Exhibit 10.17
EMPLOYMENT
AGREEMENT
BY AND BETWEEN
FAVRILLE, INC.
AND
DAVID GUY
TABLE OF CONTENTS
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PAGE
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1.
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EMPLOYMENT
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1
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2.
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LOYAL AND CONSCIENTIOUS PERFORMANCE; EXCLUSIVE
PROPERTY
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2
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3.
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COMPENSATION OF EXECUTIVE
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2
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4.
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TERMINATION
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3
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5.
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CONFIDENTIAL AND PROPRIETARY
INFORMATION
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6
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6.
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ASSIGNMENT AND BINDING EFFECT
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6
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7.
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SURVIVAL
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6
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8.
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NOTICES
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7
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9.
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CHOICE OF LAW
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7
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10.
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INTEGRATION
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7
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11.
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AMENDMENT
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7
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12.
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WAIVER
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7
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13.
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SEVERABILITY
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8
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14.
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INTERPRETATION; CONSTRUCTION
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8
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15.
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REPRESENTATIONS AND WARRANTIES
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8
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16.
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COUNTERPARTS
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8
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17.
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REFERENCES
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8
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18.
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ARBITRATION
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8
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19.
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TRADE SECRETS OF OTHERS
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9
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20.
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ADVERTISING; WAIVER
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9
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i
EMPLOYMENT
AGREEMENT
THIS
EMPLOYMENT AGREEMENT (the
“Agreement” ) is made and entered into
effective as of December 1, 2005 (the “Effective
Date” ) by and between FAVRILLE, INC. , a
Delaware corporation (the “Company” ),
and DAVID GUY ( “Executive” ). The
Company and Executive are collectively referred to herein as the
“Parties , ” and each is
individually referred to herein as a “Party
. ”
Recitals
A.
The Company desires assurance of the
association and services of Executive in order to retain
Executive’s experience, skills, abilities, background and
knowledge, and is willing to engage Executive’s services on
the terms and conditions set forth in this Agreement.
B.
Executive desires to be in the
employ of the Company and is willing to accept such employment on
the terms and conditions set forth in this Agreement.
Agreement
In
consideration of the foregoing recitals and the mutual promises and
covenants herein contained, and for other good and valuable
consideration, the Parties, intending to be legally bound, agree as
follows:
1.
Employment.
1.1
Term. The Company
hereby employs Executive, and Executive hereby accepts employment
by the Company, upon the terms and conditions set forth in this
Agreement. The term of this Agreement shall begin on the
Effective Date and shall continue until it is terminated pursuant
to Section 4 (the “Term” ). On the
last day of the Term, Executive shall immediately resign from all
positions with the Company. Notwithstanding anything herein
to the contrary, either Party may terminate Executive’s
employment under this Agreement at any time, with or without Cause
(as defined in Subsection 4.6(b)), subject to the terms and
conditions of Sections 4 and 5.
1.2
Title. Executive
shall have the title of Chief Commercial Officer of the Company and
shall serve in such other capacity or capacities as the Board of
Directors of the Company (the “Board” )
may prescribe from time to time. Executive shall report to
the Chief Executive Officer of the Company (the
“CEO” ) and the Board.
1.3
Duties. Executive
shall do and perform all services, acts or things necessary or
advisable to manage and conduct the business of the Company and
that are normally associated with the position of Chief Commercial
Officer, consistent with the bylaws of the Company and as required
by the CEO and the Board.
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1.4
Policies and Practices. The employment relationship between the Parties
shall be governed by the policies and practices established by the
Company and the Board. Executive hereby acknowledges that
Executive has read the Company’s Employee Handbook, which,
along with this Agreement, shall govern the terms and conditions of
Executive’s employment with the Company. In the event
that the terms of this Agreement differ from or are in conflict
with the Company’s policies or practices or the
Company’s Employee Handbook, the terms of this Agreement
shall control. Normal working hours are from 8:00 a.m. to
5:00 p.m., Monday through Friday. As an exempt salaried
employee, you will be expected to work additional hours as required
by the nature of your work assignments.
1.5
Location . Unless
the Parties otherwise agree in writing, during the Term, Executive
shall perform the services Executive is required to perform
pursuant to this Agreement at the Company’s offices located
in San Diego, California, or at any other place the Company
maintains a principal office; provided, however, that the
Company may from time to time require Executive to travel
temporarily to other locations in connection with the
Company’s business.
2.
Loyal and Conscientious
Performance; Exclusive Property.
2.1
Loyalty . During
Executive’s employment by the Company, Executive shall devote
Executive’s full business energies, interest, abilities and
productive time to the proper and efficient performance of
Executive’s duties under this Agreement.
2.2
Exclusive Property. Executive agrees that all business
procured by Executive on behalf of the Company, and all
Company-related business opportunities and plans made known to
Executive, while employed by the Company are and shall remain the
exclusive property of the Company.
3.
Compensation of
Executive.
3.1
Base Salary. The
Company shall pay Executive a base salary of $250,000 per year,
less payroll deductions and all required withholdings payable in
regular periodic payments in accordance with Company policy.
Such base salary shall be subject to annual review and prorated for
any partial year of employment on the basis of a 365-day fiscal
year.
3.2
Stock Options.
Upon the commencement of Executive’s employment with the
Company and subject to approval of the Board or the Compensation
Committee and the terms of the Company’s Amended and Restated
2001 Equity Incentive Plan, as may be amended from time to time
(the “Plan” ), Executive will be granted
a stock option (the “Option” ) under the
Plan to purchase shares of the Company’s common stock (the
“Common Stock” ). To the maximum
extent possible, the Option shall be an Incentive Stock Option as
such term is defined in Section 422 ( “Section
422” ) of the Internal Revenue Code of 1986, as
amended. The Option will be governed by and granted pursuant
to the Plan and a separate Grant Notice and Stock Option Agreement,
in substantially the form attached hereto as EXHIBIT A
, as may be amended from time to time upon the approval of the
Board or the Compensation Committee. The exercise price per
share of the Option will be equal to the fair market value of the
Common Stock established on the date of grant subject to any
limitations under Section 422 and approval by the
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Board or the Compensation Committee. The
Option will be subject to vesting over four years so long as
Executive provides Continuous Service (as defined in the Plan) to
the Company or an Affiliate in accordance with the Plan, according
to the following schedule: 25% of the shares subject to the Option
will vest on the first anniversary of the date of grant and 1/48
th of the shares subject to the Option will vest monthly
thereafter over the next three years.
3.3
Employment Taxes .
All of Executive’s compensation shall be subject to customary
withholding taxes and any other employment taxes as are commonly
required to be collected or withheld by the Company.
3.4
Benefits.
Executive shall, in accordance with Company policy and the terms of
the applicable plan documents, be eligible for the following
standard Company benefits: medical, dental and vision insurance, as
well as participation in the Company’s Section 125
flexible spending plan and participation in the Company’s
401(k) plan, subject to the terms of those plans. Executive also
shall, in accordance with Company policy and the terms of the
applicable plan documents, be eligible to participate in benefits
under any executive benefit plan or arrangement which may be in
effect from time to time and made available to the Company’s
executive or key management employees. The Company reserves the
right to modify benefits from time to time as it deems necessary in
its sole discretion. Executive will also be eligible for paid time
off in accordance with the Company’s flexible
“time-off” plan. Executive will accrue flexible
“time-off” at a rate of 25 days per year and will be
entitled to 12 holidays per year. The Company reserves the right to
modify its policies from time to time as it deems necessary in its
sole discretion.
4.
Termination.
4.1
Termination for Complete Disability . Executive’s employment with the
Company shall terminate effective upon the date of
Executive’s Complete Disability (as defined in Subsection
4.6(a)).
4.2
Termination by the Company . Executive’s employment with the
Company may be terminated by the Company as follows:
(a)
For Cause . The
Company may terminate Executive’s employment under this
Agreement at any time for “Cause” (as
defined in Subsection 4.6(b)) by delivery of written notice to
Executive specifying the Cause or Causes relied upon for such
termination. Any notice of termination given pursuant to this
Subsection 4.2(a) shall effect termination as of the date specified
in such notice or, in the event no such date is specified, two
business days after written notice is given to
Executive.
(b)
Without Cause . The
Company may terminate Executive’s employment under this
Agreement at any time and for any reason by delivery of written
notice of such termination to Executive. Any notice of
termination given pursuant to this Subsection 4.2(b) shall effect
termination as of the date specified in such notice or, in the
event no such date is specified, two weeks after written notice is
given to Executive.
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4.3
Termination by Executive . Executive may terminate
Executive’s employment with the Company at any
time.
4.4
Compensation upon Termination .
(a)
Death or Complete Disability . If Executive’s employment by the
Company is terminated by Executive’s death or Complete
Disability, the Company shall pay to Executive’s heirs or
Executive, as applicable, Executive’s base salary and accrued
and unused vacation benefits earned through the date of termination
at the rate in effect at the time of such termination, less
standard deductions and withholdings, and the Company shall
thereafter have no further obligations to Executive and/or
Executive’s heirs under this Agreement.
(b)
With Cause. If
Executive’s employment is terminated by the Company for
Cause, the Company shall pay Executive’s base salary and
accrued and unused vacation benefits earned through the date of
termination at the rate in effect at the time of such termination,
less standard deductions and withholdings, and the Company shall
thereafter have no further obligations to Executive under this
Agreement.
(c)
Without Cause. If the
Company terminates Executive’s employment without Cause, the
Company shall pay Executive’s base salary and accrued and
unused vacation earned through the date of termination at the rate
in effect at the time of such termination, less standard deductions
and withholdings. In addition, subject to the limitations set
forth in Subsection 4.5(d) and upon Executive’s furnishing to
the Company an effective release and waiver of claims, in
substantially the form attached hereto as EXHIBIT B
(the “Release and Waiver” ), Executive
also shall be entitled to:
i.
The equivalent of Executive’s
annual base salary in effect at the time of termination for a
period of 9 months (the “Severance
Period” ), in each case, less standard deductions and
withholdings, to be paid over a period of 9 months after the date
of termination pursuant to the Company’s standard payroll
practices;
ii.
In the event Executive elects
continued coverage under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (
“COBRA” ), the Company shall reimburse
Executive for the same portion of Executive’s COBRA health
insurance premium that it paid during Executive’s employment
up until the earlier of either (i) the last day of the
Severance Period or (ii) the date on which Executive begins
full-time employment with another company, organization or business
entity; and
iii.
The accelerated vesting of the
portion of any outstanding option to purchase Common Stock held by
Executive on the date of termination that would have otherwise
vested during the Severance Period, so that each such portion is
vested and exercisable as of the date of termination to the extent
such portion would otherwise become vested and exercisable as of
the end of the Severance Period.
(d)
Termination of Obligations . Notwithstanding any provisions in this
Agreement to the contrary, including any provisions contained in
this Subsection 4.5, the
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Company’s obligations, and
Executive’s rights, pursuant to Subsection 4.5(c) shall cease
and be rendered a nullity immediately should Executive violate any
provision of Section 2 and Section 5, or should Executive violate
the terms and conditions of either Executive’s Proprietary
Information and Inventions Agreement or Nondisclosure Agreement
with the Company (discussed in Subsection 5.1).
4.5
Definitions . For
purposes of this Agreement, the following terms shall have the
following meanings:
(a)
Complete Disability . “Complete
Disability” shall mean the inability of Executive to
perform Executive’s duties under this Agreement because
Executive has become permanently disabled within the meaning of any
policy of disability income insurance covering employees of the
Company then in force. In the event the Company has no policy
of disability income insurance covering employees of the Company in
force when Executive becomes disabled, the term
“Complete Disability” shall mean the
inability of Executive to perform Executive’s duties under
this Agreement by reason of any incapacity, physical or mental,
that the Board, based upon medical advice or an opinion provided by
a licensed physician acceptable to the Board, determines to have
incapacitated Executive from satisfactorily performing all of
Executive’s usual services for the Company for a period of at
least 120 days during any 12-month period (whether or not
consecutive). Based upon such medical advice or opinion, the
determination of the Board shall be final and binding and the date
such determination is made shall be the date of such Complete
Disability for purposes of this Agreement.
(b)
For Cause .
“Cause” for the Company to terminate
Executive’s employment hereunder shall mean the occurrence of
any of the following events:
(i)
Executive’s conviction of any
felony or any crime involving fraud or dishonesty;
(ii)
Executive’s participation
(whether by affirmative act or omission) in a fraud, act of
dishonesty or other act of misconduct against the Company and/or an
Affiliate;
(iii)
Conduct by Executive which, based
upon a good faith and reasonable factual investigation by the
Board, demonstrates Executive’s gross unfitness to
serve;
(iv)
Executive’s violation of any
fiduciary duty or duty of loyalty owed to the Company and/or an
Affiliate;
(v)
Executive’s breach of any
material term of any material contract between Executive and the
Company and/or an Affiliate;
(vi)
Executive’s violation of any
material Company policy; and
(vii)
Executive’s violation of state
or federal law in connection with the performance of
Executive’s job.
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The determination that a termination
is for Cause shall be made by the Board in its sole and exclusive
judgment and discretion.
5.
Confidential and Proprietary
Information.
5.1
As a condition of employment,
Executive agrees to execute and abide by the terms of Proprietary
Information and Inventions Agreement, in substantially the form
attached hereto as EXHIBIT C , and a Nondisclosure
Agreement, in substantially the form attached hereto as EXHIBIT
D .
5.2
Executive recognizes that
Executive’s employment with the Company will involve contact
with information of substantial value to the Company that is not
generally known in the trade and that gives the Company an
advantage over its competitors who do not know or use it, including
but not limited to, techniques, designs, drawings, processes,
inventions know how, strategies, marketing, and/or advertising
plans or arrangements, developments, equipment, prototypes, sales,
supplier, service provider, vendor, distributor and customer
information, and business and financial information relating to the
business, products, services, practices and techniques of the
Company (hereinafter referred to as “Confidential and
Proprietary Information” ). Executive will at
all times regard and preserve as confidential such Confidential and
Proprietary Information obtained by Executive from whatever source
and will not, either during Executive’s employment with the
Company or thereafter, publish or disclose any part of such
Confidential and Proprietary Information in any manner at any time,
or use the same except on behalf of the Company, without the prior
written consent of the Company.
6.
Assignment and Binding
Effect.
Neither this Agreement nor any rights or obligations hereunder
shall be assignable by Executive. This Agreement shall be
binding upon and inure to the benefit of the Company and its
successors, assigns and legal representatives.
7.
SURVIVAL. Subsections 4.4(c) and 4.4(d) and Sections 5, 6,
7, 8, 9, 18 and 19 shall survive the termination of this
Agreement.
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8.
NOTICES. All
notices or demands of any kind required or permitted to be given by
the Company or Executive under this Agreement shall be given in
writing and shall be personally delivered (and receipted for) or
faxed during normal business hours or mailed by certified mail,
return receipt requested, postage prepaid, addressed as
follows:
If to the Company:
Favrille, Inc.
10421 Pacific Center
Court
San Diego, CA 92121
Phone: (858) 526-8000
Fax: (858) 597-7040
Attn: Chief Financial
Officer
Any such written notice
shall be deemed given on the earlier of the date on which such
notice is personally delivered or three days after its deposit in
the United States mail as specified above. Either Party may
change its address for notices by giving notice to the other Party
in the manner specified in this Section 8.
9. CHOICE
OF LAW. This
Agreement is made in San Diego, California. This Agreement
shall be construed and interpreted in accordance with the internal
laws of the State of California, excluding its conflicts of laws
principles.
10.
INTEGRATION. Except
as provided in Executive’s Proprietary Information and
Inventions Agreement and Nondisclosure Agreement with the Company,
the Plan and the related Plan documents, this Agreement, including
EXHIBIT B hereto, contains the complete, final and exclusive
agreement of the Parties relating to the terms and conditions of
Executive’s employment with the Company and the termination
of Executive’s employment, and supersedes all prior and
contemporaneous oral and written employment agreements or
arrangements between the Parties. To the extent this Agreement
conflicts with the Proprietary Information and Inventions Agreement
or the Nondisclosure Agreement, the terms of such Proprietary
Information and Inventions Agreement or Nondisclosure Agreement,
respectively, shall control.
11. AMENDMENT.
This Agreement cannot be
amended or modified except by a written agreement signed by
Executive and the Company.
12. WAIVER.
No term, covenant or
condition of this Agreement or any breach thereof shall be deemed
waived, except with the written consent of the Party against whom
the wavier is claimed, and any waiver or any such term, covenant,
condition or breach shall not be deemed to be a waiver of any
preceding or succeeding breach of the same or any other term,
covenant, condition or breach.
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13.
SEVERABILITY. The
finding by a court of competent jurisdiction of the
unenforceability, invalidity or illegality of any provision of this
Agreement shall not render any other provision of this Agreement
unenforceable, invalid or i
