EXHIBIT 10.5
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Employment Agreement"), dated as of January 1,
1996 (the "Effective Date"), is entered into by and between Object Products,
Inc. (the "Company") and Xxxx X. Xxxxxxxx ("Executive"). In consideration of
the mutual covenants and agreements hereinafter set forth, the parties agree as
follows:
WITNESSETH:
----------
WHEREAS, the Company desires to employ Executive as the Chief Executive Officer
of the Company, and Executive desires to be employed by the Company, upon the
terms and conditions set forth in this Employment Agreement;
NOW, THEREFORE, in consideration of the promises and the mutual covenants
hereinafter set forth, the Company and Executive hereby agree as follows:
1. EMPLOYMENT.
----------
1.1 Position. During the Employment Term (as hereinafter defined) and
--------
subject to the terms and conditions set forth herein, the Company agrees to
employ Executive as its Chief Executive Officer, reporting directly to the Board
of Directors of the Company.
1.2 Duties. Executive shall diligently, and to the best of his ability,
------
perform all such duties incident to his position and as may be assigned from
time to time and to use his best efforts to promote the interests of the
Company.
1.3 Time to be Devoted to Employment. 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 Company. Executive hereby represents that he is
not a party to any agreement, which would be an impediment to entering into this
Employment Agreement, and that he is permitted to enter into this Employment
Agreement and perform the obligations hereunder.
2. COMPENSATION AND BENEFITS.
-------------------------
2.1 Annual Salary. In consideration of and as compensation for the
-------------
services agreed to be performed by Executive hereunder, the Company agrees to
pay Executive an annual base salary of $120,000, payable in accordance with the
Company's regular payroll schedule ("Base Salary"), less applicable withholdings
and deductions. The Base Salary will be subject to change at the sole discretion
of the Board of Directors of the Company (the "Board").
2.2 Bonus. The Board or a duly appointed committee thereof will no less
-----
than once annually determine if the award of a bonus is warranted and the amount
of such bonus, if any; the Board or any duly appointed committee thereof shall
have sole discretion to grant or not grant a bonus.
1.
2.3 Participation in Benefit Plans. During the Employment Term, Executive
------------------------------
shall be entitled to participate in any pension, group insurance, medical
hospitalization, annual physical, disability, or other similar benefit plan, to
the extent permitted by law, that may from time to time be adopted by the Board,
that is generally available to the other executive officers of the Company. The
Company reserves the right to amend, modify or terminate any employee benefits
at any time for any reason. The Company will cover 100% of the cost of such
plans for the Executive and Executive's dependants.
2.4 Reimbursement of Expenses. The Company shall reimburse Executive for
-------------------------
all reasonable business expenses incurred by Executive on behalf of the Company
during the Employment Term, provided that: (i) such reasonable expenses are
ordinary and necessary business expenses incurred on behalf of the Company, and
(ii) Executive provides the Company with itemized accounts, receipts and other
documentation for such reasonable expenses as are reasonably required by the
Company.
2.5 Personal Time. During the Employment Term, Executive will be entitled
-------------
to a maximum of twenty-five (25) days of paid personal time per annum, provided,
however, that the Company and Executive must mutually agree as to the time
during which such vacation may be taken. Paid personal time will be accrued and
capped per Company policy. Executive's personal time accrual account will be
credited with the full amount of personal time allowed per Company policy as of
the signing of this Agreement.
3. EMPLOYMENT TERM.
---------------
3.1 At-Will Employment. Employment with the Company is employment at-will.
------------------
Employment at-will may be terminated with or without cause, and with or without
notice at any time at the will of either the Executive or the Company. Terms
and conditions of employment with the Company may be modified at the sole
discretion of the Company with or without cause and with or without notice.
Other than the Board of Directors of the Company, no one has the authority to
make any agreement for employment other than for employment at-will or to make
any agreement limiting the Company's discretion to modify the terms and
conditions of employment. No implied contract concerning any employment related
decision or term or condition of employment can be established by any other
statement, conduct, policy or practice.
3.2 Employment Term. The "Employment Term" means the period commencing on
---------------
the Effective Date and terminating as set forth in Section 4.1.
4. TERMINATION OF EMPLOYMENT.
-------------------------
4.1 Method of Termination. Executive has the right to terminate his
---------------------
employment with the Company, for any reason at any time, with or without cause,
and the Company retains the same right. Accordingly such Employment Term will
upon the first of the following to occur:
A. Executive's death;
B. Date that written notice is deemed given or made by the Company
to Executive that as a result of any physical or mental injury or disability, he
is unable to perform
2.
the essential functions of his job, with reasonable accommodation. Such notice
may be issued when the Board has reasonably determined that Executive has become
unable to perform substantially his services and duties hereunder with
reasonable accommodation because of any physical or mental injury or disability,
and that it is reasonably likely that he will not be able to resume
substantially performing his services and duties on substantially the terms and
conditions as set forth in this Employment Agreement;
X. Xxxx that written notice is deemed given or made by the Company
to Executive of termination for "cause." For purposes of this Employment
Agreement, "cause" shall mean any one of the following:
1. Gross negligence or the repeated failure of Executive to
perform his duties and responsibilities to the reasonable satisfaction of the
Board or any breach by Executive of his fiduciary duties to the Company or any
material term of this Employment Agreement. For purposes of this Employment
Agreement, any act or acts or omission or omissions by Executive that have a
material adverse effect on the Company's operations, prospects, reputation or
business shall be deemed to be a breach of his duties and responsibilities to
the Company, or
2. The conviction of Executive for a felony, other than a first
conviction under Section 23152 of the California Vehicle Code (Driving under the
Influence) in which punishment is provided solely under Section 23160
(Punishment for First Offense of Driving Under the Influence) or Xxxxxxx 00000
(Conditions of Probation for First Offense of Driving Under the Influence) of
the California Vehicle Code;
D. Date that written notice is deemed given or made by Executive of
his resignation without Good Reason (as hereinafter defined), his voluntary
departure, or his departure pursuant to Sections 4.1.A. or 4.1B. of this
Employment Agreement as an employee of the Company;
E. Date that written notice is deemed given or made by Executive of
his resignation from the Company for Good Reason. For purposes of this
Employment Agreement, "Good Reason" shall mean Executive's resignation by reason
of:
1. The material breach by the Company of one or more of its
obligations under this Employment Agreement which are not otherwise corrected
within the cure period provided under Section 4.2 following Executive's written
notice to the Company of such breach; or
2. The occurrence of a Corporate Transaction;
a. For purposes of this Employment Agreement, a "Corporate
Transaction" shall mean either of the following stockholder-approved
transactions to which the Company is a party if at the time the Company is a
privately held corporation:
1). A merger or consolidation in which securities
possessing more than fifty percent (50%) of the total combined voting power of
the Company's
3.
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.
b. For purposes of this Employment Agreement, a "Corporate
Transaction" shall mean the occurrence of any one of the following events if the
company is a publicly held corporation at the time:
1). Any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) other than a trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any corporation owned, directly
or indirectly, by the Company's stockholders in substantially the same
proportions as their ownership of the Company's stock, becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing thirty percent (30%) or
more of the total combined voting power of the Company's then outstanding
securities;
2). The majority of the members of the Board ceases to
be comprised of individuals who are Continuing Members; for such purpose, a
"Continuing Member" shall mean an individual who is a member of the Board on the
date of this Employment Agreement and any successor of a Continuing Member who
is elected to the Board or nominated for such election by action of a majority
of Continuing Members then serving on the Board;
3). A merger, consolidation or other transaction in
which the Company shall cease to be an independent publicly-owned corporation,
or a sale or other disposition of all or substantially all of the Company's
assets;
4). Any reverse merger or similar transaction in which
the Company is the surviving entity but in which securities possessing fifty
percent (50%) or more of the 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 merger or similar
transaction;
5). A liquidation or dissolution of the Company.
3. The occurrence of any of the following events without
Executive's express written consent, unless corrected prior to the Date of
Termination specified in the Notice of Termination given by Executive pursuant
to Section 4.3: a change in Executive's position with the Company which
materially reduces Executive's level of responsibilities; a reduction in
Executive's Level of compensation (including base salary, fringe benefits and
any non-discretionary and objective-standard incentive payment or bonus award).
F. Date that written notice is deemed given or made by the Company
to Executive of Executive's termination without "cause."
4.
4.2 Notice of Termination. Any termination of Executive's employment
---------------------
either by the Company or by Executive shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 7.1 hereof. In
the case of resignation for Good Reason, the Notice of Termination must specify
in reasonable detail the basis for such resignation and give the Company at
least twenty (20) business days in which to correct the circumstances prompting
the resignation before such resignation for Good Reason shall be deemed
effective for purposes of this Employment Agreement
4.3 Date of Termination. "Date of Termination" shall mean the date
-------------------
specified in the Notice of Termination.
4.4 Effect of Termination for Cause, Executive's Resignation Without Good
---------------------------------------------------------------------
Reason or Other Events. Upon (i) the termination of Executive for cause; or
----------------------
(ii) Executive's resignation without good reason or voluntary departure;
Executive will not be entitled to any additional compensation or other rights or
benefits from the Company, and, as a result, the Company shall be obligated to
pay Executive only that portion of his Base Salary that Executive has earned and
reasonable business expenses incurred prior to the effective date of the
termination of Executive's employment with the Company.
4.5 Effect of Termination without Cause or Executive's Resignation for
------------------------------------------------------------------
Good Reason. In the event (i) the Company terminates Executives employment with
-----------
the Company without cause; or (ii) Executive resigns for Good Reason; or (iii)
Executive's termination is due to death or disability, Executive shall be
entitled to his then existing Base Salary for a period of eighteen (18) months
from the date of termination payable in accordance with the Company's regular
payroll schedule and reasonable business expenses incurred prior to the date of
termination. In addition, Executive shall be entitled to (i) his annual bonus,
including the cash value of shares issued, prorated to his date of termination,
and (ii) immediate and full vesting of all outstanding stock options granted
through the termination date. To the extent that Executive and/or any of his
dependents is eligible to, and timely elects to receive continuation coverage
under any group health plan providing medical, dental, vision, prescription
drug, wellness or other health care or medical coverage which is subject to the
provisions of part 6 of Title I of ERISA ("COBRA") the Company shall timely
reimburse Executive and/or any of his dependents to the extent permitted by law
for any premiums required for such coverage for up to eighteen (18) months from
the date of termination. This payment of premiums by the Company is not intended
to alter in any way the provisions of any group health plan of the Company, and
all time limits, effects of subsequent coverage and all other relevant
provisions of any such plan remain unchanged and shall control Executive's (and
his dependent's) entitlement to coverage or benefits under such plan. Should any
or all of the payments made pursuant to this Employment Agreement be determined
by the Company to be a parachute payment under Section 280G of the Internal
Revenue Code, then such payments shall be limited to an amount that will not
cause a parachute excise tax. Upon the termination of Executive's employment
without cause or Executive's Resignation for Good Reason, neither Executive nor
his beneficiary or estate shall have any further rights or claims against the
Company except as provided in this Section 4.5 and Executive's right to receive
his unpaid portion of his Base Salary earned through the Date of Termination;
reimbursement for any expenses; payment of all unused personal days accrued per
company policy; and any rights pursuant to Company's benefit or retirement
plans.
5.
4.6 Resignation as an Officer and Director. In the event Executive's
--------------------------------------
employment with the Company terminates for any reason, Executive agrees, as
evidenced by his signature on this Agreement, to immediately resign as an
officer of the Company. If Executive is a director of the Company and in the
event Executive's employment with the Company terminates due to death or under
the terms of paragraph 4.1.C.2, Executive agrees, as evidenced by his signature
on this Agreement, to immediately resign as a director of the Company.
5. CONFIDENTIAL INFORMATION AND COVENANT NOT TO COMPETE.
-----------------------------------------------------
5.1 Proprietary Information and Inventions. Executive understands and
agrees that he will execute and be bound by a Proprietary Information and
Inventions Agreement in the form attached hereto as Exhibit 1.
5.2 Non-Competition
---------------
A. During the Employment Term, and during any period for which
Executive is receiving payments from the Company pursuant to Section 4.5,
Executive shall not directly or indirectly:
1. Own, manage, operate, join, control or participate in the
ownership, management, operation or control of, or be employed by or connected
in any manner with, any enterprise which is engaged in any business competitive
with that which the Company is at the time conducting or proposing to conduct;
provided, however, that such restriction shall not apply to any passive
investment representing an interest of less than two percent (2%) of an
outstanding claw of publicly traded securities of any corporation or other
enterprise which is not, at the time of such investment, engaged in a business
geographically competitive with the Company's business; or
2. During the Employment Term and for eighteen months following
the Date of Termination, the Executive will not encourage or solicit any Company
employee to leave the Company's employ for any reason or interfere in any
material manner with employment relationships at the time existing between the
Company and its current employees, except as may be required in any bona fide
termination decision regarding any Company employee. In the event the Executive
is determined by a court to have breached this covenant, the Executive will be
responsible to return any payments made under the terms of paragraph 4.5
subsequent to the substantiated date of breech.
5.3 Acknowledgment. Executive acknowledges that the specialized nature of
--------------
his knowledge of the Company's Proprietary Information, trade secrets and other
intellectual property are such that a breach of his covenant not to compete or
confidentiality obligations contained in this Section 5 of this Employment
Agreement would necessarily and inevitably result in a disclosure,
misappropriation and misuse of such Proprietary Information, trade secrets and
other intellectual property. Accordingly, Executive acknowledges and agrees that
such a breach would inflict unique and irreparable harm upon the Company and
that the Company shall be entitled, in addition to its other rights and
available remedies, to enforce, by injunction or decree of specific performance,
Executive's obligations set forth herein.
6.
6. RESTRICTIVE COVENANT.
--------------------
During the Employment Term:
6.1 Executive shall devote substantially all of his time and energy to the
performance of Executive's duties described herein, except during periods of
illness or vacation periods.
6.2 Executive shall not directly or indirectly provide services to or
through any person, firm or other entity except the Company, unless otherwise
authorized by the Company in writing.
6.3 Executive shall not render any services of any kind or character for
Executive's own account or for any other person, firm or entity without first
obtaining the Company's written consent.
6.4 Notwithstanding the foregoing, Executive shall have the right to
perform such incidental services as are necessary in connection with (i) his
private passive investments, but only if Executive is not obligated or required
to (and shall not in fact) devote any managerial efforts which interfere with
the services required to be performed by him hereunder, (ii) his charitable or
community activities or (iii) participation in trade or professional
organizations, but only if such incidental services do not significantly
interfere with the performance of Executive's services hereunder.
7. MISCELLANEOUS
-------------
7.1 Notices. All notices, demands and requests required by this
-------
Employment Agreement shall be in writing and shall be deemed to have been given
or made for all purposes (i) upon personal delivery, (ii) one day after being
sent, when sent by professional overnight courier service, (iii) five days after
posting when sent by registered or certified mail, or (iv) on the date of
transmission when sent by telegraph, telegram, telex, or other form of "hard
copy" transmission, to either party hereto at the address set forth below or at
such other address as either party may designate by notice pursuant to this
Section:
If to the Company, to:
Object Products, Inc.
000 Xxxxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Attention: Secretary
And a Copy to:
Xxxxxx X. Xxxxxxxxxx
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
Two Embarcadero Place
0000 Xxxx Xxxx
Xxxx Xxxx, XX 00000
7.
If to Executive, to:
Xxxx X. Xxxxxxxx
00 Xxxxxx Xxxx Xxxx
Xxxxxx, XX 00000
7.2 Assignment. This Employment Agreement shall be binding on, and shall
----------
inure to the benefit of, the parties hereto and their respective heirs, legal
representatives, successors and assigns; provided, however, that Executive may
not assign, transfer or delegate his rights or obligations hereunder and any
attempt to do so shall be void.
7.3 Deductions. All amounts paid to Executive hereunder are subject to all
----------
withholdings and deductions required by law, as authorized under this Employment
Agreement, and as authorized from time to time.
7.4 Entire Agreement. This Employment Agreement contains the entire
----------------
agreement of the parties with respect to the subject matter hereof, and all
prior agreements, written or oral, are merged herein and are of no further force
or effect.
7.5 Amendment. This Employment Agreement may be modified or amended only
---------
by a written agreement signed by a member of the Compensation Committee who is a
member of the Board of Directors of the Company and Executive.
7.6 Waivers. No waiver of any term or provision of this Employment
-------
Agreement will be valid unless such waiver is in writing signed by the party
against whom enforcement of the waiver is sought. The waiver of any term or
provision of this Employment Agreement shall not apply to any subsequent breach
of this Employment Agreement.
7.7 Counterparts. This Employment Agreement may be executed in several
------------
counterparts, each of which shall be deemed an original, but together they shall
constitute one and the same instrument.
7.8 Severability. The provisions of this Employment Agreement shall be
------------
deemed severable, and if any part of any provision is held illegal, void or
invalid under applicable law, such provision may be changed to the extent
reasonably necessary to make the provision, as so changed, legal, valid and
binding. If any provision of this Employment Agreement is held illegal, void or
invalid in its entirety, the remaining provisions of this Employment Agreement
shall not in any way be affected or impaired but shall remain binding in
accordance with their terms.
7.9 Governing Law. THIS EMPLOYMENT AGREEMENT AND THE RIGHTS AND
-------------
OBLIGATIONS OF THE COMPANY AND EXECUTIVE HEREUNDER SHALL BE DETERMINED UNDER,
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA
AS APPLIED TO AGREEMENTS AMONG CALIFORNIA RESIDENTS ENTERED INTO AND TO BE
PERFORMED ENTIRELY WITHIN CALIFORNIA.
8.
7.10 Arbitration. The Executive understands and agrees that, as a
-----------
condition of his employment with the Company, any and all disputes that the
Company may have with Executive or Executive may have with the Company, or any
of its employees, officers, directors, agents or assigns, which arise out of the
Executive's employment with the Company shall be resolved through final and
binding arbitration, as specified in this Employment Agreement. This shall
include, without limitation, any controversy, claim or dispute of any kind,
including disputes relating to any employment by the Company or the termination
thereof, claims for breach of contract or breach of the covenant of good faith
and fair dealing, infliction of emotional distress, defamation and any claims of
discrimination, harassment or other claims under Title VII of the Civil Rights
Act of 1964, the Age Discrimination in Employment Act, the Americans With
Disabilities Act, the Employee Retirement income Securities Act, or any other
federal, state or local law or regulation now in existence or hereinafter
enacted and as amended from time to time concerning in any way the subject of
the Executive's employment with the Company or its termination. The only claims
not covered by this Employment Agreement are claims for benefits under the
unemployment insurance or workers' compensation laws, and any claims pursuant to
paragraph 5 of this Employment Agreement, which will be resolved pursuant to
those laws. Any disputes and/or claims covered by this Employment Agreement
shall be submitted to final and binding arbitration to be conducted in Palo
Alto, California, in accordance with the rules and regulations of the American
Arbitration Association. Each side will bear its own attorneys' fees, and the
arbitrator will not have authority to award attorneys' fees unless a statutory
section at issue in the dispute authorizes the award of attorneys' fees to the
prevailing party, in which case the arbitrator has authority to make such award
as permitted by the statute in question. The arbitration shall be instead of any
civil litigation; this means that the Executive is waiving any right to a jury
trial, and that the arbitrator's decision shall be final and binding to the
fullest extent permitted by law and enforceable by any court having jurisdiction
thereof
IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement
as of the date first above written.
OBJECT PRODUCTS, INC.
By:
/s/ Xxxxxxx X. Xxxx, III
----------------------------------------
Xxxxxxx X. Xxxx, III
Secretary
/s/ Xxxx X. Xxxxxxxxx
----------------------------------------
Xxxx X. Xxxxxxxxx
Director & Compensation Committee Member
EXECUTIVE
/s/ Xxxx X. Xxxxxxxx
----------------------------------------
Xxxx X. Xxxxxxxx
9.
