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EXHIBIT 10.16
EMPLOYMENT AGREEMENT
This Employment Agreement is made and entered into by and between Zland inc.
(the "Company") and Xxxxx X. Xxxxx ("Xxxxx").
RECITALS
A. On June 7, 1999 (the "Commencement Date") Xxxxx was employed by the
Company as its President and Chief Operating Officer;
NOW, THEREFORE, in consideration of the promises and benefits contained
in this Agreement, Xxxxx and the Company hereby agree as follows:
1. Position and Duties: Xxxxx shall be employed by the Company as its
President and Chief Operating Officer reporting to Xxxx Xxxxxxxx,
Chairman and CEO, effective June 7, 1999. As President and COO,
Xxxxx agrees to devote his full business time, energy and skill to
his duties at the Company. These duties shall include, but not be
limited to, any duties consistent with his position which may be
assigned to Xxxxx from the CEO. Xxxxx will have offices in both
Company headquarters as well as a new office to be opened in or
about San Jose, CA.
2. Term of Employment: Xxxxx'x employment with the Company pursuant
to this Agreement shall be on an at-will basis, subject to the
provisions regarding termination set forth below. Upon termination
of Xxxxx'x employment with the Company, neither Xxxxx nor the
Company shall have any further obligation or liability to the
other, except as set forth in Paragraphs 3(c ), 4, and 5 below.
3. Compensation: Xxxxx shall be compensated by the Company for his
services as follows:
(a) Base Salary: Xxxxx shall be paid a monthly base salary of
twenty thousand dollars ($20,000.00) (two hundred forty
thousand dollars ($240,000.00) on an annualized basis),
subject to applicable withholding and paid in accordance
with the Company's normal payroll procedures. Such salary
will be reviewed on an annual basis and adjustments made as
deemed appropriate by the CEO and the Board of Directors.
Any decrease in salary may be viewed as a material event at
Xxxxx'x sole discretion and therefore trigger termination
clauses as set forth in Paragraphs 4 and 5 below.
(b) Benefits: Xxxxx shall have the right, on the same basis as
other employees of the Company, to participate in and to
receive benefits under any of the Company's benefit plans,
including medical, dental and group insurance plans for
Xxxxx and his immediate family. Xxxxx shall also be
entitled to participate in
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any 401 (k) Plan or Employee Stock Purchase Plan that the
Company may offer, now or in the future, in accordance with
its terms. In addition, Xxxxx shall be entitled to the
benefits afforded to other employees under the Company's
vacation, holiday and business expense reimbursement
policies.
(c) Executive Incentive Compensation Plan: Xxxxx will be
eligible to receive, in addition to his Base Salary, an
annual incentive compensation payment which would equal, at
a minimum, fifty percent (50%) of Xxxxx'x current Base
Salary, and at a maximum, seventy-five (75%) of Xxxxx'x
Base Salary, provided the Company achieves pre-defined
goals for that period. These goals will be determined
mutually between the CEO, Xxxxx and the Board of Directors.
For 1999, this bonus will be calculated on a pro-rata basis
for the period between the Commencement Date and the end of
the fiscal year.
Similar bonuses will apply in subsequent fiscal years.
These payments will normally be made on a six month
retroactive basis, by August 30th of the current fiscal
year, and February 28th of the next fiscal year.
In the event that Xxxxx terminates his employment
voluntarily, Xxxxx shall be entitled to receive a payment
pro-rated in accordance with the period of Xxxxx'x
employment with the Company during the applicable fiscal
year, provided that the predetermined goals for that period
were met. Payment in this case will be made at the normal
August 30th or February 28th interval.
(d) Stock Options: Xxxxx will be granted a hiring option to
purchase 500,000 shares of the Company's common stock at a
pre-IPO price not to exceed $9.00/share. The shares subject
to this option will vest as follows: (A) upon the one (1)
year anniversary of the Commencement date, 25%; (B)
thereafter, 2.0833% per month.
In addition, Xxxxx will be granted a hiring bonus of
100,000shares of the Company's common stock at a pre-IPO
price not to exceed $9.00/share. The shares subject to this
option will be vested immediately.
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4. Benefits Upon Voluntary Termination: In the event that Xxxxx
voluntarily resigns from his employment with the Company, Xxxxx
shall be entitled to no compensation or benefits other than those
earned in Paragraph 3 above through the date of his termination,
unless the Company materially altered Xxxxx'x duties,
responsibilities, authority or compensation from that set forth in
Paragraphs 1 and 3 above. In that event, Paragraph 5(b) shall
apply. Xxxxx will have one (1) year from the date of his
resignation to exercise any stock options that were vested prior
to the date of his resignation.
In the event that Xxxxx'x employment terminates as a result of his
death or disability, Xxxxx shall be entitled to the benefits
described in Paragraph 5(c).
5. Benefits Upon Other Termination: Xxxxx agrees that his employment
may be terminated by the Company at any time, with or without
cause. In the event of the termination of Xxxxx'x employment by
the Company for the reasons set forth below, he shall be entitled
to the following:
(a) Termination for Cause: If Xxxxx'x employment is terminated
by the Company for Cause as defined below, Xxxxx shall be
entitled to no compensation or benefits other than those
earned under Paragraph 3 through the date of his
termination. Xxxxx will have one (1) year from the date of
his termination to exercise any stock options that were
vested prior to the date of his termination.
For purposes of this Agreement, a termination "for Cause"
may only occur if Xxxxx is terminated for any of the
following reasons:
(i) theft, dishonesty, or falsification of any
employment or Company records;
(ii) improper disclosure of the Company's confidential or
proprietary information;
(iii) failure or inability to perform any reasonable
assigned duties after written notice from the
Company of, and a reasonable opportunity to cure
such failure or inability; or
(iv) Xxxxx'x conviction of any criminal act which impairs
his ability to perform his duties under this
Agreement.
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(b) Termination for Other Than Cause: If Xxxxx'x employment is
terminated by the Company for any reason Other Than Cause
and not as a result of death or disability as set forth in
Paragraph 4, and not a result of a Change of Control as set
forth in subparagraph 5(c) below, Xxxxx shall be entitled
to receive a lump sum severance payment equal to twelve
(12) month's Base Compensation plus 50% bonus, less
applicable withholding, at his final monthly salary rate.
This payment shall be made immediately upon termination.
Xxxxx will also be entitled to full benefits as set forth
in Paragraph 3(b) above, for a period of twelve (12) months
after termination. In addition, Xxxxx shall be entitled to
an acceleration of all remaining unvested stock options
granted as set forth in Paragraph 3(d) for which he has up
to one (1) year after the date of Termination to exercise.
For purposes of subparagraph 5(b), a Termination for Other
Than Cause shall occur if the Company materially alters
Xxxxx'x duties, responsibilities, authority or compensation
from that set forth in Paragraphs 1 and 3 above.
(c) Termination Following a Change in Control:
(i) In the event a Change in Control occurs, Xxxxx will
be entitled to immediate acceleration of vesting for
all stock options granted to Xxxxx as set forth in
Paragraph 3(d), as of the date of the Change in
Control, for which he has up to one (1) year after
the date of the Change in Control, to exercise.
(ii) In addition, in the event of termination of Xxxxx'x
employment for any reason, or if the Company
materially alters Xxxxx'x duties, responsibilities,
authority or compensation from that set forth in
Paragraphs 1 and 3 above, within two (2) years after
a Change of Control, Xxxxx shall be entitled to a
lump sum severance payment equal to two (2) years
Base Salary and 50% bonus, less applicable
withholding at his final monthly salary rate. This
payment shall be made immediately upon termination.
(iii) In addition, Xxxxx will also be entitled to full
benefits as set forth in Paragraph 3(c) above, for a
period of twelve (12) months after termination.
(iv) For purposes of this Agreement, a "Change of
Control" shall mean an Ownership Change in which the
shareholders of the Company before such Ownership
Change do not retain, directly or indirectly, at
least a majority of the beneficiary interest in the
voting stock of the Company after such transaction
or in which the Company is not the
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surviving corporation. For purposes of this
Agreement an "Ownership Change" shall be deemed to
have occurred in the event any of the following
occurs with respect to the Company:
A. the direct or indirect sale or exchange by
the shareholders of the Company of all or
substantially all of the stock in the
Company;
B. a merger or consolidation in which the
Company is a minority party;
C. the sale, exchange, or transfer of all or
substantially all of the assets of the
Company; or
D. a liquidation or dissolution of the Company.
6. Exclusive Remedy: Xxxxx agrees that the severance plan described
in Paragraphs 4 and 5 above shall be his sole and exclusive remedy
in the event that the Company terminates his employment and he
shall be entitled to no further compensation for any damage or
injury arising out of the termination of his employment by the
Company.
7. 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
Agreement.
8. Interpretation: Xxxxx and the Company agree that this Agreement
shall be interpreted in accordance with and governed by the laws
of the State of California.
9. Successors and Assigns: This Agreement shall inure to the benefit
of and be binding upon the Company and its successors and assigns.
In view of the personal nature of the services to be performed
under this Agreement by Xxxxx, he shall not have the right to
assign or transfer any of his rights, obligations or benefits
under this agreement, except as otherwise noted herein.
10. Entire Agreement: This Agreement constitutes the entire employment
agreement between Xxxxx and the Company regarding the terms and
conditions of his employment with the exception of any stock
option agreement between Xxxxx and the Company for shares granted
in Paragraph 3(d) above.
11. Modification: This Agreement may only be modified or amended be a
supplemental written agreement signed by Xxxxx and the Company.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and
year written below.
Zland Corporation
Date: 5/20/99 By: /s/ XXXX X. XXXXXXXX
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its: CEO
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Date: 5/20/99 /s/ XXXXX X. XXXXX
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Xxxxx X. Xxxxx
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