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EXHIBIT 10.33
HI/FN, INC.
ALBERT E. SISTO EMPLOYMENT
AGREEMENT
This Employment Agreement (the "Agreement") is
entered into as of November 16, 2006, by and between Hi/fn, Inc.
(the "Company") and Albert E. Sisto ("Executive").
1. Duties and
Scope of Employment .
(a)
Positions and Duties . As of November 9,
2006 (the "Effective Date"), Executive will serve as the
Company’s Interim Chief Executive Officer. Executive will
report to the Company’s Board of Directors (the "Board") and
will continue in his role as Chairman of the Board. As of the
Effective Date, Executive will render such business and
professional services in the performance of his duties, consistent
with Executive’s position within the Company, as will
reasonably be assigned to him by the Board. The period Executive is
employed by the Company under this Agreement is referred to herein
as the "Employment Term".
Subject to the termination and notice provisions
herein, Executive agrees to remain employed with the Company until
the date upon which a successor Chief Executive Officer commences
employment with the Company. However, in the event that the Company
desires to retain Executive as its regular Chief Executive Officer,
then this Agreement will be terminated and the parties hereto will
negotiate a new employment agreement covering the terms and
conditions of Executive’s ongoing role.
(b)
Board Membership . Executive was appointed
to serve as a member of the Board prior to the Effective Date and
was appointed Chairman of the Board on the Effective Date. During
the Employment Term, at each annual meeting of the Company’s
stockholders at which Executive’s term as a member of the
Board has otherwise expired, the Company will nominate Executive to
serve as a member of the Board. Executive’s service as a
member of the Board will be subject to any required stockholder
approval. Upon the termination of Executive’s employment for
any reason, unless otherwise requested by the Board, Executive will
be deemed to have resigned from all positions held at the Company
and its affiliates, except that of Chairman of the Board,
voluntarily, without any further required action by Executive, as
of the end of Executive’s employment and Executive, at the
Board’s request, will execute any documents necessary to
reflect his resignation.
(c)
Obligations . During the Employment Term,
Executive will devote Executive’s full business efforts and
time to the Company and will use good faith efforts to discharge
Executive’s obligations under this Agreement to the best of
Executive’s ability and in accordance with each of the
Company’s corporate guidance and ethics guidelines, conflict
of interests policies and code of conduct. For the duration of the
Employment Term, Executive agrees not to actively engage in any
other employment, occupation, or consulting activity for any direct
or indirect remuneration without the prior approval of the Board
(which approval will not be unreasonably withheld); provided,
however, that Executive may, without the approval of the Board,
serve in any capacity with any civic, educational, or charitable
organization, provided such services do not interfere with
Executive’s obligations to Company. Executive expects to
serve as a member of the Board of Directors of Digital Signal
Corporation, Tulip Ego Lifestyle, and Validity Sensors, Inc. and
such service will not constitute a violation of this section
1(c).
Executive hereby
represents and warrants to the Company that Executive is not party
to any contract, understanding, agreement or policy, written or
otherwise, that would be breached by Executive’s entering
into, or performing services under, this Agreement. Executive
further represents that he has disclosed to the Company in writing
all threatened, pending, or actual claims that are unresolved and
still outstanding as of the Effective Date, in each case, against
Executive of which he is aware, if any, as a result of his
employment with his current employer (or any other previous
employer) or his membership on any boards of directors.
(d)
Other Entities . Executive agrees to serve
and will be appointed, without additional compensation, as an
officer and director for each of the Company’s subsidiaries,
partnerships, joint ventures, limited liability companies and other
affiliates, including entities in which the Company has a
significant investment as determined by the Company. As used in
this Agreement, the term "affiliates" will include any entity
controlled by, controlling, or under common control of the
Company.
2. At-Will
Employment . Executive and the Company agree that
Executive’s employment with the Company constitutes "at-will"
employment. Executive and the Company acknowledge that this
employment relationship may be terminated at any time, upon written
notice to the other party, with or without good cause or for any or
no cause, at the option either of the Company or Executive.
3. Compensation .
(a)
Base Salary . As of the Effective Date,
the Company will pay Executive an annual salary of $350,000 as
compensation for his services (such annual salary, as is then
effective, to be referred to herein as "Base Salary"). The Base
Salary will be paid periodically in accordance with the
Company’s normal payroll practices and be subject to the
usual, required withholdings.
(b)
Annual Incentive . Executive will be
eligible to receive annual cash incentives payable for the
achievement of performance goals established by the Board or by the
Compensation Committee of the Board (the "Committee"). During the
Employment Term, Executive’s target annual incentive ("Target
Annual Incentive") will equal 65% of Executive’s Base Salary.
The actual earned annual cash incentive, if any, payable to
Executive for any performance period will depend upon the extent to
which the applicable performance goal(s) specified by the Committee
are achieved or exceeded and will be adjusted for under- or
over-performance.
(c)
Stock Options .
(i)
Following the Effective Date, the Committee
will grant an option to purchase 225,000 shares of Company common
stock at a per share exercise price equal to the closing price per
share on the Nasdaq Global Market ("Nasdaq") for the common stock
of the Company on the date of grant (the "Option"). The Option will
be granted under and subject to the terms, definitions and
provisions of the Company’s Amended and Restated 1996 Equity
Incentive Plan (the "Plan") and will be scheduled to vest 1/36
th of the shares subject to the Option each month
following the Effective Date, subject to Executive’s
continued employment with the Company as its Chief Executive
Officer (whether on an interim basis or otherwise) through each
scheduled vesting date. Upon Executive ceasing to be the
Company’s Chief Executive Officer (whether on an
interim
-2-
basis or otherwise), all vesting of the Option
will terminate immediately and the unvested portion of the Option
will immediately terminate. Notwithstanding the foregoing vesting
schedule, if during the first year of the Employment Term while
Executive is acting as the Company’s Chief Executive Officer,
the Company hires a successor Chief Executive Officer other than
Executive, the Option will immediately vest and become exercisable
as to 75,000 shares in addition to the number of shares subject to
the Option that have vested as of such date. Except as provided in
this Agreement, the Option will be subject to the Company’s
standard terms and conditions for options granted under the
Plan.
(ii)
Following the Effective Date, the Committee
will grant Executive 75,000 shares of restricted stock (the "Stock
Grant"). The Stock Grant will be granted under and subject to the
terms, definitions and provisions of the Plan, and will vest six
(6) months from the Effective Date, subject to Executive’s
continued employment with the Company as its Chief Executive
Officer on such date. Subject to the provisions of Section 7 of
this Agreement, upon Executive’s termination as the
Company’s Chief Executive Officer, all further vesting of the
Stock Grant will terminate immediately and such shares will be
forfeited to the Company at no cost to the Company. Notwithstanding
the foregoing, if during the first six (6) months of the Employment
Term, the Company hires a successor Chief Executive Officer other
than Executive, the Stock Grant will fully vest. Except as provided
in this Agreement, the Stock Grant will be subject to the
Company’s standard terms and conditions for restricted stock
granted under the Plan.
4. Employee
Benefits .
(a)
Generally . Executive will be eligible to
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