EXHIBIT 10.7
CANEUM, INC.
XXXX X. XXXXXXXXX EMPLOYMENT AGREEMENT
This Agreement is entered into as of October 28, 2003, (the "Effective
Date") by and between Caneum, Inc. (the "Company"), and Xxxx X. Xxxxxxxxx
("Individual").
1. Duties and Scope of Employment.
(a) Positions and Duties. As of the Effective Date Individual
will serve as Chairman of the Board of Directors of the Company (as set
forth in Section 1(b) below) and as an employee of the Company with a title
to be agreed upon from time to time by Company and Individual. Subject to
Section 1(c) below, Individual will render such business and professional
services in the performance of his duties, related to strategic planning,
corporate and product development and general business and financial
matters, as will reasonably be assigned to him by the Company's Board of
Directors (the "Board"). The period of Individual's employment under this
Agreement is referred to herein as the "Employment Term."
(b) Board Membership. During the Employment Term, the Company
agrees that Individual may serve as a member and Chairman of the Board,
subject to any required Board and/or stockholder approval. Individual may
resign his service on the Board at any time, which resignation shall in no
way affect this Agreement.
(c) Obligations; Outside Business Activities. Individual shall
not be required to devote his entire business time, ability and attention
to the business of the Company, and the Company agrees and acknowledges
that Individual, during the term of this Agreement and thereafter, may be
engaged in other business endeavors both in the same and other industries,
both competitive and non-competitive with the Company, that will require
the time, ability and attention of Individual; however, Individual agrees
to devote his best efforts to performing well all duties that the Company
may reasonably assign to him from time to time during the term of this
Agreement; provided, however, that in no case shall Individual be required
to devote in excess of 25% of his business time and effort to providing
services hereunder; and, provided further, that Individual shall not be
required to provide services in connection with the offer or sale of
securities of the Company in a capital-raising transaction, or to provide
services to directly or indirectly promote or maintain a market for the
securities of the Company. Other than non-waiveable fiduciary duties and
duties of loyalty to the Company that Individual may owe to the Company in
Individual's capacity as a member of the Board, Individual shall have no
affirmative duty to bring business opportunities to the attention of the
Company or to report potential competitive issues between the Company's
activities and Individual's other business activities other than those
activities conducted on behalf of the Company.
2. [Intentionally Omitted]
3. Compensation.
(a) Base Salary. During the Employment Term, the Company will
pay Individual an annual salary of $120,000 as compensation for his
services (the "Base Salary"). The Base Salary will be paid periodically in
accordance with the Company's normal payroll practices and be subject to
the usual, required withholding. Individual's salary will be subject to
review and upward adjustments will be made based upon the Company's normal
performance review practices.
(b) Performance Bonus. Individual will be eligible to receive an
annual bonus between 25.0% and 100.0% of the then applicable Base Salary,
less applicable withholding taxes, upon achievement of annual performance
objectives to be determined by the Board and Individual, which such
objectives for the first year of this Agreement will be established within
thirty (30) days of the Effective Date. These bonuses may be paid in
either cash or unrestricted and registered stock subject to the
determination of the Company's Compensation Committee based on the cash
position of the Company at the time of the effective date of the
Performance Bonus. Objectives for subsequent years will be determined as
set forth herein within thirty (30) days of the beginning of each fiscal
year of the Company.
(c) Initial Option Grant. The option granted to Individual at
the August 14, 2003 meeting of the Board (the "Option") shall continue in
effect and the Grant of Stock Option (and the exhibits thereto) attached
hereto as Exhibit B (the "Option Agreement") shall have been, or shall be
as soon as administratively practicable following the Effective Date
executed and delivered by Individual to the Company. The Option will be
subject to the terms, definitions and provisions of the Company's 2002
Stock Option/Stock Issuances Plan (the "Option Plan") and the Option
Agreement, both of which documents are incorporated herein by reference.
4. Employee Benefits. During the Employment Term, Individual will
be entitled to participate in the employee benefit plans currently and
hereafter maintained by the Company of general applicability to other
senior executives of the Company, including, without limitation, the
Company's group medical, dental, vision, disability, life insurance,
flexible-spending account, 401(k) and other plans. Failure to provide full
medical, dental and vision coverage under a PPO or equivalent plan to
Individual that will fully cover Individual, Individual's spouse and all
Individual's dependents, during the Employment Term, will constitute a
material breach of this Agreement.
5. Vacation. Individual will be entitled to paid vacation of four
(4) weeks per year in accordance with the Company's vacation policy, with
the timing and duration of specific vacations mutually and reasonably
agreed to by the parties hereto.
6. Expenses. The Company will reimburse Individual for reasonable
travel, entertainment or other expenses incurred by Individual in the
furtherance of or in connection with the performance of Individual's duties
hereunder, in accordance with the Company's expense reimbursement policy as
in effect from time to time.
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7. Termination.
(a) Termination Due To Death. Individual's employment and this
Agreement shall terminate immediately upon Individual's death. If
Individual's employment is terminated due to his death, his estate or his
beneficiaries, as the case may be, shall be entitled to:
(i) payment of any due but unpaid portion of the Base
Salary through the date of such termination;
(ii) reimbursement pursuant to Section 6 for any outstanding
reasonable expenses Individual incurred or paid in performing hereunder;
(iii) the right to elect continuation coverage of
insurance benefits under the Company's plans to the extent permitted by
law;
(iv) full and immediate vesting of all outstanding stock
options (and stock subject to vesting) issued to Individual;
(v) any pension survivor benefits that may become due
pursuant to any employee benefit plan or program of the Company; and
(vi) payment of any accrued but unpaid benefits, and any
other rights, as required by the terms of any benefit plan or program of
the Company, this Agreement, or any other agreement between the Company and
the Individual.
(b) Termination Due To Disability. The Company may terminate
Individual's employment at any time if Individual becomes disabled, upon
written notice by the Company to Individual. For all purposes under this
Agreement, "Disability" shall mean that Individual, at the time the notice
is given, has been unable to perform his duties under this Agreement for a
period of not less than ninety (90) days during any 180-day period as a
result of Individual's incapacity due to physical or mental illness. If
Individual's employment is terminated due to his Disability, he shall be
entitled to:
(i) payment of any due but unpaid portion of the Base
Salary through the date of such termination;
(ii) reimbursement pursuant to Section 6 for any outstanding
reasonable expenses Individual incurred or paid in performing hereunder;
(iii) the right to elect continuation coverage of
insurance benefits under the Company's plans to the extent permitted by
law;
(iv) full and immediate vesting of all outstanding stock
options (and stock subject to vesting) issued to Individual;
(v) payment of any accrued but unpaid benefits, and any
other rights, as required by the terms of any benefit plan or program of
the Company, this Agreement, or any other agreement between the Company and
the Individual.
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As soon as administratively possible following the Effective
Date, the Company shall make available to the Individual, and other
similarly-situated employees, a disability benefit plan, paid by the
Company, that provides monthly payments to Individual equal to at least two
thirds (2/3) of the highest monthly Base Salary Individual receives
pursuant to this Agreement, which payment will continue for as long as
Individual remains disabled.
(c) Termination For Cause.
The Company may terminate Individual's employment at any time for
Cause, provided that the Company gives written notice of termination to
Individual as set forth below. If Individual's employment is terminated
for Cause, as defined below, he shall be entitled to:
(i) payment of any due but unpaid portion of the Base
Salary through the date of such termination;
(ii) reimbursement pursuant to Section 6 for any outstanding
reasonable expenses Individual incurred or paid in performing hereunder;
(iii) the right to elect continuation coverage of
insurance benefits under the Company's plans to the extent permitted by
law;
(iv) payment of any accrued but unpaid benefits, and any
other rights, as required by the terms of any benefit plan or program of
the Company, this Agreement, or any other agreement between the Company and
the Individual.
For purposes of this Agreement, a termination for "Cause" shall
mean: (i) the final conviction of Individual of, or Individual's plea of
guilty or nolo contendere to, any felony involving moral turpitude,
(ii) fraud, misappropriation or embezzlement by Individual in connection with
Individual's duties to the Company, or (iii) Individual's willful failure
or gross misconduct in the performance of his duties to the Company.
If the Company exercises its right to terminate the Individual
for Cause, the Company shall: (1) give the Individual written notice of
termination at least twenty (20) days before the date of such termination
specifying in detail the conduct constituting such Cause, and (2) deliver
to the Individual a copy of a resolution duly adopted by a majority of the
entire membership of the Board, excluding interested directors, after
reasonable notice to Individual and an opportunity for Individual to be
heard in person by members of the Board, finding that the Individual has
engaged in such conduct.
(d) Termination By the Company Without Cause or Constructive
Termination Without Cause. The Company may terminate the Individual's
employment at any time without Cause, provided that it gives written notice
of termination at least sixty (60) days before the date of such
termination. If the Individual's service is terminated by the Company
without Cause, or if there is a Constructive Termination Without Cause, as
defined below, the Individual shall be entitled to receive from the Company
the following:
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(i) payment of any due but unpaid portion of the Base
Salary through the date of such termination;
(ii) reimbursement pursuant to Section 6 for any outstanding
reasonable expenses Individual incurred or paid in performing hereunder;
(iii) the right to elect continuation coverage of
insurance benefits under the Company's plans to the extent permitted by
law;
(iv) full and immediate vesting of all outstanding stock
options (and stock subject to vesting) issued to Individual;
(v) payment of any accrued but unpaid benefits, and any
other rights, as required by the terms of any benefit plan or program of
the Company, this Agreement, or any other agreement between the Company and
the Individual.
(vi) payment of amounts equal to any premiums for health
insurance continuation coverage under any Company health plans that is
elected by the Individual or his beneficiaries pursuant to Section 4980B of
the Internal Revenue Code, at a time or times mutually agreed to by the
parties for the remainder of the period from the date of termination to the
end of the term provided in Section 2 hereof (notwithstanding early
termination), but only so long as the Individual is not eligible for
coverage under a health plan of another employer (whether or not he elects
to receive coverage under that plan); and
(vii) subject to limitations set forth below, a
severance benefit in an amount equal to two and one half (2.5) times the
largest Base Salary received by Individual under the Agreement if such
termination occurs on or before July 31, 2004, and one (1) time the largest
Base Salary received by Individual under the Agreement if such termination
occurs after July 31, 2004, but only if (x) Individual executes an
agreement releasing the Company from any further liability under this
Agreement, (y) the period for revoking such release has expired, and
(z) Individual has not materially breached the Confidential Information
Agreement.
The Individual shall be deemed to have earned and the Company
shall pay to Individual 75% of the total severance benefit in Section
7(d)(vii) above within thirty (30) days after all of the applicable
conditions are satisfied. The remaining 25% of the severance benefit will
be deemed earned by Individual, and the Company shall pay to Individual
such remaining 25% of the severance benefit within thirty (30) days
following the first anniversary of the Individual's termination date unless
the Individual materially breaches the Confidential Information Agreement
during the one year period following the Individual's termination date, in
which case such remaining 25% of the severance benefit will be deemed
unearned and will not be paid. All severance benefits paid to the
Individual shall be paid subject to all legally required payroll deductions
and withholdings for sums owed by the Company to the Individual.
For purposes of this Agreement, "Constructive Termination Without
Cause" shall mean a termination of Individual at his own initiative
following the occurrence, without the Individual's prior written consent,
of one or more of the following events not on account of Cause:
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(1) a reduction in the Individual's then current Base
Salary, or a significant reduction by the Company in Individual's
opportunities for earnings under any incentive compensation plans or bonus
opportunity, or the termination or significant reduction of any benefit or
perquisite enjoyed by Individual;
(2) any relocation of the Company's office more than 10
miles from its location as of the Effective Date;
(3) the failure of the Company to obtain an assumption in
writing of its obligation to perform under this Agreement by any successor
to all or substantially all of the assets of the Company in connection with
any merger, consolidation, sale or similar transaction; or
(4) any material breach of this Agreement by the Company.
In the event the Individual is terminated by the Company without
Cause or there is a Constructive Termination Without Cause, each party
shall provide the other with written notice not less than thirty (30) days
before the effective date of the termination of employment.
(e) Voluntary Termination. If the Individual voluntarily
terminates his service on his own initiative for reasons other than his
death, Disability, or Constructive Termination Without Cause, he shall be
entitled to:
(i) payment of any due but unpaid portion of the Base
Salary through the date of such termination;
(ii) reimbursement pursuant to Section 6 for any outstanding
reasonable expenses Individual incurred or paid in performing hereunder;
(iii) the right to elect continuation coverage of
insurance benefits under the Company's plans to the extent permitted by
law;
(iv) payment of any accrued but unpaid benefits, and any
other rights, as required by the terms of any benefit plan or program of
the Company, this Agreement, or any other agreement between the Company and
the Individual.
Individual may voluntarily resign his employment and terminate
the Agreement at any time by providing fifteen (15) days notice to the
Company.
8. Mitigation And Offset. If Individual's employment is terminated
during the term of this Agreement pursuant to the provisions of Section
7(d), above, Individual shall be under no duty or obligation to seek or
accept other employment, and no payment or benefits of any kind due him
under this Agreement shall be reduced, suspended or in any way offset by
any subsequent employment. The obligation of the Company to make the
payments provided for in this Agreement shall not be affected by any
circumstance including, by way of example rather than limitation, any set-
off, counterclaim, recoupment, defense, or other right that the Company may
assert, or due to any other employment or source of income obtained by the
Individual.
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9. Confidential Information. Individual agrees to enter into the
form of Confidential Information and Invention Assignment Agreement
attached hereto as Exhibit A (the "Confidential Information Agreement")
upon commencing employment hereunder.
10. Assignment. This Agreement will be binding upon and inure to the
benefit of (a) the heirs, executors and legal representatives of Individual
upon Individual's death and (b) any successor of the Company. Any such
successor of the Company will be deemed substituted for the Company under
the terms of this Agreement for all purposes. For this purpose,
"successor" means 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
the Company. None of the rights of Individual to receive any form of
compensation payable pursuant to this Agreement may be assigned or
transferred except by will or the laws of descent and distribution. Any
other attempted assignment, transfer, conveyance or other disposition of
Individual's right to compensation or other benefits will be null and void.
11. Notices. All notices, requests, demands and other communications
called for hereunder will be in writing and will be deemed given (i) on the
date of delivery if delivered personally, (ii) one (1) day after being sent
by a well established commercial overnight service, or (iii) four (4) days
after being mailed by registered or certified mail, return receipt
requested, prepaid and addressed to the parties or their successors at the
following addresses, or at such other addresses as the parties may later
designate in writing:
If to the Company, to:
Caneum, Inc.
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
With a copy (which shall not constitute notice) to:
Xxxxxx X. Xxxxx
Attorney at Law
00 Xxxx 000 Xxxxx
Xxxxx 000
Xxxx Xxxx Xxxx, XX 00000
If to Individual, to:
Xxxx X. Xxxxxxxxx
00 Xxxxx Xxx
Xxxxxxx Xxxxx, XX 00000
12. Severability. In the event that any provision hereof becomes or
is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement will continue in full force and
effect without said provision.
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13. Integration. This Agreement, together with the Option Plan,
Option Agreement and the Confidential Information Agreement represents the
entire agreement and understanding between the parties as to the subject
matter herein and supersedes all prior or contemporaneous agreements
whether written or oral. No waiver, alteration, or modification of any of
the provisions of this Agreement will be binding unless in writing and
signed by duly authorized representatives of the parties hereto.
14. Waiver of Breach. The waiver of a breach of any term or
provision of this Agreement, which must be in writing, will not operate as
or be construed to be a waiver of any other previous or subsequent breach
of this Agreement.
15. Headings. All captions and section headings used in this
Agreement are for convenient reference only and do not form a part of this
Agreement.
16. Tax Withholding. All payments made pursuant to this Agreement
will be subject to withholding of applicable taxes.
17. Governing Law. This Agreement will be governed by the laws of
the State of California (with the exception of its conflict of laws
provisions).
18. Acknowledgment. Individual acknowledges that he has had the
opportunity to discuss this matter with and obtain advice from his private
attorney, has had sufficient time to, and has carefully read and fully
understands all the provisions of this Agreement, and is knowingly and
voluntarily entering into this Agreement.
19. Counterparts. This Agreement may be executed in counterparts,
and each counterpart will have the same force and effect as an original and
will constitute an effective, binding agreement on the part of each of the
undersigned.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by their duly authorized officers, as of the day and
year first above written.
COMPANY:
CANEUM, INC.
By: /s/ Xxxxx Xxxxxxx Date: November 5, 2003
Title: Director
INDIVIDUAL:
/s/ Xxxx X. Xxxxxxxxx Date: November 6, 2003
Xxxx X. Xxxxxxxxx
[SIGNATURE PAGE TO XXXX X. XXXXXXXXX EMPLOYMENT AGREEMENT]
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