EXHIBIT 10.21
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
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This Amended and Restated Employment Agreement is made and entered into
by and between IKOS Systems, Inc. (the "Company") and Xxxxx X. Xxxxx ("Xxxxx")
as of August 1, 1995, (the "Restated Agreement").
The Company and Xxxxx wish to amend and restate the Employment Agreement
dated September 27, 1994 by and between the Company and Xxxxx (the "Former
Agreement") to clarify certain technical matters regarding position and duties
and compensation as a result of Xxxxx' promotion to Chief Executive Officer of
the Company and as a result of the Company's one-for-two reverse stock split
effective April 24, 1995.
1. Position and Duties: Xxxxx shall be employed by the Company as its
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President and Chief Executive Officer ("CEO") reporting to the Company's Board
of Directors (the "Board"), effective August 1, 1995 (the "Commencement Date").
As President and CEO, Xxxxx agrees to devote his full business time, energy and
skill to his duties at the Company. These duties shall include, but not be
limited to, any duties consistent with his position which may be assigned to
Xxxxx from time to time by the Company's Board.
2. Term of Employment: Xxxxx' employment with the Company, pursuant to
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this Agreement, is for no specified term and may be terminated by the Company or
Xxxxx at any time, with or without cause. Upon the termination of Xxxxx'
employment with the Company, for any reason, neither Xxxxx nor the Company shall
have any further obligation or liability to the other, except as set forth in
Sections 4, 5, 7 and 8 below.
3. Compensation: Xxxxx shall be compensated by the Company for his
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services as follows:
(a) Salary: As President and CEO, Xxxxx shall be paid a monthly
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salary of $16,250.00 ($195,000.00 on an annualized basis), subject to applicable
withholding, in accordance with the Company's normal payroll procedures. Such
salary shall be reviewed annually by the Board.
(b) Benefits: As the Company's CEO, Xxxxx shall have the right, on
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the same basis as other members of senior management of the Company, to
participate in and to receive benefits under any of the Company's employee
benefit plans, including the medical, dental, vision and disability group
insurance plans. Xxxxx shall also be entitled to participate in the 401(k) Plan
maintained by the Company in accordance with its terms. In addition, Xxxxx shall
be entitled to the benefits afforded to other members of senior management under
the Company's vacation, holiday and business expense reimbursement policies.
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(c) Stock Options:
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(i) Upon execution of the Former Agreement, Xxxxx was granted a
nonqualified stock option to purchase 150,000 shares of the Company's Common
Stock at an exercise price equal to the fair market value of the Company's
Common Stock as determined by the Board as of the date of grant. The shares
subject to that option vest as follows: (i) upon six (6) months' anniversary of
the Former Agreement, 12.5%; (ii) during the next forty-two (42) month period,
2.083% per month. The options are and shall be subject to the terms and
conditions of the Company's Stock Option Plan and the Company's standard form of
Stock Option Agreement.
(ii) If the Company achieves its earnings per share objective as
set forth in the Company's annual business plan approved by the Board, Xxxxx
shall be granted additional stock options to purchase shares according to the
following chart:
Earnings Per Share Objectives
% of Plan Number of Shares
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90% of Earnings Per Share Attained............ 0
91% of Earnings Per Share Attained............ 1,250
92% of Earnings Per share Attained............ 2,500
93% of Earnings Per Share Attained............ 3,750
94% of Earnings Per Share Attained............ 5,000
95% of Earnings Per Share Attained............ 6,250
96% of Earnings Per Share Attained............ 7,500
97% of Earnings Per Share Attained............ 8,750
98% of Earnings Per Share Attained............ 10,000
99% of Earnings Per Share Attained............ 11,250
100% of Earnings Per Share Attained............ 12,500
(iii) In addition to the above, for every $.01 earnings per
share that the Company achieves over its objectives, Xxxxx shall be granted
additional stock options to purchase 1,000 shares. The stock options earned by
Xxxxx under this Section 3(c)(iii) will vest as follows: 8.3333% per month. The
exercise price for these options shall be equal to the fair market value of the
Company's Common Stock determined by the Board as of their date of grant. These
options shall be subject to the terms and conditions of the Company's Stock
Option Plan and the Company's standard form of Stock Option Agreement.
Up to forty percent (40%) of the stock options referred
to in Sections 3(c)(ii) and 3(c)(iii) above shall be earned in the first half of
the applicable fiscal year and up to sixty percent (60%) shall be earned in the
second half of the applicable fiscal year.
(d) Performance Bonus. Effective August 1, 1995, Xxxxx shall have
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the opportunity to earn an annual Performance Bonus. As President and CEO, Xxxxx
may earn an annual Performance Bonus of up to $100,000.00 per year. The
Performance Bonus shall have two components: (i) 80% of the Performance Bonus
may be earned on the basis of revenue objectives and earnings per share; and
(ii) 20% of the Performance Bonus is discretionary and will be granted based
upon Xxxxx' job performance and other factors as determined by the Board. The
Performance Bonus shall be determined as follows:
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(i) Based upon the achievement of the Company's revenue objectives
and earnings per share objectives pursuant to and measured against its annual
business plan, as approved by the Board, Xxxxx shall have the opportunity to
earn up to 80% of the annual Performance Bonus ($80,000) as follows:
a. Up to 50% of this component ($40,000) may be earned if the
Company achieves its revenue objectives for the Company's fiscal year as set
forth in the Company's annual business plan according to the following chart:
Revenue Objectives Bonus Earned
% of Plan % of $40,000
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90% of Revenues Attained........ 0% Earned
91% of Revenues Attained........ 10% Earned
92% of Revenues Attained........ 20% Earned
93% of Revenues Attained........ 30% Earned
94% of Revenues Attained........ 40% Earned
95% of Revenues Attained........ 50% Earned
96% of Revenues Attained........ 60% Earned
97% of Revenues Attained........ 70% Earned
98% of Revenues Attained........ 80% Earned
99% of Revenues Attained........ 90% Earned
100% of Revenues Attained........ 100% Earned
Up to forty percent (40%) of the Performance Bonus amount referred
to in this Section 3(d)(i)a. ($16,000), shall be earned in the first half of the
applicable fiscal year and up to sixty percent (60%) of the Performance Bonus
amount referred to in this Section 3(d)(i)a. ($24,000), shall be earned in the
second half of the applicable fiscal year. Notwithstanding the above, if the
objectives are not achieved in the first half of the fiscal year, such
objectives may not be recouped in the second half of the fiscal year.
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b. Up to 50% of this component ($40,000) may be earned if the Company
achieves its earnings per share objectives for the Company's fiscal year as set
forth in the Company's annual business plan according to the following chart:
Earnings Per Share Objectives Bonus Earned
% of Plan % of $40,000
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90% of Earnings Attained....... 0% Earned
91% of Earnings Attained....... 10% Earned
92% of Earnings Attained....... 20% Earned
93% of Earnings Attained....... 30% Earned
94% of Earnings Attained....... 40% Earned
95% of Earnings Attained....... 50% Earned
96% of Earnings Attained....... 60% Earned
97% of Earnings Attained....... 70% Earned
98% of Earnings Attained....... 80% Earned
99% of Earnings Attained....... 90% Earned
100% of Earnings Attained....... 100% Earned
Up to forty percent (40%) of the Bonus amount referred to in this
Section 3(d)(i)b. ($16,000) shall be earned in the first half of the applicable
fiscal year and up to sixty percent (60%) of the Bonus amount referred to in
this Section 3(d)(i)b. ($24,000) shall be earned in the second half of the
applicable fiscal year. Notwithstanding the above, if the objectives are not
achieved in the first half of the fiscal year, such objectives may not be
recouped in the second half of the fiscal year.
(ii) Xxxxx shall have the opportunity to earn up to 20% of the annual
Performance Bonus ($20,000) based upon achievement of his job performance and
other duties. Such component of the annual Performance Bonus shall be payable
at the sole discretion of the Board's Compensation Committee. Up to forty
percent (40%) of the Bonus amount referred to in this Section 3(d)(ii) ($8,000)
may be earned in the first half of the applicable fiscal year and up to sixty
percent (60%) ($12,000) may be earned in the second half of the applicable
fiscal year.
(iii) The Performance Bonus, if any, to be paid to Xxxxx, pursuant to
this Section (3)(d), shall be paid to Xxxxx in a lump sum payment no later than
thirty days following the completion of the first half of the Company's fiscal
year and no later than thirty days following the completion of the second half
of the Company's fiscal year.
(iv) Xxxxx shall not participate in any profit sharing plan that is
available to other officers of the Company.
4. Benefits Upon Voluntary Termination: In the event that Xxxxx
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voluntarily resigns from his employment with the Company, or in the event that
Xxxxx' employment terminates as a result of his death or disability, Xxxxx shall
be entitled to no compensation or benefits from the Company other than those
earned under Section 3 above through the date of his termination.
5. Benefits Upon Other Termination: Xxxxx agrees that his employment may
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be terminated by the Company at any time, with or without cause. In the event of
the termination of Xxxxx' employment by the Company for the reasons set forth
below, he shall be entitled to the following:
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(a) Termination for Cause: If Xxxxx' employment is terminated by the
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Company for cause as defined below, Xxxxx shall be entitled to no compensation
or benefits from the Company other than those earned under Section 3 through
the date of his termination.
For purposes of this Agreement, a termination "for cause" occurs if
Xxxxx is terminated for any of the following reasons:
(i) theft, dishonesty, or falsification of any employment or
Company records;
(ii) improper disclosure of the Company's confidential or
proprietary information;
(iii) any intentional act by Xxxxx which has a material detrimental
effect on the Company's reputation or business; or
(iv) any material breach of this Agreement, which breach is not
cured within thirty (30) days following written notice of such breach from the
Company.
(b) Termination for Other Than Cause: If Xxxxx' employment is
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terminated by the Company for any reason other than cause, Xxxxx shall be
entitled to the following separation benefits:
(i) payment of a monthly amount for nine months and such monthly
payment shall change from month-to-month as it shall be equal to Xxxxx' average
monthly income that he received over the last twelve (12) months. Such average
monthly income shall take into account all compensation that Xxxxx received from
the Company;
(ii) continued vesting in any unvested shares of the Company's
stock which were granted to Xxxxx pursuant to the stock options described in
Section 3(c) above; and
(iii) continued provision of the employee benefits described in
Section 3(b) for a period of nine (9) months following such termination.
(c) Termination Due to an Ownership Change and/or a Transfer of
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Control. In the event of an Ownership Change and/or a Transfer of Control as
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defined in the agreement dated June 2, 1994 and attached hereto as Exhibit A
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(hereinafter the "Transfer of Control Agreement)" and Xxxxx' employment with the
Company is terminated by the Company or by Xxxxx for the reasons set forth in
the Transfer of Control Agreement, Xxxxx shall only be entitled to the benefits
set forth therein.
6. Exclusive Remedy: Subject to Section 5 above, Xxxxx shall be entitled to
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no further compensation for any damage or injury arising out of the termination
of his employment by the Company.
7. Confidential Information and Inventions Agreement: Xxxxx agrees to abide
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by the terms and conditions of the Company's standard employee Confidential
Information and Inventions Agreement that was executed by Xxxxx and attached
hereto as Exhibit B.
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8. Conflict of Interest: Xxxxx agrees that for a period of two (2) years
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after termination of his employment with the Company, he will not, directly or
indirectly, solicit the services of or in any other manner persuade an employee
or customers of the Company to discontinue that person's relationship with or
to the Company as an employee or customer, as the case may be.
9. Attorneys' Fees: The prevailing party shall be entitled to recover from
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the losing party its attorneys' fees and costs incurred in any action brought
to enforce any right arising out of this Restated Agreement.
10. Interpretation: Xxxxx and the Company agree that this Restated
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Agreement shall be interpreted in accordance with and governed by the laws of
the State of California.
11. Successors and Assigns: This Restated Agreement shall inure to the
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benefit of and be binding upon the Company and its successors and assigns. In
view of the personal nature of the services to be performed under this Restated
Agreement by Xxxxx, he shall not have the right to assign or transfer any of
his rights, obligations or benefits under this Restated Agreement, except as
otherwise noted herein.
12. Entire Agreement: This Restated Agreement constitutes the entire
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employment agreement between Xxxxx and the Company regarding the terms and
conditions of his employment, with the exception of (i) the Confidentiality and
Inventions Agreement described in Section 7, (ii) any stock option agreement
between Xxxxx and the Company as described in Section 3(c)(i) and (iii) the
Transfer of Control Agreement attached hereto as Exhibit A. This Agreement
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supersedes all prior negotiations, representations or agreements between Xxxxx
and the Company, whether written or oral, concerning Xxxxx' employment by the
Company, including but not limited to, the Employment Agreement by and between
the Company and Xxxxx dated September 27, 1994.
13. No Representations: Xxxxx acknowledges that he is not relying, and has
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not relied, on any promise, representation or statement made by or on behalf of
the Company which is not set forth in this Restated Agreement.
14. Validity: If any one or more of the provisions (or any part thereof) of
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this Restated Agreement shall be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
(or any part thereof) shall not in any way be affected or impaired thereby.
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15. Modification: This Agreement may only be modified or amended by a
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supplemental written agreement signed by Xxxxx and the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
IKOS SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
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Its: Chairman
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/s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
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