (iii) constituting gross negligence in the
performance of Xxxxx'x duties hereunder;
b. Intentional or willful misconduct or refusal to follow the
written lawful instructions of the Board; or
c. Intentional or willful breach of the material terms of this
Agreement, his Employee Confidential Information and Inventions Agreement or any
other agreement between Xxxxx and the Company.
For these purposes, no act or failure to act shall be considered "intentional or
willful" unless it is done, or omitted to be done, in bad faith without a
reasonable belief that the action or omission is in the best interests of the
Company.
10.3 Resignation Due to "Constructive Termination". For purposes of
this Agreement, resignation as a result of "Constructive Termination" means that
any of the following is undertaken without Xxxxx'x express written consent and
Xxxxx resigns from the Company within 30 days of such action:
a. A substantial diminution in Xxxxx'x title, duties, or
compensation, other than (i) a change in title resulting from a merger or
acquisition of the Company or a sale of all or substantially all of the
Company's assets, or (ii) a transition to the position of Chairman of the
Company's Board;
b. A substantial increase in Xxxxx'x duties without a mutually
agreeable increase in compensation;
c. A relocation of Xxxxx'x principal business office to a
location more than 15 miles from Redwood Shores, California; or
d. The Company's material breach of this Agreement that
remains uncured for 30 days following Xxxxx'x written notice of such breach to
Board.
-3-
10.4 Continued Affiliation With the Company. Xxxxx'x stock options
granted pursuant to this Agreement shall continue to vest for so long as Xxxxx
is affiliated with the Company either as an employee or as a Board member.
10.5 Effect of Termination For "Cause". Upon any termination of this
Agreement for Cause, the Company will have no further obligation to make any
payment to Xxxxx, under this Agreement or otherwise, except for the salary and
vacation accrued as of the date of termination. In addition, Xxxxx'x entitlement
to participate in any Company benefit plans shall immediately cease as of the
date of termination, except as otherwise required by law.
10.6 Cooperation with Company At Termination of Employment. Upon
termination of this Agreement by either party, Xxxxx shall cooperate fully with
Company in providing an orderly transition of all Xxxxx'x pending work. Upon the
mutual agreement of the Parties, Xxxxx also may provide such full-time or
part-time services as Company may reasonably require during all or any part of
the period following any notice of termination given by either party.
10.7 Return of Company Property Upon Termination. Upon termination
of Xxxxx'x employment, Xxxxx shall return all originals and copies of the
Company's property in Xxxxx'x possession or control, including equipment,
devices, vehicles, keys, computers, and including materials, memoranda, records,
reports, recordings, customer lists or other documents, and specifically
including any documents or computer disks or records containing confidential
information, trade secrets or other proprietary information
11. Nature of Employment. Xxxxx represents to the Company that he has no
other outstanding commitments inconsistent with any of the terms of this
Agreement or the services to be provided in accordance with this Agreement. In
addition, while employed with the Company, Xxxxx shall not, whether for
compensation or otherwise, directly or indirectly perform any services or acts
for any person or entity who is in competition with any business, services or
products being offered for sale or produced by the Company. Xxxxx shall not own
an interest in, participate in or be connected as an officer, employee, agent,
independent contractor, partner, shareholder or principal, of any corporation,
partnership, proprietorship, firm, association, person, or other entity that
directly or indirectly compete with the services and business of Company.
12. Nonsolicitation Upon Termination of Employment.
12.1 Nonsolicitation of Clients. Xxxxx agrees all customers or
clients of the Company for which Xxxxx provides services during Xxxxx'x
employment are solely the clients of the Company and not of Xxxxx. Xxxxx agrees
that both while employed and for a period of one year after the termination of
this Agreement for any reason, Xxxxx shall not, either directly or indirectly,
solicit business, as to products or services competitive with those of the
Company, from any of the Company's clients or prospective clients.
12.2 Nonsolicitation of Employees. Xxxxx agrees the Company has
invested substantial time and effort and resources in assembling, training and
managing its present staff of personnel, which constitutes a significant asset
of the Company. Accordingly, Xxxxx agrees that both while employed and for a
-4-
period of one year after the termination of this Agreement for any reason, Xxxxx
will not directly or indirectly solicit any of the Company's employees to leave
their employment with the Company.
13. Notices. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and if sent by
registered or certified mail to Xxxxx at the last address he has filed in
writing with the Company or, in the case of the Company, to the General Counsel
or Chief Financial Officer at the Company's principal executive offices.
14. Binding Agreement. This Agreement shall be binding upon Xxxxx and the
Company on and after the date of this Agreement. The rights and obligations of
the Company under this Agreement shall inure to the benefit of the Company and
any successor of the Company.
15. Integration. This Agreement and the stock option agreement entered
into pursuant to Section 6 above constitute the entire understanding of Xxxxx
and the Company with respect to the subject matter herein and supersedes and
voids any and all prior agreements or understandings, written or oral, regarding
the subject matter hereof. To the extent any of the referenced agreements are
inconsistent with this Agreement, the terms of this Agreement shall control.
This Agreement may not be changed, modified, or discharged orally, but only by
an instrument in writing signed by the Parties.
16. Construction. Each party has reviewed this Agreement. Therefore the
normal rule of construction that any ambiguity or uncertainty in any writing
shall be interpreted against the party drafting the writing shall not apply to
any action on this Agreement.
17. Governing Law. This Agreement shall be governed by the laws of the
State of California, and the invalidity or unenforceability of any provisions
hereof shall in no way affect the validity or enforceability of any other
provision.
18. Severability. Any provision of this Agreement which is prohibited or
unenforceable by any court of competent jurisdiction will immediately become
null and void, leaving the remainder of this Agreement in full force and effect.
Any such prohibition or unenforceability in any court of competent jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction.
-5-
IN WITNESS WHEREOF, the Parties have executed and delivered this Agreement
as of the date first above written.
WHERIFY WIRELESS, INC.
Dated: _______________________ By: ______________________________________
W. Xxxxxxx Xxxxxx, Chairman
Dated: _______________________ By: ______________________________________
Xxxxxxx X. Xxxxx, Personally
-6-
