EXECUTIVE EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into by and between
Data Net International, Inc. (the "Company") and Max Toghraie ("Executive"), as
of the 1st day of July, 1997.
I. EMPLOYMENT.
The Company hereby employs Executive and Executive hereby accepts such
employment, upon the terms and conditions hereinafter set forth, from July 1,
1997, to and including June 30, 2002. This Agreement is subject to renewal only
as set forth in Section VI below.
II. DUTIES.
A. Executive shall, during course of his employment, serve as Chief
Executive Officer and a director of the Board of Directors of the Company, and
shall have such other duties and responsibilities as the Board of Directors of
the Company shall determine from time to time.
B. Executive agrees to devote substantially all of his time, energy and
ability to the business of the Company. Nothing herein shall prevent Executive,
upon approval of the Board of Directors of the Company, from serving as a
director or trustee of other corporations or businesses which are not in
competition with the business of the Company as set forth in Section IV hereof
or in competition with any present or future affiliate of the Company. Nothing
herein shall prevent Executive from investing in real estate for his own account
or from becoming a partner or a stockholder in any corporation, partnership or
other venture not in competition with the business of the Company as set forth
in Section IV hereof or in competition with any present or future affiliate of
the Company.
C. During the term of this Agreement, Executive shall be the most senior
executive officer in the Company and shall report to the Board of Directors of
the Company.
III. COMPENSATION.
A. The Company will pay to Executive a base salary at the annual rate of
$144,000.00 up to and including September 30, 1997 and thereafter at the annual
rate of $192,000.00 during the remaining term of his employment pursuant to this
Agreement. Such salary shall be earned monthly and shall be payable in periodic
installments no less frequently than monthly in accordance with the Company's
customary practices. Amounts payable shall be reduced by standard withholding
and other authorized deductions. The Company may in its discretion increase
Executive's salary but it may not reduce it during the term of this Agreement.
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B. STOCK OPTIONS. The Company shall grant to Executive, concurrent with
the execution of this Agreement, options to purchase 11,500 shares of the
Company's Common Stock (the "Options"), exercisable at a per share exercise
price of $29.55 per share, subject to the vesting requirements set forth in the
Option Certificate to be signed by Executive, a copy of which is attached hereto
and made a part hereof.
C. WELFARE BENEFIT PLANS. Executive and/or his family, as the case may
be, shall be eligible for participation in and shall receive all benefits under
welfare benefit plans, practices, policies and programs provided by the Company
(including, without limitation, medical, prescription, dental, disability,
salary continuance, employee life, group life, accidental death and travel
accident insurance plans and programs) to the extent applicable generally to
other peer executives of the Company. Executive will be compensated for up to
ten sick days per year.
D. EXPENSES. Executive shall have access to an expense account in the sum
of $20,400.00 per year. Executive shall be entitled to withdraw from the
expense account to pay for all reasonable employment expenses incurred by him in
accordance with the policies, practices and procedures as in effect generally
with respect to other peer executives of the Company.
E. FRINGE BENEFITS. Executive shall be entitled to fringe benefits in
accordance with the plans, practices, programs and policies as in effect
generally with respect to other peer executives of the Company.
F. VACATION. Executive shall be entitled to two weeks paid vacation per
year, in accordance with the plans, policies, programs and practices as in
effect generally with respect to other peer executives of the Company.
G. CAR ALLOWANCE. Executive shall be entitled to a car allowance in the
sum of $500.00 per month.
H. The Company reserves the right to modify, suspend or discontinue any
and all of the above plans, practices, policies and programs at any time without
recourse by Executive so long as such action is taken generally with respect to
other similarly situated peer executives and does not single out Executive.
IV. TERMINATION.
A. DEATH OR DISABILITY. Executive's employment shall terminate
automatically upon Executive's death. If the Company determines in good faith
that the Disability of Executive has occurred (pursuant to the definition of
Disability set forth below), it may give to Executive written notice in
accordance with Section XIX of its intention to terminate, effective on the 30th
day after receipt of such notice by Executive, provided that, within the 30 days
after such receipt, Executive shall not have returned to full-time performance
of his duties. For purposes of this Agreement, "disability" shall mean a
physical or mental impairment which substantially limits a major life
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activity of Executive and which renders Executive unable to perform the
essential functions of his position, even with reasonable accommodation which
does not impose an undue hardship on the Company. The Company reserves the
right, in good faith, to make the determination of disability under this
Agreement based upon information supplied by Executive and/or his medical
personnel, as well as information from medical personnel (or others) selected
by the Company or its insurers. "Incapacity" as used herein shall be limited
only to such Disability which substantially prevents the Company from
availing itself of the services of Executive.
B. CAUSE. The Company may at any time terminate Executive's employment
for "cause," which shall be based solely upon a good-faith determination by a
majority vote of the Company's Board of Directors that such termination of such
employment is necessary for the welfare of, and in the best interests of, the
Company by reason of: (i) acts of dishonesty, theft, misappropriation of
corporate assets; (ii) willful and repeated failure to follow explicit
instructions of the Company's Board of Directors; (iii) willful malfeasance;
(iv) willful nonfeasance; and (v) breach of any material term of this Agreement.
C. OTHER THAN CAUSE OR DEATH OR DISABILITY. The Company may terminate
Executive's employment other than for the reasons set forth in Sections IV(A)
and (B) above upon written notice.
D. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
1. DEATH OR DISABILITY. If Executive's employment is terminated
by reason of Executive's Death or Disability, this Agreement shall terminate
without further obligations to Executive or his/her legal representatives under
this Agreement, other than for (a) payment of the sum of (i) employees annual
base salary through the date of termination to the extent not heretofore paid
and (ii) any compensation previously deferred by Executive (together with any
accrued interest or earnings thereon) and any accrued vacation pay, in each case
to the extent not theretofore paid (the sum of the amounts described in clauses
(i) and (ii) shall be hereinafter referred to as the "Accrued Obligations"),
which shall be paid to Executive or his estate or beneficiary, as applicable, in
a lump sum in cash within 30 days of the date of termination; and (b) payment to
Executive or his estate or beneficiary, as applicable, any amounts due pursuant
to the terms of any applicable welfare benefit plans.
2. CAUSE. If Executive's employment is terminated by the Company
for Cause, this Agreement shall terminate without further obligations to
Executive other than for the timely payment of Accrued Obligations. If it is
subsequently determined that the Company did not have Cause for termination
under this Section IV(D)(2), then the Company's decision to terminate shall be
deemed to have been made under Section IV(D)(3) and the amounts payable
thereunder shall be the only amounts Executive may receive for his termination.
3. OTHER THAN CAUSE OR DEATH OR DISABILITY. If the Company
terminates Executive's employment for other than Cause or Death or Disability,
it shall continue to pay to
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Executive, in installments in the same manner and at the same times the
Company pays base salaries to other executive officers of the Company,
Executive's then current base salary pursuant to Section III(A) of this
Agreement, for the lesser of (i) twenty four (24) months, commencing on the
date of notice of termination pursuant to this Section IV(C) or (ii) the
remainder of the term of this Agreement (the "Severance Period"), and the
Company shall continue to provide Executive benefits pursuant to Section
III(C) of this Agreement during the Severance Period until comparable
benefits are obtained by Executive from another employer.
4. EXCLUSIVE REMEDY. Executive agrees that the payments
contemplated by this Agreement shall constitute the exclusive and sole remedy
for any termination of his employment and Executive covenants not to assert or
pursue any other remedies, at law or in equity, with respect to any termination
of employment.
V. ARBITRATION.
Any controversy or claim arising out of or relating to this Agreement, its
enforcement or interpretation, or because of an alleged breach, default or
misrepresentation in connection with any of its provisions, shall be submitted
to arbitration, to be held in Los Angeles County, California in accordance with
California Civil Procedures Code Sections 1282-1284.2. In the event either
party institutes arbitration under this Agreement, the party prevailing in any
such litigation shall be entitled, in addition to all other relief, to
reasonable attorneys' fees relating to such arbitration. The non prevailing
party shall be responsible for all costs of the arbitration, including but not
limited to, the arbitration fees, court reporter fees, etc.
VI. RENEWAL.
This Agreement shall be automatically renewed for consecutive periods of
one year each, after the expiration of the stated term, unless one party or the
other gives notice, in writing, at least (30) days prior to the expiration of
this Agreement (or any renewal) of their desire to terminate the Agreement or
modify its terms.
VII. ANTI-SOLICITATION.
Executive promises and agrees that during the term of this Agreement or
renewal in accordance with Section VI above, he will not influence or attempt to
influence customers of the Company or any of its present or future subsidiaries
or affiliates, either directly or indirectly to divert their business to any
individual, partnership, firm, corporation or other entity then in competition
with the business of the Company, or any subsidiary or affiliate of the Company.
VIII. JOINING FORMER COMPANY EMPLOYEES.
Executive promises and agrees that for one year following his termination
of employment other than pursuant to Section IV(C) above or Disability above or
expiration of this Agreement,
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he will not enter business or work with any person who was employed with the
Company, and who earned annually $25,000 or more as a Company employee during
the last six months of his or her own employment, in any business,
partnership, firm, corporation or other entity then in competition with the
business of the Company or any subsidiary or affiliate of the Company.
IX. SOLICITING EMPLOYEES.
Executive promises and agrees that he will not, for a period of one year
following termination of his accordance with Section VI above, directly or
indirectly solicit any of the Company employees who earned annually $25,000 or
more as a Company employee during the last six months of his or her own
employment to work for any business, individual, partnership, firm, corporation,
or other entity then in competition with the business of the Company or any
subsidiary or affiliate of the Company.
X. CONFIDENTIAL INFORMATION.
A. Executive, in the performance of Executive's duties on behalf of the
Company, shall have access to, receive and be entrusted with confidential
information, including but in no way limited to development, marketing,
organizational, financial, management, administrative, production,
distribution and sales information, data, specifications and processes
presently owned or at any time in the future developed, by the Company or its
agents or consultants, or used presently or at any time in the future in the
course of its business that is not otherwise part of the public domain
(collectively, the "Confidential Material"). All such Confidential Material
is considered secret and will be available to Executive in confidence.
Except in the performance of duties on behalf of the Company, Executive shall
disclose or use any such Confidential Material, unless such Confidential
Material ceases (through no fault of Executive's) to be confidential because
it has become part of the public domain. All records, files, drawings,
documents, equipment and other tangible items, wherever located, relating in
any way to the Confidential Material or otherwise to the Company's business,
which Executive prepares, uses or encounters, shall be and remain the
Company's sole and exclusive property and shall be included in the
Confidential Material. Upon termination of this Agreement by any means, or
whenever requested by the Company, Executive shall promptly deliver to the
Company any and all of the Confidential Material, not previously delivered to
the Company, that may be or at any previous time has been in Executive's
possession or under Executive's control.
B. Executive hereby acknowledges that the sale or unauthorized use or
disclosure of any of the Company's Confidential Material by any means whatsoever
and any time before, during or after Executive's employment with the Company
shall constitute unfair Competition. Executive agrees that Executive shall not
engage in Unfair Competition either during the time employed by the Company or
any time thereafter.
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XI. SUCCESSORS.
A. This Agreement is personal to Executive and shall not, without the
prior written consent of the Company, be assignable by Executive.
B. This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns and any such successor or assignee shall
be deemed substituted for the Company under the terms of this Agreement for all
purposes. As used herein, "successor" and "assignee" shall include any person,
firm, corporation or other business entity which at any time, whether by
purchase, merger or otherwise, directly or indirectly acquires the stock of the
Company or to which the Company assigns this Agreement by operation of law or
otherwise.
XII. WAIVER.
No waiver of any breach of any term or provision of this Agreement shall be
construed to be, nor shall be, a waiver of any other breach of this agreement.
No waiver shall be binding unless in writing and signed by the party waiving the
breach.
XIII. MODIFICATION.
This Agreement may not be amended or modified other than by a written
agreement executed by Executive and an officer of the Company following
authorization by the Board of Directors of the Company.
XIV. SAVING CLAUSE.
If any provision of this Agreement or the application thereof is held
invalid, the invalidity shall not effect other provisions or applications of the
Agreement which can be given effect without invalid provisions or application
and to this end the provisions of this Agreement are declared to be severable.
XV. COMPLETE AGREEMENT.
This Agreement constitutes and contains the entire agreement and final
understanding concerning Executive's employment with the Company and the other
subject matters addressed herein between the parties. It is extended by the
parties as a complete and exclusive statement of the terms of their agreement.
It supersedes and replaces all prior negotiations and all agreements proposed or
otherwise, whether written or oral, concerning the subject matter hereof. Any
representation, promise or agreement, not specifically included in this
Agreement shall not be binding upon or enforceable against either party. This
is a fully integrated agreement.
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XVI. GOVERNING LAW.
This Agreement shall be deemed to have been executed and delivered within
the State of California, and the rights and obligations of the parties hereunder
shall be construed and enforced in accordance with and governed by, by the laws
of the State of California without regard to principles of conflict of laws.
XVII. CONSTRUCTION.
Each party has cooperated in the drafting and preparation of this
Agreement. Hence, in any construction to be made of this Agreement, the same
shall not be construed against any party on the basis that the party was the
drafter. The captions of this Agreement are not part of the provisions hereof
and shall have no force or effect.
XVIII. NOTICES.
All notices, requests, demands and other communications hereunder shall be
in writing and shall be deemed to have been duly given if delivered or if mailed
by registered or certified mail, postage prepaid, addressed as follows:
If to Executive: Max Toghraie
000 Xxxxx Xxxxxxx
Xxxxxxxx Xxxx, Xxxxxxxxxx 00000
If to Company: Data Net International, Inc.
0000 Xxxx Xxxx Xxxxx
Xxxx xx Xxxxxxxx, XX 00000
Either party may change the address at which notice shall be given by written
notice given in the above manner.
XIX. EXECUTION.
This Agreement is being executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument. Photographic copies of such signed counterparts may be
used in lieu of the original for any purpose.
XX. LEGAL COUNSEL.
Executive and the Company recognize that this is a legally binding contract
and acknowledge and agree that they have had the opportunity to consult with
legal counsel of their choice.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
Data Net International, Inc.
By
------------------------------------ ----------------------------------
Its Executive
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OPTION CERTIFICATE
(NON-STATUTORY STOCK OPTION)
THIS IS TO CERTIFY that Data Net International, Inc., a California
corporation (the "COMPANY"), has granted to the person named below ("OPTIONEE")
a non-statutory stock option (the "OPTION") to purchase shares of the Company's
Common Stock (the "SHARES") under its 1997 Stock Plan and upon the terms and
conditions as follows:
Name of Optionee: Max Toghraie
-----------------------------------------
Address of Optionee: 000 Xxxxx Xxxxxxx
-----------------------------------------
Xxxxxxxx Xxxx, XX 00000
-----------------------------------------
Number of Shares: 11,500
-----------------------------------------
Option Exercise Price: $ 29.55 per share
-------
Date of Grant: July 1, 1997
--------------
Option Expiration Date: July 1, 2007
--------------
EXERCISE SCHEDULE: The Option shall become exercisable as follows:
One-quarter (1/4) of the options ( 2,875 Shares) shall vest on the Date of
Grant. The remaining three-quarters (3/4) of the options ( 8,625 Shares) shall
vest on the first day of each calendar month for forty-seven (47) months
thereafter in equal installments of one-forty eighth (1/48) of the remaining
Shares (179 Shares). All remaining Shares shall vest on July 1, 2001.
ACCELERATION OF VESTING: If the employment of Optionee pursuant to that
certain Employment Agreement between Optionee and the Company dated July 1, 1997
(the "Employment Agreeement") is terminated Without Cause by the Company, as
defined in the Employment Agreement, then all unvested options to purchase
Shares shall vest and become immediately exercisable upon such termination.
SUMMARY OF OTHER TERMS: This Option is defined in the Stock Option
Agreement (Non-statutory Stock Option) (the "OPTION AGREEMENT") which is
attached to this Option Certificate (the "CERTIFICATE") as Annex I. This
Certificate summarizes certain of the provisions of the Option Agreement for
your information, but is not complete. Your rights are governed by the Option
Agreement, not by this summary. The Company strongly suggests that you
carefully review the full Option Agreement prior to signing this Certificate or
exercising the Option.
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Among the terms of the Option Agreement are the following:
EMPLOYMENT: The Option Agreement does not obligate the Company to retain
you for any period of time. Unless otherwise agreed IN WRITING, the Company
reserves the right to terminate any employee at any time, with or without
cause. See Section 5(d) of the Option Agreement.
TERMINATION OF EMPLOYMENT: While the Option terminates on the Option
Expiration Date, it will terminate earlier if you cease to be employed by the
Company. If your employment ends due to death or permanent disability, the
Option terminates six months after the date of death or disability, and is
exercisable during such six-month period as to the portion of the Option
which had vested prior to the date of death or disability. In all other
cases, the Option terminates 30 days after the date of termination of
employment, and is exercisable during such time period as to the portion of
the Option which had vested prior to the date of termination of employment;
PROVIDED, HOWEVER, if you are terminated "for cause," the Option will
terminate 5 days after the date of termination of your employment and is
exercisable during such time period as to the portion of the Option which had
vested prior to the date of termination of employment. See Section 5 of the
Option Agreement.
TRANSFER: The Option is personal to you, and cannot be sold,
transferred, assigned or otherwise disposed of to any other person, except on
your death. See Section 15(d) of the Option Agreement.
EXERCISE: You can exercise the Option (once it is exercisable), in whole
or in part, by delivering to the Company a Notice of Exercise identical to
Exhibit "A" attached to the Option Agreement, accompanied by payment of the
Exercise Price for the Shares to be purchased. The Company will then issue a
certificate to you for the Shares you have purchased. You are under no
obligation to exercise the Option. See Section 4 of the Option Agreement.
MARKET STAND-OFF: The Option provides that in connection with any
underwritten public offering by the Company, you may not sell or transfer any
of your Shares without the prior written consent of the Company or its
underwriters for a period of up to 180 days after the effective date of the
offering. See Section 6(a) of the Option Agreement.
ADJUSTMENTS UPON RECAPITALIZATION: The Option contains provisions which
affect your rights in the event of stock splits, stock dividends, mergers and
other major corporate reorganizations. See Section 7 of the Option Agreement.
WAIVER: By signing this Certificate, you will be agreeing to all of the
terms of the Option Agreement, including those not summarized in this
Certificate. You will waive your rights to options or stock which may
otherwise have been promised to you. See Section 8 of the Option Agreement.
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WITHHOLDING: The Company may require you to make any arrangements
necessary to insure the proper withholding of any amount of tax, if any,
required to be withheld by the Company as a result of the exercise of the
Option. See Section 13 of the Option Agreement.
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