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Exhibit 10.01
AMENDED AND RESTATED EMPLOYMENT AGREEMENT BETWEEN
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ AND VIEWSTAR CORPORATION
This Agreement is entered into between ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
("Executive") and ViewStar Corporation ("Company") this 9th day of October,
1995 ("Execution Date") and is effective upon the effective date of the merger
between the Company and Caere Corporation ("Caere") ("Effective Date"). This
Agreement, when effective, shall supersede any and all prior agreements
relating to Executive's employment with the Company.
RECITALS
WHEREAS Executive has been continuously employed by Company since its
founding in 1986, serving previously as President and since May 1994 as
Chairman of the Board of Directors; and
WHEREAS Company's Board of Directors ("Board") has now requested
Executive to defer his planned departure from the Company and remain actively
employed by the Company with the specific objective of repositioning it going
forward; and
WHEREAS Executive has agreed to accept such assignment under the terms
and conditions set forth below.
NOW, THEREFORE, the parties mutually agree as follows:
1. Employment. Executive is employed by the Company on a full-time basis and
shall serve as its President and Chief Executive Officer reporting to the Board
of Directors, effective July 26, 1995 through the period ending July 31, 1996
("Employment Term").
2. Salary and Operating Bonus. (a) During the Employment Term, Executive shall
continue to receive not less than his current salary and eligibility for an
operating incentive bonus of 40% of his then current base salary based on
achievement of Company performance goals at Plan.
(b) His base salary will be reviewed not later than January, 1996 by
the Board on the same basis as the Board shall review compensation of other
executive officers, and shall consider changes in relevant cost of living
indices and the Company's performance, including growth in revenue, operating
income and overall performance according to the Company's Plan.
(c) His operating bonus eligibility will be based on satisfaction of
certain operating performance goals mutually determined and reviewed annually
or more frequently as appropriate by the Board in consultation with Executive,
and will concern such matters as revenue, pre-tax profitability and return on
shareholders' equity. The above notwithstanding, half of Executive's annual
bonus (20% of base salary) will be paid twice-monthly pursuant to the Company's
regular payroll practices, regardless of actual Company performance. So long
as he remains employed, the remaining annual bonus will be paid based on actual
Company performance compared to Plan consistent with Company practice at the
time regarding payment of executive bonuses.
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3. Benefits; Expenses during Employment. During his employment hereunder,
Executive will continue to participate in any group medical, dental, life
insurance and disability insurance plans, or similar benefit plans of the
Company to the extent eligible and that are available to comparable employees.
The Company will reimburse Executive for all reasonable business and travel
expenses actually incurred and paid by Executive in the performance of his
services in accordance with the Company's expense reimbursement policies in
effect at the time.
4. Severance Payment. Upon termination of his employment pursuant to the
provisions of Section 10 below, Company shall pay to Executive the sum of
$258,000 ("Severance Payment"), payable in a lump sum at the time of
termination or on January 15, 1996, whichever is later.
5. Consultant. At the end of the Employment Term, unless mutually extended,
or at the termination of his employment in the event such termination should
occur prior to July 31, 1996, Executive's status as an employee shall terminate
and convert automatically to consultant status for a 12 month period
("Consulting Term.") During the Consulting Term, Executive will be available
to provide consulting services to the Company up to two days per month and as
mutually agreed.
6. Payments and Benefits after Employment. For the duration of the Consulting
Term or July 31, 1997 whichever is later, Executive shall be entitled to: (a)
reimbursement of all reasonable business and travel expenses actually incurred
or paid in the performance of his services as consultant in accordance with the
Company's expense reimbursement policies in effect; (b) so long as he complies
with the non-compete and non-solicitation provisions set forth below, his
existing options (pursuant to agreements dated April 6, 1992 and June 14, 1993
as amended) ("Existing Stock Options") and his Additional Stock Option (see
Attachment A, 1994 Stock Option Grant) ("Additional Stock Option") will
continue to vest. (c) For a period of eighteen (18) months from termination of
his employment, the Company will pay directly or otherwise reimburse Executive
for continued coverage under any group health plans currently existing or as
they may be modified, pursuant to the Consolidated Omnibus Budget
Reconstruction Act of 1985, as amended ("COBRA").
7. Consulting Fee. (a) As compensation for the consulting services to be
provided by Executive pursuant to this Agreement, as well as compensation for
Executive's agreement not to solicit current employees, not to hire current
employees and not to compete with the Company following employment termination
as set forth below in Sections 12 and 13, Company shall pay to Executive the
sum of $400,000, payable in a lump sum upon termination of his employment.
(b) Company shall use its best efforts to obtain approval as soon as
practicable, whether from the holders of more than 75% of the Company's voting
shares (excluding any shares which Executive may hold) or otherwise to the
extent required, for the Severance Payment, the Consulting Fee and any other
payments under this Agreement to be excluded from the definition of the term
"parachute payment" under Section 280G of the Internal Revenue Code.
8. Existing Stock Option Grants. Executive's Existing Stock Options will
continue to vest through the Employment Term and the Consulting Term or July
31, 1997 whichever is later. Further, they will continue to vest thereafter if
he remains as a director of the Company and/or continues to provide
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consulting services as mutually agreed, so long as he complies with the
non-compete and non-solicitation provisions set forth in paragraphs 12 and 13 of
this Agreement. The non-compete requirements shall terminate immediately if the
Company has filed for creditor protection (as defined).
The Company shall loan Executive sufficient funds to exercise his
Existing Stock Options through one loan made at the same time as Executive
exercises such options. The loan shall be secured by the shares purchased and
shall be full recourse. The loan shall bear interest at the minimum rate
necessary to avoid imputation of interest to the Company. The loan shall be
due and payable in full on the earlier of (a) three years from the date the
loan is made or (b) 18 months after the date the Company completes an IPO or
(c) 18 months after the shares received upon exercise of the options become
freely tradable on the open market. A portion of the principal amount of the
loan shall be due and payable on the date of the sale of any portion of the
stock securing the loan. The portion of the loan which becomes due upon each
such sale shall equal the initial principal amount multiplied by (i) the number
of shares being sold divided by (ii) the number of shares which initially
secure the loan.
9. Additional Stock Option Grant. Company reaffirms the Additional Stock
Option Grant to purchase 50,000 shares of the Company's Common Stock previously
granted Executive, the terms of which are set forth in Attachment A to this
Agreement.
10. Benefits on Termination:
a. If Company terminates Executive for cause (defined below) during
the Employment Term, he will be entitled to receive only the salary and
benefits earned or accrued and expense reimbursement through the termination
date.
For purposes of this Agreement, termination for "cause" shall mean (i)
the willful failure by the Executive to substantially perform his material
duties for 60 days after written demand for substantial improvement in
performance is delivered to the Executive by the Board which specifically
identifies the manner in which the Board believes that the Executive has not
substantially performed his duties, (ii) the Executive's failure (in a material
respect) to follow reasonable and lawful policies or directives established by
the Board within 10 days after written notice to the Executive by the Board
that the Executive is not following such policies or directives, (iii)
demonstrated bad faith conduct that is materially detrimental to the Company,
or (iv) the conviction of the Executive of any crime involving the property or
business of the Company.
b. If Company terminates Executive without cause during the
Employment Term, he will be entitled to be paid: (i) the remainder of the
salary and bonus he would have received through the Employment Term had he
remained employed through that period, payable pursuant to the Company's
regular payroll practices through Employment Term; (ii) the Severance Payment
as provided and payable in paragraph 4 above; (iii) payment of the additional
bonus if appropriate following the 1995 and 1996 fiscal year audits, or
alternatively, at the Company's sole option, payment at termination of an
additional fixed bonus amount of 20% of his base salary; (iv) payment of his
Consulting Fee as provided in paragraph 7 above; and (v) payment of amounts
necessary to maintain his health benefits coverage for 18 months as set forth in
paragraph 6
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above. In addition, stock vesting for Existing Stock Options and the Additional
Stock Option shall continue as provided above in paragraphs 6, 8 and 9.
For purposes of this Agreement, termination "without cause" shall mean
termination for any reason other than "cause" as herein defined or "voluntary
resignation," including but not limited to any change in Executive's position,
duties (stated or actual), reporting structure or compensation, unless agreed
to in advance and in writing by Executive.
c. If Executive voluntarily resigns his employment during the
Employment Term, he will be entitled to receive only the salary and benefits
earned or accrued plus expense reimbursement through the resignation date.
d. If Executive dies during the Employment Term, his employment shall
terminate and his rights and benefits (or those of his estate) shall be
determined under the Company's appropriate benefit plans pursuant to the
provisions of those plans then in effect.
e. Company may terminate Executive's employment during the Employment
Term on the basis of disability by giving him thirty (30) days' advance notice
in writing. For all purposes under this Agreement, "disability" shall mean
that the Executive, at the time notice is given, has been unable to
substantially perform his duties under this Agreement for a period of not less
than six (6) consecutive months as the result of his incapacity due to physical
or mental illness. In the event that the Executive resumes the performance of
substantially all of his duties hereunder before the termination of his
employment under this subsection (f) becomes effective, the notice of
termination shall automatically be deemed to have been revoked. No
compensation or benefits will be paid or provided to the Executive under this
Agreement on account of termination for Disability. The Executive's rights
under the Company's benefit plans shall be determined under the provisions of
those plans.
11. Change of Control. For purposes of this Agreement, a "Change of Control"
of the Company shall be deemed to have occurred if (i) the Company sells or
otherwise disposes of all or substantially all of its assets; (ii) there is a
merger or consolidation of the Company with any other corporation or
corporations, provided that the shareholders of the Company, as a group, do not
hold, immediately after such event, at least 50% of the voting power of the
surviving or successor corporation; or (iii) any person or entity, including
any "person" as such term is used in Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (exclusive of persons who
are now officers or directors of the Company), becomes the "beneficial owner"
(as defined in the Exchange Act) of Common Stock of the Company representing
50% or more of the combined voting power of the voting securities of the
Company. The parties agree that Change of Control as herein defined includes
the Change of Control upon which this Amended and Restated Employment Agreement
becomes effective.
12. Non-solicitation; Non-Hire. (a) During Employment Term, the Consulting
Term, and so long after that as Executive serves as a director and/or continues
to provide consulting services as mutually agreed, Executive will not solicit
or induce employees to leave the Company's employ. (b) Executive will not, for
a period of twelve months after the Effective Date of this Agreement, hire any
person who, as of such date, was an employee of the Company. Notwithstanding
the foregoing, the provisions of this section
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12(b) do not apply to the following named persons after June 30, 1996: ▇▇▇▇▇
▇▇▇▇▇▇▇; and ▇▇▇▇▇ ▇▇▇▇▇▇▇. (c) The provisions of sections 12(a) and (b) may
be waived on a case-by-case basis by written agreement of the Executive and the
Company.
13. Non-Competition. (a) Executive agrees that so long as he remains employed
and/or so long after that as he continues to serve as a director, he will not
become an officer, employee, agent, partner, founder, consultant, director or
holder of more than 10% of the equity or debt of any business enterprise (or
division or operating group thereof, as appropriate) operating in direct
competition with the Company's business, defined as "document imaging and
workflow software and services commercially available on the date of
termination of Executive's employment." The parties agree that for purposes of
this Agreement, the Company's business does not include developing and
marketing client/server application software aimed at customer-centric case
management business applications across target industry segments.
(b) Notwithstanding the foregoing however, for a period of twelve (12)
months from the Effective Date of this Agreement, regardless of the status of
his employment, Executive will not become an officer, employee, agent, partner,
founder, consultant, director or holder of more than 10% of the equity or debt
of any of the following named organizations: FileNet Corporation; Wang
Computers; The Workflow Division of International Business Machines; and
Optica, Inc.
(c) The Company further recognizes and agrees that Executive will be
establishing a new business venture aimed at developing and marketing the
application software described above, which venture will commence formal
operations after termination of his employment with Company. Executive shall
provide Company up to thirty (30) days' notice in advance of the date on which
his new business venture is scheduled to commence operations (provided that in
the event his termination is by the Company, the Company has provided at least
30 days' notice of termination to Executive), during which time the parties may
discuss forms of possible cooperation between their respective business
entities.
(d) Executive stipulates that the remedy at law for any breach or
threatened breach of Sections 12 or 13 would be inadequate and that damages
would be impossible to measure, and accordingly agrees that in addition to any
other remedies, a restraining order and/or injunction (without bond) may be
issued for such breach or threatened breach.
14. Transfer of equipment. On termination of Executive's employment, the
Company shall take all action necessary to transfer and assign to Executive the
personal computers, printers, monitors and other computer hardware accessories,
and cellular telephone, actively used by Executive in the course of his duties,
up to a maximum value for these items of $20,000.
15. Third Party Licenses. On termination of Executive's employment, the
Company shall assign to Executive all software then actively used by Executive
in the course of his duties covered by "shrink-wrap" licenses from third
parties which by their terms are assignable to the possessor of the applicable
disk and documentation.
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16. Withholding; No Offset. Payments and transfers of salary, bonus and
severance payments made during the Employment Term are subject to tax
withholding, to the extent applicable. Payments and transfers of salary
continuation, bonus and severance payments made during the Consulting Term are
not subject to tax withholding. Executive is not required to mitigate the
amount of any payment by Company, whether by seeking new employment or in any
other manner, and Company's obligations shall not be reduced through
Executive's employment by or activities on behalf of other entities or by the
absence of such employment or activities.
17. Successors. The Company shall require any successor or assignee, in
connection with any sale, transfer or other disposition of all or substantially
all of the Company assets or business, whether by purchase, merger,
consolidation or otherwise, expressly to assume and agree to perform the
Company's obligations under this Agreement in the same manner and to the same
extent that the Company would be required to perform if no such succession or
assignment had taken place. In such event, the term "Company", as used in this
Agreement, shall mean the Company as defined above and any successor or
assignee to the business and assets which by reason hereof becomes bound by the
terms and provisions of this Agreement.
18. Confidentiality. Except as required by applicable laws, neither party
shall disclose the contents of this Agreement without first obtaining the prior
written consent of the other party, provided, however, that the Executive may
disclose this Agreement to his attorney, financial planner and tax advisor if
such persons agree to keep the terms hereof confidential.
19. Arbitration. 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 pursuant to the rules then in effect of the American Arbitration
Association in San Mateo County, California; provided, however, that 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. All costs
and expenses of arbitration or litigation, including but not limited to
attorneys fees and other costs reasonably incurred by the Executive, shall be
paid by the party who shall not have prevailed in the arbitration all as
conclusively determined by the arbitrators. Judgment may be entered on the
award of the arbitration in any court having jurisdiction.
20. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California applicable to agreements
made and to be performed entirely within such state.
21. Integration. This Agreement, the Proprietary Information Agreement,
Stock Restriction Agreement, Stock Option Agreements (as amended to date), and
any written Company plans that are referenced herein, represent the entire
agreement and understanding between the parties as to the subject matter hereof
and supersede all prior or contemporaneous agreements, whether written or oral.
No waiver, alteration, or modification, if any, of the provisions of this
Agreement shall be binding unless in writing and signed by duly authorized
representatives of the parties hereto.
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22. Voluntary Execution; Conflict Waiver. The Executive has received
independent legal counsel regarding this Agreement, which was drafted jointly
by the Executive's and the Company's counsel. The Executive is signing this
Agreement knowingly and voluntarily. The Company and the Executive acknowledge
that Wilson, Sonsini, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ ("WSGR") has acted as counsel to the
Company in negotiating this Agreement and may continue to serve as the
Company's general counsel in the future, acknowledge that each has received
full disclosure of any potential conflict of interest which may result from
such representation, and knowingly and voluntarily waive any such conflict of
interest.
23. Release of Claims. Executive agrees that on the date his employment
from Company terminates, he will execute a release in the form attached to this
Agreement as Exhibit B.
24. Independent Advice. In negotiating this Agreement, Executive acknowledges
that he has been represented by his own counsel and has received his own
independent tax advice. The Company has no responsibility for any tax
consequences which may result from the transactions described in this
Agreement.
25. Counterparts. This Agreement may be executed in counterparts, which
together will constitute one instrument.
26. Effective Date. This Agreement becomes effective on the effective date of
a merger between the Company and Caere Corporation. In the event that such
merger does not become effective on or before March 31, 1996, this Agreement
shall be null and void.
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Agreed to this day of , 1995.
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EXECUTIVE VIEWSTAR CORPORATION
By:
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇, Jr.
Director and Member,
Compensation Committee
Each person executing this Revised Employment Agreement represents and warrants
that he has the full authority to enter into this Agreement and to fully bind
the party to be bound.
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CONSENT OF SPOUSE
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I hereby consent to this Agreement for purposes of any community
property interest I may have in the foregoing arrangements. I have had the
opportunity to seek independent counsel with regard to this consent and
knowingly and voluntarily waive the right to such counsel.
Dated:
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Printed Name of Spouse
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EXHIBIT A
ADDITIONAL STOCK OPTION GRANT
(A) Option Grant. Effective this 20th day of May, 1994, (the
"Grant Date"), the Executive shall be granted a stock option to purchase up to
50,000 shares of the Company's Common Stock (the "Additional Option"). The
Additional Option shall have a ten (10)-year term, subject to earlier
termination as provided in the Plan and shall have an exercise price equal to
the fair market value of the Common Stock on the Grant Date, as determined by
the Board but which option exercise price shall be no greater than $1.50 per
share. The Additional Option shall be an incentive stock option to the extent
permitted by Section 422 of the Internal Revenue Code.
(B) Vesting. So long as Executive's employment has not been
terminated for cause or disability, the Executive's right to exercise the
Additional Option shall vest 100% on May 20, 2002. In the event before
December 31, 1995 of either an IPO or the Company entering into a strategic
corporate relationship involving an equity investment in the Company of not
less than $5 million, the Executive's right to exercise the Additional Option
shall accelerate so that, at the time of either of such events, the Additional
Option shall become vested as to 2% of the number of shares initially subject
to the option for each month elapsed from the grant date to the date of such
event, and shall continue to vest at the rate of 2% per month during the
remainder of the Employment Term and the Consulting Term (including, if
applicable, any continuation period).
For purposes of this Stock Option Grant, termination for "Cause" shall
mean (i) the willful failure by the Executive to substantially perform his
material duties within 10 days after written demand for substantial improvement
in performance is delivered to the Executive by the Board which specifically
identifies the manner in which the Board believes that the Executive has not
substantially performed his duties, (ii) the Executive's failure (in a material
respect) to follow reasonable policies or directives established by the Board
within 10 days after written notice to the Executive by the Board that the
Executive is not following such policies or directives, (iii) bad faith conduct
that is materially detrimental to the Company, or (iv) the conviction of the
Executive of any crime involving the property or business of the Company.
(C) Early Exercise. The Executive may, at his election, exercise
the Additional Option as to shares that are not yet vested (the "Unvested
Shares"). The Executive may purchase Additional Option shares, including
Unvested Shares, by delivering to the Company a promissory note (the
"Promissory Note"), which shall be a non-interest bearing full-recourse note
that is due and payable in full upon the earliest of (i) five (5) years, (ii)
18 months following an initial public offering of the Company's Common Stock to
the public registered under Form S-1 (or any successor form) with the
Securities and Exchange commission under the Securities Act of 1933, as amended
(an "IPO"), or (iii) in the event of a Change of Control (as defined herein) of
the Company in which the Executive receives either cash or marketable
securities for his Common Stock, thirty (30) days after such Change of Control,
provided that if the securities received are subject to restrictions on
transfer, thirty (30) days after such restrictions no longer apply.
Unvested Shares shall be subject to the Company's right to repurchase
such Shares at the Executive's original cost upon the Executive's termination
of all services (whether as an employee or a consultant) for any reason (the
"Repurchase Right"). Subject to applicable laws, the Repurchase Right shall be
mandatory in the event the fair market value of the Unvested Shares at the time
of the Executive's termination of employment (or expiration of the Continuation
period, whichever is applicable) is less than the Executive's original cost
therefor. The Repurchase Right shall be exercisable for a period of twelve
(12) months, commencing with the Executive's termination of employment with the
Company' provided, however, that in the case of a termination without cause or
for disability, the twelve (12)-month period shall commence upon the expiration
of the consulting term or any continuation period. Subject to a Change of
Control, the Repurchase Right shall lapse on the same schedule as the
Additional Option would have vested under Section (B). Unvested Shares shall
be issued in the Executive's name but shall be placed in escrow with the
Company pending completion of the vesting periods. Vesting of the Unvested
Shares is dependent upon the Executive's continued services to the Company as
an employee or consultant.
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