Re: EMPLOYMENT AGREEMENT
Exhibit 10.5
IRONPLANET, INC.
February 11, 2010
Xxxxxxx X. X’Xxxxxxx
Dear Xxxxxxx:
On behalf of IronPlanet, Inc., a Delaware corporation (the “Company”), I am pleased to
continue your employment with the Company on the terms and conditions set forth in this agreement
(the “Agreement”):
1. Duties and Scope of Employment.
(a) Position. For the term of your employment under this Agreement (your
"Employment”), the Company agrees to employ you in the position of Chief Financial Officer.
You shall report to the Company’s Chief Executive Officer. You shall perform the duties and have
the responsibilities and authority customarily performed and held by an employee in your position
or as otherwise may be assigned or delegated to you by the Company’s Chief Executive Officer.
(b) Obligations to the Company. During your Employment, you shall devote your full
business efforts and time to the Company and shall not assist any person or entity in competing
with the Company or in preparing to compete with the Company. During your Employment, without the
prior written approval of the Company’s Board of Directors (the “Board”), you shall not
render services in any capacity to any other person or entity and shall not act as a sole
proprietor or partner of any other person or entity or own more than five percent of the stock of
any other corporation. Notwithstanding the foregoing, you may serve on corporate, civic or
charitable boards or committees, deliver lectures, fulfill speaking engagements, teach at
educational institutions, or manage personal investments without such advance written consent,
provided that such activities do not individually or in the aggregate interfere with the
performance of your duties under this Agreement. You shall comply with the Company’s policies and
rules, as they may be in effect from time to time during your Employment.
(c) No Conflicting Obligations. You represent and warrant to the Company that you are
under no obligations or commitments, whether contractual or otherwise, that are inconsistent with
your obligations under this Agreement. In connection with your Employment, you shall not use or
disclose any trade secrets or other proprietary information or intellectual property in which you
or any other person has any right, title or interest and your Employment shall not infringe or
violate the rights of any other person. You represent and warrant to the Company that you have
returned all property and confidential information belonging to any prior employer.
2. Cash Compensation, Employee Benefits, Equity.
(a) Salary. The Company shall pay you as compensation for your services a base salary
at a gross annual rate of $250,000. Such salary shall be payable in accordance with the Company’s
standard payroll procedures. The annual compensation specified in this subsection (a), together
with any modifications in such compensation that the Company may make from time to time, is
referred to in this Agreement as “Base Salary.” Your Base Salary may be reviewed on an
annual basis by the Board or a Compensation Committee of the Board (the “Compensation
Committee”) based upon available market data.
(b) Incentive Bonus. You shall be eligible to be considered for an annual incentive
bonus each fiscal year during the term of your Employment under this Agreement based upon the
achievement of certain objective or subjective criteria established by the Board or the
Compensation Committee, as set forth in an incentive bonus plan (each, an “Incentive Bonus
Plan”). Your eligibility to earn an annual incentive bonus and the target amount of such bonus
shall be governed by the terms and conditions in each year’s Incentive Bonus Plan. Any incentive
bonus for a fiscal year shall be paid no later than the date that is 21/2 months after the close of
that fiscal year, but only if you are still employed by the Company at the time of payment. The
determinations of the Board or the Compensation Committee with respect to such bonus shall be final
and binding.
(c) Employee Benefits. During your Employment, you shall be eligible to participate
in the employee benefit plans maintained by the Company and generally available to similarly
situated employees of the Company, subject in each case to the generally applicable terms and
conditions of the plan in question and to the determinations of any person or committee
administering such plan.
(d) Equity. Any shares of the Company’s Common Stock or options to purchase shares
of the Company’s Common Stock that were granted or issued to you shall continue to be governed by
the terms and conditions of the agreements evidencing the purchase of such Common Stock or grant of
option, all of which remain in full force and effect, except that any vesting acceleration with
respect to such shares or options contained in any agreement, including (without limitation) an
offer letter or employment agreement or amendment thereto, a stock option agreement or restricted
stock purchase agreement, shall be nullified and superseded in its entirety by the vesting
acceleration set forth below in Section 4 of this Agreement (collectively, the “Equity
Documentation”).
3. Termination.
(a) Employment at Will. Your Employment shall be “at will,” meaning that either you
or the Company shall be entitled to terminate your Employment at any time and for any reason, with
or without notice or Cause, as defined in Section 4 below. Any contrary representations that may
have been made to you shall be superseded by this Agreement. This Agreement shall constitute the
full and complete agreement between you and the Company on the “at-will” nature of your Employment,
which may only be changed in an express written agreement signed by you and a duly authorized
member of the Compensation Committee.
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(b) Rights Upon Termination. Subject to Section 4 below, upon the termination of your
Employment, you shall only be entitled to the compensation and benefits earned and the
reimbursements described in this Agreement for the period preceding the effective date of the
termination.
4. Severance Pay.
(a) General Release. Any other provision of this Agreement notwithstanding,
Subsections 4(b) and 4(c) shall not apply unless you (i) have returned all Company property in your
possession, (ii) have resigned as a member of the Board or the boards of directors of the Company’s
subsidiaries, to the extent applicable, and (iii) have executed a general release of all claims
(the “Release”) that you may have against the Company or persons affiliated with the
Company (collectively, the “Conditions”). The Release must be in the form that is
reasonably acceptable to you and the Company. The Company shall deliver the Release to you within
ten (10) days after your Separation (as defined below). You must satisfy the Conditions within
sixty (60) calendar days following your Separation (the “Deadline”).
(b) Severance Pay Not in Connection with Change in Control. If prior to the date
that is two (2) months prior to a Change in Control (as defined below), you experience a Separation
as a result of (i) your resignation from Employment for Good Reason (as defined below) or (ii) the
Company’s termination of your Employment for any reason other than (A) Cause (as defined below),
(B) death or (C) Disability (as defined below) (the Separation as a result of (i) or (ii) shall be
known as an “Involuntary Termination”), then, in addition to the amounts payable in
accordance with Section 3(b), the Company shall pay you severance pay equal to (i) your Base Salary
for a six-month period (the “Severance Period”) plus (ii) the health care premium for you
and your dependents under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) for
a period equal in length to the Severance Period, commencing on the first date on which you and
your dependents lose health care coverage under the Company’s health plans as a result of your
Involuntary Termination, provided that you and your dependents are eligible for COBRA with respect
to the Company’s health plans and timely elect COBRA. Your Base Salary shall be paid at the rate in
effect at the time of your Involuntary Termination in accordance with the Company’s standard
payroll procedures on the Company’s payroll dates for a period equal in length to the Severance
Period, commencing on the Company’s first regular payroll date following the last day of the
Deadline, and shall be subject to all applicable withholdings.
(c) Severance Pay in Connection with Change in Control. If within two (2) months
prior to or within twelve (12) months following a Change in Control, you experience an Involuntary
Termination, then, in addition to the amounts payable in accordance with Section 3(b), the Company
shall pay you severance pay equal to (i) your Base Salary for a twelve-month period (the “CIC
Severance Period”) plus (ii) the health care premium for you and your dependents under COBRA
for a period equal in length to the CIC Severance Period, commencing on the first date on which you
and your dependents lose health care coverage under the Company’s health plans as a result of your
Involuntary Termination, provided that you and your dependents are eligible for COBRA with respect
to the Company’s health plans and timely elect COBRA; plus (iii) an amount equal to one year of
the average of your annual incentive bonus paid to you with respect to the two (2) years
immediately preceding the year in which your
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Involuntary Termination occurs; plus (iv) vesting acceleration with respect to all of your
shares of the Company’s Common Stock, options to purchase shares of the Company’s Common Stock and
any other Company equity that have been granted to you by the Company (collectively, the
"Company Equity”), such that you shall become vested in one hundred percent (100%) of the
Company Equity that is unvested as of the date of your Involuntary Termination. Your Base Salary
shall be paid at the rate in effect at the time of the termination of your Employment. The
severance pay set forth in this Section 4(c), collectively the Base Salary in (i) and the bonus in
(iii), shall be aggregated for a total cash severance amount, which shall be paid in substantially
equal installments in accordance with the Company’s standard payroll procedures on the Company’s
payroll dates for a period equal in length to the CIC Severance Period, commencing on the Company’s
first regular payroll date following the last day of the Deadline, and shall be subject to all
applicable withholdings. For the avoidance of doubt, upon an Involuntary Termination, you shall be
eligible to receive the severance pay and benefits set forth in this Section 4(c) or Section 4(b)
above, but not both. This Section 4, including (without limitation) the severance pay and benefits
set forth in Section 4(b) and Section 4(c), shall be in effect for four (4) years from the date of
this Agreement. Following such four-year term, the Board or the Compensation Committee, each in
its sole discretion, shall determine whether to offer to you severance pay and benefits according
to terms and conditions to be determined at such time.
(d) Internal Revenue Code Section 409A. Notwithstanding anything stated herein to the
contrary, the severance pay provided in connection with your Involuntary Termination under this
Section 4 is intended to be exempt from Internal Revenue Code (“Code”) Section 409A
pursuant to Treasury Regulation Section 1.409A-1(b)(9)(iii) and to the extent it is exempt pursuant
to such section it shall in any event be paid no later than the last day of your second taxable
year following the taxable year in which your Involuntary Termination has occurred; provided that,
to the extent that such severance and any other payments paid to you in connection with your
Involuntary Termination does not qualify or otherwise exceeds the limit set forth in Treasury
Regulation Section 1.409A-1(b)(9)(iii)(A) or any similar limit promulgated by the Treasury or the
IRS, the portion of the severance pay that does not qualify or otherwise exceeds such limit, as
determined by the Company in its sole discretion, shall be paid by no later than the fifteenth
(15th) day of the third (3rd) month following the end of your first tax year in which your
Involuntary Termination occurs, or, if later, the fifteenth (15th) day of the third (3rd) month
following the end of the Company’s first tax year in which your Involuntary Termination occurs, as
provided in Treasury Regulation Section 1.409A-1(b)(4).
To the extent that any COBRA payment premiums set forth in Section 4(b) or 4(c) above are not
exempt from Code Section 409A, then (i) the benefits provided during any calendar year may not
affect the benefits to be provided in any other calendar year; (ii) any payment of COBRA premiums
shall be made on or before the earlier of the last day of the calendar year following the calendar
year in which the COBRA premium expense was incurred and the end of the second calendar year
following the year of the Involuntary Termination; and (iii) the right to such benefits shall not
be subject to liquidation or exchange for another benefit.
Notwithstanding the above, if any of the severance pay provided in connection with your
Involuntary Termination does not qualify for any reason to be exempt from Code Section 409A
pursuant to Treasury Regulation Section 1.409A-1(b)(9)(iii) or Treasury Regulation Section
1.409A-1(b)(4) or any other applicable exemption and you are deemed by the
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Company at the time of your Involuntary Termination to be a “specified employee,” as defined
in Treasury Regulation Section 1.409A-1(i), each such severance payment shall not be made or
commence until the date which is the first (1st) business day of the seventh (7th) month after your
Involuntary Termination and the installments that otherwise would have been paid during the first
six (6) months after your Involuntary Termination shall be paid in a lump sum on the first (1st)
business day of the seventh (7th) month after your Involuntary Termination, with any remaining
severance pay to be paid in accordance with the schedule set forth in Section 4(b) or 4(c) above,
as applicable. Such deferral shall only be effected to the extent required to avoid adverse tax
treatment to you, including (without limitation) the additional twenty percent (20%) federal tax
for which you would otherwise be liable under Section 409A(a)(1)(B) of the Code in the absence of
such deferral.
(e) Definition of “Change in Control.” For all purposes under this Agreement,
"Change in Control” shall mean: (i) the consummation of a merger or consolidation of the
Company or any other corporate reorganization or business combination transaction of the Company
with or into another corporation, entity or person; (ii) the sale, transfer or other disposition of
all or substantially all of the Company’s assets; (iii) a change in the composition of the Board,
as a result of which fewer than 50% of the incumbent directors are directors who either (A) had
been directors of the Company on the date 24 months prior to the date of such change in the
composition of the Board (the “Original Directors”); or (B) were appointed to the Board, or
nominated for election to the Board, with the affirmative votes of at least a majority of the
aggregate of (A) the Original Directors who were in office at the time of their appointment or
nomination and (B) the directors whose appointment or nomination was previously approved in a
manner consistent with this Paragraph (iii); or (iv) any transaction as a result of which any
person is the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of
1934 (the “Exchange Act”)), directly or indirectly, of securities of the Company
representing at least 50% of the total voting power represented by the Company’s then outstanding
voting securities. For purposes of this Subsection (iv), the term “person” shall have the same
meaning as when used in sections 13(d) and 14(d) of the Exchange Act but shall exclude (i) a
trustee or other fiduciary holding securities under an employee benefit plan of the Company or of a
parent or subsidiary and (ii) a corporation owned directly or indirectly by the stockholders of the
Company in substantially the same proportions as their ownership of the common stock of the
Company. A transaction shall not constitute a Change in Control if its sole purpose is to change
the state of the Company’s incorporation or to create a holding company that shall be owned in
substantially the same proportions by the persons who held the Company’s securities immediately
before such transaction.
(f) Definition of “Cause.” For all purposes under this Agreement, “Cause”
shall mean:
(i) Any material breach by you of this Agreement, the Confidentiality Agreement (as defined
below), the Equity Documentation or any other written agreement between you and the Company, which
breach to the extent deemed curable by the Board is not cured within 10 business days after written
notice thereof from the Company;
(ii) Any material failure by you to comply with the Company’s written policies or rules,
including (without limitation) the Company’s ethics or xxxxxxx xxxxxxx policies,
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as they may be in effect from time to time during your Employment, which breach to the extent
deemed curable by the Board is not cured within 10 business days after written notice thereof from
the Company;
(iii) Your repeated failure to follow reasonable and lawful instructions from the Board, which
failure is not cured within 10 business days after written notice thereof from the Company;
(iv) Commission, conviction of, or a plea of “guilty” or “no contest” to, a felony under the
laws of the United States or any State by you if such felony is work-related, impairs your ability
to perform services for the Company in accordance with this Agreement, or results in a loss to the
Company or damage to the reputation of the Company;
(v) Your misappropriation of funds or property of the Company;
(vi) Gross neglect of your duties;
(vii) Your act or omission that results directly or indirectly in financial accounting
improprieties for the Company;
(viii) Your failure to cooperate with a government investigation; or
(ix) Any gross or willful misconduct by you resulting in a loss to the Company or damage to
the reputation of the Company.
(g) Definition of “Good Reason.” For all purposes under this Agreement, “Good
Reason” shall mean that you resign within ninety (90) days after one of the following
conditions has come into existence without your written consent:
(i) A material diminution in your authority, duties or responsibilities; or
(ii) A material reduction of your annual Base Salary unless there is a corresponding reduction
in the base salaries of all other executive officers of the Company.
A condition shall not be considered “Good Reason” unless you give the Company written notice
of the condition within 30 days after the condition comes into existence and the Company fails to
remedy the condition within 30 days after receiving your written notice.
(h) Definition of “Disability.” For all purposes under this Agreement, “Disability”
shall mean that you are unable to perform the essential functions of your position, with or without
reasonable accommodation, for a period of at least 120 consecutive days because of a physical or
mental impairment.
(i) Definition of “Separation.” For all purposes under this Agreement,
"Separation” shall mean an “involuntary separation from service,” as defined in the
regulations under Section 409A of the Code.
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5. Confidentiality Agreement. The Company’s Confidential Information and Invention
Assignment Agreement (the “Confidentiality Agreement”), which you previously executed,
remains in full force and effect.
6. Code Section 280G. In the event that it is determined that any payment or
distribution of any type to or for your benefit made by the Company, any of its affiliates, any
person who acquires ownership or effective control of the Company or ownership of a substantial
portion of the Company’s assets (within the meaning of Code Section 280G, as amended, and the
regulations thereunder) or any affiliate of such person, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise (the “Total Payments”),
would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties
with respect to such excise tax (such excise tax, together with any such interest or penalties, are
collectively referred to as the “Excise Tax”), then such payments or distributions shall be
payable either in (i) full or (ii) as to such lesser amount which would result in no portion of
such payments or distributions being subject to the Excise Tax, whichever method provides you with
the greater payments or distributions on an after-tax basis.
All mathematical determinations and all determinations of whether any of the Total Payments
are “parachute payments” (within the meaning of section 280G of the Code) that are required to be
made under this Section 6, shall be made by the independent professionals retained by the Company
(the “Auditors”), who shall provide their determination (the “Determination”),
together with detailed supporting calculations regarding the amount of any relevant matters, both
to the Company and to you within twenty (20) business days of your termination date, if applicable,
or such earlier time as is requested by the Company or you. Any determination by the Auditors shall
be binding upon the Company and you, absent manifest error. The Company shall pay the fees and
costs of the Auditors.
Any reduction in payments and/or benefits required by this Section 6 shall occur in the
following order: (i) reduction of cash payments in reverse chronological order such that the
payment owed on the latest date following the occurrence of the event triggering such Excise Tax
shall be the first payment to be reduced; and (ii) reduction of other benefits paid to you in
reverse chronological order such that the benefit owed on the latest date following the occurrence
of the event triggering such Excise Tax shall be the first payment to be reduced. In the event that
acceleration of vesting of equity awards is to be reduced, such acceleration of vesting shall be
cancelled in the reverse order of the date of grant for your equity awards (i.e., most recently
granted equity awards are reduced first).
7. Miscellaneous Provisions.
(a) Notice. Notices and all other communications contemplated by this Agreement shall
be in writing and shall be deemed to have been duly given when personally delivered or when mailed
by U.S. registered or certified mail, return receipt requested and postage prepaid, or Federal
Express, with delivery charges prepaid. In your case, mailed notices shall be addressed to you at
the home address that you most recently communicated to the Company in writing. In the case of the
Company, mailed notices shall be addressed to its corporate headquarters, and all notices shall be
directed to the attention of its Secretary.
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(b) Modifications and Waivers. No provision of this Agreement shall be modified,
waived or discharged unless the modification, waiver or discharge is agreed to in writing and
signed by you and by an authorized member of the Compensation Committee. No waiver by either party
of any breach of, or of compliance with, any condition or provision of this Agreement by the other
party shall be considered a waiver of any other condition or provision or of the same condition or
provision at another time.
(c) Whole Agreement. No other agreements, representations or understandings (whether
oral or written and whether express or implied) which are not expressly set forth in this Agreement
have been made or entered into by either party with respect to the subject matter hereof. This
Agreement, the Confidentiality Agreement and the Equity Documentation contain the entire
understanding of the parties with respect to the subject matter hereof and supersede and replace
your previous offer letter or employment agreement with the Company and any amendments thereto.
(d) Withholding Taxes. All payments made under this Agreement shall be subject to
reduction to reflect taxes or other charges required to be withheld by law.
(e) Choice of Law and Severability. This Agreement shall be interpreted in accordance
with the laws of the State of California without giving effect to provisions governing the choice
of law. If any provision of this Agreement becomes or is deemed invalid, illegal or unenforceable
in any applicable jurisdiction by reason of the scope, extent or duration of its coverage, then
such provision shall be deemed amended to the minimum extent necessary to conform to applicable law
so as to be valid and enforceable or, if such provision cannot be so amended without materially
altering the intention of the parties, then such provision shall be stricken and the remainder of
this Agreement shall continue in full force and effect. If any provision of this Agreement is
rendered illegal by any present or future statute, law, ordinance or regulation (collectively, the
"Law”) then that provision shall be curtailed or limited only to the minimum extent
necessary to bring the provision into compliance with the Law. All the other terms and provisions
of this Agreement shall continue in full force and effect without impairment or limitation.
(f) Assignment; Successors.
(i) The rights and obligations under this Agreement shall be binding upon and inure to the
benefits of any successor (whether direct or indirect and whether by purchase, lease, merger,
consolidation, liquidation or otherwise) to all or substantially all of the Company’s business
and/or assets (a “Successor Entity”). For all purposes under this Agreement, the term
"Company” shall include any successor to the Company’s business or assets that becomes
bound by this Agreement. The Company may assign its rights under this Agreement to any Successor
Entity without your consent.
(ii) This Agreement and all of your rights and obligations hereunder are personal to you and
may not be transferred or assigned by you at any time. This Agreement and all of your rights
hereunder shall inure to the benefit of, and be enforceable by, your personal or legal
representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.
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(g) Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute one and the same
instrument.
[Signature Page Follows]
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We are all delighted to be able to continue your employment on the terms and conditions set
forth in this Agreement. To indicate your acceptance of the Company’s offer and continue your
employment with the Company, please sign and date this Agreement in the space provided below and
return it to me.
| Very truly yours, | ||||||
| IRONPLANET, INC. | ||||||
| By: | /s/ Xxxxxxx X. Xxxxx
|
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| Name: | Xxxxxxx X. Xxxxx | |||||
| Title: | Chairman & Chief Executive Officer | |||||
ACCEPTED AND AGREED: |
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/s/ Xxxxxxx X. X’Xxxxxxx
|
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