AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT
Exhibit 10.22
AMENDMENT
TO EXECUTIVE EMPLOYMENT AGREEMENT
This
Executive Employment Agreement (the “Agreement”) is deemed effective as of
January 1, 2009, by and between AltiGen Communications, Inc., existing under the
laws of the State of Delaware with its principal office located at 0000 Xxxxxxx
Xxxxxxx, Xxxxxxx, XX 00000 (the “Company”), and Xxxxxx XxXxxxxxx
(“Executive”).
NOW,
THEREFORE, in consideration of the mutual covenants and promises contained
herein, the Company and Executive hereto, each intending to be legally bound
hereby, agree as follows:
SECTION
ONE
AT-WILL
EMPLOYMENT
Executive
and the Company agree that Executive’s employment with the Company constitutes
“at-will” employment. Executive and the Company acknowledge that this
employment relationship may be terminated at any time, upon written notice to
the other party, with or without good cause or for any or no cause, at the
option either of the Company or Executive. However, as described in
this Agreement, Executive may be entitled to severance benefits depending upon
the circumstances of Executive’s termination of employment.
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SECTION
TWO
DUTIES OF
EXECUTIVE
A. As
of January 1, 2009 (the “Effective Date”), Executive will continue to serve as
the Company’s Chief Financial Officer, reporting to the Chief Executive Officer
(CEO). Executive will perform those duties which are normal and
customary in the industry for like positions, including, but not limited to,
those duties identified in the Chief Financial Officer Job
Description. Executive will be responsible to perform other such
duties consistent with Executive’s position, as reasonably assigned by the
CEO. The period Executive is employed by the Company under this
Agreement is referred to herein as the “Employment Term”.
B. During
the Employment Term, Executive will devote Executive’s full business efforts and
time to the Company and will use good faith efforts to discharge Executive’s
obligations under this Agreement to the best of Executive’s ability and in
accordance with the Company’s policies. For the duration of the
Employment Term, Executive agrees not to actively engage in any other
employment, occupation, or consulting activity for any direct or indirect
remuneration without the prior approval of the CEO (which approval will not be
unreasonably withheld); provided, however, that Executive may, without the
approval of the CEO, serve in any capacity with any civic, educational, or
charitable organization, provided such services do not interfere with
Executive’s obligations to Company.
C. Executive
hereby represents and warrants to the Company that Executive is not party to any
contract, understanding, agreement or policy, written or otherwise, that would
be breached by Executive’s entering into, or performing services under, this
Agreement. Executive further represents that he has disclosed to the
Company in writing all threatened, pending, or actual claims that are unresolved
and still outstanding as of the Effective Date, in each case, against Executive
of which he is aware, if any, as a result of his employment with his current
employer (or any other previous employer) or his membership on any boards of
directors.
SECTION
THREE
EXECUTIVE
COMPENSATION
A. As
compensation for services that Executive will provide to the Company under the
terms of this Agreement, Executive shall initially receive from the Company base
compensation in the amount of Two Hundred Thousand Dollars ($200,000) per annum
(the “Base Salary”). The Base Salary will be paid in accordance with
the Company’s normal payroll practices and be subject to the usual, required
withholdings.
B. In
addition to the Base Salary, Executive is also eligible to receive incentive
compensation, including bonuses, commission and stock options, based on factors
including, but not limited to, Executive’s performance and the Company’s overall
performance. The Base Salary and all incentive compensation are
referred to herein as “Total Compensation.” Any agreement for
additional incentive compensation must be set forth in a written agreement
executed by both the Company and Executive.
C. The
Company shall review Executive’s compensation annually, to determine whether a
change in Base Salary and/or incentive compensation is warranted as a result of
Executive’s and the Company’s performance.
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D. Executive
shall be eligible to participate in all Executive benefit plans now existing or
hereafter established by the Company that are applicable to other executive
officers of the Company according to their terms, including but not limited to,
any bonus and incentive plan, stock option plan, hospital, surgical or medical
benefit plan, dental plan, group health, life or disability insurance plan,
pension or profit sharing plan, and any other benefit plan or arrangement made
available from time to time to executive officers of the Company.
E. Executive
will be entitled to receive paid annual vacation in accordance with Company
policy for other senior executive officers. In no event will
Executive receive less than three (3) weeks of paid vacation time per calendar
year.
F. The
Company will reimburse Executive for reasonable travel, entertainment and other
expenses incurred by Executive in the furtherance of the performance of
Executive’s duties hereunder, in accordance with the Company’s expense
reimbursement policy as in effect from time to time.
G. In
the event of a Change of Control of the Company that occurs during the
Employment Term, all of Executive’s outstanding stock options immediately will
vest and become exercisable.
SECTION
FOUR
NON-DISCLOSURE
OF CONFIDENTIAL INFORMATION
SECTION
FIVE
TERMINATION
In the
event Executive’s employment with the Company terminates for any reason,
Executive will be entitled to any (a) unpaid Total Compensation accrued up
to the effective date of termination; (b) pay for accrued but unused
vacation; (c) benefits or compensation as provided under the terms of any
employee benefit and compensation agreements or plans applicable to Executive;
(d) unreimbursed business expenses required to be reimbursed to Executive,
and (e) rights to indemnification Executive may have under the Company’s
Certificate of Incorporation, Bylaws, the Agreement, or separate indemnification
agreement, as applicable. In addition, if the termination is by the
Company without Cause or Executive resigns for Good Reason, Executive will be
entitled to the amounts and benefits specified in Section 6.
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SECTION
SIX
SEVERANCE
A. Termination Without Cause or
Resignation for Good Reason. If Executive’s employment is
terminated by the Company without Cause or if Executive resigns for Good Reason,
then, provided that Executive signs and does not revoke the Termination
Certification attached as Exhibit B and a Separation Agreement and Release of
Claims in a form acceptable to the Company, and provided that such Separation
Agreement and Release of Claims becomes effective and irrevocable no later than
sixty (60) days following the termination date or such earlier date required by
the Separation Agreement and Release of Claims (such deadline, the “Release
Deadline”), then subject to Section 8(B), Executive will receive: (i) payment of
Executive’s Total Compensation (including any approved bonus payments)
for six (6) months, less applicable tax withholdings, such amount to
be paid out in a single lump sum within ten (10) days of the date the
Separation Agreement and Release of Claims becomes effective and irrevocable;
(ii) full accelerated vesting with respect to the shares subject to Executive’s
then outstanding, unvested equity awards and (iii) reimbursement for premiums
paid for continued health benefits for Executive (and any eligible dependents)
under the Company’s health plans until the earlier of (x) six (6) months
following Executive’s termination, payable when such premiums are due (provided
Executive validly elects to continue coverage under COBRA within the time period
prescribed pursuant to COBRA), or (y) the date upon which Executive and
Executive’s eligible dependents become covered under similar plans.
B. Release. In
no event will severance payments or benefits be paid or provided until the
Separation Agreement and Release of Claims actually becomes effective and
irrevocable. If the Separation Agreement and Release of Claims does
not become effective by the Release Deadline, Executive will forfeit any rights
to severance or benefits under this Agreement. It is expected that
all severance under this Agreement will be exempt from Section 409A (as defined
below) as a payment that satisfies the requirements of the “short-term deferral”
rule set forth in Section 1.409A-1(b)(4) of the Treasury
Regulations. However, if this is not the case, then any severance
payments or benefits under this Agreement that would be considered Deferred
Compensation Separation Benefits (as defined herein) will be paid on the
sixtieth (60th) day
following Executive’s separation from service, or, if later, such time as
required by the provisions of Section 409A (see Section 8(B)
below). If Executive should die
before all of the severance amounts to which Executive is entitled have been paid, such unpaid
amounts will be paid in a lump-sum payment promptly following such event to
Executive’s designated beneficiary, if
living, or otherwise to the personal representative of Executive’s estate.
C. Voluntary Termination
Without Good Reason or Termination for Cause. If Executive’s
employment is terminated voluntarily, including due to death or Disability,
without Good Reason or is terminated for Cause by the Company, then, except as
provided in Section 5, (i) all further vesting of Executive’s outstanding
equity awards will terminate immediately and (ii) all payments of
compensation by the Company to Executive hereunder will terminate immediately,
subject to the terms of this agreement.
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SECTION
SEVEN
DEFINITIONS
A. Cause. For
purposes of this Agreement, “Cause” is defined as (i) an act of fraud made by
Executive related to Executive’s responsibilities as an employee; (ii)
Executive’s material misconduct with regard to the performance of Executive’s
employment duties; provided
however, that Executive shall not be required to materially increase
Executive’s normal business travel in accordance with Executive’s employment
duties; (iii) Executive’s material violation of any Company employment policy,
or (iv) Executive’s breach of any confidentiality or proprietary information
agreement with the Company.
B. Good
Reason. For purposes of this Agreement, “Good Reason” means
Executive’s termination of employment within thirty (30) days following the
expiration of any cure period (as discussed below) following the occurrence of
any of the following, without Executive’s express written consent: (i) a
material reduction of Executive’s authority, duties or responsibilities,
relative to Executive’s authority, duties or responsibilities in effect
immediately prior to such reduction; (ii) a material reduction in Executive’s
base compensation; or (iii) a material change in the geographic location of
Executive’s principal place of employment; provided that a change in either the
geographic location of the Company or Executive’s principal place of employment
(if other than the Company)of less than fifty (50) miles shall not be deemed to
be a “material change” for purposes of this
Agreement. Notwithstanding the foregoing, Executive will not be
deemed to have resigned for “Good Reason” for purposes of this Agreement unless
(a) Executive provides written notice specifically identifying the acts or
omissions constituting the grounds for Good Reason to the Company of the
condition or event that constitutes Good Reason within thirty (30) days of its
occurrence and (b) the Company has been given a period of no less than thirty
(30) days to remedy the event or condition that constitutes Good Reason and has
failed to do so.
C. Change of
Control. For purposes of this Agreement, “Change of Control”
will mean the occurrence of any of the following events: (i) the consummation by
the Company of a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than 50% of the total
voting power represented by the voting securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation;
(ii) the approval by the stockholders of the Company, or if stockholder approval
is not required, approval by the Company’s Board of Directors (the “Board”), of
a plan of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company’s assets;
(iii) any “person” (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended) becoming the “beneficial owner” (as
defined in Rule 13d-3 under said Act), directly or indirectly, of
securities of the Company representing more than 50% of the total voting power
represented by the Company’s then outstanding voting securities; or (iv) a
change in the composition of the Board within a one (1) year period, as a result
of which fewer than a majority of the directors are Incumbent
Directors. “Incumbent Directors” will mean directors who either (A)
are directors of the Company as of the date hereof, or (B) are elected, or
nominated for election, to the Board with the affirmative votes of at least a
majority of those directors whose election or nomination was not in connection
with any transactions described in subsections (i), (ii), or (iii) or in
connection with an actual or threatened proxy contest relating to the election
of directors of the Company. Notwithstanding the foregoing provisions
of this definition, a transaction will not be deemed a Change of Control unless
the transaction qualifies as a change of control event within the meaning of
Section 409A.
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D. Disability. For
purposes of this Agreement, “Disability” will mean Executive’s absence from his
responsibilities with the Company on a full-time basis for 120 calendar days in
any consecutive twelve (12) months period as a result of Executive’s mental or
physical illness or injury.
E. Section 409A
Limit. For purposes of this Agreement, “Section 409A Limit”
will mean the lesser of two (2) times: (i) Executive’s annualized compensation based upon
the annual rate of pay paid to Executive during Executive’s taxable year
preceding Executive’s taxable year of Executive’s termination of employment as
determined under, and with such adjustments as are set forth in, Treasury
Regulation Section 1.409A-1(b)(9)(iii)(A)(1) and any Internal Revenue Service
guidance issued with respect thereto; or (ii) the maximum amount that may be
taken into account under a qualified plan pursuant to Section 401(a)(17) of the
Code for the year in which Executive’s employment is terminated.
SECTION
EIGHT
A. Excise Tax
Gross-Up. In the event that the benefits provided for in this
Agreement constitute “parachute payments” within the meaning of Section 280G of
the Internal Revenue Code of 1986, as amended (the “Code”) and will be subject
to the excise tax imposed by Section 4999 of the Code, then Executive will
receive (i) a payment from the Company sufficient to pay such excise tax, and
(ii) an additional payment from the Company sufficient to pay the federal and
state income and employment taxes and additional excise taxes arising from the
payments made to Executive by the Company pursuant to this
sentence. Unless Executive and the Company agree otherwise in
writing, the determination of Executive’s excise tax liability, if any, and the
amount, if any, required to be paid under this Section 8 will be made in writing
by the independent auditors who are primarily used by the Company immediately
prior to the Change of Control (the “Accountants”). For purposes of
making the calculations required by this Section 8(A), the Accountants may make
reasonable assumptions and approximations concerning applicable taxes and may
rely on reasonable, good faith interpretations concerning the application of
Sections 280G and 4999 of the Code. Executive and the Company agree
to furnish such information and documents as the Accountants may reasonably
request in order to make a determination under this Section 8(A). The
Company will bear all costs the Accountants may reasonably incur in connection
with any calculations contemplated by this Section 8. The Company
will pay all amounts required by this Section 8(A) as soon as reasonably
practicable, but in no event later than the end of Executive’s taxable year next
following Executive’s taxable year in which Executive remits the related
taxes.
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B. Code Section
409A.
(i) Notwithstanding
anything to the contrary in this Agreement, no severance payable to Executive,
if any, pursuant to this Agreement, when considered together with any other
severance payments or separation benefits that are considered deferred
compensation under Section 409A of the Code and the final regulations and any
guidance promulgated thereunder (“Section 409A”) (together, the “Deferred
Compensation Separation Benefits”) shall be payable until Executive has a
“separation from service” within the meaning of Section 409A.
(ii) Notwithstanding
anything to the contrary in this Agreement, if Executive is a “specified
employee” within the meaning of Section 409A at the time of Executive’s termination of employment (other than
due to death), then the Deferred Compensation Separation Benefits, if any,
otherwise due to Executive on or within the six (6) month period following the
Termination Date will accrue during such six (6) month period and will become
payable in a lump sum payment (less applicable withholding taxes) on the date
six (6) months and one (1) day following the Termination Date. All
subsequent payments, if any, will be payable in accordance with the payment
schedule applicable to each payment or benefit. Notwithstanding
anything herein to the contrary, if Executive dies following his termination of
employment but prior to the six (6) month anniversary of the Termination Date,
then any payments delayed in accordance with this paragraph will be payable in a
lump sum (less applicable withholding taxes) to Executive’s estate as soon as
administratively practicable after the date of Executive’s death and all other
Deferred Compensation Separation Benefits will be payable in accordance with the
payment schedule applicable to each payment or benefit. Each payment
and benefit payable under this Agreement is intended to constitute separate
payments for purposes of Section 1.409A-2(b)(2) of the Treasury
Regulations.
(iii) Any
amount paid under this Agreement that satisfies the requirements of the
“short-term deferral” rule set forth in Section 1.409A-1(b)(4) of the Treasury
Regulations shall not constitute Deferred Compensation Separation Benefits for
purposes of clause (i) above.
(iv) Any
amount paid under this Agreement that qualifies as a payment made as a result of
an involuntary separation from service pursuant to Section 1.409A-1(b)(9)(iii)
of the Treasury Regulations that do not exceed the Section 409A Limit shall not
constitute Deferred Compensation Separation Benefits for purposes of clause (i)
above.
(v) This
provision is intended to comply with the requirements of Section 409A so that
none of the severance payments and benefits to be provided hereunder will be
subject to the additional tax imposed under Section 409A, and any ambiguities
herein will be interpreted to so comply. The Company and Executive
agree to work together in good faith to consider amendments to this Agreement
and to take such reasonable actions which are necessary, appropriate or
desirable to avoid imposition of any additional tax or income recognition prior
to actual payment to Executive under Section 409A.
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SECTION
NINE
ASSIGNMENT
This
Agreement will be binding upon and inure to the benefit of (a) the heirs,
executors and legal representatives of Executive upon Executive’s death, and
(b) any successor of the Company. Any such successor of the
Company will be deemed substituted for the Company under the terms of this
Agreement for all purposes. For this purpose, “successor” means any
person, firm, corporation, or other business entity which at any time, whether
by purchase, merger, or otherwise, directly or indirectly acquires all or
substantially all of the assets or business of the Company. None of
the rights of Executive to receive any form of compensation payable pursuant to
this Agreement may be assigned or transferred except by will or the laws of
descent and distribution. Any other attempted assignment, transfer,
conveyance, or other disposition of Executive’s right to compensation or other
benefits will be null and void.
SECTION
TEN
NOTICES
All
notices, requests, demands and other communications called for hereunder will be
in writing and will be deemed given (a) on the date of delivery if
delivered personally; (b) one (1) day after being sent overnight by a
well-established commercial overnight service, or (c) four (4) days after
being mailed by registered or certified mail, return receipt requested, prepaid
and addressed to the parties or their successors at the following addresses, or
at such other addresses as the parties may later designate in
writing:
|
If
to the Company:
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Attn: Xxxxxxx
Xx
AltiGen
Communications, Inc
0000 Xxxxxxx Xxxxxxx
Xxxxxxx, XX
00000
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If
to Executive:
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Xxxxxx XxXxxxxxx
0000 Xxxxxxx Xxxxxxx
Xxxxxxx, XX
00000
|
SECTION
ELEVEN
OTHER
PROVISIONS
A. Governing
Law. This Agreement will be governed by the laws of the state
of California without regard to its conflict of laws provisions.
B. Severability. If
any provision hereof becomes or is declared by a court of competent jurisdiction
to be illegal, unenforceable, or void, this Agreement will continue in full
force and effect without said provision.
C. Waiver of
Breach. The waiver of a breach of any term or provision of
this Agreement, which must be in writing, will not operate as or be construed to
be a waiver of any other previous or subsequent breach of this
Agreement.
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D. Acknowledgment. Executive
acknowledges that he has had the opportunity to discuss this matter with and
obtain advice from his private attorney, has had sufficient time to, and has
carefully read and fully understands all the provisions of this Agreement, and
is knowingly and voluntarily entering into this Agreement.
E. Counterparts. This
Agreement may be executed in counterparts, and each counterpart will have the
same force and effect as an original and will constitute an effective, binding
agreement on the part of each of the undersigned.
SECTION
TWELVE
ENTIRE
AGREEMENT
This
Agreement, together with the Confidentiality Agreement attached as Exhibit A,
represents the entire agreement and understanding between the parties as to the
subject matter herein and supersedes all prior or contemporaneous agreements
whether written or oral, including any prior agreements with the Company or its
agents. No waiver, alteration, or modification of any of the
provisions of this Agreement will be binding unless in a writing and signed by
duly authorized representatives of the parties hereto. In entering
into this Agreement, no party has relied on or made any representation,
warranty, inducement, promise, or understanding that is not in this
Agreement.
IN WITNESS WHEREOF each party
to this agreement has caused it to be executed on the date indicated
below.
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ALTIGEN
COMMUNICATIONS, INC.:
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/s/
Xxxxxxx Xx
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Date: March 6, 2009 | |||
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Xxxxxxx
Xx
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Chairman
and Chief Executive Officer
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EXECUTIVE:
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/s/
Xxxxxx XxXxxxxxx
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Date: March 6, 2009 | |||
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Xxxxxx
XxXxxxxxx
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Chief
Financial Officer
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