EXHIBIT 10.19
EMPLOYMENT AGREEMENT
This Employment Agreement is made and entered into by and between
SpatiaLight, Inc. (the "Company") and Xxxxxxx X. Xxxxxx ("Xxxxxx") as of
September 19, 1997 (the "Effective Date"). This Employment Agreement
supersedes that agreement between Xxxxxx and the Company dated July 1, 1996,
which agreement shall have no further force or effect.
1. POSITION AND DUTIES:
1.1 Xxxxxx was employed by the Company in the position of
President and Chief Executive Officer in the period from December 1,
1994 through June 20, 1997. Since June 20, 1997 Xxxxxx has been
employed as the Chief Executive Officer of the Company. Xxxxxx has also
held the position of Chairman of The Board of Directors of the Company
("Chairman") since June 20, 1997. Xxxxxx shall continue to be employed
in the position of Chief Executive Officer through the Term and any
Renewal Term as defined in paragraph, below. In this position, Xxxxxx
will continue to report to the Company's Board of Directors (the
"Board").
As Chairman of the Company's Board, Xxxxxx shall continue to be
subject to the provisions of the Company's bylaws and all applicable
general corporation laws relative to his position on the board. In
addition, to the Company's bylaws, as a member of the Board, Xxxxxx
shall also be subject to the statement of powers, both specific and
general, as set forth in the Company's Articles of Incorporation.
1.2 Xxxxxx 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, all duties consistent with Xxxxxx' position, as well
as any other duties that may be assigned to Xxxxxx from time to time by
the Board.
2. COMPENSATION:
2.1 BASE SALARY: Xxxxxx has been and will continue to be
paid an annual salary of $120,000, less applicable withholding, in
accordance with the Company's normal payroll procedures. Xxxxxx' salary
will be reviewed by the Board on an approximately annual basis, and may
be subject to adjustment based upon various factors including, but not
limited to, Xxxxxx' performance and the Company's profitability. In any
event, upon the occurrence of the earlier of: (i) January 1, 1998; or
(ii) an equity financing in which the Company sells equity securities of
the Company in an amount not less than Three Million Dollars
($3,000,000.00), Xxxxxx' salary shall be increased to at least $200,000
per year.
2.2 PERFORMANCE BONUS PLAN: Xxxxxx will be eligible to participate in
the Company's performance bonus plan (the "Bonus Plan"), which currently
provides for a bonus of twenty (20) percent of salary upon achievement of
pre-established goals. Under the Bonus Plan, all bonuses, if earned, are
paid at the end of the fiscal year. Any bonus will be governed by the terms
of the Company's standard Bonus Plan in effect at the time.
2.3 EQUITY STAKE: The Board has previously approved the issuance to
Xxxxxx of an option to purchase a total of 420,000 shares of the Company's
common stock (the "Options") in accordance with the Company's Stock Option
Plan (the "Plan"). The Plan provides that fifty percent of the options vest
upon the completion of one year's service and the remaining fifty percent of
the options vest upon completion of the second year's service. Upon the
execution of this Agreement the Options shall be amended to provide that in
the event of a Change of Control of the Company, all of the options issued
pursuant to the Options shall become fully vested as of the date of the
Change in Control. A "Change of Control" is defined herein as a transaction
or a series of related transactions resulting in the sale of all or
substantially all of the Company'' assets or a merger or consolidation, or
sale or transfer of securities, which results in any entity which does not
currently hold any of the outstanding voting securities of the Company (as
determined immediately prior to such merger or consolidation or sale or
transfer of stock) owning, directly or indirectly, thirty-three percent or
more of the beneficial interest in the outstanding voting securities of the
Company or the surviving corporation that controls the Company or of such
surviving
corporation's parent corporation (determined immediately after such merger or
consolidation or sale or transfer of stock). The stock option agreements
establishing the Options shall be amended to reflect this additional
provision, and Xxxxxx agrees to execute such amended stock option
agreement(s).
2.4 ADDITIONAL OPTIONS: After the occurrence of an equity
financing during the nine months following the Effective Date in which the
Company sells equity securities of the Company in an amount not less than
Three Million Dollars ($3,000,000.00), Xxxxxx shall be granted an additional
stock option to purchase that number of shares of Common Stock determined by
the following formula: the number of shares of the Company times four
percent (4.0%) less the number shares subject to options previously granted
to Xxxxxx. If such formula produces a negative number, then Xxxxxx shall not
receive this Additional Option. The exercise price of this option shall be
the fair market value at the time of the grant of the option. This
Additional Option shall be immediately exercisable.
2.5 BENEFITS: Xxxxxx will be entitled to continue to participate
in all of the Company's benefit plans, as those plans may change from time to
time, on the same terms as all other employees of the Company. However, in
the event that the Company does not provide long term disability insurance to
its other employees, the Company shall also reimburse Xxxxxx for the cost of
his obtaining long term disability insurance.
3. TERM OF EMPLOYMENT: Xxxxxx' employment with the Company pursuant to
this Agreement is for a period from the Effective Date through July 1, 2001,
subject to the provisions regarding termination set forth below (the
"Term"). If neither party gives the other written notice of termination or a
desire to change the provisions herein, on or before the thirtieth (30th) day
prior to the expiration of the Term, this Agreement shall be automatically
renewed for an additional one (1) year period (the "Renewal Term").
Thereafter, if neither party gives the other written notice of termination or
a desire to change the provisions herein, on or before the thirtieth (30th)
day prior to the expiration of each Renewal Term, this Agreement shall be
renewed for an additional one (1) year period.
4. BENEFITS UPON TERMINATION: Notwithstanding paragraph 3 above, Xxxxxx'
employment may be terminated by Xxxxxx or the Company at any time, with or
without notice and with or without cause. In the event that either party
elects to terminate this Agreement prior to the expiration of the contract
term, benefits shall be provided as set forth below:
4.1 VOLUNTARY TERMINATION: In the event that Xxxxxx voluntarily
resigns from his employment with the Company, or in the event that Xxxxxx'
employment terminates as a result of his death or disability, Xxxxxx shall be
entitled to no compensation or benefits from the Company other than those
earned under paragraph 2 above through the date of his termination. In the
event that Xxxxxx voluntarily resigns from his employment with the Company he
shall simultaneously resign from any position he holds on the Company's Board.
4.2 INVOLUNTARY TERMINATION: In the event of the termination of Xxxxxx'
employment by the Company for the reasons set forth below, Xxxxxx shall be
entitled to the following:
a. TERMINATION FOR CAUSE: If Xxxxxx' employment is terminated by
the Company for cause as defined below, Xxxxxx shall be entitled to no
compensation or benefits from the Company other than those earned under
paragraph 2 through the date of Xxxxxx' termination.
For purposes of this Agreement, a termination "for cause" occurs if Xxxxxx'
employment is terminated for any of the following reasons:
(1) theft, dishonesty, or falsification of any employment or
Company records;
(2) conviction of a felony or any act involving moral
turpitude;
(3) consistent poor performance, as determined by the Board
in its sole discretion;
(4) improper disclosure of the Company's confidential or
proprietary information;
(5) any intentional act by Xxxxxx that has a material
detrimental effect on the Company's reputation or
business;
(6) the Company ceases or fails to continue to do business; or
(7) any material breach of this Agreement, which breach, if
curable, is not cured within thirty (30) days following
written notice of such breach from the Company.
b. TERMINATION FOR OTHER THAN CAUSE: If Xxxxxx' employment is
terminated by the Company for any reason other than cause, Xxxxxx shall be
entitled to continuation of Xxxxxx' salary and all other benefits, including,
but not limited to, vesting in all stock options, for six months following
the termination of Xxxxxx' employment.
5. CONFIDENTIAL AND PROPRIETARY INFORMATION: As a condition of Xxxxxx;
employment with the Company, Xxxxxx has signed the Company's standard form of
proprietary information and assignment of inventions agreement and Xxxxxx has
and agrees to continue to comply with the terms of that agreement.
6. DISPUTE RESOLUTION: In the event of any dispute or claim relating to or
arising out of this Agreement (including, but not limited to, any claims of
breach of contract, wrongful termination or age, sex, race or other
discrimation), Xxxxxx and the Company agree that all such disputes shall be
fully and finally resolved by binding arbitration conducted by the American
Arbitration Association in San Francisco, California in accordance with its
National Employment Dispute Resolution rules, as those rules are currently in
effect (and not as they may be modified in the future). Xxxxxx acknowledges
by accepting this arbitration provision he is waiving any right to a jury
trial in the event of such a dispute. Provided, however, that this
arbitration provision shall not apply to any disputes or claims relating to
or arising out of the misuse or misappropriation of trade secrets or
proprietary information.
7. ATTORNEYS' FEES: The prevailing party shall be entitled to recover from
the losing party its attorneys' fees and costs incurred in any action brought
to enforce any right arising out this Agreement.
8. INTERPRETATION: This Agreement shall be interpreted in accordance with
and governed by the laws of the State of California.
9. ASSIGNMENT: In view of the personal nature of the services to be
performed under this Agreement by Xxxxxx, Xxxxxx shall not have the right to
assign or transfer any of his obligations under this Agreement.
10. ENTIRE AGREEMENT: This Agreement, along with any agreements referred to
in paragraph 2, relating to stock options and paragraph 5, relating to
proprietary information and assignment of inventions, sets forth the entire
agreement between Xxxxxx and the Company regarding the terms and conditions
of Xxxxxx' employment, and supersedes all prior negotiations, representations
or agreements between Xxxxxx and the Company regarding Xxxxxx' employment,
whether written or oral.
11. NO REPRESENTATIONS: Xxxxxx acknowledges that his is not relying, and
has not relied, on any promise, representation or statement made by or on
behalf of the Company that is not set forth in this Agreement.
12. MODIFICATION: This Agreement may only be modified or amended by a
supplemental written agreement signed by Xxxxxx and an authorized member of
the Board.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year written below.
SPATIALIGHT, INC.
DATE:__________________________ By:______________________________
Its:_____________________________
DATE:__________________________ _________________________________
Xxxxxxx X. Xxxxxx
