EXECUTIVE EMPLOYMENT AGREEMENT
Exhibit 10.9
This Executive Employment Agreement (the “Agreement”) is made as of the 1st day of July , 2005
(the “Effective Date”), by and between Xxxxx Micro Software, Inc., a Delaware corporation (the “
SMSI”) and Xxxxxxxx Xxxx (“Executive”), an individual residing in California.
WHEREAS, SMSI is in need of an executive with significant experience in operating a software
business to develop and sell utility and security software programs; and
WHEREAS, Executive has experience in such fields; and
WHEREAS, SMSI wishes to engage Executive to serve as a Sr. Vice President of SMSI,
NOW THEREFORE, in consideration of the premises and the covenants contained herein, the
parties hereby agree as follows:
1. DUTIES AND POSITION. During the term of this Agreement, Executive agrees to be employed by and
to serve SMSI as a Senior Vice President. SMSI agrees to employ and retain Executive in such
capacity and Executive accepts and agrees to such employment, subject to the general supervision,
advice and direction of the President of SMSI. Executive shall perform such duties as are
customarily performed by an executive in a similar position. Executive’s reasonable attention to
personal investments and other business matters shall not be deemed to be a violation of this
Agreement.
2. TERM OF EMPLOYMENT.
2.1. Term of Employment. This Agreement shall be effective as of the date first set
forth above and shall continue for a period of three (3) years (the “Term”), unless sooner
terminated pursuant to the provisions set forth herein.
2.2. Place of Performance. Executive shall be based at the principal business offices
of Allume Systems, Inc., which are currently located at 000 Xxxxxxxxx Xx., Xxxxxxxxxxx, XX 00000
(the “Principle Place of Performance”).
3. SALARY, BENEFITS AND BONUS COMPENSATION.
3.1. Salary. As payment for the services to be rendered by Executive as provided in
Section 1 and subject to the terms and conditions of Section 4, SMSI agrees to pay to Executive a
salary equal to no less than two hundred thousand dollars ($200,000) per year, payable in such
equal increments which are in accordance with the SMSI’s regular payroll practices then in effect
(as may be adjusted from time to time, the “Base Salary”). Executive’s salary shall be reviewed by
SMSI’s Board of Directors in accordance with SMSI policies, and Executive shall be eligible for
increases in salary and benefits as determined by SMSI’s Board of Directors their sole discretion.
In no event shall Executive’s salary be reduced below the Base Salary except with
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Executive’s consent which may be withheld in Executive’s sole discretion, and except as part
of a salary reduction applicable to all senior management of SMSI.
3.2. Bonuses. Executive shall receive a discretionary bonuses as determined by SMSI’s
Board of Directors, in accordance with SMSI’s standard bonus policies and equal to or greater than
the bonuses awarded to other similar employees of SMSI and its subsidiaries for similar
performance.
3.3. Employee Benefits. Executive shall be eligible to participate in all benefit
plans generally available to employees who are executives of SMSI including health, dental, life
insurance, retirement, disability, stock and bonus compensation programs.
3.4. Expenses. SMSI will pay, or reimburse the Executive for, all ordinary and
reasonable out-of-pocket business expenses incurred by Executive in connection with his performance
of services hereunder in accordance with SMSI’s expense authorization and approval procedures then
in effect upon presentation to SMSI of an itemized account and written proof of such expenses.
3.5. Options. Executive shall receive a grant of incentive stock options to purchase
150,000 shares of SMSI’s Common Stock at the market value of such stock on the date on which the
2005 Incentive Stock Option Plan is ratified by SMSI shareholders, and which options shall vest
twenty five (25%) percent after six (6) months and the remainder monthly over the two year period
commencing upon the date of plan ratification. Executive’s incentive stock options shall be part of
SMSI’s 2005 Incentive Stock Option Plan.
4. TERMINATION.
Definitions. For purposes of this Agreement, the following terms shall have the following
meanings:
(a) “Termination For Cause” shall mean termination by SMSI of Executive’s employment by SMSI
for reasons of Executive’s conviction of, or plea of “guilty” or “no contest” to, a felony
involving moral turpitude, persistent dishonesty or fraud, persistent willful breaches of the
material terms of this Agreement, or willful neglect of the duties which he is required to perform
hereunder. No act or failure to act by Employee shall be deemed to be “willful” unless done, by
him not in good faith and without reasonable belief that his action or omission was in the best
interest of SMSI.
(b) “Termination Other Than For Cause” shall mean termination by SMSI of Executive’s
employment by SMSI (other than a Termination For Cause, Disability, or Death) and shall include a
substantial, non-voluntary change in the duties required of Executive, or moving the principal
Place of Performance more than one hundred (100) miles from its current location.
(c) “Voluntary Termination” shall mean termination of Executive’s employment with SMSI by
action of Executive (other than termination by reason of Executive’s disability or death as
described in Sections 4.4 and 4.5).
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4.2. Termination For Cause.
(a) Termination For Cause may be effected by SMSI at any time during the Term and shall be
effected by notice to Executive.
(b) Upon Termination For Cause, Executive immediately shall be paid any accrued salary, any
bonus compensation to the extent earned, any vested deferred compensation (other than pension plan
or profit sharing plan benefits which will be paid in accordance with the applicable plan), any
benefits under any plan of SMSI in which Executive is a participant to the full extent of
Executive’s rights under such plans, any accrued vacation pay and any appropriate business expenses
incurred by Executive in connection with his duties hereunder, all to the date of termination, but
Executive shall not be paid any other compensation or reimbursement of any kind, including without
limitation, severance compensation; provided that, any of Employee’s options in SMSI which at such
time were vested, shall remain vested.
4.3. Termination Other Than For Cause.
(a) Notwithstanding anything else in this Agreement, SMSI may effect a Termination Other Than
For Cause, Disability, Death, or Voluntary Termination at any time by written notice to Executive
of such termination.
(b) Upon any Termination Other Than For Cause, Executive shall be paid any accrued salary, any
bonus compensation to the extent earned, any deferred compensation (other than pension plan or
profit sharing plan benefits which will be paid in accordance with the applicable plan), any
accrued vacation pay and any appropriate business expenses incurred by Executive in connection with
his duties hereunder, all to the date of termination, and any severance compensation provided in
Section 5, but Executive shall be entitled to no other compensation or reimbursement of any kind.
In addition, Executive shall continue to participate in all medical, health and life insurance
plans and the other benefits provided the Executive (at the same benefit level at which Executive
was participating on the date of termination) at SMSI’s expense during the severance compensation
period provided for in Section 5, and all unvested stock options then held by Executive shall
immediately vest and be exercisable in full within two (2) years of termination.
(c)
4.4. Termination by Reason of Disability.
(a) If, during the Term, Executive is determined by an examining physician to have failed to
perform his duties under this Agreement on account of illness or physical or mental incapacity, and
such illness or incapacity continues for a consecutive period of more than four (4) months, or an
aggregate of more than six (6) months in a twelve (12) month period, the SMSI shall have the right
to terminate Executive’s employment hereunder by notice to Executive.
(b) Upon a termination by reason of disability SMSI shall pay to the Executive any accrued
salary, any bonus compensation to the extent earned, any vested deferred
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compensation (other than pension plan or profit sharing plan benefits which will be paid in
accordance with the applicable plan), any benefits under any plans of SMSI in which Executive is a
participant to the full extent of Executive’s rights under such plans, any accrued vacation pay and
any appropriate business expenses incurred by Executive in connection with his duties hereunder,
all to the date of termination, but no other compensation or reimbursement of any kind, except
Executive shall have the right to exercise in full any vested stock options then held by Executive.
4.5. Death.
Upon termination by death, SMSI shall pay to Executive’s estate any accrued salary, any bonus
compensation to the extent earned, any vested deferred compensation (other than pension plan or
profit sharing plan benefits which will be paid in accordance with the applicable plan), any
accrued vacation pay and any appropriate business expenses incurred by Executive in connection with
his duties hereunder, all to the date of termination, but no other compensation or reimbursement of
any kind, except that Executive’s estate shall have the right to exercise any stock options vested
in Executive prior to Executive’s death.
4.6. Voluntary Termination. Executive may effect a Voluntary Termination of this
Agreement at any time upon sixty (60) days notice to SMSI. In the event of a Voluntary
Termination, SMSI immediately shall pay any accrued salary, any bonus compensation to the extent
earned, any vested deferred compensation (other than pension plan or profit sharing plan benefits
which will be paid in accordance with the applicable plan), any benefits under any plans of SMSI in
which Executive is a participant to the full extent of Executive’s rights under such plans, any
accrued vacation pay and any appropriate business expenses incurred by Executive in connection with
his duties hereunder, all to the date of termination, but no other compensation or reimbursement of
any kind.
4.7. . Good Cause for Executive to Terminate. Executive shall have the right to
terminate this Agreement for “Good Reason,” encompassing (i) any breach by SMSI or SMSI of any of
the material terms and provisions of the employment contract on its part to be observed or
performed; (ii) any material diminution in Executive’s positions, titles, authority, or status or
the assignment to Executive of duties which are materially inconsistent with his position with
SMSI; (iii) any reduction in Executive’s salary, except as part of a salary reduction applicable to
all senior management; (iv) the relocation of the Place of Performance by more than one hundred
(100) miles or (v) a “Change of Control” (i.e. a change in a majority of the membership of the
Board, the sale of all or substantially all of SMSI’s or SMSI’s assets the merger or consolidation
of SMSI or SMSI as a result of which Executive does not remain the Sr. Vice President of SMSI.)
Upon a termination by Executive for Good Cause, Executive shall be paid any accrued salary, any
bonus compensation to the extent earned, any deferred compensation (other than pension plan or
profit sharing plan benefits which will be paid in accordance with the applicable plan), any
accrued vacation pay and any appropriate business expenses incurred by Executive in connection with
his duties hereunder, all to the date of termination, and any severance compensation provided in
Section 5, but Executive shall be entitled to no other compensation or reimbursement of any kind,
except that all unvested stock options then held by Executive shall immediately vest and all
options be exercisable in full within two (2) years of termination . In
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addition, Executive shall continue to participate in all medical, health and life insurance
plans and the other benefits provided the Executive (at the same benefit level at which Executive
was participating on the date of termination) at SMSI’s expense during the severance compensation
period provided for in Section 5.
5. SEVERANCE COMPENSATION. Upon a Termination Other Than for Cause, Disability, Death, or
Voluntary Termination, Executive shall receive a severance fee equal to eighteen months at his
then-current Base Salary. Such fee shall be payable in equal monthly increments over the period
following termination.
6. PAID TIME OFF. Executive shall accrue paid time off (“PTO”), not including sick leave and
personal business days, on a monthly basis at the rate of days per month. Executive shall thereby
be entitled to not less than twenty (20) business days of PTO during each year of employment plus
the “roll over” of Executive’s accrued PTO accumulated prior to the date of this Executive
Employment Agreement. Executive is ineligible to accrue PTO benefits while Executive is absent
without pay including, but not limited to, unpaid leaves of absence. The purpose of PTO is, among
other things, to provide time for recreation and relaxation. SMSI encourages all of its employees
to take accrued PTO each year. Accordingly, the maximum PTO Executive will be permitted to accrue
is twenty (20) business days. Once this cap on the accrual of PTO has been reached, no additional
PTO will accrue until Executive has reduced the balance of her unused PTO accrued to less than
twenty (20) business days. Thereafter, PTO will accrue on a prospective basis as long as
Executive’s total accrual remains under the cap. SMSI reserves the right to compensate Executive
for earned, unused PTO at any time in its sole discretion via a “roll-over” of unused time.
7. HOLIDAYS. Executive shall be entitled to holidays with pay during each calendar year consistent
with the holiday schedule applicable to management employees of SMSI, generally.
8. COMPLIANCE WITH EMPLOYER’S RULES. The employment relationship between the parties shall be
governed by the general employment policies and procedures of SMSI, including (but not limited to)
those relating to the protection of confidential information and assignment of inventions;
provided, however, that when the terms of this Agreement differ from or are in conflict with SMSI’s
general employment policies or procedures, this Agreement shall control. Executive agrees to abide
by all of SMSI’s policies and procedures in effect from time to time.
9. RETURN OF PROPERTY. Upon termination of Executive’s employment, Executive shall deliver all
property (including keys, records, notes, lists, data, memoranda, models, and equipment) that is in
the Executive’s possession or under the Executive’s control which is the SMSI’s property or related
to SMSI’s business.
10. INDEMNIFICATION OF EXECUTIVE. SMSI shall indemnify Executive against any direct losses
incurred by Executive to the full extent permitted under the Articles of Incorporation and By-Laws
of SMSI, and the laws of the State of Delaware in the performance of his duties to the fullest
extent permissible under applicable law.
11. MISCELLANEOUS.
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11.1. Notice: Every notice or other communication required or contemplated by this
Agreement by either party shall be delivered to the other party at the address set forth on the
signature page below by: (i) personal delivery and deemed given upon delivery; (ii) postage
prepaid, return receipt requested, registered or certified mail and deemed given five (5) days
after deposit with the United States Postal Service or; (iii) internationally recognized express
courier, such as Federal Express, UPS or DHL and deemed given upon delivery. Either party may
change its or his address for notice from time to time by providing written notice in the manner
set forth above.
11.2. Attorney Fees. In the event that any action, suit or other proceeding at law or
in equity is brought to enforce the provisions of this Agreement, or to obtain money damages for
the breach thereof, and such action results in the award of a judgment for money damages or in the
granting of any injunction in favor of SMSI, then all reasonable expenses, including, but not
limited to, reasonable attorneys’ fees and disbursements (including those incurred on appeal) of
SMSI in such action, suit or other proceeding shall (on demand of SMSI) forthwith be paid by
Executive. If such action results in a judgment in favor of Executive, then all reasonable
expenses, including but not limited to, reasonable attorney’s fees and disbursements (including
those incurred on appeal) of Executive in such action, suit or other proceeding shall (on demand of
Executive) forthwith be paid by SMSI.
11.3. Entire Agreement. This Agreement supersedes all prior agreements, and the terms
set forth herein represent the entire understanding and agreement between SMSI and Executive
regarding compensation, employment, status and position. It is further understood that SMSI’s
policies, procedures and rules may be amended or changed at any time by SMSI.
11.4. Amendment. This Agreement may be modified or amended only if the amendment is
made in writing and is signed by both parties. This Agreement cannot be altered in any way by any
oral statement(s) made by Executive or SMSI.
11.5. Severability. If any provision(s) of this Agreement shall be held to be invalid
or unenforceable for any reason, the remaining provisions shall continue to be valid and
enforceable. If a court finds that any provision(s) of this Agreement is invalid or unenforceable,
but that by limiting such provision it would become valid or enforceable, then such provision shall
be deemed to be written, construed, and enforced as so limited.
11.6. Waiver Of Contractual Right. The failure of either party to enforce any
provision of this Agreement shall not be construed as a waiver or limitation of that party’s right
subsequently to enforce and compel strict compliance with every provision of this Agreement.
11.7. Applicable Law. This Agreement shall be governed by the laws of the State of
California without regard to conflict of laws principles.
11.8. Venue. The parties agree they entered into this Agreement in Santa Xxxx County
and any disputes concerning this Agreement or attempt to enforce this Agreement shall be brought in
the Superior Court of the State of California in and for the County of Orange.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above
written.
SMSI
|
EXECUTIVE | |
/s/ Xxxxxx X. Xxxxxxx Xxxxxx X. Xxxxxxx for Xxxxxxx X. Xxxxx, Xx, and on behalf of the Board of Directors |
/s/ Xxxxxxxx Xxxx Xxxxxxxx Xxxx |
|
00 Xxxxxxxx Xxxxx Xxxxx, XX 00000 |
000 Xxxxxxxx Xxxxx Xxxxx, XX 00000 |
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