First Name Last Name
Dear First Name,
On behalf of Company Name (the “Company”), the Company’s Board of Directors (the “Board”) is pleased to offer you the following terms of employment as Chief Executive Officer of the Company, effective Date. The initial terms of your new position with the Company are as set forth below.
You will be the Chief Executive Officer of the Company. Your place of employment will be the Company’s office in Company Location. Your responsibilities in this position will include managing the day to day operations of the Company and you will report to the Board. You agree to the best of your ability and experience that you will at all times loyally and conscientiously perform all of the duties and obligations required of and from the Company. During the term of your employment, you further agree that you will devote all of your business time and attention to the business of the Company and that you will not, directly or indirectly, engage or participate in any personal, business, charitable or other enterprise that is competitive in any manner with the business of the Company, whether or not such activity is for compensation.
Your base salary will continue to be at the rate of $Salary per year, less payroll deductions and all required withholdings. You will be paid semi-monthly on the Company’s regularly scheduled pay dates. Additionally you are eligible to earn bonus compensation of up to 60% of your base salary for your performance for Calendar Year Year as part of the Executive Bonus Compensation Plan (the “Bonus Plan”), the details of which are attached as Addendum A.
In addition, you will continue to be eligible for the following standard Company benefits: health, dental, and vision coverage for employees, as well as subsidized coverage for family members; Short and Long Term Disability and Life Insurance coverage; and you will be able to participate in the company 401 (k) plan. Additionally, you will continue to receive the equivalent of 18 days of personal time off (PTO) per year that accrues semi-monthly commencing from your first date of employment with the Company (the “Original Start Date”). PTO will stop accruing when an employee reaches 252 hours of PTO. Details about these benefits are provided in the Summary Plan Descriptions, available for your review. The Company may modify your compensation and benefits from time to time as it deems necessary, with or without advance notice.
You are entitled to be granted options to purchase up to Number of Options shares of the Company Common Stock (“Options”) under the Company’s Stock Incentive Plan (the “Plan”). The Board may, in its absolute discretion, choose to grant to you additional options in the future. The Options are subject to the terms of the Plan, and will vest on a monthly basis over four years from the Original Start Date in forty-eight equal installments. In the event your employment is terminated prior to an IPO or a Change in Control, you will also have eighteen months from your last day of employment to exercise these options.
Like all Company employees, you will continue to be required, as a condition of your employment, to abide by Company rules and policies. You must sign the Company’s Employee Confidential Information and Non-Solicitation Agreement, which, among other things, prohibits unauthorized use or disclosure of the Company’s proprietary and confidential information and the unauthorized disclosure or use of any third party proprietary and confidential information. That agreement shall continue in full force and effect. You further agree that you will not bring onto Company premises any unpublished documents or property belonging to any former employer or other person to whom you have an obligation of confidentiality. In addition, as a condition of employment, you agree that you will not assist any person or organization in competing with the Company, in preparing to compete with the Company or in hiring any employees of the Company.
Throughout the duration of your employment, you agree to disclose to the Company in writing, any continuing outside working relationships with other customers or entities with whom you are working or will work (whether or not for compensation), as well as any potential conflicts of interest, sources of income or other business endeavors (including any entity in which you own more than 5% of the outstanding equity securities or have voting control of more than 5%).
Your employment with the Company will continue to be “at-will.” This means that either you or the Company may terminate your employment relationship at any time, with or without notice, and with or without cause. By accepting the role of CEO you confirm you understand and agree, that this at-will relationship cannot be changed or retracted, either orally or in writing, or by any policy or conduct, unless you receive a document expressly stating that your employment is no longer at-will, which is signed both by you and the Chair of the Board.
The Company recognizes that upon a Change of Control, it is appropriate to provide you with accelerated vesting if your employment is involuntarily terminated without cause or you are constructively terminated following such a Change of Control.
Accordingly, if within 12 months following any Change of Control, your employment is involuntarily terminated without Cause, or you are Constructively Terminated following such Change in Control, then upon such termination you will be entitled to immediate vesting of 100% of the number of shares subject to all Options granted to you which remain unvested as of the date of your termination or Constructive Termination. If Options are not being assumed by the successor entity in connection with a Change of Control (where “assumed” means translated into some form of compensation), then all Options granted to you will become fully exercisable immediately prior to the consummation of the Change of Control. You will not be entitled to any salary continuation or severance payments.
If you are terminated with Cause or voluntarily resign your employment following any Change in Control, but are not Constructively Terminated, you will not be entitled to any accelerated vesting of Options or severance payments.
For purposes of this offer letter, “Cause”, “Change of Control” and “Constructive Termination” shall have the meaning set forth on Exhibit A. Your right to such acceleration is conditioned upon your signing the Company’s then current standard form of release releasing the Company (or any successor entity), its officers, directors and affiliates from all liability whatsoever.
If you are terminated without Cause or you resign your employment due to a Constructive Termination, so long as such termination is not within 12 months following a Change of Control, then you shall be entitled to receive, as severance, (a) 6 month’s base salary continuation, (b) 6 months reimbursement of payments for continuing health coverage, pursuant to COBRA, assuming you elect COBRA continuation, and (c) continued vesting of your shares for a period of 3 months following such employment termination. Your right to such salary continuation, COBRA reimbursement, and continued vesting is conditioned upon your signing the Company’s then current standard form of release releasing the Company (or any successor entity), its officers, directors and affiliates from all liability whatsoever. For clarity purposes, you shall not be entitled to any bonus after any such termination, nor shall you be entitled to any acceleration of vesting of your stock options.
This letter, the Employee Confidential Information and Non-Solicitation Agreement and the Option Exercise Agreement contain all of the terms of your employment with the Company and supersede any prior understandings or agreements, whether oral or written, between you and the Company. This letter may not be amended or modified except by an express written agreement signed by you and the Chairman of the Board.
Upon acceptance of this letter, please sign and return to me.
Company Officer Title
Agreed and accepted as of:
First Name Last Name
“Cause” shall mean: (i) you engaging in knowing and intentional illegal conduct that was or is materially injurious to the Company or its affiliates; (ii) you violating a federal or state law or regulation applicable to the Company’s business which violation was or is reasonably likely to be injurious to the Company; (iii) you materially breaching the terms of any confidentiality agreement or invention assignment agreement between you and the Company; or (iv) you being convicted of, or entering a plea of nolo contendere, to a felony or committing any act of moral turpitude, dishonesty or fraud against, or the misappropriation of material property belonging to, the Company or its affiliates.
“Change of Control” shall mean the consummation of a reorganization, merger or consolidation, or sale or other disposition of all or substantially all of the assets of the Company, or the acquisition of assets of another corporation or entity, or other similar transaction (each, a “Business Combination”), unless, in each case, immediately following such Business Combination (A) all or substantially all of the individuals and entities who were the beneficial owners of voting stock of the Company immediately prior to such Business Combination beneficially own, directly or indirectly, more than 55% of the combined voting power of the then outstanding shares of voting stock of the entity resulting from such Business Combination (including, without limitation, an entity which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries,) and (B) at least a majority of the members of the Board of Directors of the entity resulting from such Business Combination were members of the Board of Directors of the Company at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination.
“Constructive Termination” shall mean (i) without your written consent, a reduction in your base salary, other than a reduction in salary that is part of an expense reduction effort applied to the executive management team (defined as the Chief Executive Officer and the Chief Executive Officer’s direct reports) generally and which results in a percentage reduction of your salary or bonus no greater than the greatest percentage reduction applied to at least one other member of the executive management team; or (ii) without your written consent, a relocation of your principal place of work to a location more than 35 miles away from your workplace prior to the relocation; or (iii) without your written consent the significant reduction of your duties or responsibilities when compared to your duties or responsibilities in effect immediately prior to such change; it is understood, however, that if, following a Change of Control pursuant to which the Company becomes part of a larger entity but remains a separate business entity, you continue to be the general manager of such business entity (or a successor entity) and you retain responsibility for managing the day to day operations of such business entity (even if the Company is a part of such larger entity and/or you no longer report to or interact with the Board of Directors of either the Company or the acquiring entity or if you no longer retain the title of Chief Executive Officer) such arrangements shall not be considered a Constructive Termination under the foregoing clause (iii).