Sample Business Contracts

Employment Agreement - Castelle and Scott C. McDonald

Employment Forms

  • Employment Agreement. Employers can customize an employment agreement that states the salary, benefits, working hours and other important provisions for their new or existing employee.
  • Consulting Agreement. Answer simple questions to build a contract with a consultant. Specify the services rendered, when payment is due, as well as IP rights.
  • Commission Agreement. Employers who compensate their sales employees based on commissions can prepare an agreement to reduce misunderstandings by specifying the base salary and how commissions are calculated.
  • Executive Employment Agreement. Companies may offer their business executives a contract that is different from the one provided to their regular employees. Executive employment agreements may be more complex because the compensation structure may include a combination of salary and commissions, provide for bonuses based on sales, stock or other financial targets, and include non-compete, confidentiality and severance provisions.
  • Sales Representative Contract. Independent sales representatives offer companies the potential to increase the sale of products or services without the burden of increasing headcount. Both parties should understand how commissions are calculated, when commissions will be paid, as well as how the representative will treat confidential information from the company and whether the representative may also sell a competing line of products or services.
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                              EMPLOYMENT AGREEMENT

         This Employment Agreement ("Agreement") is entered into on the
twenty-second day of April, 2002, by and between SCOTT C. MCDONALD ("Executive")
and CASTELLE, a California corporation (the "Company").

         WHEREAS, the Company desires to employ Executive to provide personal
services to the Company, and wishes to provide Executive with certain
compensation and benefits in return for his services; and

         WHEREAS, Executive wishes to be employed by the Company and provide
personal services to the Company in return for certain compensation and

         NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, it is hereby agreed by and between the parties hereto as


1.1      The effective date of this Agreement shall be April 22, 2002.

1.2 Subject to terms set forth herein, the Company agrees to employ Executive in
the position of Chief Executive Officer and Executive hereby accepts such
employment effective as of April 22, 2002 (the "Employment Date"). During the
term of his employment with the Company, Executive will devote his best efforts
and substantially all of his business time and attention (except for vacation
periods as set forth herein and reasonable periods of illness or other
incapacities permitted by the Company's general employment policies or as
otherwise set forth in this Agreement) to the business of the Company. Executive
will work at the Company's Morgan Hill, California headquarters.

1.3 Executive shall serve in an executive capacity and shall perform such duties
as are customarily associated with the position of Chief Executive Officer and
such other duties as are assigned to Executive by the Company's Board of
Directors (the "Board"). Executive will report to the Board. Executive shall
continue to serve on the Board and the Company will use its best efforts to
re-elect Executive to the Board.

1.4 The employment relationship between the parties shall also be governed by
the general employment policies and practices of the Company and Executive will
be expected to abide by Company rules and policies, including those relating to
protection of confidential information and assignment of inventions, except that
when the terms of this Agreement differ from or are in conflict with the
Company's general employment policies or practices, this Agreement shall


Salary. Executive shall receive for services to be rendered hereunder an
     annualized base salary of two hundred thousand dollars ($200,000), payable
     on a semi-monthly basis and subject to standard payroll deductions and
     required withholdings.

Bonus. Executive will be eligible to earn quarterly performance bonuses, in a
     total amount of up to one hundred thousand dollars ($100,000) per year, if
     performance criteria to be developed by the Compensation Committee of the
     Board (the "Compensation Committee") are met as determined in the sole
     discretion of the Compensation Committee. These performance criteria will
     be established by the Compensation Committee prior to the end of the second
     quarter of the year. In the event Executive exceeds the performance


     criteria established by the Compensation Committee in a given year (as
     determined by the Compensation Committee), Executive will be eligible to
     earn bonuses that exceed a total of one hundred thousand dollars ($100,000)
     for the year. The performance criteria will be measured quarterly, and the
     performance bonuses will be earned and paid (to the extent earned) on a
     quarterly basis.. During the first four (4) quarters of Executive's
     employment, Executive will receive guaranteed bonus payments of twenty-five
     thousand dollars ($25,000) per quarter so long as he remains an employee in
     good standing as of the bonus payment date.

Standard Company Benefits. Executive shall be entitled to all rights and
     benefits for which he is eligible under the terms and conditions of the
     standard Company benefits and compensation practices which may be in effect
     from time to time and provided by the Company to its executive employees

Stock Option Awards. Subject to approval by the Compensation Committee, on April
     5, 2002 the Board shall grant Executive a statutory stock option to acquire
     two hundred thousand (200,000) shares of the Common Stock of the Company
     (the "Initial Option"). The Initial Option shall be granted under the
     Company's 1988 Incentive Stock Plan (the "Option Plan"), and the exercise
     price per share will be equal to one hundred percent (100%) of the fair
     market value of the Company's Common Stock, as determined under the Option
     Plan on the date of grant. The Initial Option shall be subject to the terms
     and conditions of the Option Plan, any amendments thereto, and the
     corresponding grant agreement. Subject to Executive's Continuous Service to
     the Company (as defined in the Option Plan), one-fourth (1/4) of the
     Initial Option shares shall vest on the date that is six (6) months after
     the Employment Date and an additional one-twenty-fourth (1/24) of the
     Initial Option shares shall vest each calendar month for eighteen (18)
     months thereafter . In addition, at such time as enough shares of Common
     Stock become available for grant under the Option Plan or under a new stock
     option plan, subject to approval by the Compensation Committee, the Board
     shall grant to Executive a second stock option grant to purchase an
     additional one hundred thousand (100,000) shares of the Company's Common
     Stock (the "Second Option") at an exercise price equal to the fair market
     value of the Common Stock on the date of grant as determined under the
     applicable option plan. The Second Option shall be subject to the terms and
     conditions of the applicable stock option plan, any amendments thereto, and
     the corresponding grant agreement. The vesting commencement date for the
     Second Option shall be the second anniversary of the Employment Date and,
     subject to Executive's Continuous Service to the Company (as defined in the
     applicable stock option plan), the Second Option shares will become fully
     vested on the third year anniversary of the Employment Date. Vesting of
     shares of the Initial Option and Second Option may be accelerated upon a
     termination of Executive's employment with the Company to the extent
     provided by the provisions of the Executive Severance and Transition
     Benefits Agreement that Executive will enter into with the Company.

Executive Severance And Transition Benefits Agreement. Effective as of the
     Employment Date, Executive will be eligible to enter into an Executive
     Severance and Transition Benefits Agreement with the Company in the form
     attached hereto as Exhibit A (the "Severance Agreement"). The Severance
     Agreement will provide the sole severance benefits that Executive will be
     eligible to receive upon Executive's termination of employment with the
     Company for any reason.


Agreement.  As a condition of his  employment,  Executive  agrees to execute and
     abide by the  Proprietary  Information  and Inventions Agreement attached
     hereto as Exhibit B.


Remedies. Executive's duties under the Proprietary Information and Inventions
     Agreement shall survive termination of his employment with the Company.
     Executive acknowledges that a remedy at law for any breach or threatened
     breach by him of the provisions of the Proprietary Information and
     Inventions Agreement would be inadequate, and he therefore agrees that the
     Company shall be entitled to injunctive relief in case of any such breach
     or threatened breach.


Except for Executive's current directorship positions with the following two
     outside companies (Octant Technologies, Inc. and Epsilon LLC), and with the
     prior written consent of the Board, Executive will not during the term of
     this Agreement undertake or engage in any other employment, occupation or
     business enterprise, other than ones in which Executive is a passive
     investor. Executive may engage in civic and not-for-profit activities so
     long as such activities do not materially interfere with the performance of
     his duties hereunder.

During the term of his employment by the Company, except on behalf of the
     Company, Executive will not directly or indirectly, whether as an officer,
     director, stockholder, partner, proprietor, associate, representative,
     consultant, or in any capacity whatsoever engage in, become financially
     interested in, be employed by or have any business connection with any
     other person, corporation, firm, partnership or other entity whatsoever
     which were known by him to compete directly with the Company, throughout
     the world, in any line of business engaged in (or planned to be engaged in)
     by the Company; provided, however, that anything above to the contrary
     notwithstanding, he may own, as a passive investor, securities of any
     competitor corporation, so long as his direct holdings in any one such
     corporation shall not in the aggregate constitute more than one percent
     (1%) of the voting stock of such corporation

         AT-WILL EMPLOYMENT RELATIONSHIP. Both the Company and Executive shall
have the right to terminate Executive's employment with the Company at any time,
with or without cause or prior notice. If Executive's employment with the
Company is terminated, Executive will be eligible to receive severance benefits
only to the extent provided by the Severance Agreement.


                  While employed by the Company, and for one (1) year
immediately following his employment termination date, Executive agrees not to
interfere with the business of the Company by soliciting, attempting to solicit,
inducing, or otherwise causing any employee of the Company to terminate his or
her employment in order to become an employee, consultant or independent
contractor to or for any competitor of the Company.


Notices. Any notices provided hereunder must be in writing and shall be deemed
     effective upon the earlier of personal delivery (including personal
     delivery by facsimile) or the third day after mailing by first class mail,
     to the Company at its primary office location and to Executive at his
     address as listed on the Company payroll.

Severability. Whenever possible, each provision of this Agreement will be
     interpreted in such manner as to be effective and valid under applicable
     law, but if any provision of this Agreement is held to be invalid, illegal
     or unenforceable in any respect under any applicable law or rule in any
     jurisdiction, such invalidity, illegality or unenforceability will not
     affect any other provision or any other jurisdiction, but this Agreement
     will be reformed, construed and enforced in such jurisdiction as if such
     invalid, illegal or unenforceable provisions had never been contained


Waiver. If either party should waive any breach of any provisions of this
     Agreement, he or it shall not thereby be deemed to have waived any
     preceding or succeeding breach of the same or any other provision of this

Right to Work. As required by law, this Agreement is subject to satisfactory
     proof of Executive's right to work in the United States.

Complete Agreement. This Agreement, including its exhibits, constitutes the
     complete, final and exclusive embodiment of Executive's employment
     agreement with the Company. This Agreement is entered into without reliance
     upon any promise, warranty or representation, written or oral, on any
     subject concerning Executive's employment with the Company other than those
     expressly contained herein, and it supersedes any other such promises,
     warranties, representations or agreements. This Agreement cannot be
     modified or amended except in a writing signed by the Executive and a duly
     authorized member of the Board.

Counterparts. This Agreement may be executed in separate counterparts, any one
     of which need not contain signatures of more than one party, but all of
     which taken together will constitute one and the same Agreement. Facsimile
     signatures shall suffice as original signatures.

Headings.  The headings of the sections  hereof are inserted for  convenience
     only and shall not be deemed to constitute a part hereof nor to affect the
     meaning thereof.

Successors and Assigns. This Agreement is intended to bind and inure to the
     benefit of and be enforceable by Executive and the Company, and their
     respective successors, assigns, heirs, executors and administrators, except
     that Executive may not assign any of his duties hereunder and he may not
     assign any of his rights hereunder without the written consent of the
     Company, which shall not be withheld unreasonably.

Attorneys' Fees. If either party hereto brings any action to enforce his or its
     rights hereunder, each party in any such action shall be responsible for
     its own attorneys' fees and costs incurred in connection with such action.

Choice of Law. All questions  concerning the  construction,  validity and
     interpretation of this Agreement will be governed by the law of the State
     of California

         IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first above written.


                                                     By: /s/ Donald L. Rich
                                                          Donald L. Rich

Accepted and agreed this
Twenty-second day of April, 2002

/s/ Scott C. McDonald