EXHIBIT 10.39
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and entered into as
of June 5, 1998 (the "Effective Date"), by and between CIDCO Incorporated, a
Delaware corporation (the "Company"), and Xxxxxxx X. Sole ("Executive").
Recitals
The Company and Executive desire to enter into this Agreement in order
to provide compensation and benefits to Executive and to encourage Executive to
devote his full attention and dedication to the Company and to continue his
employment with the Company. The Company believes that the existence of this
Agreement will serve as an incentive to Executive to remain in the employ of the
Company and will enhance its ability to call on and rely upon Executive to
continue to provide services to the Company.
Definitions: As used in this Agreement, unless the context requires a different
meaning, the following terms shall have the meanings set forth herein:
Cause" means:
Executive's theft, material act of dishonesty, fraud, or intentional
falsification of any employment or Company records, or Executive's commission of
any criminal act which impairs Executive's ability to perform his duties under
this Agreement;
the neglect or refusal of Executive to substantially fulfill his
material duties as an employee; improper disclosure of the Company's
confidential, business or proprietary information by Executive; a material
breach of any fiduciary duty by Executive with respect to the Company resulting
in material harm to the Company; or
Executive's conviction (including any plea of guilty or nolo
contendere) for a crime involving moral turpitude or which causes material harm
to the reputation and standing of the Company, as determined by the Company in
good faith.
"Change in Control" means the occurrence of either:
the sale, exchange or transfer of all or substantially all of the
property and assets of the Company; or
a merger or consolidation in which the Company is a party or the direct
or indirect sale or exchange by the stockholders of the Company of a majority of
the voting stock of the Company which, in any such event, constitutes a "Change
in Control," as defined in subsection 12(b) of the CIDCO Incorporated Amended
and Restated 1993 Stock Option Plan as in effect on the Effective Date.
"Constructive Termination" means the occurrence of any of the following
conditions, which condition(s) remain(s) in effect thirty (30) days after
written notice to the Company's Chief Executive Officer from Executive of such
conditions(s), which written notice of condition(s) shall be delivered by
Executive to the Chief Executive Officer within ten (10) days following the
occurrence of the alleged condition(s):
a material decrease in Executive's annual base salary which is made
without Executive's written consent, except that, in the event of a reduction in
base salary that is initiated for all executives, such action can be taken and
will not constitute Constructive Termination for purposes of this Agreement nor
will it require Executive's written consent;
a demotion, a material reduction in Executive's position,
responsibilities or duties or a material, adverse change in Executive's
substantive functional responsibilities or duties, as measured against
Executive's position, responsibilities or duties immediately prior to such
change causing it to be of materially less stature or responsibility;
the relocation of Executive's work place for the Company to a location
more than twenty-five (25) miles from Executive's principal place of employment
prior to such relocation;
any material breach of this Agreement by the Company; or
any failure or refusal of a successor company to assume the Company's
obligations under this Agreement as required by Section 16.
"Permanent Disability" means that:
Executive has been incapacitated by bodily injury or disease so as to
be prevented thereby from engaging in the performance of Executive's duties;
such incapacity shall have continued for a period of four(4)consecutive
months or six (6) months in any twelve (12) month period; and
such incapacity will, in the opinion of a qualified physician, be
permanent and continuous during the remainder of Executive's life.
Position and Duties. Executive shall continue to be an at-will employee of the
Company. Executive shall also be entitled to continue to participate in and to
receive benefits on the same basis as other executive or senior staff members
under any of the Company's employee benefit plans as in effect from time to
time. In addition, Executive shall be entitled to the benefits afforded to other
employees similarly situated under the Company's vacation, holiday and business
expense reimbursement policies. Executive 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 Executive from time to time.
Benefits Upon Executive's Termination for Cause, Voluntary Termination,
Permanent Disability or Death. In the event that Executive voluntarily
terminates his employment relationship with the Company at any time and his
termination is not for nor deemed for Constructive Termination, or in the event
that Executive's employment terminates as a result of his death or Permanent
Disability or for Cause, Executive shall be entitled to no compensation or
benefits from the Company other than those earned under Section 2 above through
the date of his termination of employment.
Termination for Other Than Cause and/or for Constructive Termination. If
Executive's employment is terminated by the Company for any reason other than
Cause or if Executive terminates his employment with the Company for
Constructive Termination, Executive shall be entitled to the following
separation benefits: twelve (12) months of Executive's annual base salary as in
effect as of the date of such termination, less applicable withholding, paid in
a lump sum payment; and Executive shall be entitled to elect continued medical
insurance coverage in accordance with the applicable provisions of federal law
(COBRA) and the Company shall pay for the cost of such COBRA coverage for twelve
(12) months. This payment shall be made in a lump sum together with the payment
described in subsection 4(a). If such coverage included Executive's dependents
immediately prior to the date of termination, such dependents shall also be
covered at the Company's expense for the same time period as Executive's COBRA
coverage described above.
Additional Benefit Upon Certain Termination After Change in Control. If, within
six (6) months following the date of consummation (i.e., the closing) of a
Change in Control, Executive either (i) is given notice of termination of his
employment by the Company for any reason other than Cause or (ii) gives notice
to the Company of the occurrence of one or more conditions constituting
Constructive Termination and subsequently terminates his employment with the
Company on the basis of such Constructive Termination, then in either such event
Executive shall be entitled to the Stock Option Acceleration Benefit described
below in addition to the payments and benefits provided by Section 4. Except as
otherwise provided below, the Stock Option Acceleration Benefit shall apply to
each option (an "Option") to purchase shares of stock of the Company or its
successor granted to Executive by the Company or its successor and outstanding
as of the date ten (10) business days prior to the effective date of the
termination of Executive's employment (the "Effective Termination Date") for a
reason described in this Section 5, regardless of whether such Option was
granted before, on or after the Effective Date of this Agreement. Pursuant to
the Stock Option Acceleration Benefit:
the vesting and exercisability of each Option shall be computed on the
basis of monthly vesting periods commencing on the date contemplated by the
stock option agreement evidencing such Option (the "Vesting Commencement Date")
notwithstanding that such agreement provides for vesting on the basis of one or
more periods of different length, such as a year;
and in addition to the number of actual full months of Executive's
employment with the Company from the Vesting Commencement Date through the
Effective Termination Date, Executive shall be credited, effective as of the
date ten (10) business days prior to the Effective Termination Date, with an
additional number of full months of employment for Option vesting purposes equal
to the lesser of (i) twelve (12) months or (ii) the number of actual full months
of Executive's employment with the Company beginning on the Vesting Commencement
Date and ending on the Effective Termination Date.
This Section 5 shall not be applied or construed in any manner that would reduce
the degree of vesting or exercisability of any Option determined in the absence
of this Section. Notwithstanding any provision of this Section 5 to the
contrary, if it is determined that the provisions or operation of this Section 5
would preclude treatment of a Change in Control as a "pooling-of-interests" for
accounting purposes and provided further that in the absence of this Section 5
such Change in Control would be treated as a "pooling-of-interests" for
accounting purposes, then this Section 5 shall be void ab initio, and the
vesting and exercisability of each Option shall be determined under any other
applicable provision of the stock option agreement evidencing such Option.
Required Advance Notice of Termination for Other Than Cause. No termination of
Executive's employment by the Company for any reason other than Cause shall be
effective prior to the tenth (10th) business day following the date on which
Executive is given written notice of such termination.
Excess Parachute Payment. In the event that any payment or benefit received or
to be received by Executive pursuant to this Agreement or otherwise would
subject Executive to any excise tax pursuant to Section 4999 of the Internal
Revenue Code of 1986, as amended (the "Code"), due to the characterization of
such payment or benefit as an excess parachute payment under Section 280G of the
Code, Executive may elect in his sole discretion to reduce the amounts of any
payments or benefits otherwise called for under this Agreement in order to avoid
such characterization.
Conflict of Interest/Non-Solicitation. Executive agrees that for a period of one
(1) year following termination of his employment with the Company, he will not,
directly or indirectly, solicit the services of or in any manner persuade
employees, customers or vendors of the Company to discontinue that person's or
entity's relationship with or to the Company as an employee, customer or vendor,
as the case may be. Payment of Taxes. All payments made to Executive under this
Agreement shall be subject to all applicable federal and state income,
employment and payroll taxes.
Exclusive Remedy. Under any claim for breach of this Agreement or wrongful
termination, the payments and benefits provided for in Section 4 and Section 5
as applicable shall constitute Executive's sole and exclusive remedy for any
alleged injury or other damages arising out of the cessation of the employment
relationship between Executive and the Company in the event of Executive's
termination. Except as expressly set forth herein, Executive shall be entitled
to no other compensation, benefits, or other payments from the Company as a
result of any termination of employment with respect to which the payments
and/or benefits described in Section 4 and Section 5 as applicable have been
provided to Executive.
Proprietary and Confidential Information. Executive agrees to continue to abide
by the terms and conditions of the Company's confidentiality and/or proprietary
rights agreement between Executive and the Company.
Arbitration. Pursuant to the Federal Arbitration Act, any claim,
dispute or controversy arising out of this Agreement, the interpretation,
validity or enforceability of this Agreement or the alleged breach thereof shall
be submitted by the parties to binding arbitration in Santa Xxxxx County,
California or elsewhere by mutual agreement. The selection of the arbitrator and
procedure shall be governed by the Employment Arbitration Rules of the American
Arbitration Association. The arbitrator shall be someone with an employment law
background and from the AAA Commercial Arbitration Panel, or if both parties
agree, the Judicial Arbiters Group. Notwithstanding the above, this arbitration
provision shall not preclude the Company from seeking injunctive relief from any
court having jurisdiction with respect to any disputes or claims relating to or
arising out of the misuse or misappropriation of the Company's trade secrets or
confidential and proprietary information or the breach of any provisions by
Executive of the Company's confidentiality and/or proprietary rights agreement
between Executive and Company. Each party shall bear its own costs and expenses
of arbitration or litigation, including but not limited to attorneys fees and
other costs. Judgment may be entered on the award of the arbitration in any
court having jurisdiction. Interpretation. Executive and the Company agree that
this Agreement shall be interpreted in accordance with and governed by the laws
of the State of California.
Conflict in Benefits. This Agreement shall supersede all prior arrangements,
whether written or oral, and understandings regarding the subject matter of this
Agreement including but not limited to any severance plans or arrangements or
prior employment agreements, and shall be the exclusive agreement for the
determination of any payments due upon Executive's termination of employment;
provided, however, that this Agreement is not intended to and shall not affect,
limit or terminate (i) any plans, programs, or arrangements of the Company that
are regularly made available to a significant number of employees of the
Company, (ii) any agreement or arrangement with Executive that has been reduced
to writing and which does not relate to the subject matter hereof, (iii) any
indemnification rights described below, or (iv) any agreements or arrangements
hereafter entered into by the parties in writing, except as otherwise expressly
provided herein.
Release of Claims. Except for the Stock Option Acceleration Benefit described in
Section 5, no severance benefits shall be paid to Executive under this Agreement
unless and until Executive shall, in consideration of the payment of such
severance benefit, execute a release of claims in the form attached hereto as
Exhibit A and all applicable waiting periods thereunder shall have expired;
provided, however, that such release shall not apply to any right of Executive
to be indemnified by the Company for the period during which Executive was
employed by the Company.
Successors and Assigns. This Agreement shall inure to the 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 Agreement by Executive, he
shall not have the right to assign or transfer any of his rights, obligations or
benefits under this Agreement, except as otherwise noted herein.
Notices. All notices and other communications required or permitted to be given
under this Agreement shall be in writing and shall be deemed to have been duly
given when delivered in person or sent by confirmed facsimile transmission, when
received if given by Federal Express or other internationally recognized
overnight courier service, or five (5) business days after deposit in the United
States Post Office, postage prepaid, by first-class registered or certified
mail, return receipt requested, addressed as follows:
if to the Company: CIDCO Incorporated, 000 Xxxxxxxx Xxxxxx,
Xxxxxx Xxxx, XX 00000,
Attn: Corporate Secretary,
cc: Corporate Counsel,
and if to Executive at the address specified at the end of this
Agreement. Notice may also be given at such other address as either party may
have furnished to the other in writing in accordance herewith, except that
notices of change of address shall be effective only upon receipt.
No Representations. Executive acknowledges that he is not relying and has not
relied on any promise, representation or statement made by or on behalf of the
Company which is not set forth in this Agreement.
Validity. If any one or more of the provisions (or any part thereof) of this
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.
Modification. This Agreement may only be modified or amended by a supplemental
written agreement signed by Executive and the Company.
Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original, but all of which together will constitute one and
the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and
year written below.
CIDCO Incorporated
Date: June 6, 1998
By: /s/Xxxxxx Xxxxxx
Title: Chief Executive Officer
EXECUTIVE: /s/Xxxxxxx X. Sole
Date: June 6, 1998
