EMPLOYMENT AGREEMENT
Exhibit
10.22
This
employment agreement (the
“Agreement”) is entered into as of July 16, 2007 (the “Effective Date”) by and
between Avistar Communications Corporation (the “Company”) and Xxxxx Xxxx
(“Executive”).
1. Duties and Scope of
Employment.
(a) Positions
and Duties. As of the Effective Date, Executive will serve as
President of the Company. Executive will render such business and
professional services in the performance of his duties, consistent with
Executive’s position within the Company, as shall reasonably be assigned to him
by the Chairman of the Company’s Board of Directors (the “Board”).
(b) Obligations. During
the Employment Term (as defined herein), Executive will perform his duties
faithfully and to the best of his ability and will devote his full business
efforts and time to the Company. 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.
(c) Work
Eligibility. In order to comply with employer regulations adopted
in the Immigration Reform and Control Act of 1986, within three (3) business
days of employment, Executive will need to present documentation demonstrating
authorization to work in the United States.
2. At-Will
Employment. Executive’s employment with the Company pursuant to
this Agreement (the “Employment Term”) shall commence on the Effective Date and
shall continue, unless otherwise terminated as provided
herein. Notwithstanding the foregoing, the parties agree that
Executive’s employment with the Company will be “at-will” employment and may be
terminated at any time with or without cause or notice. Executive
understands and agrees that neither his job performance nor promotions,
commendations, bonuses or the like from the Company give rise to or in any
way
serve as the basis for continuation, modification, amendment, or extension,
by
implication or otherwise, of his employment with the
Company. However, as described in this Agreement, Executive may be
entitled to severance benefits depending on the circumstances of Executive’s
termination of employment with the Company.
3. Compensation.
(a) Base
Salary. During the Employment Term, the Company will pay
Executive as compensation for his services a base salary at the annualized
rate
of $250,000.00 or such other rate not below $250,000.00 as the Compensation
Committee of the Board (the “Compensation Committee”) may determine from time to
time (the “Base Salary”). The Base Salary will be paid periodically
in accordance with the Company’s normal payroll practices and be subject to
applicable withholding taxes.
Once
the
Compensation Committee has approved or increased such Base Salary, it thereafter
shall not be reduced; provided, however, that if a Change of Control (as defined
below) has not occurred, such Base Salary may be reduced by the Compensation
Committee if such reduction is in proportion to a salary reduction program
approved by the Board which affects a majority of the other executive officers
of the Company generally.
(b) Stock
Options. The Company shall recommend to its Compensation
Committee that Executive be granted an option to purchase up to 1,100,000 shares
of the Company’s Common Stock at an exercise price equal to the fair market
value of the Company’s Common Stock on the date of grant (the
“Option”). The Option shall vest over a four (4) year period subject
to Executive’s continued service with the Company through the relevant vesting
dates. In all other respects, the Option shall be subject to the
terms, definitions and provisions of the Company’s 2000 Stock Plan and form of
option agreement adopted for use thereunder.
Executive
will be eligible to participate in the Company’s annual incentive option program
pursuant to such terms and conditions as determined by the Compensation
Committee in its sole discretion. Subject to individual and Company
performance objectives set by the Compensation Committee, such annual incentive
option grant to Executive for 2008 could be between 250,000 and 500,000
shares. However, any such annual option grant or additional grants
and the amount of such grants will be in the sole discretion of the Board and/or
the Compensation Committee, as applicable.
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(c) Bonus. For
each fiscal year of the Company, Executive will be eligible to receive an annual
bonus based upon the achievement of performance criteria specified by the
Compensation Committee (the “Bonus”). Any Bonus paid shall be subject
to all applicable withholding taxes and will be paid within sixty (60) days
of
the date that the Bonus is earned. The annual bonus shall be
determined and paid in two installments, the first as of June 30 and the second
as of December 31 of each year during the Employment Term.
For
fiscal 2007 the actual amount of Bonus paid will depend upon revenue earned
by
the Products Division of the Company during Quarter 3 and Quarter 4 of fiscal
2007 and will not be subject to any minimum revenue threshold. The
amount to be paid will be calculated based on a product and services revenue
target of $5.4 million and a target Bonus of $74,500 for Quarters 3 and 4 of
fiscal 2007 combined. The percentage of the revenue target earned by
the close of each quarter will be used to calculate the percentage of $74,500
earned for that quarter and paid out following the close of that
quarter. Should product revenues total $6.05 million or more by the
end of Q4 of fiscal 2007, the Executive will be paid an additional $13,000,
making the total possible Bonus for fiscal 2007 equal to
$87,500. This additional bonus will not be subject to pro-ration for
revenues less than $6.05 million.
For
fiscal 2008, the total possible Bonus will equal $175,000 based on metrics
to be
approved in the sole discretion of the Compensation Committee (metrics may
include, but are not limited to, minimum revenue, total revenue, revenue growth,
profits, and the like). Bonus calculations will be subject to a
minimum revenue threshold determined by the Compensation Committee in its sole
discretion.
4. Employee
Benefits. During the Employment Term, Executive will be entitled
to participate in the employee benefit plans currently and hereafter maintained
by the Company of general applicability to other senior executives of the
Company. The Company reserves the right to cancel or change the
benefit plans and programs it offers to its employees at any time.
5. Expenses. The
Company will reimburse Executive for reasonable travel, entertainment or other
expenses incurred by Executive in the furtherance of or in connection with
the
performance of Executive’s duties hereunder, in accordance with the Company’s
expense reimbursement policy as in effect from time to time.
6. Severance.
(a) Involuntary
Termination. If prior to a Change of Control (as defined below),
Executive’s employment with the Company terminates (excluding a termination
based on Executive’s death or Disability (as defined herein)) other than
voluntarily or for Cause (as defined herein), and Executive signs and does
not
revoke a standard release of claims with the Company, then, subject to Section
10, Executive shall be entitled to receive: (i) continuing payments of severance
pay (less applicable withholding taxes) at a rate equal to his Base Salary
rate,
as then in effect, for a period of six (6) months from the date of such
termination of employment, to be paid periodically in accordance with the
Company’s normal payroll policies; (ii) all shares of common stock subject to
the Option which have vested as of the date of Executive’s termination of
employment shall be exercisable for a period of six (6) months following the
date of such termination, provided, however, that in no event shall this
provision operate to extend the Option beyond the term/expiration date of such
Option (and in no event will extend the term of the Option beyond ten (10)
years
from the date of grant), nor shall the unvested portion of the Option continue
to vest during the six (6) month severance period; (iii) reimbursement for
the
cost of continued life insurance and health plan coverage for the Executive
and
his dependents for a period of six (6) months from the date of such termination
of employment; provided, however, that (A) the Executive constitutes a
qualified beneficiary, as defined in Section 4980B(g)(1) of the Internal
Revenue Code of 1986, as amended (the “Code”) and (B) Executive
elects continuation coverage pursuant to the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (“COBRA”), within the time period
prescribed pursuant to COBRA; and (iv) the portion of the projected Bonus for
the fiscal year in which such termination of employment occurs accrued up to
the
date of termination as determined by the Compensation Committee in its sole
discretion.
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(b) Voluntary
Termination; Termination for Cause. If the Executive’s employment
with the Company terminates voluntarily by Executive (including a termination
due to death or Disability) or for Cause by the Company, then (i) all vesting
of
all options to purchase the Common Stock of the Company and other equity awards
will terminate immediately and all payments of compensation by the Company
to
Executive hereunder will terminate immediately (except as to amounts already
earned) and (ii) Executive shall not receive any severance benefits or the
continuation of any other benefits.
(c) Change
of Control. In the event of a Change of Control that occurs prior
to the second anniversary of the Effective Date, then, subject to Section 10,
fifty percent (50%) of the shares subject to the Option shall become fully
vested and exercisable.
7. Section
409A.
(a) Notwithstanding
anything to the contrary in this Agreement, if Executive is a “specified
employee” within the meaning of Section 409A of the Code and the final
regulations and any other guidance promulgated thereunder (“Section 409A”) at
the time of his termination, and the severance payable to Executive, if any,
pursuant to this Agreement, when considered together with any other severance
payments or separation benefits which may be considered deferred compensation
under Section 409A (together, the “Deferred Compensation Separation Benefits”)
will not and could not under any circumstances, regardless of when such
termination occurs, be paid in full by March 15 of the year following
Executive’s termination, then only that portion of the Deferred Compensation
Separation Benefits which do not exceed the Section 409A Limit (as defined
below) may be made within the first six (6) months following Executive’s
termination of employment in accordance with the payment schedule applicable
to
each such payment or benefit. For these purposes, each severance
payment and benefit is hereby designated as a separate payment and will not
collectively be treated as a single payment. Any portion of the
Deferred Compensation Separation Benefits in excess of the Section 409A Limit
shall accrue and, to the extent such portion of the Deferred Compensation
Separation Benefits would otherwise have been payable within the first six
(6)
months following Executive’s termination of employment, will become payable on
the first payroll date that occurs on or after the date six (6) months and
one (1) day following the date of Executive’s termination of
employment. All subsequent Deferred Compensation Separation Benefits,
if any, will be payable in accordance with the payment schedule applicable
to
each payment or benefit.
(b) The
foregoing provision is intended to comply with the requirements of Section
409A
so that none of the severance payments and benefits to be provided hereunder
will be subject to the additional tax imposed under Section 409A, and any
ambiguities herein will be interpreted to so comply. The Company and
Executive agree to work together in good faith to consider amendments to this
Agreement and to take such reasonable actions which are necessary, appropriate
or desirable to avoid imposition of any additional tax or income recognition
prior to actual payment to Executive under Section 409A.
(c) For
purposes of this Agreement, “Section 409A Limit” shall mean the lesser of two
(2) times: (i) Executive’s annualized compensation based upon the annual rate of
pay paid to Executive during the Company’s taxable year preceding the Company’s
taxable year of Executive’s termination of employment as determined under
Treasury Regulation 1.409A-1(b)(9)(iii)(A)(1) and any Internal Revenue Service
guidance issued with respect thereto; or (ii) the maximum amount that may
be taken into account under a qualified plan pursuant to Section 401(a)(17)
of
the Code for the year in which Executive’s employment is
terminated.
8. Definitions.
(a) Cause. For
purposes of this Agreement, “Cause” is defined as (i) Executive engaging in
knowing and intentional illegal conduct that is injurious to the Company; (ii)
Executive’s conviction of, or plea of nolo contendere to, a felony; (iii)
Executive’s gross misconduct; or (iv) Executive’s continued substantial
violations of his employment duties after Executive has received a written
demand for performance from the Company which specifically sets forth the
factual basis for the Company’s belief that Executive has not substantially
performed his duties.
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(b) Change
of Control. For purposes of this Agreement, “Change of Control”
of the Company is defined as: (i) any “person” (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), is or
becomes the “beneficial owner” (as defined in Rule 13d-3 under said Act),
directly or indirectly, of securities of the Company representing more than
fifty percent (50%) of the total voting power represented by the Company’s then
outstanding voting securities, except Xxxxxx X. Xxxxxxx; or (ii) the date of
the
consummation of a merger or consolidation of the Company with any other
corporation that has been approved by the shareholders of the Company, other
than a merger or consolidation which 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) more than fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation or the shareholders
of the Company approve a plan of complete liquidation of the Company; or (iii)
the date of the consummation of the sale or disposition by the Company of all
or
substantially all of the Company’s assets.
(c) Disability. For
purposes of this Agreement, “Disability” means the inability of Executive, due
to a physical or mental impairment, to perform the essential functions of the
Executive’s position, with or without reasonable accommodation, for a period of
ninety (90) days. Whether Executive is disabled shall be determined
by the Company based on evidence provided by one or more physicians selected
by
the Company.
(d) Involuntary
Termination. For purposes of Section 6 of this Agreement,
“Involuntary Termination” shall include termination of Executive’s employment by
Executive within ninety (90) days after the occurrence of any of the following:
(i) any material diminution in Executive’s authority, duties or
responsibilities; (ii) any material diminution in Base Salary, other than a
reduction that is consistent with an across-the-board reduction in the base
compensation payable to other executive employees; and (iii) any material
change in the geographic location at which Executive must perform services
(in
other words, the relocation of Executive to a principal work location that
is
more than fifty (50) miles from the Company’s location on the Effective Date),
unless, in each case, such reduction or change is consented to in writing by
Executive. Notwithstanding the foregoing, before Executive’s
termination of employment may be considered an Involuntary Termination, (A)
Executive must provide the Company with written notice within ninety (90) days
of the event that Executive believes constitutes an “Involuntary Termination”
specifically identifying the acts or omissions constituting the grounds for
an
Involuntary Termination and (B) the Company must have an opportunity within
thirty (30) days following delivery of such notice to cure the Involuntary
Termination condition.
9. Confidential
Information. Executive covenants that he has executed the
Company’s standard Confidential Information and Invention Assignment Agreement
(the “Confidential Information Agreement”) and such agreement is and shall
remain in full force and effect upon the Effective Date. Executive
further agrees to sign any future amendments to the Confidential Information
Agreement provided that such amendment is also signed by a majority of the
officers of the Company.
10. Conditional
Nature of Severance Payments.
(a) Noncompete. Executive
acknowledges that the nature of the Company’s business is such that if Executive
were to become employed by, or substantially involved in, the business of a
competitor of the Company during the six (6) months following the termination
of
Executive’s employment with the Company, it would be very difficult for
Executive not to rely on or use the Company’s trade secrets and confidential
information. Thus, to avoid the inevitable disclosure of the
Company’s trade secrets and confidential information, Executive agrees and
acknowledges that Executive’s right to receive the severance payments set forth
in Section 6 (to the extent Executive is otherwise entitled to such payments)
shall be conditioned upon Executive not directly or indirectly engaging in
(whether as an employee, consultant, agent, proprietor, principal, partner,
shareholder, corporate officer, director or otherwise), nor having any ownership
interested in or participating in the financing, operation, management or
control of, any person, firm, corporation or business that competes with Company
or is a customer of the Company. Upon any breach of this section, all
severance payments pursuant to this Agreement shall immediately
cease.
(b) Non-Solicitation. Until
the date one (1) year after the termination of Executive’s employment with the
Company for any reason, Executive agrees and acknowledges that Executive’s right
to receive the severance payments set forth in Section 6 (to the extent
Executive is otherwise entitled to such payments) shall be conditioned upon
Executive not either directly or indirectly soliciting, inducing, attempting
to
hire, recruiting, encouraging, taking away, hiring any employee of the Company
or causing an employee to leave his or her employment either for Executive
or
for any other entity or person.
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(c) Consequences
of Breach of Section 10(a) or 10(b). Executive agrees and
acknowledges that upon any breach by Executive of either Section 10(a) or 10(b)
of this Agreement, the Company shall have the right to terminate all severance
benefits set forth in this Agreement.
(d) Understanding
of Covenants. Executive represents that he (i) is familiar with
the foregoing covenants not to compete and not to solicit, and (ii) is fully
aware of his obligations hereunder, including, without limitation, the
reasonableness of the length of time, scope and geographic coverage of these
covenants.
11. 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 successor of the Company. Any 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.
12. Notices. All
notices, requests, demands and other communications called for hereunder shall
be in writing and shall be deemed given (a) on the date of delivery if delivered
personally; (b) one (1) day after being sent 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:
Avistar
Communications Corporation
0000
Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxxx, XX 00000
Attn: Chairman
of the Board of Directors
If
to
Executive:
at
the
last residential address known by the Company.
13. Severability. In
the event that 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.
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14. Arbitration.
(a) General. In
consideration of Executive’s service to the Company, its promise to arbitrate
all employment related disputes and Executive’s receipt of the compensation, pay
raises and other benefits paid to Executive by the Company, at present and
in
the future, Executive agrees that any and all controversies, claims, or disputes
with anyone (including the Company and any employee, officer, director,
shareholder or benefit plan of the Company in their capacity as such or
otherwise) arising out of, relating to, or resulting from Executive’s service to
the Company under this Agreement or otherwise or the termination of Executive’s
service with the Company, including any breach of this Agreement, will be
subject to binding arbitration under the Arbitration Rules set forth in
California Code of Civil Procedure Section 1280 through 1294.2, including
Section 1283.05 (the “Rules”) and pursuant to California
law. Disputes which Executive agrees to arbitrate, and thereby agrees
to waive any right to a trial by jury, include any statutory claims under state
or federal law, including, but not limited to, claims under Title VII of
the Civil Rights Act of 1964, the Americans with Disabilities Act of 1990,
the
Age Discrimination in Employment Act of 1967, the Older Workers Benefit
Protection Act, the California Fair Employment and Housing Act, the California
Labor Code, claims of harassment, discrimination or wrongful termination and
any
statutory claims. Executive further understands that this Agreement
to arbitrate also applies to any disputes that the Company may have with
Executive.
(b) Procedure. Executive
agrees that any arbitration will be administered by the Judicial Arbitration
and
Mediation Services (“JAMS”) and that a neutral arbitrator will be selected in a
manner consistent with its National Rules for the Resolution of Employment
Disputes. All arbitration proceedings shall be held in San Mateo
County, California. The arbitration proceedings will allow for
discovery according to the rules
set forth in the Employment Arbitration Rules andProcedures
of JAMS (the “JAMS Rules”) or California Code of Civil
Procedure. Executive agrees that the arbitrator will have the
power to decide any motions brought by any party to the arbitration, including
motions for summary judgment and/or adjudication and motions to dismiss and
demurrers, prior to any arbitration hearing. Executive agrees that
the arbitrator will issue a written decision on the merits. Executive
also agrees that the arbitrator will have the power to award any remedies,
including attorneys’ fees and costs, available under applicable
law. Executive understands the Company will pay for any
administrative or hearing fees charged by the arbitrator or JAMS except that
with respect to any arbitration Executive initiates, Executive will pay the
amount Executive would have otherwise been required to pay to file a claim
in
court. Executive agrees that the arbitrator will administer and
conduct any arbitration in a manner consistent with the Rules and that to the
extent that the Rules conflict with the Rules, the Rules will take
precedence.
(c) Remedy.
Except as provided by the Rules, arbitration will be the sole, exclusive and
final remedy for any dispute between Executive and the
Company. Accordingly, except as provided for by the Rules, neither
Executive nor the Company will be permitted to pursue court action regarding
claims that are subject to arbitration. Notwithstanding, the
arbitrator will not have the authority to disregard or refuse to enforce any
lawful Company policy, and the arbitrator will not order or require the Company
to adopt a policy not otherwise required by law which the Company has not
adopted. The prevailing party in any arbitration proceeding shall be
entitled to recover from the losing party all costs that it has incurred as
a
result of such proceeding, including but not limited to, all reasonable travel
costs and reasonable attorneys’ fees.
(d) Availability
of Injunctive Relief. In addition to the right under the Rules to
petition the court for provisional relief, Executive agrees that any party
may
also petition the court for injunctive relief where either party alleges or
claims a violation of this Agreement or the Confidentiality Agreement or any
other agreement regarding trade secrets, confidential information,
nonsolicitation or Labor Code §2870. In the event either party
seeks injunctive relief, the prevailing party will be entitled to recover
reasonable costs and attorneys’ fees.
(e) Administrative
Relief. Executive understands that this Agreement does not
prohibit Executive from pursuing an administrative claim with a local, state
or
federal administrative body such as the Department of Fair Employment and
Housing, the Equal Employment Opportunity Commission or the workers’
compensation board. This Agreement does, however, preclude Executive
from pursuing court action regarding any such claim.
(f) Voluntary
Nature of Agreement. Executive acknowledges and agrees that
Executive is executing this Agreement voluntarily and without any duress or
undue influence by the Company or anyone else. Executive further acknowledges
and agrees that Executive has carefully read this Agreement and that Executive
has asked any questions needed for Executive to understand the terms,
consequences and binding effect of this Agreement and fully understands it,
including that EXECUTIVE IS WAIVING EXECUTIVE’S RIGHT TO A JURY
TRIAL. Finally, Executive agrees that Executive has been
provided an opportunity to seek the advice of an attorney of Executive’s choice
before signing this Agreement.
15. Integration. This
Agreement, together with the Company’s stock option plan, any stock option
agreements and the Confidential Information Agreement represents the entire
agreement and understanding between 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 writing and signed by duly
authorized representatives of the parties hereto.
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16. 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.
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 (with the exception of its conflict of laws provisions).
20. Acknowledgement. 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.
21. 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 their duly authorized officers, as of the day and year first
above written.
COMPANY:
Avistar
Communications Corporation
By: /s/
Xxxxxx X.
Xxxxxxx
Date: July 22,
2007
Xxxxxx
X. Xxxxxxx
Chairman
of the Board of
Directors
EXECUTIVE:
/s/
Xxxxx
Xxxx Date: July
25,
2007
Xxxxx
Xxxx
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