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Exhibit 10.12
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into as of March
__, 1995 between Xxxxx Corporation, a California corporation (the "Company"),
and Xxxxxx Xxx-Xxxxxx, an individual ("Employee"). This Agreement shall have an
effective date (the "Effective Date") of December 1, 1994.
In consideration of the promises and the terms and conditions set forth
in this Agreement, the parties agree as follows:
1. POSITION. During the term of this Agreement, the Company will
employ Employee, and Employee will serve the Company, as its Chairman of the
Board of Directors and Chief Executive Officer and President. In the event that
another individual is hired to serve as Chief Executive Officer of the Company
(following consultation with Employee) in the future, Employee shall continue as
Chairman (but not as the CEO or, unless otherwise determined by the Board of
Directors, as the President) and will continue to play an active role in the
operations and management of the Company, including in the areas of marketing,
engineering, strategic planning and corporate relationships, with leadership
responsibilities and authority in such areas.
2. DUTIES. During the period of Employee's employment relationship
with the Company, Employee will devote his best efforts to the interests of the
Company. Employee will not engage in other employment or consultancy without the
prior written consent of the Company, except where he has provided prior written
notice to the Company of his intention to engage in any such activities which in
his reasonable opinion are not adverse to the best interests of the Company and
the Company has not objected to such engagement in writing within ten (10)
business days thereafter. Employee agrees to abide faithfully by all Company
rules, regulations and policies. In the event of any conflict between the
Company's rules, regulations or policies and the terms of this Agreement or
other written agreements between the Company and Employee, the terms of this
Agreement or such other agreement will control.
3. COMPENSATION AND BENEFITS.
3.1 BASE SALARY. The Company agrees to pay Employee a base salary
of $120,000 per year (the "Initial Base Salary"), payable in accordance with the
Company's customary payroll practices, from the Effective Date of this Agreement
until the first closing (the "Initial Base Salary Period") of the Company's
Series A Preferred Stock financing in which the Company sells a minimum of
$2,500,000 of its securities (the "Financing"). Immediately following such
closing, Employee's base salary shall be increased to $145,000 year (the
"Regular Base Salary"), payable in accordance with the Company's customary
payroll practices. Further, promptly following such closing, the Company shall
pay Employee an amount equal to the difference between the Regular Base Salary
and the Initial Base Salary over the Initial Base Salary Period. Employee's base
salary shall be subject to annual review by the Board of Directors, and
increases to such base salary, if any, shall be determined by the Board of
Directors, consistent with the salaries of other senior executives of the
Company. Notwithstanding the foregoing, Employee's base salary shall be at least
equal to the base salary of the Company's Chief Executive Officer, if hired,
unless agreed otherwise by Employee in
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writing or by affirmative vote as a member of the Company's Board of Directors.
The provision set forth in the preceding sentence shall terminate and be of no
further force or effect upon the consummation of the sale of the Company's
securities pursuant to a registration statement filed by the Company under the
Securities Act of 1933, as amended, in connection with the firm commitment
underwritten offering of its securities to the general public.
3.2 CASH BONUSES. Employee shall receive an initial cash bonus
equal to 20% of Employee's Regular Base Salary (or such higher salary as is set
by the Board of Directors), to be paid immediately following the closing of the
Financing. Employee shall further be entitled to participate in the Company's
annual executive bonus plan as may be adopted by the Board of Directors or
modified from time to time; provided, however, that Employee's bonus under such
annual bonus plan shall be at least equal to the bonus received by the Company's
Chief Executive Officer, if hired, under such bonus plan until the consummation
of the sale of the Company's securities pursuant to a registration statement
filed by the Company under the Securities Act of 1933, as amended, in connection
with the firm commitment underwritten offering of its securities to the general
public.
3.3 START-UP INCENTIVE. Upon execution of this Agreement, the
Company shall pay Employee $12,082 plus an amount equal to all out-of-pocket
start-up costs of the Company incurred by Employee (upon submission to the
Company by Employee of a written expense report).
3.4 ADDITIONAL BENEFITS. Employee will be eligible to participate
in the Company's employee benefit plans of general application, including
without limitation those plans covering medical, disability and life insurance
(in an amount equal to two years' base salary) in accordance with the rules
established for individual participation in any such plan and applicable law.
Employee will receive two paid vacation days per month and will receive such
other benefits as the Company generally provides to its senior executives and
the Chief Executive Officer (exclusive of relocation related allowances or
assistance).
3.5 EXPENSES. The Company will reimburse Employee for all
reasonable and necessary expenses incurred by Employee in connection with the
Company's business, provided that such expenses are in accordance with the
Company's applicable policies and are properly documented and accounted for in
accordance with the requirements of the Internal Revenue Service.
4. SEVERANCE.
4.1 DEFINITION OF CAUSE. For purposes of this Section 4, "cause"
shall mean conviction of a felony.
4.2 DEFINITION OF CHANGE OF CONTROL. For purposes of this Section
4, a "Change of Control" shall mean: (i) a merger transaction or a sale of stock
by existing shareholders of the Company to a single purchaser or group of
affiliated purchasers, as a result of either of which actions shareholders of
the Company's voting capital stock immediately prior to the effective date of
such transaction or sale do not own at least a majority of the outstanding
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shares of the Company's voting capital stock (or other equivalent evidence of
ownership) immediately following such transaction or sale; or (ii) a sale of all
or substantially all of the Company's assets to a third party.
4.3 TERMINATION OF EMPLOYMENT OTHER THAN FOR CAUSE. In the event
that (i) Employee's employment relationship with the Company is terminated by
the Company other than for cause, (ii) Employee voluntarily terminates his
employment relationship with the Company within one hundred eighty (180) days of
the commencement of employment of a Chief Executive Officer not previously
approved by Employee in writing or by affirmative vote as a member of the
Company's Board of Directors, (iii) Employee voluntarily terminates his
employment relationship with the Company within thirty (30) days of a change in
Employee's main place of employment to a location more than forty (40) miles
from Employee's current residence without his consent, or (iv) Employee
voluntarily terminates his employment relationship with the Company within 60
days of a failure by the Company to comply with any material provision of this
Agreement which has not been cured within thirty (30) days of written notice
thereof by Employee to the Board of Directors, Employee shall be entitled to
severance payments equal to twelve (12) months of Employee's then-current base
salary (payable during such 12 month period on the Company's normal payroll
dates) and shall be entitled to receive continued benefits under the Company's
benefit plans of general application (other than further accrual of vacation
time, which shall cease upon termination of the employment relationship) during
such 12-month period, and Employee agrees in exchange for such severance
payments and benefits continuation to execute a release in reasonable form
provided by the Company releasing each party and its affiliates or related
parties from all claims, known and unknown, which such party may have against
the other party or its affiliates or related parties other than as related to
the payment of such severance, the provision of such benefits or the continued
operation of the applicable provisions of agreements relating to confidential
information which the parties have previously executed.
4.4 TERMINATION OF EMPLOYMENT FOR CAUSE, DEATH OR DISABILITY. In
the event that Employee's employment relationship with the Company is terminated
for cause or is terminated due to his death or a disability which renders him
unable to perform substantially the functions of his position, Employee shall
not be entitled to the severance payments described in Section 4.3.
4.5 STOCK VESTING MATTERS. Notwithstanding the vesting schedule
contained in Section 3(a) of the Common Stock Purchase Agreement dated January
13, 1995 between the Company and Gideon and Xxxx Xxx-Xxxxxx, Trustees of the
Xxxxxx Xxx-Xxxxxx and Xxxx Xxx-Xxxxxx Family Trust dated July 29, 1994 (the
"Stock Purchase Agreement"), the parties agree that the following provisions
shall apply under the circumstances enumerated below: (i) All of the then
Unvested Shares shall be released from the Company's repurchase option in the
event that the Company is a party to a merger transaction or if a sale of stock
by existing shareholders of the Company to a single purchaser or group of
affiliated purchasers occurs, as a result of either of which actions
shareholders of the Company's voting capital stock immediately prior to the
effective date of such transaction or sale do not own at least a majority of the
outstanding shares of the Company's voting capital stock (or other equivalent
evidence of ownership) immediately
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following such transaction or sale, or if the Company sells all or substantially
all of its assets to a third party; (ii) in addition to the Shares already
released from the Company's original repurchase option, an additional
twenty-five percent ( 25%) of the Shares shall be released from the Company's
repurchase option in the event that the Company hires a Chief Executive Officer
without first obtaining the prior approval of Purchaser and the Purchaser elects
to terminate his employment with the Company within one hundred eighty (180)
days of commencement of employment by such Chief Executive Officer; (iii) in
addition to the Shares already released from the Company's original repurchase
option, an additional twenty-five percent ( 25%) of the Shares shall be released
from the Company's repurchase option, if Purchaser's employment relationship
with the Company is terminated by the Company other than for cause; and (iv) if
Purchaser's employment relationship with the Company is terminated due to his
death or disability (as defined below), then (a) a total of twenty-five percent
(25%) of the Shares shall be released from the Company's repurchase option (in
lieu of what would otherwise have been released under the original repurchase
option) in the event that Purchaser dies or becomes disabled less than one year
after the Vesting Commencement Date, (b) a total of fifty percent (50%) of the
Shares shall be released from the repurchase option (in lieu of what would
otherwise have been released under the original repurchase option) in the event
that Purchaser dies or becomes disabled one year or more but less than two years
after the Vesting Commencement Date, and (c) only that number of Shares provided
by the terms of Section 3(a) of the Stock Purchase Agreement shall be released
from the Company's original repurchase option in the event Purchaser dies or
becomes disabled two years or more after the Vesting Commencement Date. For
purposes of the foregoing paragraph, capitalized terms shall have the meanings
ascribed to them in the Stock Purchase Agreement. For purposes of the foregoing
paragraph, "disability or "disabled" shall refer to a disability which renders
the Employee unable to perform substantially the functions of his position by
reason of any medically determinable substantial physical or mental impairment
which can be expected to result in death or which has lasted or can be expected
to last for a continuous period of not less than 12 months as certified by a
licensed physician
5. REGISTRATION RIGHTS. In the event that the Company grants
registration rights to any of its officers or investors with respect to any
shares of the Company's capital stock or other securities issued to them, the
Company shall grant no less favorable registration rights to Employee with
respect to his shares of Common Stock, whether or not Employee is then employed
by the Company.
6. CONFIDENTIALITY AGREEMENT. Employee shall sign a Confidentiality
and Inventions Agreement in the form attached hereto as Exhibit A.
7. MISCELLANEOUS.
7.1 SEVERABILITY. If any provision of this Agreement shall be
found by any arbitrator or court of competent jurisdiction to be invalid or
unenforceable, then the parties hereby waive such provision to the extent that
it is found to be invalid or unenforceable and to the extent that to do so would
not deprive one of the parties of the substantial benefit of its bargain. Such
provision shall, to the extent allowable by law and the preceding sentence, be
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modified by such arbitrator or court so that it becomes enforceable consistent
with the intent of this Agreement and, as modified, shall be enforced as any
other provision hereof, all the other provisions continuing in full force and
effect.
7.2 NO WAIVER. The failure by either party at any time to require
performance or compliance by the other of any of its obligations or agreements
shall in no way affect the right to require such performance or compliance at
any time thereafter. The waiver by either party of a breach of any provision
hereof shall not be taken or held to be a waiver of any preceding or succeeding
breach of such provision or as a waiver of the provision itself. No waiver of
any kind shall be effective or binding, unless it is in writing and is signed by
the party against whom such waiver is sought to be enforced.
7.3 ASSIGNMENT. This Agreement and all rights hereunder are
personal to Employee and may not be transferred or assigned by Employee at any
time. The Company may assign its rights, together with its obligations
hereunder, to any parent, subsidiary, affiliate or successor, or in connection
with any sale, transfer or other disposition of all or substantially all of its
business and assets, provided, however, that any such assignee assumes the
Company's obligations hereunder, and that such assignment shall be subject to
the severance provisions described in Section 4 to the extent applicable.
7.4 WITHHOLDING. All sums payable to Employee hereunder shall be
reduced by all federal, state, local and other withholding and similar taxes and
payments required by applicable law.
7.5 ENTIRE AGREEMENT. This Agreement, together with the
Confidentiality and Inventions Agreement attached hereto as Exhibit A, the
Common Stock Purchase Agreement dated January 13, 1995 and the Indemnification
Agreement dated November 14, 1994, constitute the entire and only agreements
between the parties relating to the subject matter hereof and thereof, and
supersede any and all previous contracts, arrangements or understandings with
respect hereto and thereto. This Agreement represents the mutual understanding
of the parties and shall not be interpreted against either party by reason of
its drafting or preparation.
7.6 AMENDMENT. This Agreement may be amended, modified,
superseded or canceled only by an agreement in writing executed by both parties
hereto.
7.7 NOTICES. All notices and other communications required or
permitted under this Agreement shall be in writing and hand delivered, sent by
telecopier, sent by certified first class mail, postage pre-paid, or sent by
nationally recognized express courier service. Such notices and other
communications shall be effective upon receipt if hand delivered or sent by
telecopier, three business days after mailing if sent by mail, and one business
day after dispatch if sent by express courier, to the following addresses, or
such other addresses as any party shall notify the other parties:
If to the Company: Xxxxx Corporation
0000 Xxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
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Attention: Secretary
Telecopier: (000) 000-0000
If to Employee: Xxxxxx Xxx-Xxxxxx
00000 Xxxxx Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000
7.8 BINDING NATURE. This Agreement shall be binding upon, and
inure to the benefit of, the successors and personal representatives of the
respective parties hereto.
7.9 HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall in no way affect the meaning or interpretation
of this Agreement. In this Agreement, the singular includes the plural, the
plural includes the singular, the masculine gender includes both male and female
referents.
7.10 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which,
taken together, constitute one and the same agreement.
7.11 GOVERNING LAW. This Agreement and the rights and obligations
of the parties hereto shall be construed in accordance with the laws of the
State of California, without giving effect to the principles of conflict of
laws.
7.12 ATTORNEY'S FEES. In the event that a dispute arises
concerning this Agreement or any of the terms of this Agreement or the
performance thereof, the prevailing party in any action or proceeding concerning
such dispute shall be entitled to have its reasonable attorney's fees and costs
of litigation paid by the non-prevailing party.
IN WITNESS WHEREOF, the Company and Employee have executed this
Agreement as of the date first above written.
XXXXX CORPORATION EMPLOYEE
By: __________________________ __________________________
Xxxxxx Xxx-Xxxxxx
Its:__________________________
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AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement is made as of June 2, 1995 by and
between Xxxxx Corporation, a California corporation (the "Company") and Xxxxxx
Xxx-Xxxxxx, an individual (the "Employee").
WHEREAS, the Company and the Employee entered into an Employment
Agreement dated March 27, 1995 (the "Employment Agreement"); and
WHEREAS, the Company and the Employee desire to amend certain sections
of the Employment Agreement;
NOW THEREFORE, pursuant to the provisions of Section 7.6 of the
Employment Agreement, the undersigned agree as follows:
1. Section 1 of the Employment Agreement shall be amended to read
in its entirety as follows:
"1. POSITION. The Company will employ Employee, and Employee will
serve the Company, as its Chairman of the Board of Directors and Chief Executive
Officer and President until such officer relationships are modified in
accordance with the provisions of the balance of this Section 1 or until
Employee's employment relationship with the Company is terminated by either the
Company or Employee. In the event that another individual is hired to serve as
Chief Executive Officer of the Company (following consultation with Employee) in
the future, Employee shall, so long as he remains an employee of the Company,
continue as Chairman (but not as the CEO or, unless otherwise determined by the
Board of Directors, as the President) and will continue to play an active role
in the operations and management of the Company, including in the areas of
marketing, engineering, strategic planning and corporate relationships, with
leadership responsibilities and authority in such areas."
2. Section 3.4 of the Employment Agreement shall be amended to read
in its entirety as follows:
"3.4 ADDITIONAL BENEFITS. Employee will be eligible to
participate in the Company's employee benefit plans of general application,
including without limitation those plans covering medical, disability and life
insurance (in an amount equal to two years' base salary) in accordance with the
rules established for individual participation in any such plan and applicable
law. Employee will receive paid vacation in accordance with the Company's
vacation policy then in effect (provided that in any case Employee will not
receive fewer paid vacation days than any person appointed in the future as the
Company's Chief Executive Officer or as other senior officers of the Company)
and will receive such other benefits as the Company generally provides to its
senior executives and the Chief Executive Officer (exclusive of relocation
related allowances or assistance)."
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3. Section 4.3 of the Employment Agreement shall be amended to read
in its entirety as follows:
"4.3 TERMINATION OF EMPLOYMENT OTHER THAN FOR CAUSE. In the event
that (i) Employee's employment relationship with the Company is terminated by
the Company other than for cause, (ii) Employee voluntarily terminates his
employment relationship with the Company within one hundred eighty (180) days of
the commencement of employment of a Chief Executive Officer not previously
approved by Employee in writing or by his affirmative vote as a member of the
Company's Board of Directors, (iii) Employee voluntarily terminates his
employment relationship with the Company within thirty (30) days of a change in
Employee's main place of employment to a location outside what is generally
recognized as the Silicon Valley within Northern California, (including all of
Santa Xxxxx County and adjoining cities), without his consent, or (iv) Employee
voluntarily terminates his employment relationship with the Company within 60
days of a failure by the Company to comply with any material provision of this
Agreement which has not been cured within thirty (30) days of written notice
thereof by Employee to the Board of Directors, Employee shall be entitled to
severance payments equal to twelve (12) months of Employee's then-current base
salary (payable during such 12 month period on the Company's normal payroll
dates) and shall be entitled to receive continued benefits under the Company's
benefit plans of general application (other than further accrual of vacation
time, which shall cease upon termination of the employment relationship) during
such 12-month period, and Employee agrees in exchange for such severance
payments and benefits continuation to execute a release in reasonable form
provided by the Company releasing each party and its affiliates or related
parties from all claims, known and unknown, which such party may have against
the other party or its affiliates or related parties other than as related to
the payment of such severance, the provision of such benefits or the continued
operation of the applicable provisions of agreements relating to confidential
information which the parties have previously executed."
4. All other provisions of the Employment Agreement shall remain in
full force and effect.
The foregoing Amendment to Employment Agreement is hereby executed as of
the date first above written.
"COMPANY"
XXXXX CORPORATION,
a California corporation
By: _____________________________________
Title: __________________________________
"EMPLOYEE"
_________________________________________
Xxxxxx Xxx-Xxxxxx
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