A little more on AVNX management. For those not familiar with the VC community as it relates to start-ups, the following corporate loans are not the norm.
Incidentally, if anyone knows the status of ETEK's suit against AVNX re: unfair solicitation of employees, please post an update.
sec.gov
Walter Alessandrini
In March 1999, Walter Alessandrini accepted our offer of employment. The offer letter provides that Dr. Alessandrini is entitled to receive an annual salary of $275,000 and a bonus of $150,000 during his first year of employment, to be paid based on the achievement of performance-based milestones. His employment with us is on an at-will basis. In connection with this offer letter, in April 1999, Dr. Alessandrini purchased, at a price of $.05 per share, 5,215,589 shares of our common stock, under a restricted stock purchase agreement. These shares are subject to a right of repurchase that lapses over a four-year period and as to one-fourth of these shares on March 22, 2000, with the repurchase right lapsing ratably monthly after that date. Any shares as to which the repurchase right has not lapsed are subject to repurchase by us in the event of the termination of his employment.
The offer letter also provided that we would loan Dr. Alessandrini up to $300,000 in connection with the purchase of a home. For further discussion of this loan, please see "Certain Transactions -- Loans to Executive Officers." The offer letter also provides that if we terminate his employment with us without cause then he will receive six months of salary and bonus and our right to repurchase his shares under this offer letter will lapse as to a number of shares equal to the greater of:
- one-fourth of these shares, if he is terminated before March 22, 2000; or
- an additional one-eighth of these shares if he is terminated on or after March 22, 2000.
In addition, the offer letter provides that if he cannot serve as our Chief Executive Officer for any period of time due to a legal restraint or litigation in connection with a Confidentiality and Non-Competition Agreement that he entered into with his previous employer, Pirelli Cables and Systems North America, LLC, then we shall pay him up to $100,000 in salary in monthly installments for up to six months during the period that he is not serving as our Chief Executive Officer.
In October 1999, Dr. Alessandrini purchased 521,559 shares of our common stock, at a price of $.39 per share, under a restricted stock purchase agreement. These shares are subject to a right of repurchase that lapses over a four-year period and as to one-fourth of his shares on March 22, 2000 with the repurchase right lapsing ratably monthly after that date. Each of the restricted stock purchase agreements relating to these purchases provides that, upon a change of control, the lapsing of our right of repurchase will be accelerated so that at least 50% of the common stock purchased under each restricted stock purchase agreement will not be subject to our right of repurchase. In addition, upon an involuntary termination of his employment without cause, upon or within 12 months of a change of control, our right of repurchase will lapse as to all of the common stock subject to repurchase under each of his restricted stock purchase agreements.
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Loans to Dr. Alessandrini:
In April 1999, in connection with Walter Alessandrini's purchase of 5,215,589 shares of our common stock, we loaned Dr.
Alessandrini $278,165 under a secured full recourse promissory note with an annual interest rate of 4.99% compounded semi-annually. Principal and interest on the note become due and payable on April 30, 2003. The note also provides that we may accelerate payment of the amounts outstanding under the loan in the event he ceases to be an employee or consultant of ours.
In April 1999, in connection with his purchase of a home, we loaned Dr. Alessandrini $300,000 under a secured full recourse loan with an annual interest rate of 4.9%. Principal and interest on this note become due and payable on the earlier of six months from that date on which he can sell shares of our common stock for an amount equal to the principal and interest owed on the note, or the termination of his employment with us.
In October 1999, in connection with Dr. Alessandrini's purchase of 521,559 shares of our common stock, we loaned Dr. Alessandrini $201,669 pursuant to a secured full recourse promissory note which has an annual interest rate of 6.02% compounded semi-annually. Principal and interest on the note become due and payable on October 31, 2003. The note also provides that we may accelerate payment of the amounts outstanding under the loan in the event he ceases to be an employee or consultant of ours. The largest principal amount outstanding of Mr. Alessandrini's loans during the fiscal year ended June 30, 1999 was $578,165 and the principal amount outstanding on December 31, 1999 was $779,834.
Simon Cao
On January 2, 1998, Simon Cao accepted our offer of employment. Initially, Dr. Cao was entitled to receive an annual salary of $125,000. On September 8, 1998, Dr. Cao agreed to amend his initial offer letter to increase his annual salary to $140,000. In August 1999, our board of directors increased his annual salary to $180,024. His employment with us is on an at-will basis. In connection with this offer letter, in January 1998, Dr. Cao purchased, at a price of $.0007 per share, 2,700,000 shares of our common stock, under a restricted stock purchase agreement. These shares are subject to a right of repurchase that lapses over a four-year period and lapsed as to one-fourth of these shares on January 13, 1999 with the repurchase right lapsing ratably monthly after that date.
In August 1999, Dr. Cao purchased, at a price of $.10 per share, 900,000 shares of our common stock and in October 1999 purchased, at a price of $.39 per share, 1,020,726 shares of our common stock, in each case under a restricted stock purchase agreement. These shares are subject to a right of repurchase that lapses over a four-year period and lapses as to one-fourth of the shares purchased in August 1999, on June 17, 2000 and as to one-fourth the shares purchased in October 1999, on October 8, 2000. The repurchase right lapses ratably monthly after these dates. Each of the restricted stock purchase agreements relating to these purchases provide that, upon a change of control, the lapsing of our repurchase right will be accelerated so that at least 50% of
the common stock purchased under each restricted stock purchase agreement will not be subject to our right of repurchase. In addition, upon an involuntary termination of his employment without cause, upon or within 12 months of a change of control, our right of repurchase will lapse as to all of the common stock subject to repurchase under each of his restricted stock purchase agreements.
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Loans to Simon Cao:
In August 1999, in connection with Simon Cao's purchase of 900,000 shares of our common stock, we loaned Dr. Cao $90,000 under a secured full recourse promissory note with an annual interest rate of 5.96% compounded semi-annually. Principal and interest on the note were to become due and payable on August 4, 2003. The note also provides that we may accelerate payment of the amounts outstanding under the loan in the event he ceases to be an employee or consultant of ours. In August 1999, in consideration for his continued employment with us, we agreed to forgive 25% of the principal and accrued interest under the note on each one-year anniversary of August 4, 1999 for so long as Dr. Cao remains our employee as of each anniversary.
In October 1999, in connection with Dr. Cao's purchase of 1,020,726 shares of our common stock, we loaned Dr. Cao $394,681 under a secured full recourse promissory note with an annual interest rate of 6.02% compounded semi-annually. Principal and interest on the note become due and payable on October 12, 2003. The note also provides that we may accelerate payment of the amounts outstanding under the loan in the event he ceases to be an employee or consultant of ours. Dr. Cao had no principal amounts outstanding on his loans during the fiscal year ended June 30, 1999. The principal amount outstanding on his loans on December
31, 1999 was $484,681.
Paul Jiang
In January 1998, Paul Jiang accepted our offer of employment. His offer letter provided that he was entitled to receive an annual salary of $115,000. On September 8, 1998, Mr. Jiang agreed to amend his initial offer letter to increase his annual salary to $126,500. In August 1999, our board of directors increased his annual salary to $140,000. His employment with us is on an at-will basis. In connection with this offer letter, in January 1998, Mr. Jiang was granted an option to purchase 1,800,000 shares of our common stock, at an exercise price of $.0007 per share, which he exercised in February 1998 under a restricted stock purchase agreement. These shares are subject to a right of repurchase that lapses over a four-year period and lapsed as to one-fourth of these shares on February 3, 1999 with the purchase right lapsing ratably monthly after that date.
In July 1999, Mr. Jiang purchased 450,000 shares of our common stock, at a price of $.03 per share, under a restricted stock purchase agreement. These shares are subject to a right of repurchase that lapses over a four year period and lapsed as to one-fourth of the shares purchased on February 8, 1999 with the purchase right lapsing ratably monthly after that date. In November 1999, Mr. Jiang purchased 150,000 shares of our common stock, at a price of $2.67 per share, under a restricted stock agreement. These shares are subject to a right of repurchase that lapses over a four-year period and as to one-fourth of his shares on November 22, 2000 with the repurchase right lapsing monthly after that date. Each of the restricted stock purchase agreements relating to these purchases provide that, upon a change of control, the lapsing of our repurchase right will be accelerated so that at least 50% of the common stock purchased under each restricted stock purchase agreement will not be subject to our right of repurchase. In addition, upon an involuntary termination of his employment without cause, upon or within 12 months of a change of control, our right of repurchase will lapse as to all of the common stock subject to repurchase under each of his restricted stock purchase agreements.
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Loans to Mr. Jiang
In July 1999, in connection with Paul Jiang's purchase of 450,000 shares of our common stock, we loaned Mr. Jiang $11,700 under a secured full recourse promissory note with an annual interest rate of 5.69% compounded semi-annually. Principal and interest on the note were to become due and payable on July 22, 2003. The note also provides that we may accelerate payment of the amounts outstanding under the loan in the event he ceases to be an employee or consultant of ours. In July 1999, in consideration for his continued employment with us, we agreed to forgive 25% of the principal and accrued interest under the note on each one-year anniversary of July 22, 1999 for so long as Mr. Jiang remains our employee as of each anniversary.
In November 1999, in connection with Mr. Jiang's purchase of 150,000 shares of our common stock, we loaned Mr. Jiang $400,000 under a secured full recourse promissory note with an annual interest rate of 6.2% compounded semi-annually. Principal and interest on the note become due and payable on November 22, 2004. The note also provides that we may accelerate payment of the amounts outstanding under the loan in the event he ceases to be an employee or consultant of ours. Mr. Jiang had no principal amounts outstanding on his loans during the fiscal year ended June 30, 1999. The principal amount outstanding on his loans on December 31, 1999 was $411,700.
Peter Maguire
In June 1999, Peter Maguire accepted our offer of employment. His offer letter provided that he is entitled to receive an annual salary of $165,000 and a bonus of $100,000 during his first year of employment. If he terminates his employment or if we terminate his employment for cause, he must repay this bonus. However, the amount of the bonus that must be repaid is reduced by $8,333 per full month that he remains employed by us. His offer letter provided that he receives a sales commission, to be negotiated annually, equal to .5% of our sales made by June 30, 2000. This commission will be paid upon the collection of the sales and on a quarterly basis. His employment with us is on an at-will basis.
In connection with this offer letter, in July 1999, Mr. Maguire purchased at a price of $.10 per share, 825,000 shares of our common stock, under a restricted stock purchase agreement. These shares are subject to a right of repurchase that lapses over a four-year period and lapses as to one-fourth of the shares on June 28, 2000 with the repurchase right lapsing ratably monthly after this date. The restricted stock purchase agreement relating to this purchase provides that, upon a change of control, the lapsing of our repurchase right will be accelerated so that at least 50% of the common stock purchased under this restricted stock purchase agreement will not
be subject to our right of repurchase. In addition, upon an involuntary termination of his employment without cause, upon or within 12 months of a change of control, our right of repurchase will lapse as to all of the common stock subject to repurchase under his restricted stock purchase agreement.
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Loans to Peter Maguire
In August 1999, in connection with Peter Maguire's purchase of 825,000 shares of our common stock, we loaned him $82,500 under a secured full recourse promissory note with an annual interest rate of 5.96% compounded semi-annually. Principal and interest on the note become due and payable on August 4, 2003. The note also provides that we may accelerate payment of the amounts outstanding under the loan in the event he ceases to be an employee or consultant of ours. Mr. Maguire had no principal amounts outstanding on his loan during the fiscal year ended June 30, 1999. The principal amount outstanding on his loan on December 31, 1999 was $82,500.
William Lanfri
In June 1998, William Lanfri entered into an employment agreement with us to serve as our acting Chief Executive Officer. As consideration for his services, Mr. Lanfri was granted an option to purchase 112,500 shares of our common stock, at a price of $.03 per share. These shares vested ratably over a three-month period beginning on January 1, 1999. In March 1999, this option was fully vested and he purchased 112,500 shares of our common stock. In June 1998, Mr. Lanfri was granted an additional option to purchase 341,101 shares of our common stock. Of the shares subject to this option, 227,401 shares vested ratably over a six-month period beginning in August 1998. The remaining 113,700 shares subject to this option were designated by our board of directors as "bonus shares." The bonus shares either were to vest in one lump sum on July 1, 2004 or were to vest earlier at the sole discretion of our board of directors. Our board of directors intended to vest these bonus shares if Mr. Lanfri met certain performance milestones. In August 1998, Mr. Lanfri exercised this option to purchase 341,101 shares of our common stock, but unvested shares remained subject to our right of repurchase upon termination of his employment. Upon Mr. Lanfri's resignation as our acting Chief Executive Officer in March 1999, our board of directors accelerated the lapsing of our repurchase right as to 75,801 shares of Mr. Lanfri's bonus shares and we repurchased from him the remaining 37,899 shares of common stock that remained subject to repurchase. |
