Sample Business Contracts


Employment Agreement - Picture Works Inc. and Donald W. Strickland

Employment Forms

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                              EMPLOYMENT AGREEMENT


         THIS EMPLOYMENT AGREEMENT (the "Agreement"), made this 8th day of
March, 1996, is entered into by Picture Works, Inc., a Delaware Corporation with
its principal place of business at 649 San Ramon Valley Boulevard, Danville,
California 94526 (the "Company") and Donald W. Strickland, currently residing at
20101 Mendelsohn Lane, Saratoga, California 95070 (the "Executive").

         The Company desires to employ the Executive, and the Executive desires
to be employed by the Company. In consideration of the mutual covenants and
promises contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by the parties hereto,
the parties agree as follows:

         1.       Employment. The Company hereby agrees to employ the Executive
and the Executive hereby accepts employment with the Company, upon the terms set
forth in this Agreement. Executive's employment with the Company will commence
on March 11, 1996, and shall continue until terminated pursuant to the terms
hereof.

         The provisions of Section 13 of this Agreement shall survive any such
termination. The Term of the Executive's employment hereunder is referred to as
the "Employment Period".

         2.       Title:  Capacity.

                  2.1      Chief Executive Officer. The Executive shall serve as
President and Chief Executive Officer ("CEO"), reporting to the Board of
Directors (the "Board") and having such duties and responsibilities as may be
assigned from time to time to the Executive by the Board, provided however that
the Executive shall be employed in an executive capacity as a member of the
Company's management team. The Executive shall be based at the Company's
headquarter in the Danville, California area.

                  2.2      Board Seat. For so long as the Executive is employed
as CEO, the Company will use its best efforts to cause the Executive to be
elected as a member of the Board.

                  2.3      Full-Time. The Executive agrees to devote his entire
business time, attention and energies to the business and interests of the
Company during his Employment Period.

         3.       Compensation and Benefits.

                  3.1      Salary. The Company shall pay the Executive a monthly
salary of $16,666,66. Such salary shall be subject to annual review by the
Company and, based upon such review, may be increased (but shall not be
decreased except in connection with a general reduction in pay affecting all
executive officers of the Company).

                  3.2      Fringe Benefits. The Executive shall be entitled to
participate in all bonus and benefit programs that the Company establishes and
makes available to its employees; if any, to the extent that the Executive's
position, tenure, salary, age, health and other qualifications to make him
eligible to participate. The Executive shall be entitled to four weeks vacation
each year. To the extent that the Executive does not take four weeks vacation in
any year, such unused time shall accrue and may be taken in any subsequent
Employment Year. Additionally, the Company shall pay five thousand dollars
($5,000) annually to the Executive to enable him to purchase one million five
hundred thousand dollars ($1,500,000) of term life insurance.

                  3.3      Reimbursement of Expenses. The Company shall
reimburse the Executive for all reasonable travel, entertainment and other
expenses incurred or paid by the Executive in connection with, or related to,
the performance of his duties, responsibilities or services under this
Agreement, upon presentation by the Executive of documentation, expense
statements, vouchers and/or such other supporting information as the Company may
request.

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                  3.4      Stock Purchase. As of the first Board Meeting
following March 11, 1996, the Executive will be given the opportunity to
purchase such number of shares of the Common Stock of the Company as is equal to
6% of the outstanding Common Stock of the Company, such 6% to be calculated on a
fully-diluted basis assuming (i) the completion of the financing with Battery
Ventures and the conversion of any preferred stock issued in such financing, and
(ii) the grant and exercise of stock options making the assumption set forth in
clause (i) of this sentence. Such Shares shall vest at the rate of twenty-five
percent (25%) per year. Executive may use a full recourse promissory note to
purchase such shares, and shall pledge such shares as security for repayment of
the note. Such note and pledge agreement shall provide that if Executive so
elects, such shares may be applied to the repayment of the note to the extent of
their fair market value at the time of repayment.

                  3.5      Transition. For so long as the Executive is an
employee of the Company (but in no event longer than the period commencing March
11, 1996 and ending August 13, 1998), the company will pay, or reimburse the
Executive six thousand eight hundred seventy-five dollars ($6,875) annually for
the interest expense on that certain obligation due his former employer, Apple
Computer, Inc.

                  3.6      Bonus. The Executive shall receive in the first
twelve months of his employment bonus payments totalling $100,000.00, payable in
quarterly installments of $25,000.00, with the first payment due June 1, 1996.
Thereafter, the Executive and the Board shall prepare and agree upon a plan for
the payment of bonuses to the Executive for each of the fiscal years subsequent
to the first twelve (12) months of the Executive's employment in which the
Executive is employed by the Company.

         4.       Change in Control.

                  In the event there is a change in control due to the sale or
merger of the Company, fifty percent (50%) of the Executive's unvested stock
options shall immediately be vested.


                  A "change in control of the Company shall be deemed to have
occurred if:

                  (a)      any person or entity is or becomes the beneficial
                           owner, directly or indirectly, of securities of the
                           company as a result of one or more transfers from
                           current stockholders representing 50% or ore of the
                           combined voting power of the Company's then
                           outstanding securities;

                  (b)      there occurs a merger or consolidation of the Company
                           with any other corporation, other than (1) a merger
                           or consolidation which would result in the voting
                           securities of the Company outstanding immediately
                           prior thereto continuing to represent (either by
                           remaining outstanding or by being converted into
                           voting securities of the surviving entity) more than
                           50% of the combined voting power of the voting
                           securities of the Company or such surviving entity
                           outstanding immediately after such merger or
                           consolidation (2) a merger or consolidation effected
                           to implement a recapitalization of the Company (or
                           similar transaction) in which no person or entity
                           acquires more than 50% or more of the combined voting
                           power of the Company's then outstanding securities;
                           or

                  (c)      the Company sells or disposes of all or substantially
                           all of the Company's assets.

         5.       Effect of Termination; Severance.

                  5.1      Termination. The Company may terminate the
Executive's employment hereunder at any time, with or without cause, upon
written notice from the Company to the Executive (or upon such longer notice as
the Company may state in its written notice). The Executive may terminate his
employment hereunder by providing written of termination to the Company.


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                  5.2      Termination for Cause or Voluntary Termination by the
Executive. In the event Executive's employment is terminated by the Company for
cause or voluntarily by the Executive, the Company shall pay to the Executive
the compensation and benefits otherwise payable to him under Section through the
last day of his actual employment by the Company.

                  5.3      Termination Other Than For Cause. If the Executive's
employment is terminated by the Company other than for cause, the Company shall
continue the payment of the Executive's salary and benefits and his shares shall
continue to vest until the earlier of twelve months after his actual termination
of employment or the Executive's obtaining other full time employment. For
purposes of this Section, if the Executive is demoted from his position as CEO
and within one month thereafter voluntarily terminates his employment with the
Company, such termination shall be deemed a termination by the Company other
than for cause.

                  5.4      Definition of "Cause". For the purpose of this
Section 5, "cause" for termination shall be deemed to exist upon (a) the
material breach by the Executive of any of his obligations the Agreement, (b) a
good faith finding by the Board of (i) gross negligence, willful misconduct,
dishonesty or breach of fiduciary duty to the Company or any subsidiary of the
Company; (ii) conviction for an act of embezzlement or fraud; or (iii) the
deliberate disregard of the rules or policies of the Company or any subsidiary
which results in a material directly or indirect loss, damage or injury to the
Company or any subsidiary.

         6.       Non-Disclosure Assignment of Inventions.

                  Executive agrees to execute the Company's standard employee
non-disclosure and assignment of invention agreements.

         7.       Other Agreements. Executive hereby represents that he is not
bound by the terms of any agreement with any previous employer or other party to
refrain from using or disclosing any trade secret or confidential or proprietary
information in the course of his employment with the Company or to refrain from
competing, directly or indirectly, with the business of such previous employer
or any other party, which in either case, would be violated by the Executive
being employed by the Company hereunder. Executive further represents that his
performance of all the terms of this Agreement and as an executive of the
Company does not and will not breach any agreement to keep in confidence
proprietary information, knowledge or data acquired by him in confidence or in
trust prior to his employment with the Company.

         8.       Notices. All notices required or permitted under this
Agreement shall be in writing and shall be deemed effective upon personal
delivery or upon deposition the United States Post Office, by certified mail,
postage prepaid, addressed to the other party at the address shown above, or at
such other address or addresses as either party shall designate to the other in
accordance with this Section 8.

         9.       Pronouns. Whenever the context may require, any pronouns in
this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular forms of nouns and pronouns shall include the plural,
and vice versa.

         10.      Entire Agreement. This Agreement, together with its Exhibits,
constitutes the entire agreement between the parties and supersedes all prior
agreements and understandings, whether written or oral, relating to the subject
matter of this Agreement.

         11.      Amendment. This Agreement may be amended or modified only by a
written instrument executed by both the Company and the Employee.

         12.      Governing Law. This Agreement shall be construed, interpreted
and enforced in accordance with the laws of the State of California.

         13.      Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of both parties and their respective successors and
assigns; provided that the obligations of the Employee are personal and shall
not be assigned by him.

         14.      Miscellaneous.


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                  14.1     No delay or omission by the parties hereto in
exercising any right under this Agreement shall operate as a waive of that or
any other right. A waiver or consent given by the Company on any one occasion
shall be effective only in that instance and shall not be construed as a bar or
waiver of any right on any other occasion.

                  14.2     The captions of the sections of this Agreement are
for convenience of reference only and in no way define, limit or affect the
scope or substance of any section of this Agreement.

                  14.3     In case any provision of this Agreement shall be
invalid, illegal or otherwise unenforceable, the validity, legality and
enforceability of the remaining provisions shall in no way be affected or
impaired thereby.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year set forth above.


                                                PICTUREWORKS, INC.

                                                By:  /Stanley B. Frye/
                                                   --------------------------

                                                Title:  Chairman
                                                      -----------------------


                                                EXECUTIVE

                                                /Donald W. Strickland/
                                                -----------------------------
                                                Donald W. Strickland


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