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EXHIBIT 10.5
EMPLOYMENT AGREEMENT
This Employment Agreement is entered into between JT Storage, Inc., a
Delaware corporation (the "Company"), and Kenneth D. Wing ("Executive")
effective as of June 26, 1995 (the "Effective Date") and sets forth the terms
and conditions of the Company's employment of Executive, as follows:
1. Position. Upon the Effective Date, Executive is employed as Senior
Vice President-Engineering and Quality, reporting directly to the Chief
Executive Officer of the Company.
2. Employment Term. The term of employment shall be "at will," and
may be terminated by either party at any time either with or without cause
(subject to certain severance obligations of the Company to Executive under
certain circumstances within two years after the Effective Date, as provided in
Section 7 below).
3. Base Compensation. For his services, the Company will pay
Executive a base salary at the rate of $225,000 per year (the "Base Salary"),
payable in accordance with the Company's general practices for the payment of
base salary to its executives. The Company, by action of its Board of Directors
in its discretion, may increase, but not decrease, the Base Salary at any time
and from time to time during the first two years following the Effective Date.
4. Management Bonus Programs. Executive shall be eligible to
participate in any distribution of bonuses in a manner commensurate with the
participation of the Company's other executives. The Company intends to
establish a Management Bonus Program after such time as the Company's operations
become profitable. It is anticipated that, under such Management Bonus Program,
Executive and other senior executives will receive a performance and
compensation review on an annual basis.
5. Loan to Executive. Upon the Effective Date, Executive will receive
a $160,000 loan from the Company (the "Loan") which shall bear interest at the
lowest applicable federal rate required to avoid imputed interest under federal
tax laws. The principal amount of the Loan, plus such interest, will be subject
to forgiveness as follows:
(a) subject to Executive's continued employment with the Company
through January 1, 1996, on January 1, 1996 $80,000 principal of the Loan will
be forgiven and all interest accrued thereon as of such date will be forgiven;
and
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(b) subject to Executive's continued employment with the Company
through January 1, 1997, on January 1, 1997 $80,000 principal balance and all
accrued interest on the Loan shall be forgiven.
As provided in Section 7 below, if, prior to January 1, 1997,
Executive is terminated by the Company without "cause" (as defined in Section
7(b) below) or Executive dies or becomes disabled, all principal and accrued
interest on the Loan shall be forgiven as of the termination date. If Executive
is terminated by the Company for "cause," or if Executive terminates his
employment with the Company, in either case prior to January 1, 1997, all unpaid
principal and accrued interest on the Loan shall become due and payable
immediately upon such termination.
6. Stock Options. Upon Executive's commencement of employment,
Executive will be granted an incentive stock option, under the Company's 1995
Stock Option Plan (a copy of which has been delivered to Executive, and receipt
of which is hereby acknowledged by Executive), to purchase 300,000 shares of
Common Stock of the Company at an option exercise price of $.25 per share. Such
option shall vest (that is, become exercisable) over a four-year period, such
that 37,500 shares shall vest six months after the Effective Date and,
thereafter, an additional 6,250 shares shall vest on a monthly basis until the
option becomes fully vested on the fourth anniversary of the Effective Date.
Such option shall otherwise be in accordance with the terms and conditions of
the 1995 Stock Option Plan and shall not be in any manner affected by this
Agreement. As an alternative to the foregoing, Executive may choose (subject to
compliance with all applicable securities laws) to purchase 300,000 shares of
Common Stock, at a price of $.25 per share, which shares will be subject to a
repurchase right of the Company (at $.25 per share) upon any termination of
employment with or without cause, and which repurchase right will terminate in
the same manner that the option described above would vest (i.e., the Company's
repurchase right would terminate as to 37,500 shares six months after the
Effective Date and, thereafter, would terminate as to an additional 6,250 shares
on a monthly basis until the fourth anniversary of the Effective Date, at which
time the Company's repurchase right would have fully terminated). If this
alternative is used, Executive will pay 20% of the purchase price for the shares
in cash, and the balance will be represented by a full recourse promissory note
(bearing interest at the lowest applicable federal rate required to avoid
imputed interest under federal tax laws), which would require four equal annual
payments of principal, plus accrued interest through the date of payment, on
each anniversary of the purchase date. Such promissory note would be secured by
the 300,000 shares of Common Stock.
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7. Termination of Employment Within Two Years.
(a) Termination by Company Without Cause. If the Company elects
to terminate Executive's employment hereunder without "cause" (as defined in
paragraph (b) below) within two years after the Effective Date, the Company will
provide Executive the following severance benefits:
(i) The Company will continue to pay to Executive the
Executive's then-effective Base Salary (which shall not be less than
$225,000) until the second anniversary of the Effective Date;
provided, however, that (1) such Base Salary payments shall be
reduced by any amounts earned or accrued by Executive during such
period as compensation from any subsequent employer, and (2) such
Base Salary payments shall terminate immediately if Executive
commences employment with, or provides advice or consulting
services to, a competitor of the Company; and
(ii) The Company shall continue to provide Executive with
medical, dental and life insurance coverage (as generally available
to executives of the Company) during such period as the Company is
obligated to continue to pay to Executive the full amount of Base
Salary pursuant to the immediately preceding paragraph (i).
(b) Termination by Executive, or Termination by Company for
Cause. If the Executive terminates his employment hereunder (including a
termination by reason of death or disability) or if the Company elects to
terminate Executive's employment for cause, in either case within two years
after the Effective Date, such employment will terminate on the date fixed by
Executive or the Company (as the case may be), and thereafter the Company will
not be obligated to pay Executive any additional compensation, other than
compensation due and owing to the date of termination. "Cause," for purposes of
this Agreement, shall mean any of the following:
(i) Willful breach by Executive of any material provision
of this Agreement;
(ii) Gross negligence or dishonesty in the performance of
Executive's duties hereunder; or
(iii) Executive intentionally engaging in conduct which is
materially detrimental to the business of the Company.
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8. Other Provisions.
(a) Executive shall be entitled to all standard Company
benefits.
(b) Upon presentation of itemized documentation, the Company
shall pay or reimburse Executive for all reasonable and necessary expenses
incurred by him in connection with his duties hereunder.
(c) If any provision of this Agreement shall be held to be
invalid or unenforceable, such invalidity or unenforceability shall not affect
or impair the validity or enforceability of the remaining provisions of this
Agreement, which shall remain in full force and effect in accordance with their
terms. This Agreement, together with the Company's standard form of
confidentiality and inventions assignment agreement (which Executive hereby
agrees to execute and perform), embodies the entire agreement between the
parties relating to the subject matter hereof, and supersedes all previous
agreements or understandings. No provision of this Agreement may be amended or
waived, except by a writing signed by the parties.
(d) This Agreement shall be governed by the laws of the State of
California.
JT STORAGE, INC.
By: /s/ D. T. Mitchell
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David T. Mitchell, President
/s/ Kenneth Wing
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Kenneth D. Wing, individually
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