EXHIBIT 10.15
EMPLOYMENT AGREEMENT
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This Employment Agreement (this "Agreement") is entered into as of April 1,
1997, by and between ChatCom, Inc., a California corporation (the "Company"),
and Xxxxx X. Xxxxxxx ("Mariner").
1. Employment.
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1.1 Employment as President and Chief Executive Officer. The Company
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agrees to employ Mariner, and Mariner agrees to be employed by the Company, as
the Company's President and Chief Executive Officer for the period beginning on
April 1, 1997 and ending on the termination date as described in Section 3 (the
"Employment Period").
1.2 Duties as Employee. Mariner agrees to serve the Company as
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President and Chief Executive Officer during the Employment Period. Mariner's
duties shall be those customary for a President and Chief Executive Officer of a
company similar to the Company and such other duties as are specified by the
Company's Board of Directors (the "Board"), and he shall report to the Board.
Mariner shall also serve as a member of the Board of the Company, and the
Company agrees to include Mariner as a nominee for director in its slate of
candidates in all proxy materials for shareholder meetings to be held during the
Employment Period. During the Employment Period, the Company shall employ or
engage no one other than Mariner with his title or functions under this
Agreement. During the Employment Period, all officers, employees and
consultants of the Company shall report to, and only to, Mariner (directly or
through such channels as Mariner shall designate). During the Employment
Period, Mariner shall have the full, exclusive and final power and authority to
supervise and determine the business, affairs, and operations of the Company,
subject only to the ultimate direction of the Board. Without limiting the
generality of the immediately preceding sentence, Mariner shall have the full,
exclusive and final power and authority, subject only to the ultimate direction
of the Board, to initiate any and all action with respect to the Company and
supervise or determine all administrative and operational function of the
Company with respect to all of its assets and business, including, without
limitation, to hire, replace and terminate any and all personnel; to supervise
the operation and management of all business facilities, including real and
personal property; to acquire and dispose of personal property (wherever
acquired); to produce assets and exploit, license, lease and otherwise turn the
Company's assets to account, or to refrain therefrom.
Mariner's service shall be primarily performed in the greater metropolitan
area of Los Angeles, California. During his employment, Mariner shall devote
such time and effort as may be necessary to adequately perform his duties under
this Agreement. Mariner shall be entitled to manage and direct his own personal
investments and business affairs, to participate in such charitable and public
interest activities as he may deem appropriate, and to serve on other boards
(with the reasonable approval of the Board), all and to the extent that such
activities do
not conflict with his obligations to the Company as the full-time President and
Chief Executive Officer of the Company.
This Agreement shall not be terminated by the voluntary or involuntary
dissolution of the Company, or by any merger after which the Company is not the
surviving or resulting entity, or upon any transfer of all or substantially all
of the assets of the Company. In the event of any such merger or transfer of
assets, or any similar corporate reorganization, whatever may be its form, the
provisions of this Agreement shall be binding on and inure to the benefit of,
and the obligations of the Company shall be assumed by, the surviving business
entity or the business entity to which such assets have been transferred.
1.3 Salary and Benefits.
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(a) Salary and Bonus. During the Employment Period, the Company shall
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pay Mariner a salary at the annual rate of $165,000 per year (which rate shall
increase retroactively to April 1, 1997 to $185,000 per year immediately
following the completion by the Company of a financing for at least $2,000,000),
payable bi-monthly and subject to such payroll deductions as may be necessary or
customary in respect of the Company's salaried employees in general. For the
Employment Period, the Company shall pay Mariner a cash bonus of up to $65,000,
provided that the Company achieves net income of at least $500,000 and at least
$18,000,000 in revenues for the fiscal year ended March 31, 1998. (A portion of
the foregoing $65,000 bonus will be fixed by the Board and will be payable to
Mariner in the event the goals of achieving $2,000,000 in net income and
$25,000,000 in revenues for such fiscal year are only partially satisfied, with
such portion (i) to be based on the relationship of the actual operating results
achieved to the minimum and goal amounts for net income and revenues set forth
in this Section 1.3(a) and (ii) to reflect achievement of the goal of raising
equity capital sufficient to support the growth in revenues to the foregoing
minimum or goal amount levels.)
(b) Incentive, Savings and Retirement Plans. Mariner shall be
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entitled to participate at the discretion of the Board in all annual bonus,
incentive, stock option, savings and retirement plans, practices, policies and
programs applicable generally to other senior executives of the Company.
(c) Welfare Benefit Plans. Mariner shall be eligible for
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participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company to the extent
applicable generally to other senior executives of the Company.
(d) Vacations. Mariner shall be entitled to paid four weeks vacation
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and sick leave and holidays in accordance with the Company's policies for other
senior executives of the Company.
2.
(e) Fringe Benefits. Mariner shall be entitled to fringe benefits in
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accordance with the plans, practices, programs and policies as in effect
generally with respect to other senior executives of the Company, including
medical insurance and fully paid annual physical exams, the use of the Company's
GMC Suburban or another vehicle of equivalent value or cost, auto insurance,
fuel oil and maintenance.
(f) Life Insurance. During the Employment Period, the Company, at its
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expense, shall provide Mariner with a two-year term life insurance policy in the
amount of $1 million, with the beneficiary for such policy to be named by
Mariner, provided that the annual premium cost to the Company shall not exceed
$5,000 and with Mariner having the option to pay premiums in excess of $5,000
per year.
2. Additional Compensation.
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2.1 Vesting of Options for Fiscal Year Ended March 31, 1997. The
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Company and Mariner hereby confirm and agree that, notwithstanding anything in
the provisions of the letter agreement, dated March 5, 1996, between the Company
and Mariner (the "Prior Agreement") to the contrary, all of the options to
purchase a total of 120,000 shares of the Company's Common Stock previously
granted to Mariner that were available for potential vesting with respect to the
fiscal year ended March 31, 1997 shall be deemed to be vested as of March 31,
1997, despite the Company's failure to meet the EBIT and revenue targets for
that vesting described in the Prior Agreement.
2.2 Vesting of Options for Fiscal Years Ended March 31, 1998 and
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March 31, 1999. Provided that Mariner continues to be employed as the Company's
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President and CEO through the applicable vesting dates or as otherwise
specifically provided in Section 3.3, the remaining options to purchase a total
of 240,000 shares of the Company's common stock granted to Mariner pursuant to
the Prior Agreement shall vest on March 31, 2000 as to 120,000 shares and March
31, 2001 as to the remaining 120,000 shares and be exercisable through March 4,
2003, except that such vesting will be accelerated during the Employment Period,
as follows:
(a) Options for Fiscal Year Ended March 31, 1998. Options to purchase
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120,000 shares of the Company's common stock shall vest as of March 31, 1998,
provided that the Company achieves for the fiscal year ended March 31, 1998 both
net income of at least $2,000,000 and at least $25,000,000 in revenues. (A
portion of the foregoing options to purchase 120,000 shares will be fixed by the
Board and will vest in the event the foregoing financial tests are only
partially satisfied, provided that the Company generates at least $500,000 in
net income and $18,000,000 in revenues, and with such portion (i) to be based on
the relationship of the actual operating results achieved to the minimum and
goal amounts for net income and revenues set forth in this Section 2.2(a) and
(ii) to reflect
3.
achievement of the goal of raising equity capital sufficient to support the
growth in revenues to the foregoing minimum or goal amount levels.)
(b) Options for Fiscal Year Ended March 31, 1999. The performance
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standards for the vesting of the remaining options to purchase 120,000 shares of
the Company's common stock for the fiscal year ended March 31, 1999 shall be
agreed to by the Company and Mariner prior to the commencement of that fiscal
year.
(c) Options for Fiscal Years Ended after March 31, 1999. The
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performance standards for the vesting of any options that may be granted after
the date of this Agreement with respect to fiscal years ended after March 31,
1999 shall be agreed to by the Company and Mariner prior to the commencement of
such respective fiscal years.
(d) Cancellation of Unvested Options. Except as provided below,
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options not vested pursuant to Section 2.2(a), 2.2(b) or 2.2(c) hereof shall be
cancelled following a determination by the Board that the tests for vesting have
not been satisfied.
3. Termination. The term of Mariner's employment under this Agreement
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may terminate as hereinafter provided, in which case (i) Mariner shall be
entitled to the amounts set forth in Section 3.3 hereof and (ii) Mariner shall
remain subject to the provisions of Sections 4, 5 and 6 hereof to the extent
applicable. Either party may terminate this Agreement at any time on at least
one year's written notice, provided that such notice may not be delivered by the
Company prior to April 1, 1998. Upon his termination as the Company's President
and Chief Executive Officer, Mariner shall promptly resign as a member of the
Board, if so requested by the Company.
3.1 Death or Disability. If Mariner dies or becomes disabled during
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the Employment Period, Mariner's employment under this Agreement shall
automatically terminate upon death or after four and one-half consecutive months
of disability, as the case may be. "Disability" shall mean any physical or
mental illness that renders Mariner unable to perform his agreed-upon services
under this Agreement for any four and one-half consecutive months. Such
disability shall be determined by a licensed physician not affiliated with the
parties to this Agreement. In the event of Mariner's death, the amounts due him
pursuant to this Agreement through the date of his death shall be paid to
whomever he has previously designated or, in the event no such designation is
made, to his estate, or to the beneficiaries of his estate.
3.2 Good Cause. Mariner's employment under this Agreement may be
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terminated upon written notice by the Company for "good cause," as determined in
good faith by the Board. The term "good cause" is defined as (a) Mariner's
continuing repeated willful failure or refusal to perform his duties as required
by this Agreement; (b) gross negligence, material violation by Mariner of any
duty of loyalty to the Company or any other material misconduct on the part of
Mariner; (c) Mariner's conviction by, or entry of a plea of guilty or
4.
nolo contendere in, a court of competent and final jurisdiction for any crime
involving moral turpitude or a felony punishable by imprisonment in the
jurisdiction involved; or (d) Mariner's commission of an act of fraud, whether
prior to or subsequent to the date hereof, upon the Company, as determined in
good faith by the Board. Mariner shall be given at least 30 days to fully
correct any event under (a) or (b) of the preceding sentence and to indemnify
the Company for any damage caused to it by such event.
3.3 Payments Upon Termination. Upon the completion of the Employment
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Period, Mariner shall not receive any further salary, bonus or severance
payments, but shall be entitled to receive the salary and bonus payments set
forth in Section 1.3(a) for the Employment Period. Options held by Mariner that
have vested as of the date of the completion of the Employment Period or that
otherwise vest pursuant to this Section 3.3 shall be exercisable for a period of
time following the Employment Period equal to the sum of (a) two years plus (b)
the period of time that Mariner has served as the Company's Chief Executive
Officer, but with such exercise period to not exceed five years or the original
expiration date of such options. As described in this Section 3.3, all other
unvested options shall be cancelled as of the date of completion of the
Employment Period or, where appropriate, as of the end of the applicable fiscal
year determination that the relevant performance standards have not been met.
(a) Death or Disability. In the event of Mariner's termination as set
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forth in Section 3.1 hereof, he shall receive his salary through the date of
such termination. Any bonus that would have been payable for the fiscal year in
which termination occurs pursuant to Section 3.1 and any options granted
pursuant to Section 2.2 that would otherwise have vested (in whole or in part)
at the end of the fiscal year in which such death or disability occurs will be
payable and vest (in whole or in part) upon a determination by the Board as of
the end of that fiscal year that the performance standards for such partial or
complete payment and vesting have been met; provided, however, that the
foregoing bonus shall be payable pro rata (based on the number of months that
Mariner serves as Chief Executive Officer during the fiscal year in which his
termination occurs). In no event shall Mariner be entitled to receive any other
additional salary, bonus, options or compensation of any other kind hereunder.
(b) Good Cause. In the event of Mariner's termination as set forth in
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Section 3.2 hereof, he shall receive his salary through the date of such
termination. Options vested at such termination date shall be exercisable in
accordance with the terms of the Company's Stock Option Plan, as modified by
Section 3.3. Options not vested at such termination date shall be immediately
cancelled. In no event shall Mariner be entitled to receive additional salary,
bonus, options or compensation of any other kind hereunder.
(c) Termination Without Cause. In the event the Company terminates
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the Employment Period without cause effective as of the end of a fiscal year
(the "Final Fiscal Year Served"), (a) Mariner shall be entitled to receive his
salary for the Final Fiscal Year
5.
Served, and (b) provided that the performance standards for the year preceding
the Final Fiscal Year served were achieved, Mariner shall be entitled to receive
all of his bonus for the Final Fiscal Year served and all of the options granted
pursuant to Section 2.2 that would have vested with respect to that fiscal year
shall be deemed to have vested whether or not the performance standards for the
Final Fiscal Year Served were met. In the event the Company terminates the
Employment Period by delivering the one-year termination notice on a date that
falls after the end of a fiscal year, (a) the options and bonus for the period
from the end of such fiscal year to the date of delivery of the notice shall be
earned and vested (pro rata based on the number of months that Mariner serves as
Chief Executive Officer from the end of such fiscal year to the date of delivery
of the notice) but only in the event and to the extent that the performance
standards for the fiscal year in which the termination notice was delivered are
met, and (b) Mariner shall receive his salary for the one-year period commencing
with delivery of the termination notice, and, provided that the performance
standards for the preceding fiscal year were met, the Company shall negotiate in
good faith (taking into consideration that the performance standards had been
achieved for the preceding fiscal year) a bonus amount and option vesting
schedule for the one-year period that commences with delivery of the termination
notice (which constitutes the final year of the Employment Period) that shall
not be tied to the achievement of any performance standards. In the event the
performance standards for the preceding fiscal year were only partially met,
Mariner and the Company will negotiate in good faith a bonus and option vesting
schedule with appropriate performance standards. Options not vested at the
termination date pursuant to this Section 2.2(c) shall be immediately cancelled.
In no event shall Mariner be entitled to receive any other salary, bonus,
options or compensation of any kind hereunder.
Should the Company terminate the Employment Period without cause, it shall
have the right to cause Mariner to cease serving as President and Chief
Executive Officer 30 days after delivery of such notice, in which case Mariner
shall retain all rights to receive and vest options (subject to the preceding
paragraph) as if he continued to serve for the one-year period following
delivery of the notice and he shall have the option to either (a) receive his
salary and bonus with respect to that one-year period paid either at such times
as those amounts would be payable had he continued to serve or (b) receive a
lump sum payment 30 days following receipt of such notice equal to 90% of his
salary and bonus that would be payable had he continued to serve for that one-
year period as payment in full for those amounts.
(d) Voluntary Resignation. In the event Mariner terminates the
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Employment Period without cause as of a date prior to the completion of a fiscal
year, Mariner shall be entitled to receive his salary through that date and a
pro rata share of both the bonus and the options granted pursuant to Section 2.2
for that fiscal year (based on the number of months that he served as Chief
Executive Officer in that fiscal year), but only in the event and to the extent
that the performance standards for that fiscal year were met. Options not
vested at such termination date shall be immediately cancelled. In no event
shall Mariner be entitled to receive any other salary, bonus, options or
compensation of any kind hereunder.
6.
4. Ownership of Intangibles. Mariner hereby grants and assigns to the
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Company all of his right, title and interest in and to any ideas, designs,
techniques, processes, trademarks, inventions and improvements related to the
Company's business (collectively, "Inventions") conceived during the term of
this Agreement, which Inventions relate to the business of the Company or any of
its affiliates, or to actual or demonstrably anticipated research or development
of the Company or any of its affiliates, or results from work performed by
Mariner for the Company or any of its affiliates, together with all patents that
are pending or have been issued in the United States and in all foreign
countries during the term of this Agreement with respect to such Inventions (the
"Proprietary Rights"). All such Proprietary Rights shall be the sole and
exclusive property of the Company and shall remain such notwithstanding the
subsequent termination of employment under this Agreement. To the extent that
any Proprietary Rights or other ideas, designs, techniques, processes,
trademarks, inventions or improvements used by the Company during the term of
this Agreement rely upon or use patented or unpatented Inventions that Mariner
has made or conceived prior to the date of this Agreement, Mariner hereby grants
an exclusive, perpetual, royalty-free, worldwide license to use such Invention.
5. Confidential Information. Mariner agrees that during the Employment
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Period, he will be dealing with proprietary, nonpublic and confidential
information, including inventions and processes developed by the Company or any
of its affiliates, relating to the present and prospective business, assets and
good will of the Company or any of its affiliates (all of the foregoing referred
to as "confidential information"). Without limiting the generality of the
foregoing, it is understood that Mariner will have access to information
regarding intellectual property of the Company or any of its affiliates,
inventions and ideas under development by them, and information regarding the
actual and prospective business and customers of the Company or any of its
affiliates. Mariner agrees that he will not disclose to anyone, directly or
indirectly, any of such confidential matters, or use them other than in the
course of performing his obligations under this Agreement. All documents
prepared by Mariner in connection with the services provided herein, and all
confidential information (however embodied or recorded) that might be given to
him are the exclusive property of the Company and shall be returned to the
Company at its request. After termination of Mariner's employment with the
Company, he shall not, without the prior written consent of the Company, or as
may otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and those
designated by it in writing. Mariner acknowledges that such actions could cause
irreparable harm to the Company and that the Company may obtain an injunction or
other equitable relief to enforce this provision. Furthermore, upon termination
of this Agreement, Mariner shall promptly deliver to the Company all books,
memoranda, records and written data in original form of every kind relating to
the business and affairs of the Company that may then be in his personal
possession.
7.
6. Noncompetition.
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6.1 No Competing Activities. Mariner agrees that, while he is
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employed by the Company, he shall not engage or participate in any state of the
United States, directly or indirectly, either as an owner, partner, director,
trustee, officer, employee, consultant, advisor or in any other individual or
representative capacity, in any activity which is the same as, similar to or
competitive in any manner with the business of the Company or its members or
affiliates (herein, a "Competing Activity") or have any investment in a business
which is engaged in a Competing Activity (other than an ownership interest of
less than 5% of any company whose securities are listed on the New York Stock
Exchange, the American Stock Exchange or the Nasdaq National Market or Nasdaq
Small Cap Market). Mariner further agrees that in the event of a termination
for good cause as set forth in Section 3.2 hereof or Mariner's election to
terminate employment pursuant to Section 3.3 hereof, he shall not, for a two-
year period following such termination of employment, engage in a Competing
Activity or have any investment in a business which is engaged in a Competing
Activity (other than an ownership interest of less than 5% of any company whose
securities are listed on the New York Stock Exchange, the American Stock
Exchange or the Nasdaq National Market or Nasdaq Small Cap Market).
6.2 Reasonable Limitations. Mariner acknowledges that, given the
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nature of the Company's business, the covenants contained in this Section 6
contain reasonable limitations as to time, geographical area and scope of
activity to be restrained, and do not impose a greater restraint than is
necessary to protect the legitimate business interests of the Company. If,
however, this Section 6 is determined by any court of competent jurisdiction, or
in any arbitration, as the case may be, to be unenforceable by reason of its
extending for too long a period of time or over too large a geographic area or
by reason of its being too extensive in any other respect or for any other
reason it will be interpreted to extend only over the longest period of time for
which it may be enforceable and/or over the largest geographical area as to
which it may be enforceable and/or to the maximum extent in all other aspects as
to which it may be enforceable, all as determined by such court, or in such
arbitration, as the case may be.
6.3 Acknowledgement. Mariner understands that the restrictions in
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Section 6.1 hereof may limit his ability to earn a livelihood in a business
similar to the business of the Company, but he nevertheless believes that he has
received and will receive sufficient consideration hereunder and otherwise as an
employee of the Company to justify such restrictions which, in any event, given
his education, abilities and skills, Mariner does not believe would prevent him
from earning a living.
8.
7. Miscellaneous.
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7.1 Modification and Waiver of Breach. No waiver or modification of
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this Agreement shall be binding unless it is in writing signed by the parties
hereto. No waiver of a breach hereof shall be deemed to constitute a waiver of
a future breach, whether of a similar or dissimilar nature.
7.2 Assignment. This Agreement shall inure to the benefit of and
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shall be binding upon the Company, its successors and assigns. The obligations
and duties of Mariner hereunder are personal and not assignable, whether
voluntarily or involuntarily or by operation of law or otherwise.
7.3 Notices. All notices and other communications required or
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permitted under this Agreement shall be in writing, served personally on, or
mailed by certified or registered United States mail to, the party to be charged
with receipt thereof. Notices and other communications served by mail shall be
deemed given hereunder 72 hours after deposit of such notice or communication in
the United States Post Office as certified or registered mail with postage
prepaid and duly addressed to whom such notice or communication is to be given,
in the case of (a) the Company, 0000 Xxxxxxx Xxxxxx Xxxxxxxxx, Xxxxxxxxxx,
Xxxxxxxxxx 00000, Attention: Secretary, or (b) Mariner, to the address set
forth below his name on the signature page hereof. Any such party may change
said party's address for purposes of this Section 7.3 by giving to the party
intended to be bound thereby, in the manner provided herein, a written notice of
such change.
7.4 Counterparts. This instrument may be executed in one or more
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counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same Agreement.
7.5 Governing Law. This Agreement shall be construed in accordance
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with, and governed by, the internal laws of the State of California.
7.6 Arbitration; Legal Fees. Any dispute with respect to this
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Agreement shall be resolved by binding arbitration pursuant to the rules of the
American Arbitration Association. If any legal action or other proceeding is
brought for the enforcement of this Agreement, or because of any alleged
dispute, breach, default or misrepresentation in connection with this Agreement,
the successful or prevailing party shall be entitled to recover reasonable
attorneys' fees and other costs it incurred in that action or proceeding, in
addition to any other relief to which it may be entitled.
9.
7.7 Savings Clause. If any provision of this Agreement or the
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application thereof is held invalid, the invalidity shall not affect other
provisions or applications of the Agreement which can be given effect without
the invalid provisions or applications and to this end the provisions of this
Agreement are declared to be severable.
7.8 Complete Agreement. This instrument constitutes and contains the
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entire agreement and understanding concerning Mariner's employment and the other
subject matters addressed herein between the parties, and supersedes and
replaces all prior negotiations and all agreements proposed or otherwise,
whether written or oral, concerning the subject matters hereof. This is an
integrated document.
IN WITNESS WHEREOF, the undersigned have executed this Agreement on the day
and year first above written.
MARINER: THE COMPANY:
CHATCOM, INC.
/s/ Xxxxx X. Xxxxxxx By: /s/ Xxxxxxx Xxxxxxx
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Xxxxx X. Xxxxxxx Executive Vice President
and Secretary
Address:
000 XXXXXXXXX XXX.
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NEWPORT BEACH
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XXXXXXXXXX 00000
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10.
