EXHIBIT 10.17
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EMPLOYMENT AGREEMENT
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THIS AGREEMENT, effective as of the 16th day of August 2001, between
NEXLAND, INC., a Delaware corporation (the "COMPANY"), and XXXXXX X. XXXXXX,
(the "EMPLOYEE").
NOW, THEREFORE, in consideration of the promises herein contained, the
parties covenant and agree as follows:
1. EMPLOYMENT. The Company agrees to employ the Employee as Corporate
Advisor for two (2) years, effective August 16, 2001, ending August 15, 2003
(the "EMPLOYMENT TERM"), unless terminated earlier as provided herein. The
Employment Term and any extension thereof is hereafter referred to as the
"PERIOD OF ACTIVE EMPLOYMENT."
2. DUTIES. The Employee shall be engaged as a general employee of the
Company, and shall report directly to the Chief Executive Officer of the
Company. The precise duties of the Employee may be extended or curtailed by the
Company from time to time.
3. EXTENT OF DUTIES. The Employee shall exert his best efforts with
reference to the Employer's business, but shall not be prohibited during the
period of active employment from engaging in any other business activity whether
or not such business activity is pursued for gain, profit, or other pecuniary
advantage. The Employee shall devote not less than twelve (12) days per month in
connection with the performance of his duties for the Company.
4. PLACE OF PERFORMANCE. The Employee shall perform his duties at the
Employee's residence or at such location that the Employee and the Company
mutually agree upon.
5. ADVISORY BOARD MEMBER. Throughout the period of active employment, the
Employee shall serve as a member of the Board of Advisors of the Company and the
Employee shall be entitled to receive the benefits and compensation normally
provided by the Company to its Board of Advisor members.
6. COMPENSATION AND BENEFITS. During the Employment Term, the Company, in
addition to any other compensation, profit sharing or bonus payments allocable
to the Employee at the Company's discretion, agrees to pay the Employee as
compensation for the services of the Employee, as follows:
6.1. SALARY. A basic annual salary of $144,000.00 (the "SALARY"), which
shall be payable in installments according to the Company's regular payroll
practices and subject to such deductions as may be required by law. The
Employee's Salary shall accrue until the following events occur: (i)(A) the
Company raises $200,000 in gross proceeds from a financing, or (B) the Company
ships $3,000,000 of the Company's products in any ninety (90) day period; and
(ii) Xxxxxxx X. Xxxxxx, Chief Executive Officer of the Company, receives his
accrued salary. The Employee's Salary may be increased annually at the
discretion of the Company's Board of Directors (the "BOARD OF Directors").
6.2. BENEFITS AND EXPENSE REIMBURSEMENT. The Employee shall receive:
(i) the employee benefits and perquisites provided by the Company to its
employees from time-to-time, and (ii) reimbursement for reasonable and necessary
out-of-pocket expenses, up to a maximum amount of $1,000.00 per month, in the
aggregate, unless a greater amount shall be approved by the Chief Executive
Officer of the Company, incurred in the performance of his duties hereunder,
including, but not limited to reasonable travel and entertainment expenses, and
Internet service provider, telephone and cellular telephone use charges (such
expenses shall be reimbursed by the Company, from time to time, upon
presentation of appropriate receipts therefor). Notwithstanding any other
provision of this Agreement, the Company does not
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guarantee or represent that any specific benefit plan or program will be
available to the Employee at any time hereunder.
6.3. STOCK OPTION UPON EXECUTION OF THIS AGREEMENT. Upon the execution
of this Agreement by all parties hereto, the Company shall grant to the Employee
a fully-vested option to purchase five hundred thousand (500,000) shares of the
Company's common stock (the "SIGNING STOCK OPTION"), par value $0.001 per share
(the "COMMON STOCK"), effective as of August 16, 2001, at an exercise price of
$0.26 per share. The Signing Stock Option shall be exercisable until August 15,
2011.
6.4. PERFORMANCE-BASED STOCK OPTION. Upon the execution of this
Agreement by all parties hereto, the Company shall grant to the Employee an
option to purchase one million five hundred thousand (1,500,000) shares of
Common Stock (the "PERFORMANCE-BASED STOCK OPTION") at an exercise price of
$0.26 per share. Subject to the pro rata vesting provisions described in this
Section 6.4, the Performance-Based Stock Option shall fully vest upon the
occurrence of any one of the following events: (i) the Company obtaining a
financing in an amount equal to or greater than Ten Million Dollars (US
$10,000,000.00) based upon a valuation of the Company that is equal to or
greater than One Hundred Million Dollars (US $100,000,000.00), (ii) the closing
price of the Common Stock is equal to or greater than Three Dollars (US $3.00)
per share (as reported by Bloomberg L.P.) for a continuous period of thirty (30)
business days, or (iii) a transaction in which (A) the Company and/or the
shareholders of the Company sell, based on a valuation of the Company that is
equal to or greater than One Hundred Million Dollars (US $100,000,000.00), to
any person the beneficial ownership (determined under Rule 13d-3 of the
regulations promulgated by the Securities and Exchange Commission under Section
13(d) of the Securities Exchange Act of 1934) of securities issued by the
Company having fifty percent (50%) or more of the voting power of all securities
issued by the Company, or (B) the Company merges or consolidates with or
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transfers substantially all of its assets to another person based on a valuation
of the Company that is equal to or greater than One Hundred Million Dollars (US
$100,000,000.00). In the event the Company obtains a financing in an amount
equal to or greater than Ten Million Dollars (US $10,000,000.00) based on a
valuation of the Company that is less than One Hundred Million Dollars (US
$100,000,000.00), or the Company successfully consummates the type of
transaction described in (ii)(A) or (ii)(B) above based on a valuation of the
Company that is less than One Hundred Million Dollars (US $100,000,000.00), the
Performance-Based Stock Option shall vest pro rata based on the valuation of the
Company; PROVIDED, HOWEVER, no portion of the Performance-Based Stock Option
shall vest in the event the Company obtains a financing or successfully
consummates the type of transaction described in (ii)(A) or (ii)(B) above based
on a valuation of the Company that is less than Fifty Million Dollars (US
$50,000,000.00). The following scenarios are provided for example purposes only.
In the event the Company obtains a financing in an amount equal to or greater
than Ten Million Dollars (US $10,000,000.00) based on a valuation of the Company
that is equal to Forty-Five Million Dollars (US $45,000,000.00), or the Company
successfully consummates the type of transaction described in (ii)(A) or (ii)(B)
above based on a valuation of the Company that is equal to Forty-Five Million
Dollars (US $45,000,000.00), no portion of the Performance-Based Stock Option
shall vest. In the event the Company obtains a financing in an amount equal to
or greater than Ten Million Dollars (US $10,000,000.00) based on a valuation of
the Company that is equal to Seventy-Five Million Dollars (US $75,000,000.00),
or the Company successfully consummates the type of transaction described in
(ii)(A) or (ii)(B) above based on a valuation of the Company that is equal to
Seventy-Five Million Dollars (US $75,000,000.00), fifty percent (50%) of the
Performance-Based Stock Option shall vest (I.E., seven hundred fifty thousand
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(750,000) shares of Common Stock). The Performance-Based Stock Option shall be
exercisable until August 15, 2011
6.5. DEATH OF EMPLOYEE. Upon the death of the Employee, the Employee's
estate shall have the right to exercise all vested and unexercised portions, at
the time of the Employee's death, of the Signing Stock Option and the
Performance-Based Stock Option, as well as any portion of the Performance-Based
Stock Option that shall vest within twelve (12) months following the Employee's
death. The rights granted in this Section 6.5 shall continue for the full term
of the options granted in Sections 6.3 and 6.4.
7. REGISTRATION RIGHTS. Subject to the terms and conditions of this
Agreement, the Company shall notify the Employee in writing at least twenty (20)
days prior to the filing of any registration statement under the 1933 Act for
purposes of a public offering of securities of the Company (including, but not
limited to, registration statements relating to secondary offerings of
securities of the Company, but excluding any registration statement relating to
any employee benefit plan or with respect to any corporate reorganization or
other transaction under Rule 145 of the 0000 Xxx) and will afford an opportunity
to include in such registration statement all or part of such Registrable
Securities held by the Employee. The Employee, if he desires to include in any
such registration statement, all of part of the Registrable Securities held by
him shall, within ten (10) days after the above-described notice from the
Company, so notify the Company in writing. Such notice shall state the intended
method of disposition of the Registrable Securities held by the Employee. If the
Employee decides not to include all of his Registrable Securities in the
registration statement thereafter filed by the Company, the Employee shall
nevertheless continue to have the right to include any Registrable Securities in
any subsequent registration statement or registration statements as may be filed
by the Company with respect to offerings of its securities, all upon the terms
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and conditions set forth herein. "REGISTRABLE SECURITIES" means the shares of
the Company's Common Stock issuable to the Employee pursuant to this Agreement.
8. TERMINATION. The Employee's employment pursuant to this Agreement shall
be terminated by the first to occur of the following events:
8.1. The death of the Employee.
8.2. The Complete Disability of the Employee. "COMPLETE DISABILITY" as
used herein shall mean the inability of the Employee, due to illness, accident
or any other physical or mental incapacity, to perform the services provided for
in this Agreement for an aggregate of sixty (60) days within any period of
twelve (12) consecutive months during the term hereof.
8.3. Termination for Cause. The Company shall at all times have the
right, upon written notice to the Employee, to terminate the Employee's
employment hereunder for Cause (as defined below). For purposes of this
Agreement, the term "CAUSE" shall mean: (a) an action or omission of the
Employee which constitutes an intentional, willful and material breach of this
Agreement; (b) fraud, embezzlement or misappropriation of funds in connection
with his services hereunder; (c) conviction of any crime which involves
dishonesty or a breach of trust; or (d) material failure to satisfactorily
perform or otherwise meet the Employee's duties hereunder, as reasonably
determined by the Company's Board of Directors which is not cured within thirty
(30) days after receipt by the Employee of written notice of the same. Any
termination for cause shall be made in writing to the Employee, which notice
shall set forth in detail all acts or omissions upon which the Company is
relying for such termination.
8.4. Upon any termination pursuant to Section 8.1 or 8.2, the Company
shall be released from all obligations hereunder, except for (i) the obligation
to pay any compensation and benefits described in Sections 6.1 and 6.3 hereof
which are accrued and unpaid as of the date of termination, and (ii) any portion
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of the Performance-Based Stock Options that shall vest within twelve (12) months
following the Employee's termination.
8.5. Upon any termination pursuant to Section 8.3 or in the event the
Employee voluntarily resigns from his employment with the Company, the Company
shall be released from all obligations hereunder, except for the obligation to
pay any compensation and benefits described in Sections 6.1 and 6.3 hereof which
are accrued and unpaid as of the date of termination or resignation.
9. TERMINATION WITHOUT CAUSE; EXPIRATION OF EMPLOYMENT TERM WITHOUT
RENEWAL. The Company may terminate this Agreement without cause at any time upon
one hundred eighty (180) days' written notice to the Employee prior to the end
of such period of active employment. In such event (unless the Employee is
absent from work because of accident or sickness), the Employee shall continue
to render his services and shall be paid his compensation to the day of
termination. In the event of a termination without cause or in the event that
the Employment Term expires without renewal by the Company, the Company shall be
obligated to pay any compensation and benefits described in Sections 6.1 and 6.3
hereof which are accrued and unpaid as of the date of termination, as well as
any portion of the Performance-Based Stock Options that shall vest within twelve
(12) months following the Employee's termination or the expiration of the
Employment Term. The Employee may terminate this Agreement without cause at any
time upon one hundred eighty (180) days' written notice to the Employer prior to
the end of such period of active employment. In such event (unless the Employee
is absent from work because of accident or sickness), the Employee shall
continue to render his services and shall be paid his compensation to the date
of termination. In such event, the Company shall be obligated to pay any
compensation and benefits described in Sections 6.1 and 6.3 hereof which are
accrued and unpaid as of the date of termination.
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10. AGENCY. The Employee shall have no authority to enter into any
contracts binding upon the Company, except such as shall be specifically
authorized by the Board of Directors of the Company or by the Chief Executive
Officer of the Company acting pursuant to authority granted by the Board of
Directors.
11. NOTICES. All notices, requests, demands, or other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given upon delivery if delivered in person, sent by Federal Express
(or recognized overnight courier service) or telecopied to the parties at the
following addresses:
If to the Company: Nexland, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxx, 0xx Xxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
with a copy to: Xxxxxxx X. Xxxxxx, Esquire
Xxxxxxxxxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxxxxx Xxxx., Xxxxx 0000
Xxxxx, Xxxxxxx 00000
If to the Employee: Xxxxxx X. Xxxxxx
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12. WAIVER OF BREACH. The waiver by the Company or the Employee of a
breach of any provision of this Agreement, shall not operate or be construed as
a waiver of any subsequent breach by the Employee or the Company. No wavier
shall be valid unless in writing and signed by the Employee or by an authorized
officer of the Company.
13. ASSIGNMENT. The Employee acknowledges that the services to be rendered
by him are unique and personal. Accordingly, the Employee may not assign any of
his rights or delegate any of his duties or obligations under this Agreement.
The rights and obligations of the Company under this Agreement shall inure to
the benefit of and shall be binding upon the successors and assigns of the
Company.
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14. ENTIRE AGREEMENT. This instrument contains the entire agreement of the
parties. It may not be changed orally but only by an agreement in writing signed
by the party against whom enforcement or any waiver, change, modification,
extension, or discharge is sought. This Agreement replaces any prior Employment
Agreement between the parties.
15. SEVERABILITY. The invalidity or unenforceability of any one or more
provisions of this Agreement shall not affect the validity or enforceability of
the other provisions of this Agreement, which shall remain in full force and
effect.
16. COUNTERPARTS. This Agreement may be executed in two (2) or more
counterparts, each of which shall be an original and all of which shall be
deemed to constitute one and the same instrument.
17. GOVERNING LAW. The validity and effect of this Agreement shall be
governed by and construed and enforced in accordance with the laws of Florida.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
------------------------------- NEXLAND, INC.
Witness
By:/s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
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Title: Chief Executive Officer
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Witness
/s/ Xxxxxx X. Xxxxxx
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Witness Xxxxxx X. Xxxxxx
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Witness
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