EXHIBIT 10.15
EMPLOYMENT AGREEMENT PAGE 1
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AMENDED AND RESTATED
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EMPLOYMENT AGREEMENT
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I.
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PARTIES
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This Employment Agreement ("Agreement") entered into as of January 1, 1997
and amended and restated as of April 22, 1997, by and between NetVantage Inc.,
000 Xxxxxxxxxxx Xxxx., Xxxxx 000, Xx Xxxxxxx, XX 00000-0000 ("NVI") and Xxxxxxx
X. Xxxxxxx residing at 00 Xxxxxxxxx Xxxxx, Xxxxxxxxx Xxxxx, XX 00000
("Executive").
II.
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RECITALS
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1. Executive originally joined NVI in November, 1995 as President and
Chief Operating Officer. In conjunction with his employment, a letter agreement
setting forth the terms and conditions of his employment was executed by and
between Executive and NVI on or about November 16, 1995, hereinafter the "Letter
Agreement". On or about June 19, 1996, the parties executed an Employment
Agreement (the "1996 Agreement").
2. The Executive having served successfully in the original position of
President and Chief Operating Officer, and, the former Chairman of the Board
and Chief Executive Officer of NVI having resigned, the Board of Directors of
NVI ("the Board"), unanimously promoted the Executive to the position of
Chairman of the Board and Chief Executive Officer of NVI.
3. Employee has successfully performed his duties and responsibilities as
Chairman of the Board, President and Chief Executive Officer from the date of
execution of the 1996 Agreement to the present, and the parties desire that the
Executive continue his employment on the terms and conditions set forth herein.
III.
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TERMS
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1. EFFECTIVE DATE: The 1996 Agreement shall terminate, and this Agreement
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shall become effective on January 1, 1997, except that Executive shall retain
all stock options granted under the Letter Agreement and the 1996 Agreement.
Stock options granted herein shall be in addition to the stock options granted
in the Letter Agreement and the 1996 Agreement.
2. EMPLOYMENT OF SPOUSE: The parties acknowledge that Xxxxxx Xxxxxxxx
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Rizzone, who is the spouse of Executive, is currently employed by NVI in direct
marketing and sales. The employment of Executive is separate and apart from,
and shall not have an impact upon the employment of Xxxxxx X. Xxxxxxx. It is
agreed that the performance of Executive and Xxxxxx X. Xxxxxxx will be evaluated
separately, and any future promotion, employment, compensation and/or incentive
packages will be offered on an individual basis and will not be considered on a
collective basis.
3. POSITIONS: Executive shall retain the positions of Chairman of the
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Board of Directors, President and Chief Executive Officer.
EMPLOYMENT AGREEMENT PAGE 2
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4. EMPLOYMENT DUTIES: As Chairman of the Board of Directors, President
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and Chief Executive Officer, Executive will have total overall responsibility
for all business activities of NVI, including, without limitation, the tactical
operation and strategic direction of NVI. In conjunction with this
responsibility, all personnel will report either to the Executive or to persons
reporting to him. Executive will report only to the Board. Executive will be
allowed to vote on all matters before the Board concerning NVI, including,
without limitation, Executive's employment, but excluding only matters directly
and solely related to Executive's compensation. In all voting matters, excluding
only matters directly and solely related to Executive's compensation, in the
case of any tie vote, Executive shall have the option of casting multiple votes.
Notwithstanding the foregoing the Chief Financial Officer shall also report to
the Board of Directors with respect to the books, records, financial condition
and financial reporting of the Company.
5. TERM: The term of this Agreement is five (5) years, commencing
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January 1, 1997, and terminating December 31, 2001. However, either party may
terminate Executive's employment, with or without cause, upon giving at least
thirty (30) days prior written notice. Termination of Executive's employment by
NVI shall also require a majority vote of the Board. Executive shall be allowed
to vote on this matter and cast the tie breaking vote if required. Termination
of Executive's employment, whether with or without cause, shall not terminate,
modify, reduce or in any way affect any of the provisions of Section 11. of this
Agreement.
6. SALARY: Executive shall be paid $200,000.00 per year, paid bi-weekly
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commencing January 1, 1997. Usual and customary expenses will be or reimbursed
to Executive by NVI according to its policy regarding business expenses. The
Board shall review Executive's salary, incentive compensation and stock/stock
option position annually, on January 1, of each year, with the next review to be
January 1, 1998. NVI shall provide annual salary increases, incentive
compensation and stock/stock options consistent with the custom and practice in
the industry for equivalent-sized companies with equivalent executive
responsibilities. No such annual review shall reduce Executive's annual salary,
incentive compensation, stock/stock options, nor shall it terminate or modify
any economic compensation, options, or other rights or benefits granted herein.
7. COMPANY AUTOMOBILE ALLOWANCE: NVI shall, provide to Executive for his
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sole use a 1997 BMW model 750 ("Auto"). NVI shall pay all upkeep and maintenance
and insurance for Auto. Executive shall have the option to purchase Auto at 40%
of the then wholesale Xxxxx Bluebook value in the event that Executive
terminates his employment voluntarily or if in the event the Executive's
employment is terminated involuntarily NVI shall continue to maintain the Auto
until December 31, 1999 at which time Executive shall have the option to
purchase Auto at 40% of the then wholesale Xxxxx Bluebook value. If the
Termination Benefits referenced in Section 11 are in effect on December 31,
1999, NVI will pay to the Executive a monthly car allowance of $2,000.00 from
January 1, 2000 through the end of the Termination period.
8. HEALTH CLUB MEMBERSHIP: NVI shall provide Executive with a family
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health club membership in a health club selected by Executive, the monthly dues
for such membership shall not exceed $500.00.
9. STOCK OPTIONS: In the Letter Agreement and the 1996 Agreement,
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Executive was granted options to buy shares of stock of NVI. Those stock options
granted in the Letter Agreement and the 1996 Agreement shall remain in full
force and effect. The stock options set forth herein shall be in addition to the
stock options previously granted to Executive.
a. Whereas Executive has performed extraordinary services which
have benefited NVI and NVI is unable to pay Executive cash compensation in
amounts which the Board of Directors deems adequate and whereas NVI and the
Executive have rescinded certain previously granted options in order to prevent
adverse consequences to NVI, Executive is granted options to purchase 180,000
shares of Class A
EMPLOYMENT AGREEMENT PAGE 3
Common Stock pursuant to the 1994 and 1996 Equity Incentive Plans and options to
purchase 340,000 shares of Class A Common Stock pursuant to the 1997 Equity
Incentive Plan at the average of the NASDAQ bid/ask price of the NVI Common A
stock on April 22, 1997 which was $5.75/share.
b. All options granted to Executive in the Letter Agreement, the
1996 Agreement and the 1997 Agreement as referenced above in Section 9a., are
fully vested and exercisable in whole or part at any time.
c. Executive shall have two (2) years to exercise options granted in
the Letter Agreement, 1996 Agreement and the 1997 Agreement as referenced above
after either the effective date of his voluntary resignation from NVI or the end
of the Termination Period as defined in Section 11(a)(2) below, which ever is
applicable.
d. In the event of an NVI Reorganization as defined in section 12(a)
herein, Executive shall retain all exercise rights with respect to any
substitute options and shall benefit in any subsequent reduction in exercise
price of options held by others that may occur.
e. Except as otherwise provided, the stock options referred to
herein will be for class A common stock. If NVI issues any class of stock other
than the existing class A common stock, Executive's options shall apply to such
additional class(es) of stock in the same ratio as his options for class A
common stock bear to the total issued and outstanding class A common stock.
10. HEALTH BENEFITS: NVI will provide Executive with the same health,
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disability and life insurance benefits as are made available to other Executives
of NVI.
11. RIGHTS ON TERMINATION OF EMPLOYMENT:
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a. Executive shall have the rights and benefits described below
(hereinafter "Termination Benefits"), in the event Executive's employment is
terminated as follows:
(1) NVI terminates Executive's employment, either with or without
cause at any time, for any reason, including but not limited to Executive's
voluntary or involuntary inability or failure to perform his duties hereunder;
or
(2) Executive terminates his employment for any of the following
reasons: (a) a change of job duties, title or responsibility from those
described in paragraph 4.; (b) Executive is removed from, or not re-elected to
the Board of Directors, or is removed as Chairman of the Board of Directors; (c)
there is a change in the organizational structure of NVI, i.e., who Executive
reports to or who reports to him; (d) NVI for any reason decreases the salary,
benefits or compensation to Executive; (e) Executive is required to travel more
than fifty (50) miles from his principal residence to the principal offices of
NVI; or (f) there is an acquisition or merger of NVI.
b. Executive shall not have Termination Benefits if he voluntarily
terminates his employment for any reason other than as set forth above.
c. Executive's Termination Benefits are as follows:
(1) NVI shall continue to pay Executive his salary for a period of
thirty-six (36) months from the date of termination of employment.
(2) NVI shall continue to pay and/or provide to Executive all
Health, medical, disability, life insurance, health club and other benefits
described in paragraphs 8 and 10., for a period of thirty-six (36) months from
the date of termination of employment.
EMPLOYMENT AGREEMENT PAGE 4
(3) NVI shall continue to pay and/or provide to Executive the car
allowance/automobile lease described in paragraph 7., for a period of thirty-six
(36) months from the date of termination.
(4) NVI shall pay Executive for accrued but unused vacation time
vested as of the date of termination of his employment.
(5) The termination benefits described herein shall be measured by
the highest level of salary and other benefits paid to or on behalf of
Executive.
(6) All Reorganization Consideration (described below) which would
have been payable to Executive hereinunder, if Executive's employment had
continued, for a period of forty-eight (48) months after the date of
termination of employment.
d. The parties acknowledge that any public discussion of the
circumstances pertaining to the parties' termination of their relationship would
be counter productive to the interests of either party. The parties therefore
agree to refrain from making any negative, disparaging or defamatory remarks
about the other party, or to interfere with the other party's prospective
economic gain.
12. NVI REORGANIZATION:
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a. For purposes of this Agreement, the term "Reorganization" means
any merger, acquisition, or consolidation of businesses of which NVI is a party,
or any sale of all or substantially all of NVI's assets or stock of any class. A
Reorganization shall be deemed to have occurred on the earlier of (1) execution
of an agreement for an event of Reorganization or (2) the occurrence of any
event of Reorganization.
b. For purposes of the Agreement, the term "Reorganization
Consideration" shall be the total value of all consideration paid or payable to
NVI, or, in the case of a sale or exchange of NVI stock, the cash value, or at
Executive's election, the stock consideration paid or exchanged for NVI stock.
c. The Reorganization Consideration shall be divided by the total
number of outstanding shares of NVI class A common stock as of the date
immediately preceding the occurrence of the Reorganization. The resulting amount
is hereinunder referred to as the "Reorganization Price Per Share".
d. Executive shall be paid a cash bonus (hereinafter "Reorganization
Cash Bonus"), according to the following schedule, within five (5) days of
either (1) the execution of an agreement for an event of Reorganization or (2)
the occurrence of any event of Reorganization, whichever occurs first. Payment
of the bonus will be in cash.
(1) If the Reorganization Price Per Share is $15.00 or less,
Executive will be paid two percent (2%) of the Reorganization Consideration.
(2) If the Reorganization Price Per Share is greater than $15.00
but less than $20.00, Executive will be paid three percent (3%) of the
Reorganization Consideration.
(3) If Reorganization Price Per Share is $20.00 or greater,
Executive will be paid four percent (4%) of the Reorganization Consideration.
e. The Reorganization Cash Bonus shall remain in effect twelve (12)
months after the voluntary resignation of the Executive or Forty-eight (48)
months after the date of Termination of Employment as described in section 11.2
above.
EMPLOYMENT AGREEMENT PAGE 5
f. NVI will reimburse and gross-up any extraordinary tax assessments
or tax penalties that may be applied by the IRS or any other tax authority on
the Reorganization Cash Bonus and Stock Option exercise at the time of
reorganization. Such payment will be made within fourteen (14) days of the
earlier to occur of (i) assessment or ruling by IRS or any other tax authority
or(ii) payments of such amounts by Executive in conjunction with the filing of
the personal income return for the year in which the Bonus was granted. For
calculation purposes, all gross ups will take into account the combined tax
effect at the highest applicable federal, state and local tax.
13. SECURED PROMISSORY NOTE: NVI shall lend to Executive the sum of
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$750,000.00 on such terms and conditions as are set forth in the form of a
secured promissory note attached to this Agreement as Exhibit A.
14. SURVIVORSHIP: This agreement is binding on the parties and their
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heirs, successors and assigns. In the event of Executive's death, his employment
shall be deemed terminated under section 11.a above, and the rights and benefits
of this agreement, including termination, shall inure to the estate of the
Executive.
15. DISABILITY: If, during the employment period, The Executive shall,
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in the opinion of the Board of Directors of the Company as confirmed by
competent medical evidence, become physically or mentally incapacitated to
perform his duties, then NVI shall terminate his employment under Section 11.a
above.
16. PROPRIETARY INFORMATION:
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a) Executive recognizes that his position with NVI requires
substantial trust and confidence because of his access to trade secrets and
other proprietary information of NVI (collectively "Proprietary Information").
At all times, during the term of this Agreement, and for a period of five (5)
years after the termination of this Agreement for any reason, Executive shall
use his best efforts and exercise utmost diligence to protect the unauthorized
disclosure of any Proprietary Information. Said Proprietary Information includes
but is not limited to NVI's software, marketing, manufacturing and design
processes, and operating procedures. Executive will not be required to incur
personnel expense to protect the unauthorized disclosure of any Proprietary
Information.
b) Except as may be required in the performance of his duties
hereinunder, Executive shall not use NVI's Proprietary Information for his own
benefit, or disclose NVI's Proprietary Information to another, without NVI's
prior written consent.
c) The provisions of this section 15 are in addition to those set
forth in NVI Employee Proprietary Information and Invention Agreement previously
executed by the Executive.
17. COVENANT NOT TO COMPETE: During the term of Executive's employment,
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Executive shall not engage in any act in competition with the business or best
interests of NVI. During the term of this Agreement, Executive shall not be an
agent, employee, or consultant for any competitor of NVI. Following any
notification of termination of his employment, Executive may pursue and accept
any employment or occupation whether or not it competes with NVI.
18. NO ORAL MODIFICATION: This Agreement is not subject to oral
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modification in any fashion. The terms of this Agreement may be modified only by
an agreement in writing executed by the Parties hereto. No subsequent attempt at
an oral novation will be effective to modify or change this agreement.
19. NOTICE: Any notice required by this Agreement shall be in writing
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and shall be mailed or delivered to the other party at the addresses set forth
above. If said notice is mailed, it shall be deemed effective five (5) days
after the date of mailing.
EMPLOYMENT AGREEMENT PAGE 6
20. COVENANTS INDEPENDENT: The covenants set forth herein are independent
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of one another, and a breach by one party of any promise or covenant set forth
herein, shall not terminate the Agreement or excuse performance by the other
party of his or its obligations set forth herein.
21. ENTIRE AGREEMENT: Except as provided herein, this Agreement
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constitutes the entire agreement between the parties and supersedes all prior
written or oral agreements. There are no promises, warranties, or
representations other than as contained herein. This Agreement may only be
modified by an Agreement in writing executed by the Parties hereto.
22. GOVERNING LAW: This agreement shall be governed by the laws of the
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State of California. Any action or mediation dispute arising out of this
Agreement shall be conducted in Orange County, California.
23. MEDIATION: In the event of a dispute between the parties arising out
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of this Agreement, the parties agree to submit the dispute to mediation prior to
the commencement of litigation. Mediation shall be conducted by any neutral
mediator selected by both parties. If the parties cannot agree on the selection
of a mediator, then either party may seek an order of the court of competent
jurisdiction to appoint a mediator. The party requesting the court to appoint a
mediator shall be entitled to reasonable attorney's fees and costs incurred in
obtaining the order. In the event mediation does not resolve the parties
dispute, then either party may commence an action against the other party.
24. ATTORNEYS FEES: In the event of any action arising out of this
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Agreement, the prevailing party will be entitled to reasonable attorney's fees
and costs, including pre-litigation attorney's fees and costs.
25. FURTHER ASSURANCES: Each party shall execute such documents and
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perform such acts as may be reasonably necessary or appropriate to carry out the
terms of this Agreement.
26. REVIEW BY COUNSEL: Each party has had the opportunity to review this
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Agreement with an attorney of his or its choice, and each party acknowledges
this Agreement is entered into voluntarily.
AGREED AGREED
/s/ Xxxxxxx X. Xxxxxxx 4-22-97 /s/ CA Xxxxxxxxxxx 4-22-97
_______________________/_________ ______________________/_________
XXXXXXX X. XXXXXXX DATE AUTHORIZED AGENT DATE
NetVantage, Inc.