Fill and Sign the Form of Employee Stock Option Agreement Secgov

11.05 Form: Employment Agreement With President Coupled With a Stock Option Grant EMPLOYMENT AGREEMENTThe following sample form may be used for the President, Chief Executive Officer, or other executive officer of a private or public company. The form has been prepared from the Company's perspective. THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into on [Date] by and between [Company Name], a [State] corporation (the "Company") and [Name] ("Executive"). WHEREAS, the Company desires to engage Executive as [Title] ("Title") of the Company and Executive desires to be so engaged by the Company in such positions, on the terms and conditions set forth herein; NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements herein contained, intending to be legally bound, the parties agree as follows: 1. Employment. The Company hereby agrees to employ Executive, and Executive hereby agrees to serve, subject to the provisions of this Agreement, as an employee of the Company in the position of [Title]. Executive shall perform all services and acts necessary to fulfill the duties and responsibilities of [his/her] position and shall render such services on the terms set forth herein and shall report to the Company's Board of Directors (the "Board"). In addition, Executive shall have such other executive and managerial powers and duties with respect to the Company as may reasonably be assigned to [him/her] by the Board, to the extent consistent with [his/her] position and status as set forth above. Executive agrees to devote all of [his/her] business time, attention and energies to the performance of the duties assigned hereunder, and to perform such duties diligently, faithfully and to the best of [his/her] abilities. Executive agrees to refrain from any activity that does, will or could reasonably be deemed to conflict with the best interests of the Company. 2. Term. This Agreement is for the [number]-year period (the "Term") commencing on the date hereof and terminating on the [number] anniversary of such date, or upon the date of termination of employment pursuant to Section 8 of this Agreement; provided, however, that commencing on the [number] anniversary of the date hereof and each anniversary thereafter the Term shall automatically be extended for one additional year unless, not later than __ days prior to any such anniversary, either party hereto shall have notified the other party hereto that such extension shall not take effect. 3. Place of Performance. Except for required travel on the Company's business, Executive shall perform [his/her] duties and conduct [his/her] business at the principal executive offices of the Company without regard to any relocation of the same. 4. Compensation. (a) Salary. Executive's salary shall be at the annual rate of [amount] (the "Annual Salary"), payable in accordance with the Company's regular payroll practices. All applicable withholdings, including taxes, shall be deducted from such payments. (b) Bonus. During each year of the Term, the [Board] [Compensation Committee] shall review Executive's performance, and may, in its sole discretion, cause to be paid to Executive a bonus in addition to the Annual Salary, subject to all applicable withholdings, including taxes. (c) Stock Options. Following the date Executive commences employment with the Company, the Company shall grant an option to Executive to purchase [number] shares of common stock of the Company pursuant to the [Company Stock Option Plan] at a per share exercise price equal to the fair market value of the common stock of the Company on the option grant date, as determined by the [Compensation Committee] [Board] and in accordance with the form of grant used by the Company. [Twenty-five percent (25%)] of the shares subject to the option shall vest on the first anniversary of Executive's employment commencement date, with the remaining shares vesting monthly over the ensuing [three years], provided that Executive remains continuously employed with the Company. The option shall be subject in all respects to the terms and conditions of the [Company Stock Option Plan] and the stock option grant agreement. 5. Business Expenses. During the Term, the Company will reimburse Executive for all ordinary and necessary business expenses incurred by [him/her] in connection with [his/her] employment upon timely submission by the Executive of receipts and other documentation in conformance with the Company's normal procedures. 6. Vacation, Holidays and Sick Leave. During the Term, Executive shall be entitled to paid vacation, paid holidays and sick leave in accordance with the Company's standard policies for its officers, as may be amended from time to time. 7. Benefits. During the Term, Executive shall be eligible to participate fully in all health benefits, insurance programs, pension and retirement plans and other employee benefit and compensation arrangements (collectively, the "Employee Benefits") available to officers of the Company generally, as the same may be amended from time to time. 8. Termination of Employment. (a) Notwithstanding any provision of this Agreement to the contrary, the employment of Executive hereunder shall terminate on the first to occur of the following dates: (i) the date of Executive's death, bankruptcy or incompetence; (ii) the date on which Executive shall have experienced a Disability (as defined below), and the Company gives Executive notice of termination on account of Disability; (iii) the date on which Executive shall have engaged in conduct that constitutes Cause (as defined below), and the Company gives Executive notice of termination for Cause; (iv) expiration of the Term without renewal; (v) the date on which the Company shall give Executive notice of termination for any reason other than the reasons set forth in (i) through (iv) above; or (vi) the date on which Executive gives the Company notice of termination for Good Reason (as defined below). (b) For purposes of this Agreement, "Disability" shall mean an illness, injury or other incapacitating condition as a result of which Executive is unable to perform, with reasonable accommodation, the services required to be performed under this Agreement for (i) [ninety (90)] consecutive days during the Term or (ii) a period or periods aggregating more than [one hundred and twenty (120)] days in any [six (6)] consecutive months. In any such event, the Company, in its sole discretion, may terminate this Agreement by giving notice to Executive of termination for Disability. Executive agrees to submit to such medical examinations as may be necessary to determine whether a Disability exists, pursuant to such reasonable requests made by the Company from time to time. Any determination as to the existence of a Disability shall be made by a physician selected by the Company. (c) For purposes of this Agreement, "Cause" shall mean the occurrence of any of the following events, as reasonably determined by the Board: (i) Executive's willful or continued failure to substantially perform [his/her] duties for the Company, or to carry out the business plan, as determined by the Board; (ii) Executive's conviction of a felony, or [his/her] guilty plea to or entry of a nolo contendere plea to a felony charge; (iii) the willful or negligent engaging by Executive in conduct that is materially injurious to the Company, financially or otherwise; or (iv) Executive's breach of any material term of this Agreement or the Company's policies and procedures, as in effect from time to time; provided that with respect to (i), (iii) or (iv) above, such termination for Cause shall only be effective upon a majority vote of the members of the Board, after notice to Executive and a period of not less than fifteen (15) calendar days during which time Executive shall have an opportunity to appear before the Board to demonstrate that [he/she] has cured the conduct that constitutes Cause; provided further, that the foregoing opportunity to cure shall not apply if the Board reasonably determines that Executive's conduct is not capable of being cured. (d) For purposes of this Agreement, "Good Reason" shall mean the occurrence of any of the following events, as reasonably determined by Executive: (i) a substantial reduction in Executive's responsibilities and duties by the Board, but excluding for reasons of Cause, it being understood that a change in job title or reporting lines will not alone qualify as Good Reason; (ii) the failure of the Company to pay Executive [his/her] total Annual Salary; or (iii) the Company's breach of any material term of this Agreement; provided that in all cases Executive shall have provided the Company with notice and not less than a fifteen (15) calendar day opportunity to cure the conduct that Executive claims constitutes Good Reason. 9. Compensation in Event of Termination. Upon termination of the Term for any reason, this Agreement shall terminate and the Company shall have no further obligation to Executive except to pay the amounts set forth in this Section 9.(a) In the event Executive's employment is terminated pursuant to Sections 8(a)(i), (ii), (iii) or (iv) during or at the expiration of the Term, Executive or [his/her] estate, conservator or designated beneficiary, as the case may be, shall be entitled to payment of any earned but unpaid Annual Salary through the date of termination, as well as any accrued but unused vacation and vested benefits to which Executive is entitled in accordance with the terms of each applicable Employee Benefits plan. Following any such termination, neither Executive nor [his/her] estate, conservator or designated beneficiary shall be entitled to receive any other payment provided for hereunder with respect to any period after such termination, except as Executive may otherwise be entitled pursuant to any applicable Employee Benefits plan. (b) In the event Executive's employment is terminated pursuant to Section 8(a)(v) or (vi) during the Employment Term, Executive shall be entitled to receive, as [his/her] sole and exclusive remedy, (i) payment of any earned but unpaid Annual Salary through the date of termination, as well as any accrued but unused vacation and vested benefits to which Executive is entitled in accordance with the terms of each applicable Employee Benefits plan, and (ii) a lump sum payment equal to ___ months of Annual Salary provided that Executive executes a valid release of any and all claims that Executive may have relating to [his/her] employment against the Company and its agents, including but not limited to its officers, directors and employees, in a form provided by the Company. 10. Representations. (a) The Company represents and warrants that this Agreement has been authorized by all necessary corporate action of the Company and is a valid and binding agreement of the Company enforceable in accordance with its terms. (b) Executive represents and warrants that [he/she] is not a party to any agreement or instrument that would prevent [him/her] from entering into or performing [his/her] duties in any way under this Agreement. (c) Executive represents and warrants that [his/her] performance of all the terms of this Agreement and duties as an employee of the Company will not breach any invention assignment or proprietary information or similar agreement with any former employer or other party. Executive further represents and warrants that [he/she] has not and will not bring to the Company or use in the performance of duties for the Company any documents or materials of a former employer that are not generally available to the public. (d) Executive represents and warrants that [he/she] will not disclose to the Company or cause or induce the Company to use proprietary or confidential information of others, or violate or induce the Company to violate the intellectual property rights of others. 11. [Disclosure and Assignment of Inventions. (a) Executive has provided as Exhibit A attached hereto a list describing all inventions, original works of authorship, developments, improvements and trade secrets that were made by Executive prior to employment with the Company, belonging to Executive alone or jointly with others, which relate to the Company's existing or proposed business, products or research and development and that are not assigned to the Company; if "none" is stated in Exhibit A, Executive represents that there are no such inventions, works of authorship, developments, improvements or trade secrets.(b) Executive agrees to promptly make full written disclosure to the Company, will hold in trust for the sole right and benefit of the Company, and hereby assigns to the Company all right, title and interest in and to any and all inventions (and patent rights with respect thereto), original works of authorship (including all copyrights with respect thereto), developments, improvements or trade secrets that Executive may solely or jointly conceive or develop or reduce to practice, or cause to be conceived or developed or reduced to practice during the Term. (c) Executive understands that the provisions of this Agreement requiring assignment to the Company do not apply to any invention made by an employee of the Company that qualifies fully under the provisions of Section 2870 of the California Labor Code, which provides: "(a) Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer's equipment, supplies, facilities, or trade secret information except for those inventions that either: "(1) Relate at the time of conception or reduction to practice of the invention to the employer's business, or actual or demonstrably anticipated research or development of the employer; or "(2) Result from any work performed by the employee for the employer. "(b) To the extent a provision in an employment agreement purports to require an employee to assign an invention otherwise excluded from being required to be assigned under subdivision (a), the provision is against the public policy of this state and is unenforceable." Executive agrees to advise the Company promptly in writing of any inventions that [he/she] believes meet the criteria of Section 2870 of the California Labor Code, and will also provide at that time to the Company in writing all evidence necessary to substantiate that belief. The Company will keep in confidence and will not disclose to third parties without Executive's consent any confidential information disclosed in writing to the Company relating to inventions that qualify under the provisions of Section 2870 of the California Labor Code.] 12. [Confidentiality. Executive covenants and agrees that [he/she] will not at any time during or after the end of the Term, directly or indirectly, use for [his/her] own account, or disclose to any person, firm or corporation, other than authorized officers, directors and employees of the Company or its subsidiaries, Confidential Information (as hereinafter defined) of the Company. As used herein, "Confidential Information" of the Company means information about the Company of any kind, nature or description, including but not limited to, any proprietary information, trade secrets, data, formulae, supplier, client and customer lists or requirements, price lists or pricing structures, marketing and sales information, business plans or dealings and financial information and plans as well as all papers, resumes and records (including computer records) that are disclosed to or otherwise known to Executive as a direct or indirect consequence of Executive's employment with the Company, which information is not generally known to the public or in the businesses in which the Company is engaged. Confidential Information also includes any information furnished to the Company by a third party with restrictions on its use or further disclosure.] 13. [Nonsolicitation and Noninterference.(a) Customers and Suppliers. While employed by the Company and for a one- year period thereafter, Executive shall not, directly or indirectly, solicit or influence or attempt to solicit or influence any current or prospective customer, client, vendor or supplier of the Company or any of its affiliates or subsidiaries to divert their business to any Competitor (as defined below) of the Company (whether or not exclusive) or otherwise terminate [his/her] or its relationship with the Company for any purpose or no purpose. (b) Employees.(i) Executive recognizes that, as a result of Executive's association with the Company, [he/she] will possess confidential information about other employees or consultants of the Company and its subsidiaries and affiliates relating to their education, experience, skills, abilities, compensation and benefits, and their interpersonal relationships with customers. Executive acknowledges and agrees that the information [he/she] possesses or will possess about these other employees or consultants is not generally known, is of substantial value to the Company and its affiliates and subsidiaries in developing its business and in securing and retaining customers, and is, will be or may be known to Executive because of [his/her] employment with the Company. (ii) Accordingly, Executive agrees that, while employed by the Company and for a one-year period thereafter, Executive will not, directly or indirectly, induce, solicit or recruit any employee or consultant of the Company or its subsidiaries or affiliates for the purpose of (A) being employed by Executive or by any Competitor of the Company or (B) interfering with or terminating his or her employment relationship with the Company for any purpose or no purpose. (iii) For purposes of this Agreement, a "Competitor" shall mean any other entity or person that provides or proposes to provide services or products similar in kind or purpose to those provided or proposed to be provided by the Company.] 14. Rights and Remedies upon Breach. In the event that Executive breaches, or threatens to breach, any of the agreements or covenants set forth herein, the Company shall have the following rights and remedies, each of which shall be independent of the others and severally enforceable, and each of which shall be in addition to, and not in lieu of, any other rights or remedies available to the Company under this Agreement or otherwise: (a) Specific Performance. The right and remedy to have each and every one of the covenants in this Agreement specifically enforced and the right and remedy to obtain injunctive relief, it being agreed that any breach or threatened breach of any of the confidentiality, nonsolicitation or other restrictive covenants and agreements contained herein would cause irreparable injury to the Company and that money damages would not provide an adequate remedy at law to the Company. (b) Accounting. The right and remedy to require Executive to account for and pay over to the Company all compensation, profits, monies, accruals, increments or other benefits derived or received by Executive that result from any transaction or activity constituting a breach of this Agreement.(c) Enforceability in All Jurisdictions. Executive intends to and hereby confers jurisdiction to enforce each and every one of the covenants and agreements contained herein upon the courts of any jurisdiction within the geographic scope of such covenants and agreements. If the courts of any one or more of such jurisdictions hold any such covenant or agreement unenforceable by reason of the breadth or such scope or otherwise, it is the intention of the Company and Executive that such determination shall not bar or in any way affect the Company's right to the relief provided above in the courts of any other jurisdiction within the geographic scope of such covenants and agreements. 15. [Key Person Insurance. Upon Executive passing any required physical examination, the Company shall at its expense procure and keep in effect an insurance policy or policies on the life of Executive in an amount of not less than $_____________, payable to such beneficiaries as the Company may from time to time designate. Such policies shall be owned by the Company, and Executive shall cooperate in the obtaining of all such insurance policies as the Company may desire to apply for and own for its own purposes. This insurance is in addition to any group life coverage that may be provided to Executive by the Company.] 16. Dispute Resolution. Except for an action exclusively seeking injunctive relief, any disagreement, claim or controversy arising under or in connection with this Agreement, Executive's employment or termination of employment with the Company shall be settled exclusively by arbitration before a single arbitrator in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association (the "Rules"), provided that, the arbitrator shall allow for discovery sufficient to adequately arbitrate any statutory claims, including access to essential documents and witnesses; provided further, that the Rules shall be modified by the arbitrator to the extent necessary to be consistent with applicable law. The arbitration shall take place in [___________]. The award of the arbitrator with respect to such disagreement, claim or controversy shall be in writing with sufficient explanation to allow for such meaningful judicial review as permitted by law, and that such decision shall be enforceable in any court of competent jurisdiction and shall be binding on the parties hereto. The remedies available in arbitration shall be identical to those allowed at law. The arbitrator shall be entitled to award reasonable attorneys' fees to the prevailing party in any arbitration or judicial action under this Agreement, consistent with applicable law. The Company and Executive each shall pay its or [his/her] own attorneys' fees and costs in any such arbitration, provided that, the Company shall pay for any costs, including the arbitrator's fee, that Executive would not have otherwise incurred if the dispute were adjudicated in a court of law, rather than through arbitration. 17. Binding Agreement. This Agreement is a personal contract and the rights and interests of Executive hereunder may not be sold, transferred, assigned, pledged, encumbered or hypothecated by [him/her]. 18. Disclosure Obligations. During the Term, Executive agrees to make prompt and full disclosure to the Company of any change of facts or circumstances that may affect Executive's obligations undertaken and acknowledged herein, and Executive agrees that the Company has the right to notify any third party of the existence and content of Executive's obligations hereunder. 19. Return of Company Property. Executive agrees that following the termination of [his/her] employment for any reason, [he/she] shall promptly return all property of the Company, its subsidiaries, affiliates and any divisions thereof [he/she] may have managed that is then in or thereafter comes into [his/her] possession, including, but not limited to, documents, contracts, agreements, plans, photographs, books, notes, electronically stored data and all copies of the foregoing, as well as any materials or equipment supplied by the Company to Executive. 20. Entire Agreement. This Agreement contains all the understandings between the parties hereto pertaining to the matters referred to herein, and supersedes all undertakings and agreements, whether oral or written, previously entered into by them with respect thereto. Executive represents that, in executing this Agreement, [he/she] does not rely, and has not relied, on any representation or statement not set forth herein made by the Company with regard to the subject matter, bases or effect of this Agreement or otherwise. 21. Amendment or Modification, Waiver. No provision of this Agreement may be amended or waived unless such amendment or waiver is agreed to in writing, signed by Executive and by a duly authorized officer of the Company. The failure of either party to this Agreement to enforce any of its terms, provisions or covenants shall not be construed as a waiver of the same or of the right of such party to enforce the same. Waiver by either party hereto of any breach or default by the other party of any term or provision of this Agreement shall not operate as a waiver of any other breach or default. 22. Notices. Any notice to be given hereunder shall be in writing and shall be deemed given when delivered personally, sent by courier or fax or registered or certified mail, postage prepaid, return receipt requested, addressed to the party concerned at the address indicated below or to such other address as such party may subsequently give notice of hereunder in writing:To Executive at:[Name][Address] [fax number] To the Company at: [Company][Address] [fax number] Attention: [_______] With a copy to: [Company's Attorneys][Address] [fax number] Attention: [______________] Any notice delivered personally or by courier under this Section 22 shall be deemed given on the date delivered. Any notice sent by telecopy or registered or certified mail, postage prepaid, return receipt requested, shall be deemed given on the date telecopied or mailed. 23. Severability. In the event that any one or more of the provisions of this Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remainder of the Agreement shall not in any way be affected or impaired thereby. Moreover, if any one or more of the provisions contained in this Agreement shall be held to be excessively broad as to duration, activity or subject, such provisions shall be construed by limiting and reducing them so as to be enforceable to the maximum extent allowed by applicable law. 24. Survivorship. The respective rights and obligations of the parties hereunder shall survive any termination of this Agreement to the extent necessary for the intended preservation of such rights and obligations. 25. Each Party the Drafter. This Agreement and the provisions contained in it shall not be construed or interpreted for or against any party to this Agreement because that party drafted or caused that party's legal representative to draft any of its provisions. 26. Governing Law. This Agreement will be governed by and construed in accordance with the laws of the State of [State], without regard to its conflicts of laws principles. 27. Headings. All descriptive headings of sections and paragraphs in this Agreement are intended solely for convenience, and no provision of this Agreement is to be construed by reference to the heading of any section or paragraph. 28. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above. COMPANY EXECUTIVE By: ________________________ By: ________________________