Exhibit 10.10
EMPLOYMENT AGREEMENT
This Agreement is made and entered into effective as of May 15, 2000 by
and between Michael Klein (the "Executive") and R2 Technology, Inc., a
California corporation (the "Company").
1. Duties and Scope of Employment. The Company hereby employs the
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Executive in the position of President and Chief Executive Officer of the
Company. The Executive will, to the best of his ability during this
employment, devote his full time and best efforts to the performance, duties and
functions of the position of President and Chief Executive Officer of the
Company, and in the performance of those duties will comply with the policies of
the Company and the direction of the Board of Directors. At the next meeting of
the Board of Directors after the commencement of the Executive's employment with
the Company, the excutive will be appointed as a member of the Company's Board
of Directors, and will serve in that capacity for as long as he remains the
President and Chief Executive Officer of the Company.
2. Compensation.
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(a) The Company agrees to pay the Executive and the
Executive agrees to accept as the compensation for his services, a monthly base
salary of $20,416.67, less applicable witholding, payable in accordance with the
Company's standard payroll policy. The first and last payment by the Company to
the Executive shall be prorated, if necessary, to reflect a commencement or
termination date other than the first or last working day of a pay period.
Additionally, at least annually, the Board of Directors will consider increases
in the annual rate of salary in light of the Executive's individual performance
and other relevant individual and business factors.
(b) As additional compensation, the Executive will be
eligible to receive a cash bonus based on criteria set by the board of
directors annually. For calendar year 2000 the Executive shall be entitled to a
cash bonus based on achievement of the revenue and operating income goals set
forth on Exhibit A.
(c) The Company will lend the Executive $75,000 upon his
commencement of employment with the Company. This loan will be evidenced by a
promissory note payable to the Company which promissory note will bear interest
at the minimum rate to avoid imputed interest and be forgiven in its entirety on
the earlier of the first anniversary of the commencement of the Executive's
employment with the Company or a sale of the Company in which control is
transferred provided in either case that the Executive is employed by the
Company of that date.
3. Equity Compensation.
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(a) The Company will grant the Executive a stock
option ("Option") exerciseable for either (a) 5% of the fully diluted capital
stock or (b) 4% of the fully diluted capital stock with an opportunity to earn
an additional 2% based on the attainment of performance objectives set forth in
Exhibit A. The Executive shall elect one of these programs within 30 days of the
date of this Agreement. The percentages will be calculated as of the date of
this Agreement. The exercise price for the option shall be $1.10 per share (the
fair market value of the Company's Common Stock). The Option shall vest during
the Executive's employment over a 48 month period. 12/48 of the shares subject
to the Option shall vest at the end of one year following the commencement date
of the Executive's employment with the Company and an additional 1/48 of the
shares shall vest at the end of each full month thereafter until all of the
shares are excisable, provided in each case that the Executive's employment with
the Company has not terminated prior to such date. The vesting on the Option
shall accelerate in its entirety upon your involuntary or constructive
termination of employment following a sale of the business in which control is
transferred as more fully described in the Option.
(b) The Executive will be entitled to vacation, fringe benefits and
reinbursement for reasonable out of pocket expenses in accordance with the
Company's standard practice covering executive personnel, as such may be in
effect from time to time.
4. Proprietary Information Agreement. The Executive shall enter into the
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Company's standard proprietary information agreement, a copy of which has been
delivered to the Executive.
5. Term of Termination.
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(a) The term of this Agreement shall commence on May 15, 2000 and
shall continue until terminated by either party in accordance with the
provisions of this Section 5.
(b) This Agreement may be terminated by the Company for justifiable
cause (as hereinafter defined) upon 30 days notice without any severance
obligation on the part of the Company. For the purpose of this Agreement, the
term justifiable cause shall include acts of moral turpitude, the willful
habitual neglect of the executives' obligations under this Agreement misuse of
corporate funds, or any other act of gross misconduct.
(c) This Agreement may be terminated by the Company upon 30 days
notice without justifiable cause provided that the Company shall pay the
Executive an amount equal to the sum of his then current monthly base salary as
a severance payment to him for a period of nine months following the date of
termination, or until the Executive finds other full time employment, whichever
is shorter. The executive's medical benefits shall continue during this
severance period. The payment to the Executive of the severance payment
described in this Section 5 shall discharge all of the Company's obligations to
the Executive.
(d) This Agreement may be terminated by the Executive at any time upon
30 days written notice, in which case the Company shall have no severance
obligations to the Executive.
6. Miscellaneous.
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(a) This Agreement shall be binding upon the legal representatives
distributees, successors and assigns of the parties hereto.
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(b) This Agreement contains the entire agreement of the
parties, and may not be changed or amended except with a writing signed by the
party against whom enforcement of such change or amendment is sought.
(c) This Agreement supercedes all prior written or oral
agreements between the Executive and the Company or any officer, director or
shareholder of the Company. It is agreed that a waiver by either party of a
breach of any provision of this Agreement shall not operate or be construed as a
waiver of any subsequent breach by the same party.
(d) In case one or more of the provisions contained in this
Agreement shall for any reason be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not effect
any other provisions of this Agreement but such provisions shall be deemed
deleted and such deletions shall not effect the validity of other provisions of
this Agreement.
(e) This Agreement shall be governed by and construed
according to the laws of the State of California. The parties hereto agree that
any dispute or controversy arising out of or relating to or in connection with
this Agreement, or the interpretation, validity, construction, performance,
breach or termination thereof shall be finally settled by binding arbitration to
be held in Santa Clara County, California under the employment dispute
resolution rules of the American Arbitration Association as then in effect. The
arbitrator may grant in junctions or other relief in such dispute or
controversy. The decision of the arbitrator shall be final, conclusive and
binding on the parties to the arbitration; and judgement may be entered on the
decision of the arbitrator in any court having jurisdiction.
Executive has read and understands this Section 6(e) which discusses
arbitration. Executive understands that by signing this Agreement executive
agrees to submit any claims arising out of, relating to or in connection with
this Agreement or the interpretation, validity, construction, performance,
breach or termination thereof to binding arbitration and that this arbitration
clause constitutes a waiver of executive's right to a jury trial and relates to
the resolution of all disputes relating to the executive's relationship with the
Company.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
R2 Technology, Inc.
By: /s/ Steve Lazarus
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Title: DIRECTOR
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Accepted:
/s/ Michael S. Klein
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Michael Klein
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EXHIBIT A
Cash Bonus Mix
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Variance (10)% Plan (10)% (11)% (20)% (30)%
Revenue $15,816 $17,573 $19,330 $19,500 $21,088 $22,845
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Op
Income
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($4,043) 80% 90% 100% 110% 120% 130%
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($3,234) 90% 100% 110% 120% 130% 140%
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($2,650) 100% 110% 120% 150% 160% 170%
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($1,617) 110% 120% 130% 160% 170% 180%
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$ 0 120% 130% 140% 170% 180% 190%
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Equity Bonus Mix
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Variance (10)% Plan (10)% (11)% (20)% (30)%
Revenue $15,816 $17,573 $19,330 $19,500 $21,088 $22,845
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Op
Income
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($4,043) 4.0% 4.0% 4.5% 5.0% 6.0% 6.0%
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($3,234) 4.0% 5.0% 5.25% 5.5% 6.0% 6.0%
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($2,650) 4.0% 5.25% 5.5% 6.0% 6.0% 6.0%
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($1,617) 4.5% 5.5% 6.0% 6.0% 6.0% 6.0%
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$ 0 5.0% 6.0% 6.0% 6.0% 6.0% 6.0%
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