EXECUTIVE COMPENSATION AGREEMENT
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AGREEMENT, dated as of November 17, 1999(the "Agreement"), by and
between Nexland, Inc., an Arizona corporation having its principal place of
business at 20801 Biscayne Boulevard Suite 414, Aventura, Florida 33180 (the
"Company"), and Greg Levine (the "Executive").
WHEREAS, the Company desires to employ and retain the Executive for the
term specified herein in order to advance the business and interests of the
Company on the terms and conditions set forth herein; and
WHEREAS, the Executive desires to provide his services to the Company
in such capacities, on and subject to the terms and conditions hereof;
WHEREAS, the Company desires to provide the Executive with certain
options to acquire stock in the Company in order that the Executive may have the
opportunity to participate in the growth and performance of the Company, as set
forth herein;
NOW, THEREFORE, the parties hereto, intending to be legally bound,
agree as follows:
1. Employment and Term. Subject to all of the terms and
conditions hereof, the Company does hereby employ and agree to employ the
Executive as its President unless directed by the Board of Directors to serve in
some other executive capacity, for and during the Employment Term, as defined
below, and the Executive does hereby accept such employment. The term of
employment shall commence on November 17, 1999 (the "Effective Date") and shall
continue until December 31, 2005 unless earlier terminated as herein provided
(such term, the "Employment Term"), and thereafter shall be renewed for
additional terms of one (1) year, unless either party provides the other with
notice, as provided for herein, at least ninety (90) days prior to the date the
Employment Term would otherwise renew, of that party's intention not to so renew
such term.
2. Duties of Executive. The Executive shall, during the term
of employment hereunder, perform the executive and administrative duties,
functions and privileges, as the same may be determined by the Board of
Directors of the Company from time to time. The Executive shall report to the
Board of Directors of the Company (or such person designated by the Board of
Directors), and if so elected, the Executive shall serve as a member of the
Board of Directors. The Executive agrees to serve the Company faithfully,
conscientiously and to the best of his ability, and to devote substantially all
of his business time to the business and affairs of the Company (and, if
requested by the Board of Directors, any subsidiary or affiliate of the Company)
so as to promote the profit, benefit and advantage of the Company and, if
applicable, any subsidiaries or affiliates of the Company. The Executive agrees
to accept the payments to be made to him under this Agreement, and the stock
options, if any, to be issued to him under this Agreement, as full and
complete compensation for the services required to be performed by, and the
covenants of, the Executive under this Agreement.
3. Location and Travel. The Executive shall not be required to
relocate outside the greater Miami-Fort Lauderdale metropolitan area without his
consent. The Executive acknowledges, however, that significant domestic and
international travel may be required as part of his duties hereunder; and the
Executive agrees to undertake such travel as may be reasonably required by the
business of the Company from time to time.
4. Compensation.
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4.1 Base Salary. The Executive shall be paid at an
annual rate of One Hundred Thousand Dollars ($100,000.00) from the Effective
Date until such time as the Company shall have obtained equity investments
and/or debt financing totalling in the aggregate at least one million dollars;
thereafter, at the annual rate of One Hundred Fifty Thousand Dollars
($150,000.00). All compensation shall be made in accordance with the standard
payroll practices of the Company, and whichever compensation rate is applicable
at a particular time is referred to herein as the "Base Salary".
4.2 Performance Bonus. Periodically, but in no event
less than every six (6) months from the Effective Date, the Board of Directors
of the Company (excluding the Executive, if he is a director), shall evaluate
the Executive's performance and determine the amount of any bonus to be paid to
Executive.
4.3 Regular Benefits. The Executive shall be entitled
to participate in any health insurance, accident insurance, hospitalization
insurance, life insurance, pension, or any other similar plan or benefit
afforded by the Company to its employees generally, if and to the extent that
the Executive is eligible to participate in accordance with the provisions of
any such insurance, plan or benefit generally (such benefits, collectively, the
"Regular Benefits").
4.4 Vacation. The Executive shall be entitled to four
(4) weeks paid vacation per year, such vacations to be taken at times mutually
agreeable to the Executive and the Company. The Executive shall further be
entitled to the number of paid holidays, and leaves for illness or temporary
disability in accordance with the policies of the Company for its senior
executives.
4.5 Term Life Insurance. The Company shall have the
right from time to time to purchase, modify or terminate insurance policies on
the life of the Executive for the benefit of the Company in such amount as the
Company shall determine in its sole discretion. In connection therewith the
Executive shall, at such time or times and at such place or places as the
Company may reasonably direct, submit himself to such physical examinations and
execute and deliver such documents as the Company may deem necessary or
desirable; provided, however, that the eligibility
of the Executive for, or the availability of, such insurance shall not be deemed
to be a condition of continued employment hereunder. The Executive makes no
representation to the Company as to his current or future eligibility for
insurance.
4.6 Expense Reimbursement. The Company shall
reimburse the Executive for all expenses reasonably incurred by him in
connection with the performance of his duties hereunder and the business of the
Company upon the submission to the Company of appropriate receipts therefor, in
accordance with the expense reimbursement policy of the Company which shall be
substantially consistent with the policies applicable to the Executive in
connection with his employment immediately prior to the commencement of the Term
hereof.
5. Termination and Severance Arrangements.
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5.1 Termination by the Company. The Company may
terminate this Agreement at any time on or after December 31, 2001 by providing
at least 30 days advance written notice to the Executive. In the event that the
Company terminates this Agreement (a) on or after December 31, 2000, (b) other
than in connection with a Change of Control, in which event Section 7 shall
apply, and (c) other than for Cause, in which event Section 6.3 shall apply, the
Company shall, notwithstanding such termination, in consideration for all of the
undertakings and covenants of the Executive contained herein, continue to pay to
the Executive the Base Salary and the Regular Benefits for a period of twelve
(12) months from the date of such termination. In no event however, shall the
continuation of such payments during such post-termination period be deemed to
be employment hereunder for purposes of calculating any bonus due to the
Executive, for purposes of determining the vesting or exercise period of any
stock options granted hereunder, or otherwise.
5.2 Termination by Executive. The Executive may
terminate this Agreement at any time on or after December 31, 2000 by providing
at least 180 days advance written notice to the Company.
5.3 Termination for Cause. Notwithstanding the
Employment Term, the Company may terminate the Executive for Cause, as defined
below, upon a resolution duly adopted by the affirmative vote of not less than a
majority of the entire membership (excluding the Executive) of the Board of
Directors at a meeting called and held for such purpose (after reasonable notice
to the Executive and an opportunity for the Executive, together with his
counsel, to be heard before the Board of Directors), finding that in the good
faith opinion of the Board of Directors there shall have been Cause, as defined
below, to terminate the Executive and specifying the particulars thereof in
detail. In the event that the employment of the Executive is terminated by the
Company for Cause, no severance or other post-termination payment shall be due
or payable by the Company to the Executive (except solely such bonus or other
payments as may have been accrued but not yet paid prior to such termination).
For purposes hereof, "Cause" shall mean: (a) the conviction with respect to any
felony or misdemeanor involving theft, fraud, dishonesty or misrepresentation;
(b) any
material misappropriation, embezzlement or conversion of the Company's or any of
its subsidiary's or affiliate's property by the Executive; (c) willful
misconduct by the Executive in respect of the material duties or obligations of
the Executive under this Agreement; or (d) a material breach by the Executive of
any of his material obligations hereunder, after written notice thereof and a
reasonable opportunity of thirty (30) days to cure the same, provided that the
same is not caused by the physical disability including mental disease or defect
of the Executive, in which event Section 6.4 shall apply.
5.4 Death or Disability. In the event that the
employment of the Executive by the Company is terminated by reason of the death
of the Executive or by reason of the medical or psychiatric disability of the
Executive to perform a material portion of his duties for ninety (90)
consecutive calendar days (a "Disability"), the Company shall, promptly upon
such termination, pay the Executive an amount equal to six (6) months of Base
Salary, in a single lump sum.
6. Parachute Provisions.
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6.1 Change of Control. For purposes of this
Agreement, a "Change of Control" shall be deemed to have occurred upon the
occurrence of any one or more of the following events.
6. 1.1 Any "person" or "group" (as such terms are
used in connection with Section 13(d) and 14(d)(2) of the Securities Exchange
Act of 1934 (the "Exchange Act")) but excluding the Executive or any employee
benefit plan of the Company (a) is or becomes the "beneficial owner" (as defined
in Rule l3d-3 under the Exchange Act), directly or indirectly, of securities of
the Company representing fifty percent (50%) or more of the combined voting
power of the Company's outstanding securities then entitled to vote for the
election of directors, or (b) acquires by proxy or otherwise fifty percent (50%)
or more of the combined voting securities of the Company having the right to
vote for the election of directors of the Company, for any merger or
consolidation of the Company, or for any other matter; provided, however, that a
Change of Control shall not be deemed to have occurred solely by reason of the
public ownership of fifty percent (50%) or more of the Common Stock of the
Company;
6.1.2 There shall be consummated without the consent
of the Executive (A) any consolidation, merger or recapitalization of the
Company or any similar transaction involving the Company, whether or not the
Company is the continuing or surviving corporation, (B) any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all of the assets of the Company or (C)
the adoption of a plan of complete liquidation of the Company (whether or not in
connection with the sale of all or substantially all of the Company's assets) or
a series of partial liquidations of the Company that is de jure or de facto part
of a plan of complete liquidation of the Company; provided that the divestiture
of less than substantially all of the assets of the Company in one transaction
or a series of related transactions, whether effected by sale, lease, exchange,
spin-off, sale of the stock or
merger of a Subsidiary or otherwise, or a transaction solely for the purpose of
reincorporating the Company in another jurisdiction, shall not constitute a
"Change in Control."
6.2 Rights on Change in Control. If within one year
after, or 90 days prior to, a Change in Control of the Company, the Company
shall terminate the Executive's employment other than by reason of the
Executive's death or Disability or for Cause, the Company shall pay to the
Executive as compensation for services rendered, not later than the fifth
business day after the date of termination:
6.2.1 the Executive's Base Salary through the date of
termination, any Regular Benefits and incentive compensation for the fiscal year
in which the termination occurs in accordance with any arrangements then
existing with the Executive and proportionate to the period of the fiscal year
which has expired prior to the termination; and
6.2.2 a lump sum severance payment equal to two (2)
times the Executive's average annual compensation during the Base Period, as
defined in the Internal Revenue Code (the "Code") provided that in no event
shall Total Payments, as defined in the Code, exceed two (2) times the
Executive's Base Amount as such term is defined in Section 28OG of the Code. The
Executive's Base Amount shall be determined in accordance with temporary or
final regulations promulgated under Section 28OG of the Code then in effect, if
any.
7. Proprietary Rights.
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7.1 Non Competition. The Executive covenants and
agrees that for so long as he shall be employed by the Company and for a period
of one year from the later of the termination of such employment (such period of
time the "Restricted Period") the Executive shall not directly or indirectly,
own, manage, control, operate invest in or become principal of employee of,
director of, or consultant to, any business, entity or venture which is
competitive with the business of the Company as conducted at such time;
provided, however, that it shall not be a violation of this Agreement for the
Executive to have beneficial ownership of less than 5% of the outstanding amount
of any class of securities of any enterprise (but without otherwise
participating in the activities of such enterprise) if such securities are
listed on a national securities exchange or quoted on an inter-dealer quotation
system.
7.2 Confidentiality. The Executive recognizes and
acknowledges that certain confidential business and technical information used
by the Employee in connection with his duties hereunder that includes, without
limitation, certain confidential and proprietary information relating to the
designing, development, construction and marketing of computer hardware, is a
valuable and unique asset of the Company. Executive agrees that he shall at all
times maintain the confidentiality of the proprietary information and trade
secrets of the Company, and that he shall during the Restricted Period refrain
from disclosing any such information to the disadvantage of the Company.
7.2.1 During the Restricted Period the
Executive shall not, directly or indirectly (A) solicit, in competition with the
Company, any person who is a customer of any business conducted by the Company,
or (B) in any manner whatsoever induce, or assist others to induce, any supplier
of the Company to terminate its association with such entity or do anything,
directly or indirectly, to interfere with the business relationship between the
Company, and any of their respective current or prospective suppliers.
7.2.2 During the Restricted Period the
Executive shall not, directly or indirectly, solicit or induce any employee of
the Company to terminate his or her employment for any purpose, including
without limitation, in order to enter into employment with any entity which
competes with any business conducted by the Company
7.3 Ownership by Company. The Executive acknowledges
and agrees that all of his work product created, produced or conceived in
connection with his association with the Company shall be deemed work for hire
and shall be deemed owned exclusively by the Company. The Executive agrees to
execute and deliver all documents required by the Company to document or perfect
the Company's proprietary rights in and to the Executive's work product.
7.4 Remedies. It is expressly understood and agreed
that the services to be rendered hereunder by the Executive are special, unique,
and of extraordinary character, and in the event of the breach by the Executive
of any of the terms and conditions of this Agreement on his part to be performed
hereunder, or in the event of the breach or threatened breach by the Executive
of the terms and provisions of this Section 8 of this Agreement, then the
Company shall be entitled, if it so elects, to institute and prosecute any
proceedings in any court of competent jurisdiction, either in law or equity, for
such relief as it deems appropriate, including without limiting the generality
of the foregoing, any proceedings, to obtain damages for any breach of this
Agreement, or to enforce the specific performance thereof by the Executive.
8. Market Standoff Agreement. The Executive hereby agrees that
if so requested by the Company or by any representative of any underwriters in
connection with any registration of the offering of any securities of the
Company under the Securities Act, the Executive shall not sell or otherwise
transfer any securities of the Company during the ninety-day period following
the effective date of a registration statement of the Company filed under the
Securities Act.
9. Independent Representation. The Executive acknowledges that
he has had the opportunity to seek independent counsel and tax advice in
connection with the execution of this Agreement, and the Executive represents
and warrants to the Company (a) that he has sought such independent counsel and
advice as he has deemed appropriate in connection with the execution hereof and
the transactions contemplated hereby; and (b) that he has not relied on any
representation of the Company as to tax matters, or as to the consequences of
the execution hereof. The Company hereby agrees to reimburse the Executive for
the reasonable costs of legal counsel and tax advice
incurred by the Executive in connection with the negotiation of this Agreement
and the relationship and transactions contemplated hereby, up to a maximum of
Five Thousand Dollars ($5,000).
9.1 Neutral Construction. No party may rely on any
drafts of this Agreement in any interpretation of the Agreement. Each party to
this Agreement has reviewed this Agreement and has participated in its drafting
and, accordingly, no party shall attempt to invoke the normal rule of
construction to the effect that ambiguities are to be resolved against the
drafting party in any interpretation of this Agreement.
9.2 Attorney's Fees. In the event that either party
hereto commences litigation against the other to enforce such party's rights
hereunder, the prevailing party shall be entitled to recover all costs, expenses
and fees, including reasonable attorneys' fees (including in-house counsel),
paralegals, fees, and legal assistants' fees through all appeals.
10. General.
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10.1 No Brokers. Each of the parties to this
Agreement represents and warrants to the other that it has not utilized the
services of any finder, broker or agent. Each of the parties agrees to indemnify
the other party against any and all liabilities to any person, firm or
corporation claiming any fee or commission of any kind on account of services
rendered on behalf of such party in connection with the transactions
contemplated by this Agreement.
10.2 Applicable Law. This document shall in all
respects be governed by the laws of the State of Florida. The parties
acknowledge that substantially all of the negotiations relating to this
Agreement were conducted in Florida, and that this Agreement has been executed
by both parties in Florida. Any legal suit, action or proceeding against any
party hereto arising out of or relating to this Agreement shall be instituted in
a federal or state court in Dade County, Florida, and each party hereto waives
any objection which it may now or hereafter have to the laying of venue of any
such suit, action or proceeding and each party hereto irrevocably submits to the
jurisdiction of any such court in any suit, action or proceeding
10.3 Rights Absolute. The Company's obligation to pay
the Executive the compensation specified herein shall be absolute and
unconditional and shall not be affected by any circumstance, including, without
limitation, any setoff, counterclaim, defense or other right which the Company
may have against the Executive or anyone else. All amounts payable by the
Company hereunder shall be paid without notice or demand.
10.4 No Offset. Except as expressly provided herein,
the Company waives all rights it my now have or may hereafter have conferred
upon it, by statute or otherwise, to terminate, cancel or rescind this Agreement
in whole or in part. The Executive shall not be required to mitigate the amount
of any payment provided for in this Agreement by seeking other employment,
and if Executive obtains such other employment, any compensation earned by
Executive pursuant thereto shall not be applied to mitigate any payment made to
Executive pursuant to this Agreement.
10.5 Successor Obligations. The Company shall require
any successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company to expressly assume by written agreement and to agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.
10.6 Survival. The parties hereto agree that the
covenants contained in Section 8 hereof shall survive any termination of
employment by the Executive and any termination of this Agreement. In addition,
the parties hereto agree that any compensation or right which shall have accrued
to the Executive as of the date of any termination of employment or termination
hereof shall survive any such termination and shall be paid when due to the
extent accrued on the date of such termination.
10.7 Assignability. All of the terms and provisions
contained herein shall inure to the benefit of and shall be binding upon the
parties hereto and their respective heirs, personal representatives, successors
and assigns. The obligations of the Executive however, may not be assigned, and
the Executive may not, without the Company's written consent thereto, assign,
transfer, convey, pledge, encumber, hypothecate or otherwise dispose of this
Agreement or any interest therein. Any such attempted assignment or disposition
shall be null and void and without effect. The Company and the Executive agree
that this Agreement and all of the Company's rights and obligations hereunder
may be assigned or transferred by the Company to and may be assumed by and
become binding upon and may inure to the benefit of any affiliate of or
successor to the Company. The term "successor" shall mean, with respect to the
Company or any of its subsidiaries, and any other corporation or other business
entity which, by merger, consolidation, purchase of the assets, or otherwise,
acquires all or a material part of the assets of the Company. Any assignment by
the Company of its rights and obligations hereunder to any affiliate of or
successor shall not be considered a termination of employment for purposes of
this Agreement.
10.8 Notices. Any and all notices required or desired
to be given hereunder by any party shall be in writing and shall be validly
given or made to another party if delivered either personally, by telex,
facsimile transmission, same day delivery Service, overnight expedited delivery
service, or if deposited in the United States Mail, certified or registered,
postage prepaid, return receipt requested. If notice is served personally,
notice shall be deemed effective upon receipt. If notice is served by telex or
by facsimile transmission, notice shall be deemed effective upon transmission,
provided that such notice is confirmed in writing by the sender within one day
after transmission. If notice is served by same day delivery service or
overnight expedited delivery service, notice shall be deemed effective the day
after it is sent, and if notice is given by United
States mail, notice shall be deemed effective five days after it is sent. In all
instances, notice shall be sent to the parties at the following addresses:
If to the Company: Nexland, Inc.
20801 Biscayne Boulevard Suite 414
Aventura, Florida 33180
Fax: (305) 937-3877
If to the Executive: Greg Levine
Nexland, Inc.
20801 Biscayne Boulevard
Suite 414
Miami, Florida 33180
Any party may change its address for the purpose of receiving notices by a
written notice given to the other party.
10.9 Modifications or Amendments. No amendment,
change or modification of this document shall be valid unless in writing and
signed by all of the parties hereto.
10.10 Waiver. No reliance upon or waiver of one or
more provisions of this Agreement shall constitute a waiver of any other
provisions hereof.
10.11 Severability. If any provision of this
Agreement as applied to either party or to any circumstances shall be adjudged
by a court of competent jurisdiction to be void or unenforceable, the same shall
in no way affect any other provision of this Agreement or the validity or
enforceability of this Agreement. If any court construes any of the provisions
to be unreasonable because of the duration of such provision or the geographic
or other scope thereof, such court may reduce the duration or restrict the
geographic or other scope of such provision and enforce such provision as so
reduced or restricted.
10.12 Separate Counterparts. This document may be
executed in one or more separate counterparts, each of which, when so executed,
shall be deemed to be an original. Such counterparts shall, together, constitute
and shall be one and the same instrument.
10.13 Headings. The captions appearing at the
commencement of the sections hereof are descriptive only and are for convenience
of reference. Should there be any conflict between any such caption and the
section at the head of which it appears, the substantive provisions of such
section and not such caption shall control and govern in the construction of
this document.
10.14 Specific Performance. It is agreed that the
rights granted to the parties hereunder are of a special and unique kind and
character and that, if there is a breach by any party of any material provision
of this document, the other party would not have any adequate remedy at law. It
is expressly agreed, therefore, that the rights of the parties hereunder may be
enforced by an action for specific performance and other equitable relief.
10.15 Further Assurances. Each of the parties hereto
shall execute and deliver any and all additional papers, documents and other
assurances, and shall do any and all acts and things reasonably necessary in
connection with the performance of their obligations hereunder and to carry out
the intent of the parties hereto.
10.16 Entire Agreement. This Agreement constitutes
the entire understanding and agreement of the parties with respect to the
subject matter of this Agreement, and any and all prior agreements,
understandings or representations are hereby terminated and canceled in their
entirety.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
NEXLAND, INC., an Arizona corporation
By: /s/ Gregory S. Levine
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Name: Gregory S. Levine
Title: President
By: /s/ Greg Levine
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Greg Levine