Vivek Wadhwa, founder and former chief executive officer of Relativity Technologies, has filed a lawsuit against the company seeking at least $295,000. Among the counts is wrongful termination.
“I was left with no choice but to sue,” Wadhwa told Local Tech Wire.
Steve Maysonave, chief executive officer of Relativity, said the company had filed its own civil complaint against Wadhwa on June 10. He told Local Tech Wire that the company is seeking to resolve the dispute with Wadhwa out of court.
“This is actually in response to the complaint we filed against Vivek,” Maysonave said of Wadhwa’s suit. He said that the firm had filed a one-page form in advance of a more formal action.
“We had hoped to settle,” Maysonave said. “We essentially requested a declaratory judgment concerning that we terminated Vivek for cause. — Of course, we would never had done it if in our mind it wasn’t absolutely warranted.”
Wadhaw’s suit was filed in Wake County Superior Court on Tuesday.
“Upon information and belief, the real reasons for termination of Wadhwa’s employment were retaliatory, discriminatory and for the improper purposes of allowing the Board of Directors and the remaining members of management the freedom to operate the Company in their best interests without due regard for the shareholders,” Wadhaw’s complaint reads.
Wadhwa, who started the company in 1997, remains as Relativity’s board chairman. He is a native of India and is a prominent leader in The Indus Entrepreneurs organization.
In the suit, Wadhwa said Relativity offered him $58,000 in deferred salary with no interest on May 6. He refused to sign the offer.
Maysonave stressed that Relativity is growing as a business.
He said Wadhwa’s complaint is “filled with inaccuracies and untruths”. He pointed out that Relativity’s revenues are up “over 50 percent over Q1, we have 10 new customers, which is exceptional, Q3 is looking very, very strong — plus we’re in hiring mode.”
Wadhwa’s complaint depicts Relativity as a struggling company entangled in disputes over financing. He also said that after the company closed on $1.253 million in debt restructuring from Silicon Valley Bank this spring it did not repay the promissory note that it “had agreed to pay.” Instead, he said the company paid lawyers fees and “officers of the Company hundreds of thousands of dollars.”
“I was shocked, horrified that they could be doing this,” Wadhwa said of the officer payments. “This was unbelievable.”
He said he had committed his life’s savings to save the company.
Wadhwa was terminated on May 25 from his position as an employee at Relativity where he acted as an advisor to Maysonave, the CEO said. He added that Wadhwa had “violated employment agreements he had signed.”
Maysonave said Relativity did not dispute the fact that the company owes Wadhwa for the promissory note and had offered to pay him back on a monthly basis. He said certain conditions regarding the condition of the company had not been met that would have led to a repayment in lump sum.
Wakefield Group, one of the venture capital firms that invested in Relativity, had “no comment” on the suit when contacted by LTW.
Other investors include Noro-Moseley Partners, Intel and Wachovia Strategic Ventures.
Maysonave was recruited by Wadhwa to take over the company in 2003 as part of a new round of financing. Maysonave once worked for Intel.
Relativity provides software and support for updating older enterprise operating systems.
Wadhwa suffered a near-fatal heart attack in March of 2002.
In the suit, Wadhwa seeks damages “in excess of $10,000” for the termination, which he said occurred on May 25 in a letter on May 25. The letter said he was terminated “For Cause”. Wadhwa said such cause “did not exist.” He also wants to be reimbursed for expenses and legal fees, and he requested a jury trial.
Wadhwa, who stepped down as CEO in January of last year and became chairman, wants payment of deferred compensation and interest on those earnings. In the filing, Wadhwa said he had times delayed taking compensation in order to help the company’s cash flow.
Wadhwa said he also is due $285,866 from a promissory note that dated to March of 2002. The company has not repaid the note even though it received $1.253 million through Silicon Valley Bank for debt restructuring, Wadhwa said. According to the suit, Wadhwa said Relativity “agreed to pay the Promissory Note upon completion of a debt restructuring with Silicon Valley Bank.”
Relativity had also closed on $6.5 million in venture capital on March 8 of this year.
The 18-page complaint is filled with vivid and detailed descriptions of a running battle within Relativity management dating back to 2001. The company “encountered financial difficulties,” Wadhwa said. He “loaned” the company “approximately $500,000” over 2001 and 2002 and “deferred part of his salary in 2001 and again in 2002”.
Relativity: www.relativity.com
