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EXHIBIT 10.19
[I-CUBE LETTERHEAD]
June 3, 1996
Xx. Xxxxxxx Xxxx
000 Xxxxxxx Xxxx
Xxxxxxx Xxxxxxx, XX 00000
Dear Xxxx:
We at International Integration Incorporated ("I-CUBE" or the "Company") are
pleased to offer you the position of Chairman of the Board of Directors and
Chief Executive Officer of our Company. This position would report directly to
the Board of Directors of I-CUBE. Subject to your acceptance of the terms of
this letter agreement, your employment with us will commence on June 3, 1996.
You will receive a $1,000,000 cash "signing bonus" upon commencement of your
work with us.
As a full time employee, you will receive compensation in the amount of
$8,333.33 on a semi-monthly basis as a base salary. This amount is equivalent to
$200,000 in one full year of employment. You will be eligible to participate in
all employee benefit plans and programs made available generally to employees of
I-CUBE or to executive employees of I-CUBE. Descriptions of the benefit plans
currently being offered are available for your review. Please note that any
benefit may, from time to time, be amended or terminated with or without prior
notice. In accordance with Company policies, you will also be reimbursed for all
business, promotional, entertainment expenses incurred on behalf of the Company
or to further the Company's business. The Company will provide you with an
office, secretary and office automation and support equipment suitable for a
chief executive of the Company.
Although you will be employed full time by I-CUBE, you will have the right to
participate in charitable and community organizations, and also to participate
in activities outside of the Company related to the Company's business, such as,
for example, industry trade shows, seminars, forums, lectures and standards
setting committees. You will also have the right to provide advisory services to
your former employer under a separate agreement with your former employer, such
services to be limited to a maximum of twelve days per year. However, none of
these activities may interfere in any important way with your responsibilities
as Chief Executive Officer of the Company.
Effective upon your employment, you will receive stock options to purchase
595,000 shares of common stock. To the maximum extent possible under applicable
tax rules and
Headquarters - 000 Xxxx Xxxxxx - Xxxxxxxxx, XX 00000
Tel: (000) 000-0000 - Fax: (000) 000-0000
West Coast - 0000 Xxxxxxx Xxxxxxxxx Xxxxx - Xxxxx 000 - Xxx Xxxxxxx, XX 00000
Tel: (000) 000-0000 - Fax: (000) 000-0000
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tax rules and regulations then in effect, the stock options granted to you will
be incentive stock options within the meaning of section 422(b) of the Internal
Revenue Code of 1986, as amended (the "Code"), for federal income tax purposes,
and the balance of the options will be non-qualified stock options. These
options will be issued at the current exercise price of $3.00 per share. The
options will vest over a four year period, in eight equal semi-annual
installments commencing six months after the date of grant, except that (i) 100%
of these options shall vest immediately upon the sale of the Company or a change
of control (a transaction after which new stockholders own more than fifty
percent (50%) of the outstanding shares of the Company) and (ii) if at the time
of the IPO less than 50% of the Options have vested, then 50% of these Options
shall vest immediately upon an IPO (as defined below), the remaining 50% to vest
in four equal semi-annual installments commencing six months after the IPO.
These options will terminate if your employment is terminated by the Company for
"Cause" (as defined below), if you voluntarily leave the Company or upon your
death; provided, that you or your estate, as the case may be, may exercise the
vested portion of the Options in accordance with their terms. Notwithstanding
anything to the contrary in this Agreement or the Incentive Stock Option and
Non-Qualified Stock Option Agreements to be in the form attached hereto as
Exhibits A and B and to be dated as of the first day of your employment with the
Company, in the event that your employment is terminated by the Company without
Cause, the options which have vested as of the date of termination will remain
exercisable until the later of June 30, 1998 or 90 days after termination, after
which date they shall be deemed to have expired.
In addition to the stock options for 595,000 shares described above, you will be
entitled to receive two non-qualified stock options, each to purchase 108,000
shares of I-CUBE common stock, which also will be issued at the current
exercise price of $3.00 per share. Each of these options will vest at the end of
7 years, subject to acceleration as follows. If the Company achieves a total
market capitalization (market price of shares of common stock of the Company
times the total number of shares of common stock then outstanding whether or not
freely tradable) of $400,000,000 while you are employed by the Company or, in
the event your employment is terminated by the Company without Cause, within six
months of the effective date of such termination, one of these two options will
then completely vest. The second of these options will completely vest if the
Company achieves a total market capitalization of $600,000,000 while you are
employed by the Company or, in the event your employment is terminated by the
Company without Cause, within six months of the effective date of such
termination. Except as set forth above, these additional options will terminate
if your employment with the Company terminates for any reason or no reason prior
to their vesting.
This entire package of stock options consisting of 811,000 shares represents
approximately 7.5% of all currently outstanding stock of the Company inclusive
of all outstanding stock options, warrants and other rights held by any person
or entity to acquire equity securities of the Company. If the Company sells
shares of its stock to
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raise the $1,000,000 signing bonus payable to you as described above, the number
of shares subject to your stock options as described in the preceding paragraph
will be appropriately increased by an aggregate of 7.5% of such additional
shares. Otherwise with respect to protection against dilution, you will not be
treated any differently than any of the founders, such as Messrs. Xxxxxxxxxxx
and Xxxxx. We anticipate that the Board may issue options to employees,
including officers, but it will do so as dictated by the interests of the
Company. All options will be issued under the Company's 1996 Stock Option Plan.
You may exercise your options and pay for the stock with other stock which you
already hold, provided the Company will not thereby incur an expense charge
(normally, the shares must be held for six months to avoid such a charge). If
this method of payment is not feasible because of such expense charge, the
Company will cooperate with you to facilitate the exercise of the Options and
payment of the exercise price of the shares.
The Company may discharge you at any time for Cause upon delivery of written
notice to you, making reference to this paragraph and specifying with
particularity the actions or inactions constituting such Cause. For purposes of
this letter agreement, a termination for "Cause" shall mean only termination for
any one or more of the following reasons:
a. being convicted of criminal conduct constituting a felony offense,
other than a traffic offense, whether or not related to your employment;
b. incompetence or negligence in the performance of your duties on behalf
of the Company and which is not cured or corrected within thirty (30) days
after your receipt of written notice from the Company referring to this
paragraph and describing with specificity the conduct or omission
constituting incompetence or negligence;
c. fraud or embezzlement with respect to funds of the Company;
d. your failure to comply with lawful instructions given to you by the
Board of Directors and which is not cured or corrected within thirty (30)
days after your receipt of written notice from the Company referring to
this paragraph and describing with specificity the instructions with which
you did not comply.
The Company will provide at its expense a $4,000,000 life insurance policy
payable to your estate upon your death. This policy will be terminated 91 days
after the Company's IPO.
In connection with expenses incurred by you in negotiating this letter agreement
and relocating to the Company's headquarters, the Company will pay you a
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non-accountable expense allowance of $50,000, such amount to be paid upon our
receipt of a signed copy of this letter agreement.
You will receive the same registration rights, if any, as granted to Messrs.
Xxxxxxxxxxx and Xxxxx.
As you know, the Immigration Reform and Control Act requires employers to verify
the employment eligibility and identity of new employees. Enclosed is a copy of
the Form I-9 that you will be required to complete within the first three days
of your employment. Please bring the appropriate documents listed on that form
with you when you report to work.
We have agreed upon a form of "Nondisclosure, Noncompetition and Developments
Agreement" ("NDA"), a copy of which is attached as Exhibit A. This offer of
employment is conditioned on your willingness to sign and abide by the terms of
this agreement. In making this offer, I-CUBE understands that you are not under
any obligation to any former employer or any person, firm or corporation which
would prevent, limit or impair in any way the performance by you of your duties
as an employee of I-CUBE, other than as set forth in the NDA. Please return the
signed NDA with the signed copy of this offer letter.
It is understood that you are not being offered employment for a definite period
of time and that either you or I-CUBE may terminate the employment relationship
at any time and for any reason without prior notice.
Please acknowledge your acceptance of this offer by signing at the bottom of
this letter agreement and returning a signed copy to the attention of Xxxxxxxx
Xxxx, Human Resources. An extra copy of this offer, signed on behalf of the
Company, has been included for your records.
The undersigned officer represents and warrants that he has full power and
authority to enter into this letter agreement on behalf of the Company, and that
the execution, delivery and performance of this letter agreement have been
authorized by the Board of Directors of the Company. Upon your acceptance of
this letter agreement by signing and returning it to the Company, this letter
agreement will become binding upon you and the Company. Notwithstanding the
foregoing, the Company and you may enter into a more formal employment agreement
consistent with the terms of this letter agreement, but this letter agreement
and the offer of employment contained herein are not contingent in any manner on
the execution and delivery of a separate employment agreement.
Notwithstanding the formal nature of this letter agreement, you should know that
we are very excited at the prospect of working with you to continue our task of
creating a great company. We know that your leadership will be instrumental in
moving us forward.
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We believe this will mark the beginning of a long-term mutually beneficial
relationship. We look forward to having you on board.
Sincerely,
/s/ Xxxxxx Xxxxxxxxxxx
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Xxxxxx Xxxxxxxxxxx
Chairman
/s/ Xxxxxxx Xxxx
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Xxxxxxx Xxxx
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