EXHIBIT 10.10
INVENTA CORPORATION
EMPLOYMENT AND NONCOMPETITION AGREEMENT
This Employment and Noncompetition Agreement (the "Agreement") is made by
and between Inventa Corporation, a California corporation (the "Company") having
its principal business offices at 0000 Xxxxxxxxx Xxxxx, Xxxxx 000, Xxxxx Xxxxx,
Xxxxxxxxxx, 00000, and Xxxxx X. Xxxxxxx ("Executive"), an Ohio resident residing
at 0000 Xxxxxxxxxx Xxxxxx, Xxxxxx, Xxxx, 00000 as of December 31/st/, 1998.
RECITALS
A. The Company desires to have Executive's active services as President
and Chief Executive Officer for the period set forth in this Agreement.
B. The Company and Executive desire to enter into this Agreement on the
terms and conditions set forth in this Agreement and that this Agreement
supersede the Employment Agreement dated December 7, 1998 in its entirety so
that the Employment Agreement shall be null and void.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and in consideration of Executive's continued employment by the Company, the
parties hereto agree as follows:
1. Duties and Scope of Employment
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(a) Duties. The Company shall employ Executive to render services to
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the Company. Executive agrees that he will devote his full business time and
efforts to the business of the Company, excluding reasonable vacation and sick
leave in accordance with the Company's policies. In the course of Executive's
employment, Executive shall perform the duties of President and Chief Executive
Officer of the Company under the direction of the Board of Directors.
(b) Term of Employment. Executive's employment with the Company
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pursuant to this Agreement shall be effective January 4, 1999 or such later date
as Executive shall begin full-time employment with the Company, but in any event
no later than January 15, 1998 (the "Effective Date") and shall continue until
the three (3) year anniversary of this Agreement, or upon earlier termination in
accordance with this Agreement (the "Employment Period"). This Employment Period
will be automatically renewed for successive one-year periods, unless either
party provides written
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notice at least thirty (30) days prior to the end of the Employment Period that
such party does not wish to renew this Agreement.
(c) Location. Executive's position as President and Chief Executive
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Officer shall be located at the offices of Inventa at 0000 Xxxxxxxxx Xxxxx,
Xxxxx 000, Xxxxx Xxxxx, XX 00000. Executive shall continue to physically reside
in Hudson, Ohio, but will make himself available at the Company's offices at
Santa Clara, California as necessary according to the Company's business
circumstances and as required to fulfill the responsibilities of Executive's
position.
2. Compensation
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(a) Base Compensation. The Company shall pay the Executive as
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compensation for his service a base compensation of $20,833.33 per month, which
is equivalent to $250,000 on an annualized basis ("Salary") effective as of the
Effective Date. Such Salary shall be reviewed at least annually and not later
than January 31 of each calendar year hereafter (beginning in January, 2000)
during the Employment Period and shall be increased from time to time subject to
accomplishment of such performance and contribution goals and objectives as may
be established from time to time by the Board of Directors in good faith
consultation with Executive. Any increase to Executive's Salary shall be
retroactively applied as of January 1 of the applicable calendar year. Such
Salary shall be paid semi-monthly in accordance with normal Company payroll
policies. The annual compensation specified in this Section 2(a), together with
any increases in such compensation that the board of Directors may grant from
time to time, is referred to in this Agreement as "Base Compensation."
(b) Bonuses. In addition to Executive's base salary, Executive shall
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be entitled to receive an annual performance bonus (the "Performance Bonus") in
the maximum amount of up to $100,000 to be paid on January 15 of each calendar
year hereafter (beginning on January 15, 2000), the exact amount of which will
be determined in good faith by the Company's Board of Directors based on
achievement of objectives met during the previous calendar period as determined
by the Board of Directors in consultation with Executive. The Performance Bonus
shall be subject to annual review and increase by mutual agreement, provided
that Executive is employed by the Company on such dates. Executive shall be
entitled to receive $25,000 at the end of each quarter as a draw against such
bonus (the "Quarterly Payment"), and any amounts paid to Executive in excess of
Executive's performance bonus shall be repaid to the Company by March 31 of the
same year following the performance bonus determination. In the event that
Executive is terminated by the Company without Cause (as hereinafter defined),
Executive shall not be obligated to repay any Quarterly Payments. In addition,
Executive will receive upon commencement of employment with the Company (i) a
commencement bonus of $25,000 (less applicable withholdings) and (ii) $50,000,
representing a guaranteed Performance Bonus for the calendar year 1999 in lieu
of the Quarterly Payments for the first two quarters of 1999. Executive shall be
eligible for Performance Bonuses for the third and fourth quarters of 1999.
(c) Executive Benefits. The Company will provide Executive four (4)
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weeks paid vacation each year, and Executive will be entitled to receive such
benefits as the Company offers
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generally, including without limitation medical insurance, disability insurance,
health, accident and other insurance programs, subject to any modification or
alteration by the Company's Board of Directors.
(d) Option Grant. In connection with the commencement of Executive's
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employment, it will be recommended that the Board of Directors authorize the
grant of an incentive stock option to purchase 865,000 shares of Common Stock
(the "Option Shares") pursuant to the Company's applicable Stock Option Plan
(the "Plan"). The exercise price of the Option Shares will be the fair market
value of the Common Stock on the date of grant of the option. Such Option
Shares shall vest in accordance with the following schedule: 1/4th of the Option
Shares shall vest on the Effective Date, and 1/48th of the Option Shares shall
vest on the one year anniversary of the Commencement Date at the end of each
month thereafter, such that the Option Shares shall vest in full after four
years, subject to Executive's continued employment with the Company.
(e) Milestone Options. In connection with the commencement of
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Executive's employment, it will be recommended that the Board of Directors also
authorize the grant of incentive stock options to purchase up to an aggregate of
290,000 shares of Common Stock (the "Milestone Shares") pursuant to the Plan,
with such options to be granted following achievement of certain milestones as
set forth below. The exercise price of the Milestone Shares shall be the fair
market value of Common Stock on the date of grant of the relevant option.
Options for the Milestone Shares shall be granted in accordance with the
following schedule: (i) 145,000 shares shall be granted on January 31, 2001 if
the Company attains revenue of at least $35 million in the calendar year 2000,
and (ii) 145,000 shares shall be granted on January 31, 2003 if the Company
attains revenue of at least $100 million in calendar year 2002. In the event of
an initial public offering of the Company's Common Stock at a price of at least
$4.00 per share and aggregate proceeds to the Company in excess of $15,000,000
(an "IPO"), options for all of the Milestone Shares will be granted prior to the
closing of such IPO.
(f) Expenses During Employment. The Company shall reimburse the
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Executive for all reasonable business, entertainment and travel expenses
actually incurred or paid by the Executive in the performance of his services on
behalf of the Company, in accordance with the Company's expense reimbursement
policy as from time to time in effect. Expense reimbursement shall include
housing/hotel, meal and travel expenses in connection with Executive's commute
between Hudson, Ohio and Santa Clara, California.
3. Termination of Employment
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(a) By Death. The Employment Period shall terminate automatically upon
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the death of the Executive. In such event, the Company shall pay to Executive's
beneficiaries or his estate, as the case may be, any accrued Base Compensation,
the pro rata amount of the Performance Bonus determined in accordance with
Section 2(b) above, less any Quarterly Payments, 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
the Company in which Executive is a participant to the full extent of
Executive's rights under such plan, any accrued vacation pay and
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any appropriate business expenses incurred by Executive in connection with his
duties hereunder, all to the date of termination (collectively "Accrued
Compensation"), but no other compensation or reimbursement of any kind,
including, without limitation, severance compensation, and thereafter, the
Company's obligations hereunder shall terminate, except as otherwise required by
existing law. Nothing in this Section shall affect any entitlement of the
Executive's heirs to the benefits of any life insurance provided by the Company
as act forth above.
(b) By Disability. If Executive is prevented from properly performing his
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duties hereunder by reason of any physical or mental incapacity for a period of
more than 60 days in the aggregate in any 365-day period, then, to the extent
permitted by law, the Company may terminate the Employment Period on the 60th
day of such incapacity. In such event, the Company shall pay to Executive all
Accrued Compensation, and shall continue to pay to Executive the Salary and the
pro rata amount of the Performance Bonus determined in accordance with Section
2(b) above, less any Quarterly Payments, until such time as Executive shall
become entitled to receive disability insurance payments under the disability
insurance policy maintained by the Company (but not more than 90 days following
termination), as well as continued medical insurance benefits coverage,
including short and long-term (permanent) disability benefits, and in all other
respects coverage substantially comparable to the coverage in place prior to the
date of termination for twelve (12) months after the date of termination, but no
other compensation or reimbursement of any kind, including without limitation,
severance compensation, and thereafter the Company's obligations hereunder shall
terminate. Nothing in this Section shall affect Executive's rights under any
disability plan in which he is a participant or abrogate, extinguish, modify,
alter, waive or release any rights Executive has under existing law, including
but not limited to the Americans with Disabilities Act, the Family Medical Leave
Act, the Employee Retirement Income Security Act, and parallel state
legislation.
(c) By Resignation or By Company for Cause. If Executive's employment with
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the Company terminates due to his voluntary resignation or if the Company
terminates Executive's employment due to Cause (as defined below), the Company
shall pay Executive all Accrued Compensation less the pro rata amount of the
Performance Bonus (which shall not be paid to Executive), but no other
compensation or reimbursement of any kind, including without limitation,
severance compensation, and thereafter the Company's obligations hereunder shall
terminate. Executive shall also return any Quarterly Payments received in the
calendar year of Executive's termination to the Company. Termination shall be
for "Cause" in the event of the occurrence of any of the following: (i)
Executive's conviction by, or entry of a plea of guilty or nolo contendere in, a
court of competent and final jurisdiction for any crime which constitutes a
felony in the jurisdiction involved, which conviction materially injures the
Company; or (ii) Executive's commission of a material act of fraud or
misappropriation of funds, whether prior to or subsequent to the date hereof,
upon the Company; or (iii) gross negligence by Executive in the scope of
Executive's services to the Company; or (iv) Executive's failure to follow the
reasonable policies or directions of the Board of Directors of the Company; or
(v) Executive's intentional breach of any material term of this Agreement;
provided
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that in the event that any of the foregoing events is capable of being cured,
the Company shall provide written notice to the Executive describing the nature
of such event and the Executive shall thereafter have ten (10) business days to
cure such event.
(d) By Company for Other Than Cause. If the Company terminates Executive's
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employment with the Company for any reason Other Than Cause (as defined below),
Executive shall be entitled to receive: (i) Accrued Compensation to the date of
termination; (the "Termination Date"); (ii) severance compensation equal to
Executive's Base Compensation and Performance Bonus, immediately prior to the
termination, for twelve (12) months after the Termination Date payable in
accordance with the Company's normal payroll practice; and (iii) continued
medical insurance benefits coverage, including short and long-term (permanent)
disability benefits, and in all other respects coverage significantly comparable
to those in place immediately prior to the Termination Date, for twelve (12)
months after the Termination Date. If the Company terminates Executive's
employment with the Company for any reason Other Than Cause or Executive
voluntarily resigns upon a Change in Control (as defined below), (in addition to
the aforementioned items) Executive's Option Shares will continue to vest for an
additional twelve (12) months from the date of termination or Change in Control,
as the case may be. "Other Than Cause" shall include, but not be limited to the
following: (i) without the Executive's express written consent, the assignment
to the Executive of any duties or the significant reduction of the Executive's
duties, either of which is materially inconsistent with the Executive's position
with the Company and responsibilities in effort immediately prior to such
assignment, or the removal of the Executive from such position and
responsibilities, which is not affected for Disability or for Cause; (ii) a
material reduction by the Company in the Base Compensation and/or Performance
Bonus of the Executive as in effect immediately prior to such reduction; (iii) a
material reduction by the Company in the kind or level of Executive benefits to
which the Executive is entitled immediately prior to such reduction with the
result that the Executive's overall benefits package is significantly reduced
(other than a nondiscriminatory reduction affecting the Company's employees
generally); (iv) the relocation of the Executive, without the Executive's
express written consent; or (v) a decision by the Company under Section 1(b) of
this Agreement not to renew the Agreement, either after the initial three-year
term or any subsequent one-year term. If Executive resigns due to one of the
above enumerated factors within thirty (30) days after the date of the
occurrence of one of the above enumerated factors, such resignation shall be
deemed a termination by the Company for Other Than Cause and shall be governed
by this Section 3(d).
(e) Change in Control. In the event of a Change in Control and the
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termination of Executive's employment with the Company without Cause within one
(1) year following such Change in Control, any remaining unvested portion of
Executive's Option Shares will accelerate and vest in full such that the total
number of Option Shares will be immediately exercisable on the date of
termination. A "Change in Control" shall mean (i) an acquisition of the Company
by another entity by means of any transaction or series of related transactions
(including any reorganization, merger or consolidation) or (ii) a sale of all or
substantially all of the assets of the Company (collectively, a "Merger")
whereby the Company's stockholders of record immediately prior to such Merger
will, immediately after such Merger, hold less than 50% of the voting power of
the surviving or acquiring entity.
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4. Covenants Not to Compete or Solicit.
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(a) Non-Competition. The Executive agrees that he will not, while
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employed by the Company and for a period of one (1) year following termination
of such employment for any or no reason, directly or indirectly (other than on
behalf of the Company), without the prior written consent of the Company, engage
in a Competitive Business Activity anywhere in the Restricted Territory.
Engaging in a "Competitive Business Activity" shall mean engaging in, whether
independently or as an employee, agent, consultant, advisor, independent
contractor, partner, stockholder, officer, director or otherwise, any business
which is materially competitive with the business of the Company as conducted or
actively planned to be conducted by the Company during his employment by it,
provided that Executive shall not be deemed to engage in a Competitive Business
Activity solely by reason of (i) owning 2% or less of the outstanding common
stock of any corporation if such class of common stock is registered under
Section 12 of the Securities Exchange Act of 1934, or (ii) after the termination
of his employment by the Company, being employed by or otherwise providing
services to a corporation having total revenue of at least $500 million (or such
lower number as may be agreed by the Company) so long as such services are
provided solely to a division or other business unit of such corporation which
does not engage in a business which is then competitive with the business of the
Company. The term "Restricted Territory" shall mean each state of the United
States, each province of Canada, and each other country in the world in which
the Company, during the term of this non-competition provision, sells or markets
its products and services or otherwise engages in business.
(b) Non-Solicit of Employees. Executive agrees that he will not, while
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employed by the Company and for a period of one (1) year following termination
of such employment:
(i) directly solicit, encourage, or take any other action which
is intended to induce any other employee of the Company or any of its
subsidiaries to terminate his or her employment with the Company or any of its
subsidiaries; or
(ii) directly interfere in any manner with the contractual or
employment relationship between the Company or any of its subsidiaries and any
such employee of the Company or any of its subsidiaries.
The foregoing shall not prohibit Executive or any entity with which
Executive may be affiliated from hiring a former or existing employee of the
Company or any of its subsidiaries, provided that such hiring does not result
from the direct actions of Executive.
(c) Non-Solicit of Customers with respect to Competitive Business
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Activity. Executive agrees that he will not, while employed by the Company and
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for a period of one (1) year following termination of such employment, directly
or indirectly, whether for his own account or for the account of any other
individual or entity, solicit the business or patronage of any customers of the
Company with respect to products and/or services directly related to a
Competitive Business Activity.
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(d) Severability. The scope of the geographic, time and subject matter
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restrictions set forth in this Section 4 are intended to conform to applicable
law. If, however, a court determines that the scope of any such restriction
exceeds what is permitted by law, then such restriction shall be limited or
otherwise reformed as necessary to comply with and be enforceable under
applicable law. If a court determines that any provision of this Section 4 is
unenforceable and cannot be reformed, then such provision shall be deemed
eliminated from this Section to the extent necessary to permit the remaining
provisions of this Section to be enforced.
5. Confidential Information.
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(a) Company Information. Executive agrees at all times during the term
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of Executive's employment and thereafter, to hold in strictest confidence, and
not to use, except for the benefit of the Company, or to disclose to any person,
firm or corporation without written authorization of the Board of Directors of
the Company, any Confidential Information of the Company. Executive understands
that "Confidential Information" means any Company proprietary information,
technical data, trade secrets or know-how, including, but not limited to,
research, product plans, products, services, customer lists and customers
(including, but not limited to, customers of the Company on whom Executive
called or with whom Executive became acquainted during the term of Executive's
employment), markets, software, developments, inventions, processes, formulas,
technology, designs, drawings, engineering, hardware configuration information,
marketing, finances or other business information disclosed to Executive by the
Company either directly or indirectly in writing, orally or by drawings or
observation of parts or equipment. Executive further understands that
Confidential Information does not include any of the foregoing items which has
become publicly known or made generally available through no wrongful act of
Executive's or of others who were under confidentiality obligations as to the
item or items involved.
(b) Former Employer Information. Executive agrees that he will not,
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during his employment with the Company, improperly use or disclose any
proprietary information or trade secrets of any former or concurrent employer or
other person or entity and that Executive will not bring onto the premises of
the Company any unpublished document or proprietary information belonging to any
such employer, person or entity unless consented to in writing by such employer,
person or entity.
(c) Third Party Information. Executive recognizes that the Company has
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received and in the future will receive from third parties their confidential or
proprietary information subject to a duty on the Company's part to maintain the
confidentiality of such information and to use it only for certain limited
purposes. Executive agrees to hold all such confidential or proprietary
information in the strictest confidence and not to disclose it to any person,
firm or corporation or to use it except as necessary in carrying out Executive's
work for the Company consistent with the Company's agreement with such third
party.
6. Representations. Executive represents and warrants that the execution
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of this Agreement and the Company's Nondisclosure and Assignment of Inventions
Agreement, and the performance of Executive's obligations hereunder and
thereunder, will not conflict with, or result in a
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violation or breach of any other agreement to which Executive is a party, or any
judgment, order or decree to which Executive is subject. It is expressly agreed
that any continuing consulting services provided by Executive to Siebel Systems,
Inc. shall not constitute a breach of this Agreement.
7. Arbitration. Executive and Company agree that any dispute or
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controversy arising out of or relating to any interpretation, construction,
performance or breach of this Agreement shall be settled by arbitration of a
single arbitrator to be held in Santa Clara, California, in accordance with the
rules then in effect of the American Arbitration Association. The arbitrator
may grant injunctions or other relief in such dispute or controversy. The
decision of the arbitrator shall be final, conclusive and binding on the parties
to the arbitration. Judgment may be entered on the arbitrator's decision in any
court having jurisdiction. The Company and Executive shall each pay one-half of
the costs and expenses of such arbitration, and each party shall separately pay
counsel fees and expenses.
8. General Provisions
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(a) Governing Law; Consent to Personal Jurisdiction. This Agreement
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will be governed by the laws of the State of California. Executive and Company
hereby expressly consent to the personal jurisdiction of the state and federal
courts located in California for any lawsuit filed relating to this Agreement.
(b) Entire Agreement. This Agreement sets forth the entire agreement
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and understanding between the Company and Executive relating to the subject
matter herein, merges all prior discussions between the parties and supersedes
the Employment Agreement dated December 7, 1998 entered into between the
parties. No modification of or amendment to this agreement, nor any waiver of
any rights under this agreement, will be effective unless in writing signed by
both parties hereto. Any subsequent change or changes in Executive's duties,
salary or compensation will not affect the validity or scope of this agreement.
(c) Severability. If one or more of the provisions in this Agreement
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are deemed void by law, then the remaining provisions will continue in full
force and effect.
(d) Successors.
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i) Company's Successors. Any successor to the Company (whether
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direct or indirect and whether by purchase, lease, merger, consolidation,
liquidation or otherwise) to all or substantially all of the Company's business
and assets shall assume the obligations under this Agreement and agree expressly
to perform the obligations under this Agreement in the same manner and to the
same extent as the Company would be required to perform such obligations in the
absence of a succession. For all purposes under this Agreement, the term
"Company" shall include any successor to the Company's business and assets which
executes and delivers an appropriate assumption agreement or which becomes bound
by the terms of this Agreement by operation of law.
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(ii) Executive's Successors. The terms of this Agreement and all rights
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of the Executive hereunder shall inure to the benefit of, and be enforceable by,
the Executive's personal or legal representatives, executors, administrators,
successor, heirs, distributees, devisees or legatees.
(e) Counterparts. This Agreement may be executed in counterparts, each of
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which shall be deemed an original, but all of which together will constitute one
and the same instruments.
IN WITNESS WHEREOF, each of the parties has executed this Agreement of the
Company by its duly authorized officer, as of the day and year first written
above.
XXXXX X. XXXXXXX, an individual
Date: 12/31/98 /s/ Xxxxx X. Xxxxxxx
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INVENTA CORPORATION
Date: 12/31/98 By: /s/ X. Xxxxxxxxx
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Xxxxx Xxxxxxxxx
Chairman of the Board of Directors
