Exhibit 10.32
[Letterhead of LEXAR MEDIA]
November 28, 2001
Mr. Xxxxxxx Xxxxx
[Address]
Dear Xx. Xxxxx:
This retention agreement (the "Retention Agreement") will set forth the binding
agreement of employment effective as of September 1, 2001 regarding your
employment with Lexar Media, Inc. ("LEXAR MEDIA"). As used in this Retention
Agreement, "LEXAR MEDIA" shall refer to Lexar Media, Inc, or the surviving
entity in a Corporate Transaction. You acknowledge and agree that this Agreement
supersedes the terms set forth in your Employment Agreement dated June 25, 2001
or any other agreement whether oral or written to the extent inconsistent with
the terms of this Retention Agreement. You specifically acknowledge and agree
that the Lexar Media Inc. Employee Nondisclosure and Invention Assignment
Agreement dated July 1, 2001 remains in full force and effect.
1. PAYMENTS AND BENEFITS AFTER INVOLUNTARY TERMINATION OR CONSTRUCTIVE
TERMINATION EVENT IN THE ABSENCE OF A CORPORATE TRANSACTION
Except during a Post Transaction Period as provided in Section 2 below,
following involuntary termination by Lexar Media other than for Cause (as
defined below) or a voluntary resignation by you following a Constructive
Termination Event (as defined below) by LEXAR MEDIA you will receive:
(a) Your base salary in effect at the time of such termination
continued for six (6) months;
(b) Medical insurance and life insurance at the levels in effect at the
time of such termination for six (6) months;
(c) Your annual target bonus of forty percent (40%) of your salary paid
as a lump sum at the end of the fiscal year and pro-rated up to the
date of termination for the period you were eligible for any such
bonus; provided that you will receive payment under this Section
1(c) only if you would have earned such bonus absent your
termination, the determination of which will reflect and not be
inconsistent with the level of bonus payments made to others for
the same period;
(d) Any stock options granted to you or restricted stock sold to you as
of the date of such termination shall become vested and exercisable
as to that portion of the shares subject to the option that would
have vested and become exercisable in the twelve (12) full calendar
months following the date of such termination, followed by a twelve
(12) month period during which such options may be exercised, but
in no event may such option be exercised after ten (10) years from
the original grant
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of the option;
(e) No further continuance of other benefits such as vacation,
sick leave, and employee stock purchase plan participation,
unless specified herein; and
(f) Any cellular phone, notebook computer and camera equipment as
then currently provided to you.
Notwithstanding any provisions in this Section 1 to the contrary, you shall not
be entitled to the payments and benefits under Section 1 above unless you (i)
have executed a general release (in a form prescribed by LEXAR MEDIA) of all
known and unknown claims that you may then have against LEXAR MEDIA or persons
affiliated with LEXAR MEDIA and (ii) have agreed not to prosecute any legal
action or other proceeding based upon any of such claims.
2. PAYMENTS AND BENEFITS AFTER TERMINATION OF EMPLOYMENT FOLLOWING A
CORPORATE TRANSACTION
If at any time during the Post Transaction Period (as defined below) there is an
involuntary termination of your employment other than for Cause (as defined
below) or you voluntarily resign following a Constructive Termination Event (as
defined below), then you will receive:
(a) Your base salary in effect at the time of such termination
continued for twelve (12) months plus any earned bonus up
until the date of termination;
(b) Medical and life insurance at the levels in effect at the time
of termination for twelve (12) months;
(c) Your annual target bonus of forty percent (40%) of your salary
paid as a lump sum and pro-rated up to the date of termination
for the period you were eligible for any such bonus but
regardless of whether you would have earned such bonus prior
to your termination;
(d) All stock options or restricted stock which have been granted
to you or purchased by you subsequent to a corporate
transaction shall become 100% vested, followed by a six (6)
month period during which such options may be exercised;
(e) No further continuance of other benefits such as vacation,
sick leave, and employee stock purchase plan participation,
unless specified herein; and
(f) Any cellular phone and notebook computer as then currently
provided to you.
3. PAYMENTS AND BENEFITS FOLLOWING A CORPORATE TRANSACTION
If at any time, a Corporate Transaction as defined below occurs, and you remain
an employee of LEXAR MEDIA through the completion of the Corporate Transaction,
then you shall receive the following:
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(a) Immediately upon the occurrence of a Corporate Transaction,
twenty-five percent (25%) of all unvested stock options and restricted
stock which were previously granted to you shall become 100% vested
immediately preceding such Corporate Transaction and shall remain
exercisable pursuant to the terms of the original grant agreement or
shall be followed by a six (6) month period during which such options
may be exercised, whichever is greater. The remaining seventy-five
percent (75%) of all stock options and restricted stock which were
previously granted to you prior to the Corporate Transaction shall
become vested nine (9) months after the completion of the Corporate
Transaction and shall remain exercisable pursuant to the terms of the
original grant agreement or shall be followed by a six (6) month
period during which such options may be exercised, whichever is
greater.
4. DEATH OR DISABILITY
If you die or are unable to perform your work because of disability, all stock
options which were granted to you shall become 100% vested as of the date of
such occurrence and shall be exercisable pursuant to the terms of your stock
option agreement.
5. DEFINITIONS
For purposes of this letter, the following definitions shall apply:
(a) A "Corporate Transaction" is defined as (i) a merger or acquisition in
which LEXAR MEDIA is not the surviving entity (except for a merger of
LEXAR MEDIA into a wholly-owned subsidiary, and except for a
transaction the purpose of which is to change the State in which LEXAR
MEDIA is incorporated), (ii) the sale, transfer or other disposition
of all or substantially all of the assets of LEXAR MEDIA, or (iii) any
other corporate reorganization or business combination in which the
beneficial ownership of 50% or more of LEXAR MEDIA's outstanding
voting stock is transferred.
(b) The "Post Transaction Period" is defined as commencing one month prior
to the date of closing or effectiveness of a Corporate Transaction and
continuing for eighteen (18) months following such date.
(c) A "Constructive Termination Event" will be deemed to have occurred at
the close of business on the fourteenth (14th) day after any of the
following action(s) are taken by LEXAR MEDIA or the surviving entity
or parent corporation in a Corporate Transaction and such action(s)
are not reversed in full by LEXAR MEDIA or the surviving entity of a
Corporate Transaction within such fourteen-day (14) period unless
prior to the expiration of such fourteen-day (14) period you have
otherwise agreed to the specific relevant event in writing: (i) your
aggregate benefits are materially reduced (as such reduction and
materiality are determined by customary practice within the high
technology industry within the State of California) below those in
effect immediately prior to the effective date of such Constructive
Termination Event, and/or (ii) your duties and/or authority are
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materially decreased or increased from those in effect immediately
prior to the effective date of such Constructive Termination Event,
including but not limited to (a) your no longer acting as the Chief
Financial Officer of LEXAR MEDIA in title and substance; or (b) your
no longer reporting directly to the Chief Executive Officer of LEXAR
MEDIA; and/or (iii) you are required to perform your employment
obligations (other than routine travel consistent with that prior to
the effective date of such Constructive Termination Event) at a
location more than twenty-five (25) miles away from your principal
place of work as was in effect immediately prior to the effective date
of such Constructive Termination Event.
(d) "Cause" is defined as (i) willful misconduct in the performance of
your duties to the LEXAR MEDIA that has resulted or is likely to
result in substantial and material damage to LEXAR MEDIA; (ii)
commission of any act of fraud with respect to the LEXAR MEDIA; or
(iii) conviction of a felony or a crime involving moral turpitude
causing material harm to the business and affairs of the LEXAR MEDIA.
No act or failure to act by you shall be considered "willful" if done
or omitted by Employee in good faith with reasonable belief that such
action or omission was in the best interests of the LEXAR MEDIA.
6. MISCELLANEOUS
(a) As LEXAR MEDIA's relationship with employees is at-will, either you or
LEXAR MEDIA may terminate the employment relationship at any time for
any reason, with or without notice.
(b) In the event of a dispute arising under or related to this letter,
including any termination of your employment under this letter, you or
LEXAR MEDIA may initiate for arbitration under the arbitration under
the administration of the American Arbitration Association ("AAA").
Any arbitration hearing will be held in the vicinity of the LEXAR
MEDIA location where you last performed services and will be held in
accordance with the Employee Dispute Resolution rules of the AAA,
within 60 calendar days of such filing or as may be extended upon the
consent of the parties or their counsel. The arbitration shall be
binding on both parties and may be entered as a judgment in any court
of competent jurisdiction. Each party shall bear its own costs of
arbitration including attorneys fees, unless you prevail in whole or
in part, in which case LEXAR MEDIA will pay your costs of arbitration
including reasonable attorney fees, pro-rated to the extent you
prevail, and such shall be part of the award in the arbitration.
(c) If, due to the benefits provided under this Agreement, you are subject
to any excise tax due to the characterization of any amounts payable
hereunder as excess parachute payments pursuant to Section 4999 of the
Internal Revenue Code, the Company agrees to "gross-up" the amount
payable to you such that the net amount realizable by you is the same
as if there was no such excise tax; provided, however, that the amount
of gross-up will not exceed $150,000. Notwithstanding the foregoing,
however, upon a Corporate Transaction, you may elect in your sole
discretion, not to have any portion of such options or restricted
stock vest in order to avoid any "excess parachute payment" under
Section 280G(b)(1) of the Internal
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Revenue Code of 1986, as amended.
(e) The provisions of this letter will be governed and construed with the
laws of the State of California.
Agreed and Accepted: Sincerely,
/s/ Xxxx X. Xxxxx
/s/ Xxxxxxx Xxxxx Xxxx X. Xxxxx
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Xxxxxxx Xxxxx
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