EXHIBIT 10.12
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
as of June 1, 2001, by and between netGuru, Inc., a Delaware
corporation ("Employer"), and Xxxxx X. Xxx ("Employee").
RECITALS
A. The parties acknowledge that Employee has abilities
and expertise that are unique and valuable to the
Company.
B. In view of such abilities and expertise, the Company
desires to retain Employee as Chairman and Chief
Executive Officer of the Company.
C. The Company and Employee have determined that such
engagement of Employee is mutually beneficial and
should be subject to a mutually acceptable written
agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises, the
following mutual covenants and agreements contained herein and other
good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged by each of the parties hereto, the parties
hereto agree, intending to be legally bound, as follows:
1. TERM. Employer hereby employs Employee and Employee hereby accepts
employment on the terms and conditions hereinafter set forth. The term shall
commence on the date of this Agreement and shall terminate on May 31, 2006. The
term may be sooner terminated as hereinafter provided, and if the term is so
terminated, all references herein to the "term" of this Agreement shall mean the
original term as so shortened, except where the context otherwise requires.
2. DUTIES. Employee agrees to serve Employer as its Chairman of the
Board and Chief Executive Officer or in such other capacities as may be
requested from time to time by the Board of Directors of Employer. During the
term of this Agreement, Employee will devote his full time and exclusive
attention to, and use his best efforts to advance, the business and welfare of
Employer. During the term of this Agreement, Employee will not engage in any
other employment activities for any direct or indirect remuneration without the
prior written consent of Employer. Employee shall not be required to relocate
from Orange County, California, but agrees to undertake all reasonable travel
required by Employer to be conducted in connection with the performance of his
duties.
3. SALARY AND BENEFITS.
3.1 BASE SALARY. During the term of this Agreement, Employer
shall pay Employee a yearly salary of Three Hundred Twelve Thousand
Dollars ($312,000), or such greater amount as may be established by the
Compensation Committee of Employer's Board of Directors. Employee's
salary shall be payable in appropriate installments to conform with the
regular payroll dates for salaried personnel of Employer. Employee's
salary is subject to payroll deductions as may be necessary or
customary in respect of salaried personnel. During the term of this
Agreement, Employee's base salary be reviewed by the Compensation
Committee of Employer's Board of Directors at least annually and shall
be increased to be substantially consistent with increases in base
salary generally awarded to chief executive officers in Employer's
industry with similar financial performance. Any increase in base
salary shall not serve to limit or reduce any other obligation to
Employee under this Agreement. Employee's base salary shall not be
reduced after any such increase.
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3.2 INCENTIVE COMPENSATION. In addition to the base salary to
which Employee is entitled pursuant to Section 3.1, Employee shall be
eligible to receive additional compensation (a "Bonus"), for each
fiscal year of Employer, promptly after the determination thereof, but
in any event not later than the end of the third month of the fiscal
year next following the fiscal year for which the Bonus is awarded, a
sum determined by the Compensation Committee of Employer's Board of
Directors in the Committee's sole discretion. The Bonus payable to
Employee, if any, under this Section 3.2 shall be prorated for any
partial fiscal year that occurs during the employment term.
3.3 VACATIONS. Employee shall be entitled to four (4) weeks of
paid vacation in each year during the term of this Agreement.
3.4 MEDICAL INSURANCE AND OTHER BENEFITS. During the term of
this Agreement Employer shall furnish Employee with the same medical
and hospital insurance and other benefits furnished to other salaried
employees of Employer.
4. CONFIDENTIAL INFORMATION AND RESTRICTED ACTIVITIES.
4.1 NONDISCLOSURE AND NONUSE OF CONFIDENTIAL INFORMATION.
Employee acknowledges that Employer continually develops Confidential
Information (as defined in Section 4.7), that Employee may develop
Confidential Information for Employer and that Employee may lean of
Confidential Information during the course of his employment. Employee
will comply with Employer's policies and procedures for protecting
Confidential Information and, except as required by the nature of his
duties, Employee will never, directly or indirectly, use or disclose
any Confi-dential Information without the prior written consent of
Employer's Board of Directors. Employee understands that this
restriction will continue to apply after his employment terminates.
4.2 USE AND RETURN OF PROPERTY AND DOCUMENTS. Employee will
protect the integrity of Confidential Information and keep confidential
all documents, customer lists, records of research, proposals, reports,
memoranda, computer software and programming, financial information,
and other materials ("Documents") including any copies thereof, in
which Confidential Information may be contained. Employee will not copy
any Documents except as required by the nature of his duties. Employee
will not remove any Documents or copies from Employer's premises unless
authorized by Employer's Board of Directors. Employee will return to
Employer immediately after his employment terminates all Documents and
copies and any other property of Employer then in his possession or
control.
4.3 ASSIGNMENTS OF RIGHTS. Employee will promptly and fully
disclose all Company Property (as defined in Section 4.7) to Employer.
Employee hereby assigns and agrees to assign to Employer (or as
otherwise directed by Employer) his full right, title and interest to
all Company Property. Employee agrees to execute any and all
applications for domestic and foreign patents, copyrights or other
proprietary rights and do such other acts (including, among others, the
execution and delivery of instruments of further assurance or
confirmation) requested by Employer to assign the Company Property to
Employer and to permit Employer to enforce any patents, copyrights or
other proprietary rights in the Company Property. Employee will not
charge Employer for his time spent in complying with these obligations.
All copyrightable works that Employee creates shall be considered
"works made for hire".
4.4 NON-RECRUITMENT. For a period of one (1) year after his
employment with Employer terminates, Employee will not, and will not
assist anyone else to, hire any employee of Employer or seek to
persuade any employee of Employer to discontinue employment or to
become employed in any business directly or indirectly competitive with
Employers business, nor seek to persuade any independent contractor or
supplier of Employer to discontinue its relationship or violate any
agreement with Employer.
4.5 RESTRICTED ACTIVITIES. Employee agrees that some
restrictions on his activities during and after his employment are
necessary to protect the goodwill, Confidential Information and other
legitimate interest of Employer. While Employee is employed by Employer
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and for a period of one (1) year after his employment terminates
Employee will not compete, directly or indirectly, with Employer in the
geographic areas listed on the Non-Competition Schedule attached
hereto, whether as an employee, consultant, agent, partner, principal,
investor or otherwise. Specifically, but without limiting the
foregoing, Employee agrees not to engage in any manner in any activity
that is directly or indirectly competitive or potentially competitive
with the business of Employer as conducted at any time during his
employment. Restricted activity shall include accepting employment or a
consulting position with any person who is, or at any time within one
year prior to Employee's termination has been, a sponsor or competitor
of Employer. For purpose of this provision, the business shall include
all services offered by the Company in any manner. The foregoing
restrictions shall not prevent Employee's owning one percent (1%) or
less of the equity securities of any publicly traded company.
4.6 NOTIFICATION REQUIREMENT. Until six (6) months after the
period set forth in Section 4.5, Employee will notify Employer in
writing of any change in his address and of each new job or other
business activity in which he plans to engage, at least thirty (30)
days prior to beginning such job or activity. Such notice shall state
the name and address of any new employer and the nature of Employee's
position.
4.7 DEFINITIONS: For the purposes of this Agreement, the
following definitions shall apply:
"COMPANY PROPERTY" means developments, methods of doing
business, compositions, works, concepts and ideas (whether or not
patentable or copyrightable or constituting trade secrets) conceived,
made, created, developed or reduced to writing or practice by Employee
(whether alone or with others, and whether or not during normal
business hours or on or off Employer's premises) during Employee's
employment that relate to either the services provided by, business of,
or any prospective activity of, Employer known to Employee as a result
of his employment.
"CONFIDENTIAL INFORMATION" shall mean any and all information
of Employer that is not generally known in the information security and
printed circuit board industries or that is not generally known by
others with whom Employer does or plans to compete or do business.
Confidential Information includes, without limitation, such information
relating to (i) Employer's development, research and marketing
activities, (ii) Employer's strategic plans, (iii) the identity and
special needs of Employer's customers and (iv) people and organizations
with whom Employer has business relationships and those relationships.
Confidential Information also includes such information that Employer
may receive or have received belonging customers or others who do
business with Employer and, except to the extent disclosed by Employer
on a non-confidential basis, the Company Property.
4.8 REMEDIES. Employee acknowledges that, were he to breach
the provisions of this Section 4, the harm to Employer would be
irreparable. Employee therefore agrees that, in addition to damages and
attorneys' fees, Employer shall be entitled to obtain (and Employee
will not contest) preliminary and permanent injunctive relief against
any such breach, without having to post a bond.
4.9 ENFORCEABILITY OF COVENANTS. The parties hereto intend
that the covenants and agreements contained in this Section 4 shall be
deemed to include a series of separate covenants and agreements, one
for each and every geographic area listed on the Non-Competition
Schedule attached hereto. If in any judicial proceeding a court shall
refuse to enforce all of the separate covenants deemed included in such
action, then such unenforceable covenants shall be deemed eliminated
from the provisions hereof for the purposes of such proceeding to the
extent necessary to permit the remaining separate covenants to be
enforced in such proceeding.
5. EXPENSES. Employer will pay or reimburse Employee for such
reasonable travel, entertainment or other expenses as he may incur at the
request or for the benefit of Employer during the term of this Agreement in
connection with the performance of his duties hereunder. Employee shall furnish
Employer with such evidence that such expenses were incurred as Employer may
from time to time reasonably require or request.
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6. PARTIAL DISABILITY OF EMPLOYEE. If Employee becomes disabled by
reason of illness or other incapacity extending for a period of more than
fifty-two (52) consecutive weeks during which Employee is unable to perform his
duties hereunder on a full-time basis but is able to perform his duties
hereunder on a part-time basis, all amounts otherwise payable to Employee shall
be proportionately reduced with respect to the period commencing at the end of
said fifty-two (52) week period to reflect the extent to which Employee's
working time is reduced below a level which would result in Employee working
eighteen hundred (1,800) hours per year. In determining when Employee becomes
disabled, the same criteria shall be applicable as are used in the disability
insurance policy Employer maintains for its employees.
7. TERMINATION. This Agreement, and all obligations of Employer to pay
base salary, Bonuses and benefits to Employee, shall terminate on the first to
occur of the following:
(a) The death of Employee;
(b) The permanent disability of Employee (which, for purposes hereof,
shall have the same meaning as in Employer's disability insurance policy or, in
the absence of such a policy, the continuous loss of one-half (1/2) or more of
the time spent by Employee in the usual daily performance of his duties a result
of physical or mental illness for a period in excess of ninety (90) consecutive
days);
(c) At such time, if any, as Employer ceases to conduct business for
any reason whatsoever; or
(d) At the election of Employer, for good cause (as defined in Section
8).
8. GOOD CAUSE. The term "good cause" is defined as any one or more of
the following occurrences:
(a) Employee's breach of any of the covenants contained in Section 4 of
this Agreement;
(b) Employee's conviction by, or entry of a plea of guilty or nolo
contendere in, a court of competent and final jurisdiction for any crime
involving moral turpitude or punishable by imprisonment in the jurisdiction
involved;
(c) Employee's commission of an act of fraud, whether prior to or
subsequent to the date hereof upon Employer;
(d) Employee's continuing repeated willful failure or refusal to
perform his duties as required by this Agreement, provided, that termination of
Employee's employment pursuant to this paragraph (d) shall not constitute valid
termination for cause unless Employee shall have first received written notice
from the Board of Directors of Employer stating with specificity the nature of
such failure or refusal and affording Employee at least thirty (30) days to
correct the act or omission complained of; or
(e) Gross negligence, insubordination, material violation by Employee
of any duty of loyalty to Employer or any other material misconduct on the part
of Employee, provided that termination of Employee's employment pursuant to this
paragraph (e) shall not constitute valid termination for cause unless Employee
shall have first received written notice from the Board of Directors of Employer
stating with specificity the nature of such failure or refusal and affording
Employee at least thirty (30) days to correct the act or omission complained of.
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9. EFFECT OF TERMINATION WITHOUT GOOD CAUSE. If Employee's employment
with Employer is terminated for any reason other than those set forth in Section
8, then Employee shall (a) continue to be paid base salary and Bonuses pursuant
to Section 3 for the remainder of the term of the Agreement, (b) continue to
receive all benefits and perquisites which he had been receiving immediately
prior to such termination for the remainder of the term of the Agreement, and
(c) be immediately vested in all stock options to which he would have been
entitled during the full term of the Agreement had the termination not occurred.
10. MISCELLANEOUS.
10.1 MODIFICATION AND WAIVER OF BREACH. No waiver or
modification of this Agreement shall be binding unless it is in writing
signed by the parties hereto. No waiver of a breach hereof shall be
deemed to constitute a waiver of a future breach, whether of a similar
or dissimilar nature.
10.2 ASSIGNMENT. The rights of Employer under this Agreement
may, without the consent of Employee, be assigned by Employer, in its
sole and unfettered discretion (a) to 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 Employer, or (b) to any subsidiary or
affiliate of Employer, or any transferee, whether by purchase, merger
or otherwise, which directly or indirectly acquires all or
substantially all of the assets of Employer or such subsidiary or
affiliate.
10.3 NOTICES. All notices and other communications required or
permitted under this Agreement shall be in writing, served personally
on, or mailed by certified or registered United States mail to, the
party to be charged with receipt thereof. Notices and other
communications served by mail shall be deemed given hereunder 72 hours
after deposit of such notice or communication in the United States Post
Office as certified or registered mail with postage prepaid and duly
addressed to whom such notice or communication is to be given, in the
case of (a) Employer, 00000 Xxxx Xxxxx Xxxxxxx, Xxxxx Xxxxx, Xxxxxxxxxx
00000, Attention: Chairman and Chief Executive Officer, or (b)
Employee, 0000 X. Xxxxxx Xxxxx, Xxxxxxx Xxxxx, XX 00000. Any such party
may change said party's address for purposes of this Section by giving
to the party intended to be bound thereby, in the manner provided
herein, a written notice of such change.
10.4 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same Agreement.
10.5 CONSTRUCTION OF AGREEMENT. This Agreement shall be
construed in accordance with, and governed by, the laws of the State of
California applicable to agreements executed and to be performed in
California.
10.6 COMPLETE AGREEMENT. This Agreement contains the entire
agreement between the parties hereto with respect to the transactions
contemplated by this Agreement and supersedes all previous oral and
written and all contemporaneous oral negotiations, commitments,
writings, and understandings.
10.7 NON-TRANSFERABILITY OF INTEREST. None of the rights of
Employee to receive any form of compensation payable pursuant to this
Agreement shall be assignable or transferable except through a
testamentary disposition or by the laws of descent and distribution
upon the death of Employee. Any attempted assignment, transfer,
conveyance, or other disposition (other than as aforesaid) of any
interest in the rights of Employee to receive any form of compensation
to be made by Employer pursuant to this Agreement shall be void.
10.8 SEVERABILITY. If any provision of this Agreement or
application thereof to anyone or under any circumstances is adjudicated
to be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect any other provisions or applications
of this Agreement that can be given effect without the invalid or
unenforceable provision or application and shall not invalidate or
render unenforceable such provision in any other jurisdiction or under
any other circumstance.
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10.9 REMEDIES CUMULATIVE; NO WAIVER. No remedy conferred upon
Employer by this Agreement is intended to be exclusive of any other
remedy, and each and every such remedy shall be cumulative and shall be
in addition to any other remedy given hereunder or now or hereafter
existing at law or in equity. No delay or omission by Employer in
exercising any right, remedy or power hereunder or existing at law or
in equity shall be construed as a waiver thereof, and any such right,
remedy or power may be exercised by Employer from time to time as often
as may be deemed expedient or necessary be Employer in its sole
discretion.
10.10 LEGAL FEES. If any legal action, arbitration or other
proceeding is brought for the enforcement of this Agreement, or because
of any alleged dispute, breach, default or misrepresentation in
connection with this Agreement, the successful or prevailing party
shall be entitled to recover reasonable attorneys' fees and other costs
it incurred in that action or proceeding, in addition to any other
relief to which it may be entitled.
IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
day and year first above written.
EMPLOYEE: EMPLOYER:
NETGURU, INC.
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Xxxxx X. Xxx By:
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Xxxxx Xxxxxxxxxx
Corporate President and
Chief Operating Officer
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