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EXHIBIT 10.23
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of January
1, 1999, by and between Xxxxxx X. Xxxx ("Employee") and NextCard, Inc., a
California corporation (the "Company").
THE PARTIES HERETO AGREE AS FOLLOWS:
1. EMPLOYMENT AND DUTIES. The Company agrees to employ Employee as its
President, CEO and Chairman of the Board, and Chairman of the Executive
Committee of the Board, and Employee agrees to serve the Company in such
capacities, with the authority and responsibilities customarily accorded an
executive officer with those titles, including without limitation those set
forth on the Company's Bylaws. Employee shall loyally conscientiously perform
such services and duties as are customarily incident to such employment.
Employee agrees to devote substantially all of his normal business time and
efforts during normal business hours to the performance of his duties under this
Agreement, provided that the devotion of time to personal investments or other
personal matters will not be deemed a breach of this Agreement if it does not
substantially interfere with the performance of Employee's duties hereunder.
Employee shall duly and faithfully perform and observe any and all rules and
regulations which the Company has established governing the conduct of its
business or its employees. Employee shall report to the Company's Board of
Directors. Employee shall be permitted to work at appropriate locations outside
of the Company's headquarters in his reasonable discretion.
2. COMPENSATION.
(a) BASE SALARY; WITHHOLDING. The Company shall pay Employee a base
salary of $250,000 per year, subject to increase from time to time (but no less
frequently than annually) in the good faith discretion of the Board of Directors
of the Company, payable in arrears in equal semi-monthly installments. Such
increases shall be based on a review of the prevailing compensation rates of
comparable executives in comparable companies, as well as the performance of
Employee and the Company. The parties shall comply with all applicable
withholding requirements in connection with all compensation payable to Employee
hereunder. Employee acknowledges that the Board of Directors may decrease his
salary as part of a good faith general reduction of salaries of Company
executives (an "Approved Salary Reduction").
(b) BONUS.
i) 1998 Bonus. In addition to the base salary set forth above,
with respect to fiscal year 1998, the Company shall pay Employee, by
no later than January 15, 1999, a bonus of not less than $175,000.
ii) Subsequent Bonuses. For each year after fiscal year 1998,
Employee shall be eligible for cash bonus awards in the discretion of
the Company's Board of Directors; however, the parties anticipate that
such
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annual bonuses shall be a minimum of 100% of Employee's than annual
base salary if Employee and the Company have achieved the performance
goals set by the Board of Directors.
(c) INCENTIVE PLANS. In addition to all other benefits and
compensation provided by this Agreement, Employee shall be eligible to
participate (to the extent determined by the Board in its discretion) in such
of the Company's equity, compensation and incentive plans (including without
limitation stock and stock option plans) as are generally available to any of
the management executives of the Company.
(d) VACATION; SABBATICAL. Employee shall be entitled to such annual
vacation time with full pay as the Company may provide in its standard policies
and practices for any other management executives; provided, however, that in
any event Employee shall be entitled to a minimum of four (4) weeks annual paid
vacation time. Employee shall also be entitled to two paid sabbaticals of up to
three (3) months to be taken at any time between the fourth and sixth years of
his initial employment by the Company, but no sooner than January 1, 2000, and
between the eighth and tenth years of his initial employment by the Company;
provided, however, that Employee shall not take a sabbatical in the twelve
month period following the initial public offering of the Company's common
stock.
(e) OTHER BENEFITS. Employee shall participate in and have the
benefits of all present and future vacation, holiday, paid leave, unpaid leave,
life, accident, disability, dental, vision and health insurance plans, pension,
profit-sharing and savings plans and all other plans and benefits which the
company now or in the future from time to time makes available to any of its
management executives.
3. BUSINESS EXPENSES. The Company shall promptly reimburse Employee for
all appropriately documented, reasonable business expenses incurred by Employee
in accordance with Company policies for management executives including for
reasonable home office equipment.
4. TERM. This Agreement shall commence as of the date hereof and, shall
continue indefinitely until terminated as set forth herein.
5. TERMINATION BY THE COMPANY WITHOUT CAUSE. The Company may, by
delivering thirty (30) days' prior written notice to Employee, terminate
Employee's employment at any time and for any reason without cause by
(a) paying to Employee, no later than the date of termination, a
lump sum equal to
i) Employee's base salary accrued and unpaid through the date
of termination,
ii) all accrued vacation pay, and any bonus which would have
been paid but for the termination, prorated through the date of
termination, based upon the Company's performance and in accordance
with the
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terms, provisions and conditions of any Company incentive bonus plan
in which Employee may be designated a participant; and
iii) an amount equal to twenty-four (24) months of Employee's
base salary (at the higher of (x) the rate in effect on the date of
notice of termination and (y) the rate in effect six months prior to
the date of notice of termination):
(b) providing, at the Company's expense, coverage to Employee under
the Company's life insurance and disability insurance policies and to Employee
and his dependents under the Company's health plan, or in the event any of the
Company's health plan, life insurance, or disability insurance are not
continued or Employee is not eligible for coverage thereunder due to his
termination of employment, the Company shall pay for the premiums for
equivalent coverage, in any event, for a period of twenty-four (24) months after
the date of termination; and
(c) providing to Employee reasonable outplacement services.
In addition, notwithstanding anything to the contrary contained herein or in any
agreement with respect hereto, upon termination of Employee's employment
pursuant to this Section 5, all equity options, restricted equity grants and
similar rights held by Employee with respect to securities of the Company,
shall automatically become fully vested and shall become immediately exercisable
and Employee shall have twelve (12) months to exercise any unexercised options.
6. TERMINATION BY THE COMPANY FOR CAUSE. The Company may terminate this
Agreement at any time if such termination is for "Cause", as defined below, by
delivering to Employee prior written notice of termination supported by a
reasonably detailed statement of the relevant facts and reason for termination.
In the event of such termination, the Company shall pay Employee, no later than
the ten (10) days following the date of termination, a lump sum equal to
Employee's accrued base salary through the date of termination, and all accrued
vacation pay and bonuses. For purposes of this Agreement, "Cause" means (i)
Employee has intentionally engaged in unfair competition with the Company,
committed an act of embezzlement, fraud or theft with respect to the property of
the Company, or deliberately disregarded the rules of the Company, in any such
event in such a manner as to cause material lose, damage or injury to or
otherwise materially to endanger the property, reputation or employees of the
Company, (ii) Employee has repeatedly abused alcohol or drugs on the job or in a
manner affecting his job performance, (iii) Employee has been found guilty of or
has plead nolo contendere to the commission of a felony offense; or (iv)
Employee remains in material willful breach of a material provision of this
Agreement (or any of the other agreements mentioned in Section 14(a) hereof) for
fourteen (14) days after receiving notice of such breach from the Company (with
respect to which the Company shall have the burden of proof that such breach has
occurred and not been timely cured).
7. VOLUNTARY TERMINATION BY EMPLOYEE. Employee may terminate this
Agreement at any time for any reason or no reason upon delivering thirty (30)
days'
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prior written notice to the Company. No later than the date of termination, the
Company shall pay Employee a lump sum equal to his accrued base salary through
the date of termination, and all accrued vacation pay and bonuses.
8. NO TERMINATION BY MERGER, TRANSFER OF ASSETS OR DISSOLUTION.
This Agreement shall not be terminated by any voluntary or involuntary
dissolution of the Company or the transfer of all or substantially all the
assets of the Company or the merger or other business combination of the Company
with or into another entity.
9. TERMINATION BY DEATH OR DISABILITY.
(A) DEATH. In the event of the death of Employee during the
term hereof, the Company, within ten (10) days of receiving notice of such
death, shall pay Employee's estate all salary due or accrued as of the date of
his death, and all accrued vacation pay and bonuses, and the company shall
continue to pay Employee's salary for twelve (12) months following the date of
death. In addition, notwithstanding anything to the contrary contained herein
or in any agreement with respect thereto, upon termination of Employee's
employment pursuant to this Section 9(a), all Restricted Stock (as defined in
the Stock Restriction Agreement dated November 7, 1996, as amended), held by
Employee shall immediately and automatically become fully vested, and fifty
percent (50%) of the then remaining balance of unvested equity options,
restricted equity grants and similar rights held by Employee with respect to
securities of the Company shall automatically become fully vested and shall
become immediately exercisable.
(B) DISABILITY. In the event of mental or physical Disability
(as defined below) of Employee during the term hereof, the Company, within ten
(10) days following the determination of Disability, shall pay Employee all
salary due or accrued as of the date of such determination, and all accrued
vacation pay and bonuses, and the Company shall continue to pay Employee's
salary for twelve (12) months following the date of such determination in
either case net of all proceeds of Company-paid disability insurance received
by Employee during such period. In addition, notwithstanding anything to the
contrary contained herein or in any agreement with respect hereto, upon
termination of Employee's employment pursuant to this Section 9(b), all
Restricted Stock (as defined in the Stock Restriction Agreement dated November
7, 1996, as amended), held by Employee shall immediately and automatically
become fully vested, and fifty percent (50%) of the then remaining balance of
unvested equity options, restricted equity grants and similar rights held by
Employee with respect to securities of the Company shall automatically become
fully vested and shall become immediately exercisable. For purposes of this
Agreement, "Disability" shall mean a physical or mental condition, verified by
a physician mutually designated by the Company and Employee, which prevents
Employee from carrying out one or more of the material aspects of his assigned
duties for at least one hundred eighty (180) consecutive days.
(C) The provisions of this Section 9 supercede and prevail over
any contrary or inconsistent provision of the Stock Restriction Agreement dated
November 7, 1996, as amended.
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10. PAYMENTS UPON TERMINATION FOR GOOD REASON.
(A) DEFINITION OF "GOOD REASON". "Good Reason" shall mean:
i) The assignment of Employee to any duties
inconsistent with, or any adverse change in, Employee's
positions, duties, responsibilities or status with the Company,
or the removal of Employee from, or failure to reelect Employee
to, any of such positions; or
ii) A reduction by the Company in Employee's base
salary (other than as part of an Approved Salary Reduction);
or
iii) The Company's requiring Employee to be based in
excess of 25 miles from the Company's present executive offices
located at San Francisco, California except for travel on
Company business to an extent substantially consistent with
Employee's present business travel obligations; or
iv) Failure of the Company to provide support,
information, assistance and staffing reasonably appropriate for
Employee to carry out Employee's duties or to achieve the
performance goals set by the Company (other than an
across-the-board reduction approved by the Board of Directors in
good faith which generally affects executives substantially the
same); or
v) The failure by the Company to continue in effect
for Employee any material benefit available generally to the
management executives of the Company, including but not limited
to any retirement, pension or incentive plan, life, accident,
disability or health insurance plans, equity or cash bonus plans
or savings and profit sharing plans; or any action by the
Company which would adversely affect Employee's participation in
or reduce Employee's benefits under any of such plans or deprive
Employee of any fringe benefit enjoyed by Employee; or
vi) Any other material breach by the Company of this
Agreement which is not cured within fourteen (14) days of notice
thereof by Employee to Company, or the material breach by the
Company of this Agreement three or more times (whether or not
the breaches are the same and whether or not the breaches are
subsequently cured) in any twelve month period.
(B) Employee may terminate his employment for Good Reason at
any time upon providing written notice of termination to the Company. In the
event of termination of Employee's employment by Employee for Good Reason, the
Company shall pay Employee as follows:
i) Employee's accrued and unpaid base salary
through the date of termination, at the higher of (x) the rate
then in effect at the time
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the notice of termination is given and (y) the rate in effect six
months prior to the time such notice is given; and
ii) Any bonus which would have been paid but for the
termination, prorated through the date of termination, based upon the
Company's performance and in accordance with the terms, provisions
and conditions of any Company incentive bonus plan in which Employee
may be designated a participant; and
iii) A lump sum severance payment equal to Employee's highest
monthly base salary in effect during the twelve-month period
immediately preceding the date of termination, multiplied by
twenty-four (24); and
iv) Provide, at the Company's expense, coverage to Employee
under the Company's life insurance and disability insurance policies
and to Employee and his dependents under the Company's health plan,
or in the event any of the Company's health plan, life insurance, or
disability insurance are not continued or Employee is not eligible
for coverage thereunder due to his termination of employment, the
Company shall pay for the premiums for equivalent coverage, in any
event, for a period of twenty-four (24) months after the date of
termination; and
v) In addition, notwithstanding anything to the contrary
contained herein or in any agreement with respect hereto, all equity
options, restricted equity grants and similar rights held by Employee
with respect to the securities of the Company shall automatically
become fully vested and shall become immediately exercisable and
Employee shall have twelve (12) months to exercise any unexercised
options.
11. INDEMNIFICATION. As a employee, officer and agent of the Company,
Employee shall be fully indemnified by the Company to the fullest extent
permitted by California law. To implement this provision, Company shall execute
and deliver to Employee its standard form of indemnification agreement for
officers and directors, and Employee shall thereafter be entitled to the
benefits of any subsequent amendments thereto made for any management
executives.
12. ASSIGNMENT. The rights and obligations of the parties under this
Agreement shall be binding upon and inure to the benefit of their respective
successors, assigns, executors, administrators and heirs, provided, however,
that Employee may not delegate any of Employee's duties under this Agreement.
13. ADDITIONAL BENEFITS. Company agrees promptly to reimburse Employee
for legal fees and expenses incurred by him in relation to Employee's
relationship with the Company, including without limitation this Agreement. In
addition, Company agrees to obtain and maintain during the term of Employee's
employment, a customary directors and officers insurance policy with reasonable
policy limits, in which Employee
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is named as an insured, as long as it is maintained for any other officer or
director of the Company.
14. MISCELLANEOUS.
(A) COMPLETE AGREEMENT. This Agreement constitutes the entire
agreement between the parties and cancels and supersedes all other prior or
contemporaneous agreements between the parties which relate to the subject
matter contained in this Agreement, including without limitation the Employment
Agreement between the parties dated August 16, 1996, but excluding (i) the
Employee Confidential Information and Invention Agreement, and (ii) except to
the extent modified herein, the Stock Restriction Agreement dated November 7,
1996, as amended.
(B) MODIFICATION, AMENDMENT, WAIVER. No modification or amendment of
any provisions of this Agreement shall be effective unless approved in writing
by both parties. The failure at any time to enforce any of the provisions of
this Agreement shall in no way be construed as a waiver of such provisions and
shall not affect the right of either party thereafter to enforce each and every
provision hereof in accordance with its terms.
(C) GOVERNING LAW. This Agreement shall be construed in accordance
with the laws of the State of California.
(D) SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be held to
be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.
(E) ATTORNEYS' FEES. In the event of litigation under this Agreement
(including enforcing judgments and appeals), the prevailing party shall be
entitled to reimbursement of its reasonable attorneys' fees and costs of suit
in addition to such other relief as may be granted.
(F) NOTICES. All notices and other communications under this
Agreement shall be in writing and shall be given in person or by telegraph,
telefax or first class mail, certified or registered with return receipt
requested, and shall be deemed to have been duly given when delivered
personally or three days after mailing or one day after transmission of a
telegram or telefax, as the case may be, to the respective persons named below.
If to the Company: NextCard, Inc.
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
With a copy to: Xxxxxx Star, Esq.
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Howard, Rice, Nemerovski, et al.
Xxxxx Xxxxxxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
If to the Employee: Xxxxxx Xxxx
000 Xxxxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
With a copy to: Xxxxxx X. Xxxxxxx, Esq.
Xxxxxxx Xxxxxxxx Xxxxx & Stikker LLP
000 Xxxxxxxxxx Xxxxxx, Xxxxxxxxx Xxxxx
Xxx Xxxxxxxxx, XX 00000
IN WITNESS WHEREOF, the parties have executed this Employment Agreement as
of the day and year first above written.
COMPANY: NextCard, Inc. a California corporation
By: /s/ XXXXXX XXXXXXXXX
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Xxxxxx Xxxxxxxxx, General Counsel
EMPLOYEE: /s/ XXXXXX X. XXXX
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Xxxxxx X. Xxxx
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