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EXHIBIT 10.7
EMPLOYMENT AGREEMENT
(AS AMENDED FEBRUARY 1, 2001)
This AGREEMENT amends, replaces and supercedes that certain Employment
Agreement entered into as of November 10, 2000 (the "Effective Date"), by and
between Xxxxx X. Xxxxxxx ("Executive") and 3dfx Interactive, Inc., a California
corporation (the "Company"), and is effective as of February 1, 2001 (the
"Amendment Date"). In consideration of the mutual covenants and agreements
hereinafter set forth, the parties agree as follows:
1. Duties and Scope of Employment.
(a) Position and Duties. For the term of his employment
under this Agreement, the Company agrees to employ
Executive as its Chief Technical Officer and Founder,
reporting directly to the Chief Executive Officer
("CEO"), or person designated by the CEO. Executive
shall have such duties and authority as are commensurate
with one employed in his position, as may be customarily
incident to such position, and as may be assigned to
Executive from time to time. Executive shall diligently,
to the best of his ability, and with the highest degree
of good faith and loyalty, perform all such duties
incident to his position and use his best efforts to
promote the interests of the Company. Executive agrees
that, until the closing of the Asset Sale, he will
devote substantially all of his business efforts toward
enhancing shareholder return through performing those
duties set forth on Schedule 1 to this Agreement.
(b) Obligations to the Company. During the Employment Term,
Executive shall devote his full time and energy to the
business of the Company and shall not be engaged in any
competitive business activity without the express
written consent of the CEO. Executive shall comply with
the Company's policies and rules, as they may be in
effect from time to time during the term of his
employment.
(c) No Conflicting Obligations. Executive represents and
warrants to the Company that he is under no obligations
or commitments, whether contractual or otherwise, that
are inconsistent with his obligations under this
Agreement. Executive represents and warrants that he
will not use or disclose, in connection with his
employment by the Company, any trade secrets or other
proprietary information or intellectual property in
which Executive or any other person has any right, title
or interest and that his employment by the Company as
contemplated by this Agreement will not infringe or
violate the rights of any other person or entity.
Executive
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represents and warrants to the Company that he has
returned all property and confidential information
belonging to any prior employers.
2. Term of Employment.
(a) Basic Rule. The Company agrees to continue Executive's
employment, and Executive agrees to remain in employment
with the Company, from the Effective Date until the date
when Executive's employment terminates pursuant to
Subsection 2(b) below (the "Employment Period").
Executive's employment with the Company shall be "at
will," which means that either Executive or the Company
may terminate Executive's employment at any time, for
any reason, with "Cause" or "Without Cause." Any
contrary representations, which may have been made to
Executive shall be superseded by this Agreement. This
Agreement shall constitute the full and complete
agreement between Executive and the Company regarding
the "at will" nature of Executive's employment, which
may only be changed in an express written agreement
signed by Executive and the Chief Executive Officer.
(b) Termination. The Employment Period shall end on the
earlier of (i) the closing of the Asset Sale; (ii) upon
Executive's death or Disability; (iii) the date on which
Executive resigns his employment for any reason in
accordance with this subsection 2(b); or (iv) the date
on which the Company terminates Executive's employment
in accordance with this subsection 2(b). Subject to the
provisions contained within this Agreement, either
Executive or the Company may terminate Executive's
employment at any time for any reason (or no reason),
and with or without Cause upon giving fourteen (14)
days' notice in writing.
3. Cash and Incentive Compensation.
(a) Base Salary. The Company shall pay Executive as
compensation for his services an annualized base salary
of Two Hundred Sixty Thousand Dollars ($260,000), less
applicable deductions and withholdings, payable in
accordance with the Company's standard payroll schedule.
The compensation specified in this Subsection (a),
together with any increases in such compensation that
the Company may grant from time to time, are referred to
in this Agreement as "Base Salary."
(b) Bonus. Executive will be eligible to earn an annualized
bonus (the "Target Bonus") for the 2001 fiscal year
equal to forty percent (40%) of his Base Salary, less
applicable deductions and withholdings.
(c) Stock Options. As of the Effective Date of this
Agreement, Executive has been granted stock options
pursuant to the Company's Stock Option Plan (the
"Plan"), which are summarized in Exhibit A to this
Agreement (the "Options"). Executive's Options shall
continue to vest in accordance with
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the Plan and the stock option agreements between the
Company and Executive evidencing such Options.
(d) Vacation and Executive Benefits. During the term of his
employment, Executive shall be eligible for vacation
each year, in accordance with the Company's standard
policy for senior executives, as it may be amended from
time to time. Executive shall be eligible during his
employment term to participate in any employee benefit
plans generally available to the other senior executives
of the Company, subject in each case to the generally
applicable terms and conditions of the plan in question
and to the determinations of any person or committee
administering such plan. The Company reserves the right
to amend, modify or terminate any employee benefits at
any time for any reason.
(e) Business Expenses. During the term of his employment,
Executive shall be authorized to incur necessary and
reasonable travel and other business expenses in
connection with his duties hereunder, pursuant to and
consistent with policies and procedures as established
by the Company and as may be modified from time-to-time.
The Company shall reimburse Executive for such expenses
upon presentation of an itemized account and appropriate
supporting documentation, in accordance with Company
policy and procedures.
4. Payments and Benefits Following Termination.
(a) Termination without Cause. If the Executive remains
employed through the closing of the Asset Sale (or if
the Company terminates his employment without Cause
prior to such date), the Executive shall receive:
(i) continued severance pay (the "Severance Pay") in
an amount equal to his Base Salary in accordance
with the Company's standard payroll practices
until the earlier of (A) the Lump Sum Payment
Date, (B) the date that is twelve (12) months
following the termination of Executive's
employment, or (C) the date on which Executive
commences full-time employment for any person,
venture, partnership or corporate entity; and
(ii) payment (or reimbursement) of COBRA premiums
(or, if COBRA coverage is not available,
reimbursement of premiums paid for other medical
insurance in an amount not to exceed the COBRA
premium) for twelve (12) months following the
termination date of Executive's employment.
(b) Lump Sum Payment. If the Executive remains employed
through the closing of the Asset Sale (or if the Company
terminates his employment without Cause prior to such
date), and if the closing of the Asset Sale occurs
within twelve (12) months following the Amendment Date,
then
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the Executive shall be entitled to receive a Lump Sum
payment (the "Lump Sum Payment") equal to the sum of (i)
Executive's Base Salary and (ii) 50% of Executive's
Target Bonus, less applicable deductions and
withholdings; reduced by the Base Salary and Severance
Pay paid to the Executive during the period from the
Amendment Date through the Lump Sum Payment Date. The
Lump Sum Payment Date shall be the date that the Company
shall have fully paid or caused to be paid or otherwise
provided for (in a manner satisfactory to NVIDIA) all
Liquidated Claims. Upon the Lump Sum Payment Date,
Executive's Severance Pay under Section 4(a)(i) shall
cease, and he shall receive the Lump Sum Payment.
(c) Resignation or Termination for "Cause." If Executive
terminates his employment for any reason or no reason,
or if the Company terminates Executive's employment for
"Cause," Executive will be paid his Base Salary and for
all unused vacation earned through the date of
termination, but nothing else, and all stock vesting and
benefits will cease on Executive's date of termination.
(d) Release Required. As a prior condition to Executive
receiving any payment or benefit under Sections 4(a)
and/or 4(b) of this Agreement, Executive shall execute a
full release of known and unknown claims against the
Company, its successors, affiliates, employees, agents,
advisors and representatives, in a form designated by
the Company.
(e) Condition of Non-competition.
(i) Termination Following a Change of Control. If
required by a successor company, Executive will
not engage in any Competitive Activity for a
period of one (1) year following a Change in
Control.
(ii) Termination Outside a Change of Control. During
the one (1) year following termination of his
employment (the "Continuation Period"),
Executive shall not engage in any "Competitive
Activity" without first notifying the Company of
the contemplated activity. Executive agrees that
if there is any reasonable question regarding
whether or not a contemplated activity would be
a Competitive Activity, Executive will consult
with the Board before engaging in the
contemplated activity. The Compensation
Committee of the Board will determine in its
sole discretion whether the activity
contemplated by Executive is a Competitive
Activity and, if it so determines, Executive
will forfeit his right to any and all continued
payments and benefits under Section 4(a) of this
Agreement if he proceeds to engage in the
Competitive Activity during the Continuation
Period.
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(f) Termination Due to Death or Disability. If Executive's
employment is terminated due to death or Disability,
then Executive, or Executive's estate, will receive: (i)
payment for all Base Salary and accrued but unused
vacation earned through the date of termination; and
(ii) a lump-sum payment equal to the pro-rata portion of
Executive's full Target Bonus, based on Executive's
length of service during the year in which Executive's
employment is terminated due to death or Disability.
(g) Definitions.
(i) "Asset Sale." The sale of certain assets of the
Company pursuant to the Asset Purchase Agreement
dated as of December 15, 2000 with NVIDIA
Corporation.
(ii) "Change of Control." The parties agree that the
closing of the sale of certain assets of the
Company pursuant to the Asset Purchase Agreement
dated as of December 15, 2000 with NVIDIA
Corporation will constitute a Change of Control.
For all purposes under this Agreement, "Change
of Control" shall mean (1) a merger or
consolidation in which securities possessing at
least fifty percent (50%) of the total combined
voting power of the Company's outstanding
securities are transferred to a person or
persons different from the persons holding those
securities immediately prior to such
transaction, or (2) the sale, transfer or other
disposition of all or substantially all of the
Company's assets in complete liquidation or
dissolution of the Company.
(iii) Termination for "Cause." For all purposes under
this Agreement, a termination for "Cause" shall
mean a termination of Executive's employment for
any of the following reasons: (1) misconduct;
(2) misappropriation of the assets of the
Company; (3) conviction of, or a plea of
"guilty" or "no contest" to a felony under the
laws of the United States or any state thereof;
(4) committing an act of fraud against, or the
misappropriation of property belonging to, the
Company; (5) a material breach of any
confidentiality or proprietary information
agreement between Executive and the Company; or
(6) continued unsatisfactory performance after
being given a written warning and at least
thirty (30) days to improve performance. A
termination of Executive's employment in any
other circumstance or for any other reason will
be a termination "Without Cause."
(iv) "Disability." For all purposes under this
Agreement, "Disability" means Executive's
inability to carry out his material duties under
this Agreement for more than six (6) months in
any twelve (12) consecutive month period as a
result of incapacity due to mental or physical
illness or injury.
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(v) "Competitive Activity." For the purposes of this
Agreement, a "Competitive Activity" means any
activity in which Executive directly or
indirectly provides services of any kind or
nature (whether or not Executive is compensated
for such services), including, but not limited
to, Executive working in an employment, advisory
or consulting capacity, for any Competitor of
the Company.
(vi) "Competitor." For purposes of this Agreement,
"Competitor" is defined as any company involved
in the design and creation of 3D graphics,
animation and/or effects for use in
entertainment, or educational. Currently, the
Competitor's list includes, but is not limited
to, 3d Labs, ATI, S3, Maxtrox and any of their
successors or affiliates. During the
Continuation Period, the Company may reasonably
add other companies to the Competitors list.
(vii) "Liquidated Claims." For purposes of this
Agreement, "Liquidated Claims" mean debts,
obligations or liabilities of any nature that
are fixed and ascertainable in amount, of the
type that would be required to be disclosed on a
balance sheet prepared in accordance with GAAP,
but regardless of whether such debt, obligation
or liability is immediately due and payable. Any
unknown, undisclosed, unasserted, contingent,
conditional, vicarious or derivative claims
shall not be considered "Liquidated Claims."
5. Non-Solicitation and Non-Disclosure.
(a) Non-Solicitation. During the period commencing on the
Effective Date of this Agreement and continuing until
the second anniversary of the date when Executive's
employment terminates for any reason, Executive shall
not directly or indirectly, personally or through
others, solicit or encourage, or attempt to solicit or
encourage (on Executive's own behalf or on behalf of any
other person or entity) for hire any employee or
consultant of the Company or any of the Company's
affiliates.
(b) Non-Disclosure. As a condition of employment, Executive
will execute the Company's standard Proprietary
Information Agreement, a copy of which is attached.
6. Successors.
(a) Company's Successors. This Agreement shall be binding
upon any successor (whether direct or indirect and
whether by purchase, lease, merger, consolidation,
liquidation or otherwise) to all or substantially all of
the Company's business and/or assets. For all purposes
under this Agreement, the term "Company" shall include
any successor to the
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Company's business and/or assets which becomes bound by
this Agreement.
(b) Executive's Successors. This Agreement and all rights of
Executive hereunder shall inure to the benefit of, and
be enforceable by, Executive's personal or legal
representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees.
7. Arbitration. Executive and the Company agree to arbitrate before
a neutral arbitrator any and all disputes or claims arising from
or relating to Executive's employment with the Company, or the
termination of that employment, including disputes or claims
against any current or former agent or employee of the Company.
(a) Arbitrable Claims. Arbitrable disputes or claims include
those which arise in tort, contract, or pursuant to a
statute, regulation, or ordinance now in existence or
which may in the future be enacted or recognized,
including, but not limited to, the following claims:
(i) claims for fraud, promissory estoppel,
fraudulent inducement of contract or breach of
contract or contractual obligation, whether such
alleged contract or obligation be oral, written,
or express or implied by fact or law;
(ii) claims for wrongful termination of employment,
violation of public policy and constructive
discharge, infliction of emotional distress,
misrepresentation, interference with contract or
prospective economic advantage, defamation,
unfair business practices, and any other tort or
tort-like causes of action relating to or
arising from the employment relationship or the
formation or termination thereof;
(iii) claims of discrimination, harassment, or
retaliation under any and all federal, state, or
municipal statutes, regulations, or ordinances
that prohibit discrimination, harassment, or
retaliation in employment, as well as claims for
violation of any other federal, state, or
municipal statute, regulation, or ordinance,
except as set forth herein; and
(iv) claims for non-payment or incorrect payment of
wages, commissions, bonuses, severance, employee
fringe benefits, stock options and the like,
whether such claims be pursuant to alleged
express or implied contract or obligation,
equity, the California Labor Code, the Fair
Labor Standards Act, the Employee Retirement
Income Securities Act, and any other federal,
state, or municipal laws concerning wages,
compensation or employee benefits.
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(b) Non-Arbitrable Claims. Executive and the Company further
understand and agree that the following disputes and
claims are not covered by the arbitration agreement
contained in this Section 7 and shall therefore be
resolved as required by the law then in effect:
(i) claims for workers' compensation benefits,
unemployment insurance, or state or federal
disability insurance;
(ii) claims concerning the validity, infringement,
enforceability, or misappropriation of any trade
secret, patent right, copyright, trademark, or
any other intellectual or confidential property
held or sought by Employee or the Company, and
in which injunctive relief is sought; and
(iii) any other dispute or claim that has been
expressly excluded from arbitration by statute.
(c) Relief and Review. The Arbitrator shall have the
authority to award any relief authorized by law in
connection with the asserted claims or disputes and
shall issue a written Award that sets forth the
essential findings and conclusions on which the Award is
based. The Arbitrator's Award shall be final and binding
on both the Company and Employee and it shall provide
the exclusive remedy(ies) for resolving any and all
disputes and claims subject to arbitration under this
Agreement. The Arbitrator's Award shall be subject to
correction, confirmation, or vacation, as provided by
California Code of Civil Procedure Section 1285.8 et seq
and any applicable California case law setting forth the
standard of judicial review of arbitration Awards.
(d) Location and Rules. The arbitration shall be conducted
in Santa Xxxxx County, California, or such location as
is mutually agreeable to the parties, in accordance with
the National Rules for the Resolution of Employment
Disputes of the American Arbitration Association;
provided, however, that the Arbitrator shall allow the
discovery authorized by California Code of Civil
Procedure Section 1283.05 or any other discovery
required by California law. Also, to the extent that any
of the National Rules for the Resolution of Employment
Disputes or anything in this Agreement conflicts with
any arbitration procedures required by California law,
the arbitration procedures required by California law
shall govern.
(e) Costs and Attorneys' Fees. The Company will bear the
arbitrator's fee and any other type of expense or cost
that Executive would not be required to bear if he were
free to bring the dispute(s) or claim(s) in court as
well as any other expense or cost that is unique to
arbitration. Executive and the Company shall each bear
their own attorneys' fees incurred in connection with
the arbitration, and the arbitrator will not have
authority to award attorneys' fees unless a statute or
contract at issue in the dispute authorizes
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the award of attorneys' fees to the prevailing party, in
which case the arbitrator shall have the authority to
make an award of attorneys' fees as required or
permitted by applicable law. If there is a dispute as to
whether the Company or Executive is the prevailing party
in the arbitration, the Arbitrator will decide this
issue.
(f) WAIVER OF RIGHT TO JURY. EXECUTIVE AND THE COMPANY
UNDERSTAND AND AGREE THAT THE ARBITRATION OF DISPUTES
AND CLAIMS UNDER THIS AGREEMENT SHALL BE INSTEAD OF A
TRIAL BEFORE A COURT OR JURY OR A HEARING BEFORE A
GOVERNMENT AGENCY.
8. Miscellaneous Provisions.
(a) Notice. Notices and all other communications
contemplated by this Agreement shall be in writing and
shall be deemed to have been duly given when personally
delivered or when mailed by overnight courier, U.S.
registered or certified mail, return receipt requested
and postage prepaid. Mailed notices shall be addressed
to Executive at the home address which he most recently
communicated to the Company in writing. In the case of
the Company, mailed notices shall be addressed to its
corporate headquarters, and all notices shall be
directed to the attention of its Secretary.
(b) Modifications and Waivers. No provision of this
Agreement shall be modified, waived or discharged unless
the modification, waiver or discharge is agreed to in
writing and signed by Executive and by an authorized
officer of the Company (other than Executive). No waiver
by either party of any breach of, or of compliance with,
any condition or provision of this Agreement by the
other party shall be considered a waiver of any other
condition or provision or of the same condition or
provision at another time.
(c) Whole Agreement. No other agreements, representations or
understandings (whether oral or written) which are not
expressly set forth in this Agreement have been made or
entered into by either party with respect to the subject
matter of this Agreement. This Agreement, the
Proprietary Information Agreement, and applicable stock
option agreements and stock plans, contain the entire
understanding of the parties with respect to the subject
matter hereof.
(d) Taxes. All payments made under this Agreement shall be
subject to reduction to reflect taxes or other charges
required to be withheld by law.
(e) Choice of Law. The validity, interpretation,
construction and performance of this Agreement shall be
governed by the laws of the State of California (except
provisions governing the choice of law).
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(f) Severability. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not
affect the validity or enforceability of any other
provision hereof, which shall remain in full force and
effect.
(g) No Assignment. This Agreement and all rights and
obligations of Executive hereunder are personal to
Executive and may not be transferred or assigned by
Executive at any time. The Company may assign its rights
under this Agreement to any entity that assumes the
Company's obligations hereunder in connection with any
sale or transfer of all or a substantial portion of the
Company's assets to such entity.
(h) 280G. Executive understands and acknowledges that
certain benefits provided for under this Agreement may
constitute "parachute payments" within the meaning of
Section 280G of the Internal Revenue Code of 1986, as
amended, (the "Code"). Such parachute payments may be
subject to the excise tax imposed by Section 4999 of the
Code. Executive acknowledges and agrees that he has and
will review any tax consequences which may arise as the
result of any such parachute payments with his own tax
advisors and that he is relying and will rely solely on
such advisors and not on any representations of the
Company or any of its agent with regard to the possible
tax implications of receiving such parachute payments.
Executive further acknowledges and agrees that he is
responsible for his own tax liability which may arise as
the result of any such payments.
(i) Headings. The headings of the paragraphs contained in
this Agreement are for reference purposes only and shall
not in any way affect the meaning or interpretation of
any provision of this Agreement.
(j) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one
and the same instrument.
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IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized officer, as of the day and year
first above written.
EXECUTIVE
/s/ Xxxxx X. Xxxxxxx
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XXXXX X. XXXXXXX
3DFX INTERACTIVE, INC.
By: /s/ Xxxx X. Xxxxx
--------------------------------------
Name: XXXX X. XXXXX
------------------------------------
Title: PRESIDENT AND CHIEF EXECUTIVE
OFFICER
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