STEPHEN PEARY EMPLOYMENT AGREEMENT
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THIS
EMPLOYMENT AGREEMENT (the “Employment Agreement”), dated as of March 8, 2006, is
entered into by and between FP Technology Holdings, Inc., a Delaware corporation
(the “Company”), and ▇▇▇▇▇▇▇ ▇▇▇▇▇ (“Executive” or “Employee”), an individual
residing in the State of Arizona. In consideration of the mutual covenants
and
agreements hereinafter set forth, the parties agree as follows:
| 1. |
EMPLOYMENT.
|
1.1 Position
and Duties.
During
the Employment Term (as hereinafter defined) and subject to the terms and
conditions set forth herein, the Company agrees to employ Executive as its
Chief
Financial Officer, reporting directly to the Company’s Board of Directors.
Executive shall diligently, and to the best of his ability, perform all such
duties incident to his position and use his best efforts to promote the best
interests of the Company.
1.2 Time
to be Devoted to Employment; Location of Service.
During
the Employment Term, Executive shall devote his full time and energy to the
business of the Company and shall not be engaged in any other business activity
without the advance express written consent of the Company’s Board of Directors;
provided however, Executive may participate in those activities listed in
Section 5.3 hereof. Executive hereby represents that he is not a party to any
agreement which would be an impediment to his entering into this Employment
Agreement and that he is permitted to enter into this Employment Agreement
and
perform the obligations hereunder. The Company and Executive agree that the
Executive may reside in a location proximate to San Francisco, California.
The
Company acknowledges the limited supply of skilled professionals in the area
proximate to the Company’s current offices in Mankato, Minnesota. The Company
will reimburse the Executive for the reasonable costs associated with travel
to
and accommodations at the Company’s Mankato, Minnesota offices, in accordance
with Company travel policies. At the second anniversary of the Employment Term,
the Executive and the Company shall discuss the Executive’s choice of residence
in good faith to determine whether or not the Company and the Executive agree
that the Executive’s choice of residence is or is not interfering with the
performance of his duties.
| 2. |
COMPENSATION
AND BENEFITS.
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2.1 Annual
Salary.
In
consideration of and as compensation for the services agreed to be performed
by
Executive hereunder, the Company agrees, beginning April 1, 2006, to pay
Executive an annual base salary of $250,000 payable in accordance with the
Company’s regular payroll schedule (“Base Salary”), less applicable withholdings
and deductions.
2.2 Discretionary
Bonus.
Following the end of each fiscal year, the Board of Directors will cause the
Company to award to Executive a bonus (each a “Discretionary Bonus”) for such
year in an amount to be determined by the Board in its sole judgment based
upon
the Executive’s and the Company’s performance and the achievement of the other
goals and objectives approved by the Board of Directors in advance for such
year. The Board of Directors will undertake to outline the factors upon which
such bonus will be measured. However, it is understood that Company performance
will be the most heavily weighted factor.
2.3 Special
Bonus.
The
Company will pay to the Executive, promptly after the consummation of the
Qualified Equity Financing (as defined herein), a special cash bonus of $25,000
(the “Special Bonus”). For purposes of this Employment Agreement, the term
“Qualified Equity Financing” shall mean an equity financing(s) consummated by
the Company that occurs following the date of this Employment Agreement and
prior to this Employment Agreement’s termination, which financing results in the
receipt of gross proceeds by the Company of at least $6,000,000.
2.4 Vacation.
The
Executive will be entitled to up to fifteen (15) days paid vacation each year
with salary, provided that no more than five (5) days unused vacation time
shall
be carried over to subsequent years of service.
2.5 Participation
in Benefit Plans.
During
the Employment Term, Executive shall be entitled to participate in any medical,
dental, vision, disability, life insurance or other similar benefit plans,
to
the extent permitted by law, that may from time to time be adopted by Company
in
its sole discretion, and that are generally available to the other executive
officers of the Company. The Company reserves the right to amend, modify or
terminate any employee benefits at any time for any reason in its sole
discretion.
2.6 Reimbursement
of Expenses.
The
Company shall reimburse Executive for all reasonable business expenses incurred
by Executive on behalf of the Company during the Employment Term, provided
that:
(i) such reasonable expenses are ordinary and necessary business expenses
incurred on behalf of the Company, (ii) such reasonable expenses are submitted
to the Company in a timely manner (and no more than forty five (45) days after
incurrence by the Executive) and (iii) Executive provides the Company with
itemized accounts, receipts and other documentation for such reasonable expenses
as are reasonably required by the Company.
2.7 Annual
Review.
Executive will have his performance reviewed annually by the Company’s Board of
Directors. If merited under the circumstances, in the Company’s sole discretion,
the Executive’s Base Salary may thereafter be increased.
| 3. |
EMPLOYMENT
TERM.
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3.1 Employment
Term.
The
“Employment Term” means the period commencing on the date of execution of this
agreement and terminating three years thereafter. (subject to the notice
provisions in Section 3.2) or as set forth in Section 4.1.
3.2 Notice
of Termination Upon Expiration of Agreement.
At
least 30 days but not more than 120 days prior to the natural expiration of
the
initial Employment Term of this Employment Agreement, the Company may give
Executive written notice that the Company is terminating this Employment
Agreement upon such natural expiration date. If no such notice is provided,
the
terms of this Employment Agreement shall be automatically renewed for successive
one-year periods. Notwithstanding the foregoing, Executive’s employment with the
Company may be terminated by Executive or the Company as set forth in Section
4.1.
| 4. |
TERMINATION
OF EMPLOYMENT.
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4.1 Method
of Termination.
Executive’s employment pursuant to this Employment Agreement and the Employment
Term provided for herein shall terminate upon the first of the following to
occur:
A. On
the
date of the Executive’s death; or
B. On
the
date that written notice is given or made by the Company to Executive that
as a
result of any physical or mental injury or disability, he is unable to perform
the essential functions of his job. Such notice may be issued when the Company
has reasonably determined that Executive has become unable to perform
substantially his services and duties hereunder because of any physical or
mental injury, impairment, condition or disability that it is reasonably likely
that he will not be able to resume substantially performing his services and
duties on substantially the terms and conditions as set forth in this Employment
Agreement within a 90-day period (a “Disability”); or
C. On
the
date that written notice is given or made by the Company to Executive of
termination for Cause (as defined below). For purposes of this Employment
Agreement, “Cause” shall mean any one of the following:
1. Gross
negligence, gross misconduct or any material breach by Executive of his
fiduciary duties to the Company. For purposes of this Employment Agreement,
any
act or acts or omission or omissions by Executive performed without the
knowledge of the Board of Directors that have a material adverse effect on
the
Company, the Company’s operations, prospects, reputation or business shall be
deemed to be such a breach of his duties and responsibilities to the Company;
or
2. The
conviction or indictment of Executive for a felony, in which case,
notwithstanding anything set forth in the above paragraphs, the Company may
immediately terminate Executive for Cause; or
3. Executive’s
engagement in acts of embezzlement, fraud or dishonesty or other acts that
are
injurious to the Company, in which case, notwithstanding anything set forth
in
the above paragraphs, the Company may immediately terminate Executive for
Cause.
D. Subject
to the terms hereof, the date of Executive’s written notice to the Company’s of
Executive’s resignation or departure from the Company for “Good Reason”. As used
in this Employment Agreement, “Good Reason” shall mean Executive’s resignation
or departure by reason of the occurrence of any of the following events by
the
Company without Executive’s express written consent, unless corrected within
thirty-five (35) calendar days following Executive’s written notice to the
Company of such event: (a) an unreasonable change in Executive’s position with
the Company with regard to Executive’s responsibilities, duties or title; (b) an
involuntary termination of Executive’s employment with the Company or its
successor following a change in control of the Company;
E. On
the
date that written notice is given or made by the Company to Executive of
Executive’s termination without Cause.
4.2 Notice
of Termination.
Any
termination of Executive’s employment either by the Company or by Executive
shall be communicated by written Notice of Termination to the other party hereto
in accordance with Section 7.1 hereof. In the case of resignation for Good
Reason, the Notice of Termination must specify in reasonable detail the basis
for such resignation.
4.3 Date
of Termination.
“Date
of Termination” shall mean the date specified in any Notice of
Termination.
4.4 Effect
of Termination for Cause, Executive’s Resignation Without Good Reason, or
Voluntary Departure or Death or Disability.
Upon
(i) the termination of Executive for Cause; (ii) Executive’s
resignation without Good Reason; or (iii) Executive’s death or disability,
Executive will not be entitled to any additional compensation or other rights
or
benefits from the Company under this Agreement, and, as a result, the Company
shall be obligated to pay Executive only that portion of his Base Salary, Bonus
(if and only if the performance goals have been fully achieved and such
obligation is then due and owing) and benefits that Executive has earned prior
to the effective date of the termination of Executive’s employment with the
Company.
4.5 Effect
of Termination without Cause or Executive’s Resignation for Good
Reason.
In the
event the Company terminates Executive’s employment without Cause, or Executive
departs or resigns for Good Reason, Executive shall be entitled to the balance
of his then existing Base Salary for the remaining Employment Term, plus any
earned Bonus (if and only if the performance goals have been fully achieved
and
such obligation is then due and owing) and the other earned benefits under
this
Agreement for a period of twelve (12) months paid in equal monthly installments
over a twelve (12) month period beginning on the date of termination.
PROPRIETARY
INFORMATION AND COVENANT NOT TO COMPETE
4.6 Proprietary
Information.
Executive shall abide the Proprietary Information and Inventions Agreement
in
the form of Exhibit B hereto executed by the Company and Executive dated on
or
about Executive’s start date, and Executive further agrees that the provisions
of the Proprietary Information and Inventions Agreement shall survive any
termination of his employment with the Company, regardless of whether such
termination is with or without Cause or Good Reason.
4.7 Non-Solicitation.
During
the term of this Employment Agreement and for two (2) years thereafter,
Executive will not solicit any employee of the Company or any affiliate to
leave
the Company or any affiliate for any reason.
4.8 Non-Competition
During Employment Term.
During
the Employment Term, Executive shall not directly or indirectly:
A. own,
manage, operate, join, control or participate in the ownership, management,
operation or control of, or be employed by or connected in any manner with,
any
enterprise which is engaged in any business competitive with that which the
Company is at the time conducting or proposing to conduct and in those
geographical locations where such business activities are being or will be
conducted; provided,
however,
that
such restriction shall not apply to any passive investment representing an
interest of less than five percent (5%) of an outstanding class of publicly
traded securities of any corporation or other enterprise which is not, at the
time of such investment, engaged in a business competitive with the Company’s
business; or
B. encourage
or solicit any Company employee to leave the Company’s employ for any reason or
interfere in any material manner with employment relationships at the time
existing between the Company and its current employees.
| 5. |
RESTRICTIVE
COVENANT.
|
During
the Employment Term:
5.1 Executive
shall not directly or indirectly provide services to or through any person,
firm
or other entity except the Company, unless otherwise authorized by the Company
in writing.
5.2 Executive
shall not render any substantial services of any kind or character for
Executive’s own account or for any other person, firm or entity without first
obtaining the Company’s written consent.
5.3 Notwithstanding
the foregoing, Executive shall have the right to perform such incidental
services as are necessary in connection with (i) his private passive
investments, but only if Executive is not obligated or required to (and shall
not in fact) devote any managerial efforts which interfere with the services
required to be performed by him hereunder, (ii) his normal and customary
charitable or community activities, (iii) participation in trade or professional
organizations, (iv) his existing Board membership on and activities associated
with Down, Etc.; QuarryHouse, Inc.; Lumetique, Inc,; and ▇▇▇▇▇▇▇ Capital
Management, Ltd. but only if such incidental services do not materially
interfere with the performance of Executive’s services hereunder.
| 6. |
MISCELLANEOUS.
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6.1 Notices.
All
notices, demands and requests required by this Employment Agreement shall be
in
writing and shall be deemed to have been given or made for all purposes (i)
upon
personal delivery, (ii) one day after being sent, when sent by professional
overnight courier service, (iii) five days after posting when sent by registered
or certified mail, or (iv) on the date of transmission when sent by telegraph,
telegram, telex, or other form of “hard copy” transmission (so long as written
proof of transmission is received), to either party hereto at the address set
forth below or at such other address as either party may designate by notice
pursuant to this Section 7.
If
to the
Company, to:
FirePond,
Inc.
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ATTN:
Human Resources
Facsimile:
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and
a
copy to:
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Facsimile:
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If
to
Executive, to:
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6.2 Assignment.
This
Employment Agreement shall be binding on, and shall inure to the benefit of,
the
parties hereto and their respective heirs, legal representatives, successors
and
assigns; provided, however, that Executive may not assign, transfer or delegate
his rights or obligations hereunder and any attempt to do so shall be
void.
6.3 Deductions.
All
amounts paid to Executive hereunder are subject to all withholdings and
deductions required by law or as authorized by Executive from time to
time.
6.4 Entire
Agreement.
Except
for the Proprietary Information and Inventions Agreement, this Employment
Agreement contains the entire agreement of the parties with respect to the
subject matter hereof, and all prior agreements, both written or oral, and
any
prior written employment agreements, are merged herein and are of no further
force or effect.
6.5 Amendment.
This
Employment Agreement may be modified or amended only by a written agreement
authorized by the Company in writing (other than Executive) and signed by
Executive.
6.6 Waivers.
No
waiver of any term or provision of this Employment Agreement will be valid
unless such waiver is in writing signed by the party against whom enforcement
of
the waiver is sought. The waiver of any term or provision of this Employment
Agreement shall not apply to any subsequent breach of this Employment
Agreement.
6.7 Counterparts.
This
Employment Agreement may be executed in several counterparts, each of which
shall be deemed an original, but together they shall constitute one and the
same
instrument.
6.8 Severability.
The
provisions of this Employment Agreement shall be deemed severable, and if any
part of any provision is held illegal, void or invalid under applicable law,
such provision may be changed to the extent reasonably necessary to make the
provision, as so changed, legal, valid and binding. If any provision of this
Employment Agreement is held illegal, void or invalid in its entirety, the
remaining provisions of this Employment Agreement shall not in any way be
affected or impaired but shall remain binding in accordance with their
terms.
6.9 Governing
Law.
THIS
EMPLOYMENT AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE COMPANY AND EXECUTIVE
HEREUNDER SHALL BE DETERMINED UNDER, GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF CALIFORNIA AS APPLIED TO AGREEMENTS AMONG
CALIFORNIA RESIDENTS ENTERED INTO AND TO BE PERFORMED ENTIRELY WITHIN
CALIFORNIA.
6.10 Arbitration.
Company
and Executive mutually agree that any and all disputes between Executive and
Company, including any of its employees, officers, directors, agents or assigns,
that arise out of or relate to the Executive’s employment or investment in the
Company, shall be resolved through binding arbitration pursuant to the Federal
Arbitration Act and applicable California law. This shall include, without
limitation, any controversy, claim or dispute of any kind, including disputes
relating to Executive’s recruitment and employment by the Company or the
termination thereof, claims for breach of contract, claims for wages, benefits
or compensation, claims based on tort, public policy, emotional distress,
defamation, fraud, discrimination or harassment, and claims under Title VII
of
the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the
Americans with Disabilities Act, the Family and Medical Leave Act, the Employee
Retirement Income Securities Act, the California Fair Employment and Housing
Act, or any other federal, state or local law or regulation now in existence
or
hereinafter enacted and as amended from time to time concerning in any way the
subject of the Executive’s employment with the Company or its termination. The
only claims not
covered
by this Section are (a) claims for benefits under the unemployment insurance
or
workers’ compensation laws, which shall be brought according to their applicable
laws, and (b) claims concerning Section 5.2 hereof or the validity,
infringement, enforceability, or misappropriation of any trade secret, patent
rights, copyright, trademark, or any other intellectual or confidential property
held or sought by Executive or Company. Any disputes and/or claims required
to
be submitted to arbitration under this Section shall be conducted pursuant
to
the applicable rules of the American Arbitration Association (“AAA”), subject to
any applicable discovery or other rules required by California law. The
arbitration shall be held in Los Angeles, California. The Company shall pay
the
costs directly related to arbitration, including arbitrator and administrative
fees. However, each party shall bear its own attorneys fees’ and any costs of
expert witnesses, consultants and similar costs, unless an applicable contract
or statute provides otherwise to the prevailing party, in which case the
arbitrator shall make such determinations as required or permitted by law.
The
arbitration shall be instead of any civil litigation, meaning that the Executive
and Company are waiving
any right to a jury trial,
and the
arbitrator’s decision shall be binding to the fullest extent permitted by law
and enforceable by any court having jurisdiction thereof.
6.11 Deadline
to accept offer:
Unless
withdrawn earlier by Company, this offer shall automatically expire thirty
(30)
days after the date issued to Executive.
[Signature
page to follow.]
IN
WITNESS WHEREOF, the parties hereto have executed this Employment Agreement
as
of the date first above written.
FIREPOND,
INC.
By:
_____________________________________
Name:
___________________________________
Title:
____________________________________
Date:
____________________________________
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Sign:
_____________________________________
Date:
_____________________________________
Date
issued to Executive: ___________________________
This
offer shall expire 30 calendar days after the date of issuance or as otherwise
provided in this Agreement.
Date
returned to Company: _________________________