EXHIBIT 10.16
ZAPME! CORPORATION
EMPLOYMENT AGREEMENT
This Agreement is entered into and effective as of October 8, 2000 (the
"Effective Date") by and between ZapMe! Corporation (the "Company"), and Xxxxx
Xxxxxxxxx ("Executive").
1. DUTIES AND SCOPE OF EMPLOYMENT.
(a) POSITIONS AND DUTIES. Executive will serve as Chief Executive
Officer and President of the Company. Executive will render such business and
professional services in the performance of his duties, consistent with
Executive's position within the Company, as shall reasonably be assigned to him
by the Company's Board of Directors (the "Board").
(b) OBLIGATIONS. During the term of this Agreement, Executive will
perform his duties faithfully and to the best of his ability and will devote his
full business efforts and time to the Company. For the duration of this
Agreement, Executive agrees not to actively engage in any other employment,
occupation or consulting activity for any direct or indirect remuneration
without the prior approval of the Board.
2. COMPENSATION.
(a) ANNUAL BASE SALARY. During the term of this Agreement, the
Company will pay Executive as compensation for his services a base salary at the
annualized rate of $275,000 (the "Base Salary"). The Base Salary shall be paid
in accordance with the Company's normal payroll practices and shall be subject
to annual review by the Board for any appropriate adjustment.
(b) ANNUAL BONUS. During the term of this Agreement, Executive
shall be eligible to earn an annual bonus of up to (100%) of Executive's Base
Salary upon the meeting of specific performance objectives established for the
Company on an annual or semi-annual basis. Such bonus shall be payable in
accordance with the Company's normal payroll practice.
(c) STOCK OPTIONS: Executive may be eligible to receive stock
options in the Company, as determined by the Board. The terms and conditions
governing eligibility for, entitlement to, and receipt of any options or other
form of equity in the Company shall be governed by a ZapMe! Corporation 1998
Stock Plan Stock Option Agreement, to be executed by the parties hereto (each a
"Stock Option Agreement").
3. EMPLOYEE BENEFITS. During the term of this Agreement, Executive will
be entitled to participate in such employee benefit plans currently and
hereafter maintained by the Company of general applicability to other senior
executives of the Company. The Company reserves the right to cancel or change
the benefit plans and programs it offers to its employees at any time.
4. VACATION. Executive will be entitled to a paid vacation of four
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.
5. EXPENSES. The Company will reimburse Executive for reasonable
travel, entertainment or other expenses incurred by Executive in the furtherance
of or in connection with the performance of Executive's duties hereunder, in
accordance with the Company's travel and expense reimbursement policies as in
effect from time to time.
6. EMPLOYMENT TERM; TERMINATION.
(a) The Employment Term shall commence on the Effective Date of
this Agreement and shall continue until terminated upon the earlier to occur of
the following events: (i) the close of business on the third (3rd) anniversary
of this Agreement or (ii) the death or disability (as defined herein) of the
Executive, provided, however, that, on the third (3rd) anniversary of the date
of this Agreement, and on every subsequent annual anniversary, and unless either
party has given the other party written notice at least thirty (30) days prior
to the such anniversary date, the term of this Agreement and the Employment Term
shall be renewed for a term ending one (1) year subsequent to such date, unless
sooner terminated as provided herein.
(b) Notwithstanding the provisions of paragraph 6(a) above, the
Executive may terminate the employment relationship at any time for any reason
by giving the Company written notice at least sixty (60) days prior to the
effective date of termination. Unless otherwise provided by Section 6(d), all
compensation and benefits paid by the Company to the Executive shall cease upon
his last day of employment.
(c) If the Executive's employment is terminated for Cause, the
Executive will not be entitled to and shall not receive any compensation or
benefits of any type following the effective date of termination.
(d) In the event Executive is terminated by the Company without
Cause, or if Executive voluntarily terminates employment for Good Reason within
twelve (12) months following a Change of Control, then:
(i) LAPSE OF REPURCHASE OPTION. The Company's repurchase
option with respect to the ZapMe! Corporation Restricted Stock Purchase
Agreement, dated September 13, 1999 (the "Restricted Stock Agreement"), or any
new restricted shares that may have been granted shall lapse in full.
(ii) SEVERANCE PAYMENT. Executive shall be entitled to a cash
payment in an amount equal to two hundred percent (200%) of the Executive's Base
Salary and two hundred percent (200%) of the annual bonus, payable in accordance
with the Company's normal payroll practices.
(iii) OPTION VESTING. Executive's options under any of the
Company's stock or equity plans shall become one hundred percent (100%) vested
and exercisable.
(iv) BENEFITS. Executive shall be entitled to continue his
health insurance benefits at the same level of coverage as was provided to
Executive immediately prior to the termination without Cause or the termination
for Good Reason ("Health Care Coverage") by electing Federal COBRA continuation
coverage, or similar coverage required under state law (collectively "COBRA").
Should the Executive elect COBRA, the Company shall pay one hundred percent
-2-
(100%) of Executive's Health Care Coverage premiums under COBRA for eighteen
(18) months (for purposes of this subsection, "Premiums"). If such Health Care
Coverage included the Executive's dependents immediately prior to the
termination without Cause or the termination for Good Reason, the Company shall
pay one hundred percent (100%) of such dependent's Premiums. If the Executive is
eligible for further COBRA coverage (in excess of eighteen (18) months),
Executive shall maintain such further coverage at his sole expense after the
initial eighteen (18) month period has expired. The Company shall cease to pay
the Premiums for the Executive and Executive's dependents if Executive and his
dependents become covered under another employer's group health plan which
provides Executive and his dependents with comparable benefits and levels of
coverage and which does not contain any exclusion or limitation with respect to
any pre-existing condition of the Executive or his dependents.
(v) TAX GROSS UP. In the event any payment to Executive
pursuant to this Agreement constitutes an "excess parachute payment" under
section 280(G) of the Internal Revenue Code of 1986, as amended (the "Code"),
the Company shall reimburse Executive for any excise tax payable under the Code
as a result of any payment pursuant to this Agreement.
(e) This Agreement will terminate immediately upon the Executive's
death and the Company shall not have any further liability or obligation to the
Employee, his executors, heirs, assigns or any other person claiming under or
through his estate, except that Executive's estate shall receive any accrued but
unpaid salary or bonuses.
7. DEFINITIONS.
(a) CAUSE. For purposes of this Agreement, "Cause" is defined as
(i) an act of dishonesty made by Executive in connection with Executive's
responsibilities as an employee, (ii) Executive's conviction of, or plea of nolo
contendere to, a felony, or a crime involving moral turpitude (iii) Executive's
gross misconduct, or (iv) Executive's continued substantial violations of his
employment duties after Executive has received a written demand for performance
from the Board which specifically sets forth the factual basis for the Board's
belief that Executive has not substantially performed his duties and following a
reasonable opportunity for Executive to cure any violation.
(b) CHANGE OF CONTROL. For purposes of this Agreement, "Change of
Control" of the Company is defined as: (i) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended)
becomes, after the Effective Date, the "beneficial owner" (as defined in Rule
13d-3 under said Act), directly or indirectly, of securities of the Company
representing 50% or more of the total voting power represented by the Company's
then outstanding voting securities; or (ii) the date of the consummation of a
merger or consolidation of the Company with any other corporation that has been
approved by the stockholders or the Board of the Company; or (iii) the date on
which the stockholders or the Board of the Company approve a plan of complete
liquidation of the Company; or (iv) the date of the consummation of the sale or
disposition by the Company of all or substantially all the Company's assets.
(c) GOOD REASON. For purposes of this Agreement, "Good Reason"
shall mean the Executive voluntarily resigns within ninety (90) days after the
occurrence of any of the following (i) without the Executive's express written
consent, a material reduction of the duties, title, authority
-3-
or responsibilities, relative to the Executive's duties, title, authority or
responsibilities as in effect immediately prior to such reduction, or the
assignment to Executive of such reduced duties, title, authority or
responsibilities; (ii) without the Executive's express written consent, a
material reduction, without good business reasons, of the facilities and
perquisites (including office space and location) available to the Executive
immediately prior to such reduction; (iii) a reduction by the Company in the
Base Salary of the Executive as in effect immediately prior to such
reduction; (iv) a material reduction by the Company in the kind or level of
employee benefits, including bonuses, to which the Executive was entitled
immediately prior to such reduction with the result that the Executive's
overall benefits package is materially reduced; (iv) the relocation of the
Executive to a facility or a location more than sixty (60) miles from his
residence at the time of the relocation, without the Executive's express
written consent, (vi) or, the failure of the Company to obtain the assumption
of this agreement by any successors contemplated in Section 10.
(d) DISABILITY. For purposes of this Agreement, "disabled" shall
mean if Executive is considered totally disabled under any group disability plan
maintained by the Company and in effect at that time, or in the absence of any
such plan, under applicable Social Security regulations. In the event of any
dispute with regard to whether Executive is disabled, Executive shall submit to
a physical examination by a licensed physician mutually satisfactory to the
Company and Executive, the cost of such examination to be paid by the Company,
and the determination of such physician shall be determinative.
(e) ANNUAL BONUS. For the purposes of Section 6(d)(ii), "annual
bonus" means the greater of either (i) the annual bonus due and payable the year
of termination; or (ii) the annual bonus paid the year prior to termination.
8. COMPANY PROPERTY AND CONFIDENTIAL INFORMATION. All correspondence,
records, documents, software, promotional materials, and other Company property,
including all copies, which come into the Executive's possession by, through or
in the course of his employment, regardless of the source and whether created by
the Executive, are the sole and exclusive property of the Company, and
immediately upon the termination of the Executive's employment, the Executive
shall return to the Company all such property of the Company. Executive further
agrees that as a condition of entering into this Agreement, Executive agrees to
enter into the Company's standard Confidential Information and Invention
Assignment Agreement (the "Confidential Information Agreement"), the terms of
which are incorporated herein.
9. ASSIGNMENT. This Agreement will be binding upon and inure to the
benefit of (a) the heirs, executors and legal representatives of Executive upon
Executive'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 Executive 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 Executive's right to compensation or other benefits will be null
and void.
-4-
10. NOTICES. All notices, requests, demands and other communications
called for hereunder shall be in writing and shall 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:
ZapMe! Corporation
0000 Xxxxxxxxx Xxxxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
ATTN: Legal Department
IF TO EXECUTIVE:
at the last residential address known by the Company.
11. 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.
12. INDEMNIFICATION. The Company shall indemnify and hold harmless
the Executive for any liability incurred by reason of any act or omission
performed by the Executive while acting in good faith on behalf of the Company
and within the scope of the authority of the Executive pursuant to this
Agreement and under the rules and policies of the Company, except that the
Executive must have in good faith believed that such action was in the best
interest of the Company and such course of action or inaction must not have
constituted gross negligence, fraud, willful misconduct, or breach of a
fiduciary duty.
13. ARBITRATION. The Parties agree that any dispute or controversy
arising out of, relating to, or in connection with this Agreement, or the
interpretation, validity, construction, performance, breach, or termination
thereof, or arising out of or relating to the employment of the Executive, or
the termination thereof, including any statutory or common law claims under
federal, state or local law, including all laws prohibiting discrimination in
the workplace, shall be settled by binding arbitration to be held in Contra
Costa County, California in accordance with the National Rules for the
Resolution of Employment Disputes then in effect of the American Arbitration
Association (the "Rules"). The arbitrator may grant injunctions or other relief
in such dispute or controversy. The decision of the arbitrator will 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 arbitrator(s) will apply California law to the merits of any dispute
or claim, without reference to rules of conflicts of law. The arbitration
proceedings will be governed by federal arbitration law and by the Rules,
without reference to state arbitration law. Executive hereby consents to the
personal jurisdiction of the state and federal courts located in California for
any
-5-
action or proceeding arising from or relating to this Agreement or relating to
any arbitration in which the parties are participants.
EXECUTIVE HAS READ AND UNDERSTANDS THIS SECTION, WHICH DISCUSSES
ARBITRATION. EXECUTIVE UNDERSTANDS THAT BY SIGNING THIS AGREEMENT, EXECUTIVE AND
THE COMPANY AGREE TO SUBMIT ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN
CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION,
PERFORMANCE, BREACH OR TERMINATION THEREOF AND ANY OTHER DISPUTES REGARDING
EXEUCTIVE'S EMPLOYMENT TO BINDING ARBITRATION, AND THAT THIS ARBITRATION CLAUSE
CONSTITUTES A WAIVER OF THE PARTIES' RIGHT TO A JURY TRIAL AND RELATES TO THE
RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE EMPLOYMENT
RELATIONSHIP, INCLUDING BUT NOT LIMITED TO, DISCRIMINATION CLAIMS.
14. INTEGRATION. This Agreement, the Restricted Stock Agreement,
any Stock Option Agreement(s), and the Confidential Information Agreement
represent 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.
15. TAX WITHHOLDING. All payments made pursuant to this Agreement
will be subject to withholding of applicable taxes.
16. GOVERNING LAW. This Agreement will be governed by the laws of
the State of California (with the exception of its conflict of law provisions).
17. ACKNOWLEDGMENT. Executive 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.
18. MISCELLANEOUS.
(a) No delay or omission by the Company in exercising any
right under this Agreement shall operate as a waiver of that or any other right.
A waiver or consent given by the Company on any one occasion shall be effective
only in that instance and shall not be construed as a bar or waiver of any right
on any other occasion.
(b) The captions of the sections of this Agreement are for
convenience of reference only and in no way define, limit or affect the scope or
substance of any section of this Agreement.
-6-
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:
By: /s/ Xxxxxx Xxxxxxx
------------------------------------------------------
Name: Xxxxxx Xxxxxxx
Title: SVP, Administration and Chief Financial Officer
EXECUTIVE:
/s/ Xxxxx Xxxxxxxxx
------------------------------------------------------
Xxxxx Xxxxxxxxx
-7-
