EXHIBIT 10.05
EMPLOYMENT AGREEMENT
This Employment Agreement (the "AGREEMENT") is entered into as of June
15, 1998 (the "EFFECTIVE DATE") by and between Silicon Image, Inc., a
California corporation (the "COMPANY"), and Xxxxxx Xxxxx ("EXECUTIVE"). This
Agreement supersedes and replaces a certain offer letter dated May 21, 1998
by and between the Company and Executive.
In consideration of the promises and the terms and conditions set forth
in this Agreement, the parties agree as follows:
1. POSITION. The Company hereby appoints Executive to the position
of Chief Financial Officer, Vice President Finance and Administration,
reporting to the Company's President, who currently is Xxxxx Xxxxxxxx.
2. SALARY. Executive's salary will be $145,000 per year, subject to
annual review.
3. BENEFITS. Executive shall be eligible to participate in the
employee benefit plans and executive compensation programs maintained by the
Company applicable to other employees and key executives of the Company,
including, without limitation, retirement plans, savings or profit-sharing
plans, deferred compensation plans, supplemental retirement or excess-benefit
plans, stock option, stock purchase, incentive or other bonus plans, life,
disability, health, accident and other insurance programs, paid vacations,
and similar plans or programs.
4. EQUITY COMPENSATION. Simultaneously with the approval of this
Agreement, the Company's Board of Directors is granting Executive under the
Company's 1995 Equity Incentive Plan an incentive stock option to purchase
170,000 shares of the Company's Common Stock at $0.25 per share. The options
will be immediately exercisable in full, subject to the Company's right to
repurchase all of the shares at cost upon termination of Executive's
employment, which repurchase right shall expire with respect to 25% of the
shares on June 15, 1999 and with respect to an additional 6.25% of the shares
each quarter thereafter, subject to paragraphs 5(c) and 5(d) below.
5. SEVERANCE.
(a) DEFINITIONS. As used in this Agreement:
"CAUSE" shall mean willful gross misconduct, conviction of a felony or
an act of material personal dishonesty.
"CHANGE IN CONTROL" shall mean the occurrence of any of the following
events:
(i) any "person" (as such term is used in Section 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 fifty percent (50%) or more of the
total voting power represented by the Company's then outstanding voting
securities, other than in a private financing where securities are acquired
directly from the Company; or
(ii) the closing of any transaction or series of related transactions,
including the acquisition of the Company by another entity and any
reorganization, merger or consolidation, which results in the holders of the
Company's capital stock prior to the transaction or transactions holding less
than fifty percent (50%) of the outstanding voting power of the Company after
the transaction or transactions, or which results in the sale of all or
substantially all of the assets of the Company.
"DISABILITY" shall mean a physical or mental illness or injury which, as
determined by the Company, has continuously prevented Executive from
performing his duties with the Company for a period of six months prior to
termination.
(b) SEVERANCE. If Executive's employment terminates for any reason
other than a termination by the Company for Cause, then for six (6) months
following Executive's termination, (i) the Company shall continue to pay to
Executive his then-current salary, less applicable withholding taxes, on the
Company's normal payroll dates during that period, and (ii) the Company will
continue Executive's benefits as described in Section 3 above to the extent
permitted by the terms of the Company's plans then in effect.
(c) CONDITIONS OF ACCELERATION OF VESTING. The provisions of
paragraph 5(d) below shall apply if there is a Change in Control and either
(i) Executive is employed by the Company on the date of the Change in Control
and continues his employment after the Change in Control to aid in an orderly
transition, if the Company so requests (provided that Executive shall not be
required to continue his employment for more than three (3) months after the
Change in Control in order to satisfy such obligation), or (ii) Company
terminates Executive's employment other than for Cause, death or Disability
after the Company begins negotiations with a third party that culminate in a
Change of Control and not more than 150 days prior to the Change in Control
(in which case, for the purpose of interpreting the vesting and
exercisability provisions of Executive's stock option and/or restricted stock
grants, Executive's termination shall be deemed to occur on the date of the
Change in Control); PROVIDED, however, that notwithstanding the foregoing,
if, on or before December 15, 1998, the Company begins negotiations with a
third party regarding a Change in Control which culminate in a Change in
Control, the provisions of paragraph (d) below shall apply only if either
condition (ii) above is met or Executive's employment terminates for any
reason, other than termination for Cause by the Company, within the period
beginning on the date of the Change of Control and ending one (1) year
thereafter, provided that Executive continues his employment after the Change
in Control to aid in an orderly transition, if the Company so requests
(provided that Executive shall not be required to continue his employment for
more than three (3) months after the Change in Control in order to satisfy
such obligation).
(d) TERMS OF ACCELERATION OF VESTING. All Executive's stock option
and/or restricted stock grants made prior to the Change in Control shall have
a vesting rate of twice the vesting rate set forth in the grant, PROVIDED,
that in no event shall the minimum aggregate number of
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shares vested be less than at least one-half of the aggregate number of
shares granted. For example, if immediately prior to a Change of Control,
Executive's stock options and restricted stock grants would have otherwise
vested as to forty percent (40%) of the shares subject to the grants, then
upon such Change in Control such grants shall instead be vested as to eighty
percent (80%) of the shares subject to such grants. For example, if
immediately prior to a Change of Control, Executive's stock options and
restricted stock grants would have otherwise vested as to none of the shares
subject to the grants, then upon such Change in Control such grants shall
instead be vested as to fifty percent (50%) of the shares subject to such
grants. In addition, should Executive's employment continue following a
Change in Control, all Executive's stock option and/or restricted stock
grants made prior to the Change in Control shall continue to vest at twice
the vesting rate set forth in the original grant.
(e) LIMITATION ON PAYMENTS. In the event that the severance and
other benefits provided for in this Agreement or otherwise payable to
Executive (i) constitute "parachute payments" within the meaning of Section
280G of the Internal Revenue Code of 1986, as amended (the "Code") and (ii)
but for this Section 5(e), would be subject to the excise tax imposed by
Section 4999 of the Code, then Executive's severance benefits under this
Agreement shall be payable either:
(1) in full, or
(2) as to such lesser amount which would result in no portion
of such severance benefits being subject to excise tax under Section 4999 of
the Code;
whichever of the foregoing amounts, taking into account the applicable
federal, state and local income taxes and the excise tax imposed by Section
4999, results in the receipt by Executive on an after-tax basis, of the
greater amount of severance benefits. Unless the Company and Executive
otherwise agree in writing, any determination required under this Section
5(e) shall be made in writing by the Company's independent public accountants
(the "ACCOUNTANTS"), whose determination shall be conclusive and binding upon
Executive and the Company for all purposes.
For purposes of making the calculations required by this Section 5(e),
the Accountants may make reasonable assumptions and approximations concerning
applicable taxes and may rely on reasonable, good faith interpretations
concerning the application of Section 280G and 4999 of the Code. The Company
and Executive shall furnish to the Accountants such information and documents
as the Accountants may reasonably request in order to make a determination
under this Section 5(e). The Company shall bear all costs the Accountants
may reasonably incur in connection with any calculations contemplated by this
Section 5(e).
(f) The provisions of paragraphs 5(c), (d) and (e) will be added to
each of Executive's stock option and/or restricted stock grants.
6. PROPRIETARY RIGHTS. Simultaneously with the execution of this
Agreement, Executive and Company are entering into the Company's form of
Employee Invention Assignment and Confidential Information Agreement,
attached hereto as EXHIBIT A. Executive
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agrees not to bring to the Company any confidential or proprietary material
of any former employer and not to violate any other obligations Executive
might have to any former employer.
7. AT-WILL EMPLOYMENT. Executive's employment by the Company is "at
will," which means that either Executive or the Company can terminate the
employment at any time, with or without reason.
8. ARBITRATION. Executive and the Company shall submit to mandatory
binding arbitration in any controversy or claim arising out of, or relating
to, this Agreement or any breach hereof. Such arbitration shall be conducted
in accordance with the commercial arbitration rules of the American
Arbitration Association in effect at that time, and judgment upon the
determination or award rendered by the arbitrator may be entered in any court
having jurisdiction thereof.
9. ATTORNEYS' FEES. If any dispute under this Agreement is finally
determined in Executive's or Company's favor, the other party shall pay all
reasonable fees and expenses, including attorneys' and consultants' fees,
incurred by the prevailing party in good faith in connection therewith.
10. TERM OF AGREEMENT. This Agreement shall continue in effect until
the date of termination of Executive's employment with the Company, PROVIDED,
that if at the time of such termination Company is making payments to
Executive pursuant to Section 5(b), Company shall continue to make payments
for so long as required by that section and, PROVIDED FURTHER, that if under
Section 5(c), Executive's employment is deemed to terminate on the date of a
Change in Control, then this Agreement shall continue in effect until such
Change in Control.
11. SUCCESSORS. The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business or assets of the Company, to expressly
assume and agree to perform the obligations under this Agreement in the same
manner and to the same extent that the Company would be required to perform
if no such succession had taken place. As used in this Agreement, "Company"
includes any successor to its business or assets which executes and delivers
this Agreement or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law. This Agreement shall inure
to the benefit of and be enforceable by the Executive's personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.
12. NOTICE. Notices and all other communications provided for in
this Agreement shall be in writing and shall be deemed to have been duly
given when delivered by United States registered mail, return receipt
requested, postage prepaid, addressed to the respective addresses set forth
on the last page of this Agreement, or to such other address as either party
may have furnished to the other in writing in accordance herewith, except
that notices of change of address shall be effective only upon receipt.
13. AMENDMENT OR WAIVER. No provision of this Agreement may be
amended, modified, waived or discharged unless such amendment, waiver,
modification or discharge is
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agreed to in a writing signed by the Executive and the Company. No waiver by
either party hereto at any time of any breach by the other party hereto of,
or compliance with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time.
14. VALIDITY. This invalidity or unenforceabiltiy of any provision
of this Agreement shall not affect the validity or enforceability of any
other provisions of this Agreement, which shall remain in full force and
effect.
15. APPLICABLE LAW. This Agreement shall be interpreted and enforced
in accordance with the internal laws of the State of California.
16. CONFIDENTIALITY. Executive will not disclose the terms of this
Agreement to anyone except as follows: (1) to accountants, attorneys, or
other advisors for the purpose of consulting with them, (2) as required by
law.
17. ENTIRE AGREEMENT. This Agreement represents the entire agreement
between the Company and the Executive with respect to the matters set forth
herein.
IN WITNESS WHEREOF, this Agreement is executed as of the Effective Date.
Silicon Image, Inc. Executive
By: /s/ Xxxxx Xxxxxxxx /s/ Xxxxxx Xxxxx
---------------------------- ----------------------------------
Xxxxx Xxxxxxxx, President Xxxxxx Xxxxx
00000 Xxxx Xxxx 000 Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000-0000 Xxx Xxxxx, XX 00000
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