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EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the
"Agreement"), dated as of December 1, 2006 (the "Commencement
Date") between Net Perceptions, Inc., a Delaware corporation, (the
"Company") and Jonathan LaBarre (the "Employee").
WITNESSETH :
WHEREAS , the Company desires to
employ the Employee and to be assured of his services on the terms
and conditions hereinafter set forth; and
WHEREAS , the Employee is
willing to accept such employment on such terms and
conditions.
NOW THEREFORE , in consideration
of the mutual covenants and agreements set forth in this Agreement,
the Company and the Employee hereby agree as follows:
1. Term .
The term of this Agreement shall commence on the
Commencement Date and shall expire on the third anniversary of
Commencement Date (the "Term"), subject to earlier termination as
provided herein.
2. Duties .
(a) During the Term of
this Agreement, the Employee shall serve as the Chief Financial
Officer and Principal Financial Officer of the Company and shall
perform all duties commensurate with his position and as may be
assigned to him by the Chairman of the Board of Directors of the
Company or the Chief Executive Officer or such other person(s) as
may be designated by the Board of Directors of the Company (the
"Board"). The Employee shall devote his full business time and
energies to the business and affairs of the Company and shall use
his best efforts, skills and abilities to promote the interests of
the Company, and to diligently and competently perform the duties
of his position.
(b) The Employee shall
report to the Chairman of the Board or the Chief Executive Officer
or such other person(s) as may be designated by the Board and shall
at all times keep the Chairman of the Board (or such other officer
as the Chairman of the Board or the Chief Executive Officer or the
Board may designate from time to time) promptly and fully informed
(in writing if so requested) of his conduct and of the business or
affairs of the Company, and provide such explanations of his
conduct as may be required.
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3. Compensation, Bonus, Stock
Options, Benefits, etc.
(a)
Salary . During the Term of
this Agreement, the Company shall pay to the Employee, and the
Employee shall accept from the Company, as compensation for the
performance of services under this Agreement and the Employee's
observance and performance of all of the provisions hereof, an
annual salary at the rate of $205,000 (the "Base Compensation").
The Base Compensation shall be payable in accordance with the
normal payroll practices of the Company. The Employee’s
performance and the Base Compensation shall be subject to annual
review by the Company.
(b)
Bonus . In addition to the
Base Compensation described above, the Employee shall, in the sole
and absolute discretion of the Compensation Committee of the Board,
be entitled to performance bonuses which may be based upon a
variety of factors, including the Employee’s performance and
the achievement of Company goals, all as determined in the sole and
absolute discretion of the Board or Compensation Committee of the
Board. The target performance bonus for 2007 is 40% of the Base
Compensation, subject to the discretion of the Board, provided the
Company achieves annual earnings before interest, taxes,
depreciation and amortization ("EBITDA"), as computed by the
Company on or prior to its filing of its annual report on Form 10-K
for the year ended December 31, 2007, of at least $13,800,000 in
the fiscal year ended December 31, 2007. Additionally, as
consideration for the Employee accepting this position prior to the
receipt of the 2006 bonus he would have otherwise been entitled to
had he remained at his old employment, the Company hereby agrees to
pay to the Employee a one-time buy-out bonus in the amount of
$45,000 (the "Buy-out Bonus") provided the employment of the
Employee has not been terminated for any reason prior to filing of
the Company’s annual report on Form 10-K for the year ended
December 31, 2006. Any bonus paid to the Employee shall be subject
to withholding for applicable taxes and other amounts. In addition,
the Employee may be entitled to participate in such other bonus
plans, whether during the term of this Agreement as the
Compensation Committee of the Board may, in its sole and absolute
discretion, determine.
(c) Stock
Options .
Upon the Commencement Date, the Company shall
issue and grant to Employee, under the Company’s 1999 Equity
Incentive Plan (the "Plan"), options to purchase 250,000 shares of
the Company’s common stock (the "Common Stock"), having an
exercise price equal to the closing price of the Common Stock on
the date of grant, which shall be the Commencement Date, of which
(i) 125,000 shall vest in three equal annual installments
commencing on the first anniversary of the date of grant; and (ii)
125,000 shall vest upon satisfaction of the performance targets set
forth in and in accordance with Exhibit A , attached hereto.
During the Term of this Agreement the Employee agrees not to sell,
pledge, hypothecate or otherwise transfer the Common Stock issuable
upon the exercise of each tranche of options identified above
within a one year period after vesting of such tranche without the
consent of the Board of Directors. The terms and provisions of such
options shall be set forth in a stock option agreement in a form
satisfactory to the Company and subject to the Company’s form
of stock option agreement under the Plan. In addition, the Employee
may be entitled, during the term of this Agreement, to receive such
additional options, at such exercise prices and other terms as the
Compensation Committee of the Board may, in its sole and absolute
discretion, determine.
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(d)
Benefits . During the Term
of this Agreement, the Employee shall be entitled to participate in
or benefit from, in accordance with the eligibility and other
provisions thereof, the Company's medical insurance and other
fringe benefit plans or policies as the Company may make available
to, or have in effect for, its senior executive officers from time
to time. The Company and its affiliates retain the right to
terminate or alter any such plans or policies from time to time.
The Employee shall also be entitled to four weeks paid vacation
each year, sick leave and other similar benefits in accordance with
policies of the Company from time to time in effect for its senior
executive officers.
(e)
Reimbursement of Business Expenses .
During the Term of this Agreement, upon submission
of proper invoices, receipts or other supporting documentation
reasonably satisfactory to the Company and in accordance with and
subject to the Company’s expense reimbursement policies, the
Employee shall be reimbursed by the Company for all reasonable
business expenses actually and necessarily incurred by the Employee
on behalf of the Company in connection with the performance of
services under this Agreement.
(f)
Taxes . The Base
Compensation and any other compensation paid to Employee shall be
subject to withholding for applicable taxes and other
amounts.
4. Representations of
Employee .
(a) The Employee
represents and warrants that he is not party to, or bound by, any
agreement or commitment, or subject to any restriction, including
but not limited to agreements related to previous employment
containing confidentiality or noncompetition covenants, which
presently has or may in the future have a possibility of adversely
affecting the business of the Company or the performance by the
Employee of his duties under this Agreement.
(b) During the Term and
the Severance Period, if any, the Employee agrees that he will not
offer for sale, sell, pledge, assign, hypothecate or otherwise
create any interest in or dispose of (or enter into any transaction
or device that is designed to, or could reasonably be expected to,
result in any of the foregoing) any shares of Common Stock owned by
him on the Commencement Date or any shares of Common Stock owned or
acquired by him after the Commencement Date upon the conversion or
exercise of options or any securities convertible into or
exercisable or exchangeable for Common Stock, without first
notifying the Board in writing to inquire as to whether there
exists any facts or circumstances that would make it inadvisable
for the Company if the Employee engaged in such
transaction.
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(c) The representations,
warranties and covenants of this Section 4 shall survive
termination of the Employee’s employment hereunder and the
expiration of the Term hereof.
5. Confidentiality,
Noncompetition, Nonsolicitation and
Non-Disparagement.
For purposes of this Section 5, all references to
the Company shall be deemed to include the Company’s
affiliates and subsidiaries and their respective subsidiaries,
whether now existing or hereafter established or acquired. In
consideration for the compensation and benefits provided to the
Employee pursuant to this Agreement, the Employee agrees with the
provisions of this Section 5.
(a) Confidential
Information . (i) The Employee
acknowledges that as a result of his retention by the Company, the
Employee has and will continue to have knowledge of, and access to,
proprietary and confidential information of the Company, including,
without limitation, research and development plans and results,
software, databases, technology, inventions, trade secrets,
technical information, know-how, plans, specifications, methods of
operations, product and service information, product and service
availability, pricing information (including pricing strategies),
financial, business and marketing information and plans, and the
identity of customers, clients and suppliers (collectively, the
"Confidential Information"), and that the Confidential Information,
even though it may be contributed, developed or acquired by the
Employee, constitutes valuable, special and unique assets of the
Company developed at great expense which are the exclusive property
of the Company. Accordingly, the Employee shall not, at any time,
either during or subsequent to the Term of this Agreement, use,
reveal, report, publish, transfer or otherwise disclose to any
person, corporation or other entity, any of the Confidential
Information without the prior written consent of the Company,
except to responsible officers and employees of the Company and
other responsible persons who are in a contractual or fiduciary
relationship with the Company and who have a need for such
Confidential Information for purposes in the best interests of the
Company, and except for such Confidential Information which is or
becomes of general public knowledge from authorized sources other
than the Employee.
(ii) The Employee acknowledges that the
Company would not enter into this Agreement without the assurance
that all the Confidential Information will be used for the
exclusive benefit of the Company.
(b) Return of
Confidential Information . Upon the
termination of this Agreement or upon the request of the Company,
the Employee shall promptly return to the Company all Confidential
Information in his possession or control, including but not limited
to all drawings, manuals, computer printouts, computer databases,
disks, data, files, lists, memoranda, letters, notes, notebooks,
reports and other writings and copies thereof and all other
materials relating to the Company’s business, including
without limitation any materials incorporating Confidential
Information.
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(c) Inventions,
etc . During the Term and for a period
of one year thereafter, the Employee will promptly disclose to the
Company all designs, processes, inventions, improvements,
developments, discoveries, processes, techniques, and other
information related to the business of the Company conceived,
developed, acquired, or reduced to practice by him alone or with
others during the Term of this Agreement, whether or not conceived
during regular working hours, through the use of Company time,
material or facilities or otherwise ("Inventions").
The Employee agrees that all copyrights created
in conjunction with his service to the Company and other
Inventions, are "works made for hire" (as that term is defined
under the Copyright Act of 1976, as amended). All such copyrights,
trademarks, and other Inventions shall be the sole and exclusive
property of the Company, and the Company shall be the sole owner of
all patents, copyrights, trademarks, trade secrets, and other
rights and protection in connection therewith. To the extent any
such copyright and other Inventions may not be works for hire, the
Employee hereby assigns to the Corporation any and all rights he or
she now has or may hereafter acquire in such copyrights and any
other Inventions. Upon request the Employee shall deliver to the
Company all drawings, models and other data and records relating to
such copyrights, trademarks and Inventions. The Employee further
agrees as to all such Inventions, to assist the Company in every
proper way (but at the Company’s expense) to obtain,
register, and from time to time enforce patents, copyrights,
trademarks, trade secrets, and other rights and protection relating
to said Inventions in and all countries, and to that end the
Employee shall execute all documents for use in applying for and
obtaining such patents, copyrights, trademarks, trade secrets and
other rights and protection on and enforcing such Inventions, as
the Company may desire, together with any assignments thereof to
the Company or persons designated by it. Such obligation to assist
the Company shall continue beyond the termination of the
Employee’s service to the Company, but the Company shall
compensate the Employee at a reasonable rate after termination of
service for time actually spent by the Employee at the
Company’s request for such assistance. In the event the
Company is unable, after reasonable effort, to secure the
Employee’s signature on any document or documents needed to
apply for or prosecute any patent, copyright, trademark, trade
secret, or other right or protection relating to an Invention,
whether because of the Employee’s physical or mental
incapacity or for any other reason whatsoever, the Employee hereby
irrevocably designates and appoints the Company and its duly
authorized officers and agents as his agent coupled with an
interest and attorney-in-fac
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