EXHIBIT 10.5
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "AGREEMENT") is
made as of the ___ day of November, 1999 by and between Xxxxxxxxxxx.xxx, Inc., a
Delaware corporation (the "COMPANY"), and Xxxxx X. Xxxxx ("EMPLOYEE").
BACKGROUND
A. The Company's predecessor, a limited liability company, and Employee
are parties to that certain Employment Agreement dated January 1, 1999 (the
"EMPLOYMENT AGREEMENT"), the Admission Agreement dated January 1, 1999 including
the schedules thereto, as amended, that certain letter agreement dated February
1, 1999 (collectively, the "PRIOR AGREEMENTS") and certain other agreements.
B. Pursuant to that certain Agreement and Understanding dated September
16, 1999 between the Company and the Employee, the parties agree to amend and
restate the Employment Agreement to (i) reflect the changing of legal form from
that of a Delaware limited liability company to a Delaware corporation and other
matters as set forth herein and (ii) terminate all Prior Agreements (as set
forth in Section 5.5 of this Agreement).
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Company and
Employee hereby agree as follows:
ARTICLE I
EMPLOYMENT SERVICES
1.1 AGREEMENT. The Company and Employee shall continue their
employment relationship pursuant to the terms and conditions set forth herein.
1.2 TERM. The term of this Agreement shall be for a period of
four (4) years commencing as of January 1, 1999 (the "EMPLOYMENT TERM").
Notwithstanding the foregoing, this Agreement may be terminated prior to the
expiration of the Employment Term in accordance with the provisions of
ARTICLE II hereof.
1.3 ACTIVITIES AND DUTIES.
(a) During the Employment Term, Employee agrees to (i) serve
as Vice President of Operations for the Company, (ii) develop strategies,
programs and practices to implement and manage electronic communities, and (iii)
perform such other duties and responsibilities as the Company's President and
Chief Executive Officer, Xxxx X. Warms ("WARMS"), shall from time to time assign
him.
(b) Employee represents and warrants to the Company that he is
free to enter into this Agreement with the Company, and that he does not have,
and will not have during the Employment Term, any prior or other commitments or
obligations of any kind to anyone else which would hinder or interfere with his
performance of his obligations hereunder, or the exercise of his best efforts on
behalf of the Company.
(c) Employee hereby agrees that he shall not subcontract any
services assigned to him by the Company, or engage or permit any person or
entity other than Employee to perform any such services, without the prior
written consent of Warms.
(d) Employee hereby agrees that during the Employment Term, he
shall not, without the prior written consent of the Company, have an interest
in, be employed by, or perform any services on behalf of any person or entity
other than the Company; provided, however, that (i) nothing contained herein
shall prohibit Employee from having an ownership interest of five percent (5%)
or less in a company that has publicly traded securities which are listed on a
nationally-recognized securities exchange, and (ii) Employee may perform
services for persons or entities other than the Company if Employee obtains the
prior written consent of Warms with respect to provision of such services.
ARTICLE II
TERMINATION/ATTORNEY FEES
2.1 TERMINATION OF EMPLOYMENT TERM. Notwithstanding SECTION 1.2
hereof, the Employment Term shall terminate upon the occurrence of any of the
following events: (a) upon the mutual written agreement of the Company and
Employee; (b) death of Employee; (c) Legal Disability of Employee, as defined
in SECTION 2.5; (d) at any time by the Company for Cause, as defined in
SECTION 2.2; (e) at any time by the Company, without Cause, upon provision of
thirty (30) days written notice to Employee; or (f) at any time by Employee,
without Cause, upon provision of sixty (60) days written notice to the
Company. In the event of termination of this Agreement, the Company shall
only be obligated to pay Employee such compensation as has been earned by him
prior to the date of termination. Further, in such event, the provisions of
ARTICLE IV shall remain in full force and effect in accordance with their
terms.
2.2 CAUSE. The term "CAUSE" as used herein shall mean any of
the following acts or omissions:
(a) Employee's theft, embezzlement or other acts of
dishonesty;
(b) A material default by Employee in the performance or
observance of any promise or undertaking of Employment under this Agreement,
which default shall continue for a period of ten (10) days after written notice
thereof from the Company to Employee;
(c) The commission of an act by Employee in the performance of
his duties hereunder amounting to gross negligence or willful or wanton
misconduct;
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(d) The commission by Employee of an act or acts involving a
Class A-type felony.
2.3 DISPUTE AS TO CAUSE. In the event that there is any dispute
between the parties as to whether Cause exists, such determination shall be
made pursuant to binding arbitration, as follows: such claim shall be
submitted for arbitration to the Chicago, Illinois office of the American
Arbitration Association on demand of either party. Any such arbitration
proceeding will be conducted in Chicago, Illinois and except as otherwise
provided in this Agreement, will be conducted in accordance with the
then-current Commercial Arbitration Rules of the American Arbitration
Association. The arbitrator(s) shall determine which party, if either,
prevailed and shall award the prevailing party its costs and attorneys' fees.
The award and decision of the arbitrator will be conclusive and binding on
all parties to this Agreement and judgment on the award may be entered in any
court of competent jurisdiction. The parties acknowledge and agree that any
arbitration award may be enforced against either or both of them in a court
of competent jurisdiction and each waives any right to contest the validity
or enforceability of such award. The parties further agree to be bound by the
provisions of any statute of limitations which would be applicable in a court
of law to the controversy or claim which is the subject of any arbitration
proceeding initiated under this Agreement. The parties further agree that
they are entitled in any arbitration proceeding to the entry of an order, by
a court of competent jurisdiction pursuant to an opinion of the arbitrator,
for specific performance of any of the requirements of this Agreement.
2.4 ATTORNEYS' FEES. In the event of a breach of any provision
of this Agreement, the breaching party shall pay to the non-breaching party,
in addition to any other damages or remedies which may be available at law or
in equity, all of its attorneys' fees and costs reasonably incurred as a
result of such breach.
2.5 DEATH AND DISABILITY. Notwithstanding anything to the
contrary contained herein, this Agreement shall automatically terminate upon
the death or Legal Disability of Employee and thereafter, the Company shall
have no obligation to pay any future amounts (other than those accrued prior
to the date of Employee's death or disability) otherwise due to Employee
pursuant to this Agreement. For the purposes of this Agreement, the term
"LEGAL DISABILITY" shall mean the inability of Employee, due to illness,
accident or other physical or mental incapacity, to perform substantially all
of his regular duties hereunder for a period (whether continuous or periodic)
of six (6) months during any twelve month period of the Employment Term, or a
physical or mental incapacity in which there is no hope of recovery within
eight (8) months. In the event that there is any dispute as to Employee's
Legal Disability, a determination shall be made at the written request of
either the Company or Employee sent to the other (and within thirty (30) days
after such request) by a majority of three physicians, one of whom shall be
selected by Employee, one by the Company and the third by the two physicians
so selected.
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ARTICLE III
COMPENSATION
3.1 BASE SALARY. In consideration for performance of his
services hereunder, during the Employment Term, Employee shall receive a base
salary in the amount of $150,000 per year. Such amount shall be payable no
less frequently than monthly.
3.2 STOCK OWNERSHIP. In addition to the amounts payable
pursuant to SECTION 3.1, in consideration for performance of his services
hereunder, Employee owns stock of the Company subject to vesting as set forth
in that certain Xxxxx X. Xxxxx Stock Vesting Agreement dated as of September
13, 1999.
3.3 BENEFITS. During the Employment Term, Employee shall be
entitled to participate in the Company's group health care plan, subject to
all applicable eligibility rules thereof. In addition, Employee shall be
entitled to fifteen (15) paid vacation days per year.
3.4 REIMBURSEMENT OF EXPENSES. The Company shall reimburse
Employee for all reasonable and necessary expenses incurred by Employee while
performing his duties under this Agreement, subject to provision by Employee
of documentation satisfactory to the Company.
3.5 WITHHOLDINGS AND DEDUCTIONS. All amounts payable to
Employee pursuant to this Agreement shall be subject to such withholdings and
deductions by the Company as are required by law.
ARTICLE IV
PROPRIETARY INFORMATION; NON-SOLICITATION;
OWNERSHIP OF CONCEPTIONS
4.1 PROPRIETARY INFORMATION. Employee acknowledges that this
Agreement creates a relationship of confidence and trust with respect to all
information of a confidential, proprietary or trade secret nature disclosed
by or on behalf of the Company to Employee that relates to the business of
the Company, its affiliates, customers, suppliers and vendors (collectively,
"PROPRIETARY INFORMATION"). Such Proprietary Information includes any
material, data or information disclosed by the Company to Employee that is
not generally known or disclosed to the public or to third parties, including
without limitation:
(a) technical information, including without limitation,
computer software, algorithms, processing systems, techniques, new ideas,
discoveries, inventions, developments, know-how and trade secrets (whether
developed by the Company, an affiliate, employee or representative thereof, or
by Employee in the scope of employment hereunder);
(b) business information, including without limitation,
information relating to costs, pricing, profit margins, markets and suppliers,
business plans and projections, financial, accounting, legal and regulatory
data, names, addresses and telephone numbers of current or
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prospective customers and their respective service or product requirements,
credit histories and trade names, sales, marketing and advertising plans,
prospective or actual strategies, licenses or similar agreements, and other
commercial information;
(c) technical and/or business information furnished by third
parties to the Company, including prospects, customers, suppliers, licensers,
franchisers and vendors; and
(d) any other information which the Company reasonably
designates should be confidential.
Employee shall keep all Proprietary Information in confidence and Employee shall
not at any time, during the Employment Term or at any time thereafter, directly
or indirectly disclose, copy, distribute, republish or allow access to, any
Proprietary Information to anyone, or directly or indirectly use any Proprietary
Information for Employee's own benefit or for the benefit of any person or
entity other than the Company. Upon any termination of this Agreement, or upon
the request of the Company, Employee shall promptly deliver to the Company all
Proprietary Information, as well as all documents and materials of any nature
pertaining to the services performed by Employee hereunder and all copies
thereof in whatever form, and Employee shall not retain any documents or
materials or copies thereof containing any Proprietary Information. Employee
shall, upon learning of the unauthorized disclosure or use of the Company's
Proprietary Information or any requirement that it disclose the Company's
Proprietary Information by operation of law, regulation or other legal process,
notify the Company immediately and in writing, and cooperate fully with the
Company to protect the Company's Proprietary Information. Notwithstanding the
foregoing, Employee acknowledges and agrees that he has entered into that
certain proprietary rights agreement in the form attached to this Agreement as
EXHIBIT A, and that the terms of such agreement are in addition to the terms set
forth in this Section 4.1.
4.2 NON-COMPETITION. Employee hereby agrees that: (i) the
covenant set forth in this SECTION 4.2 is reasonable in scope and essential
to the preservation of the Company's business; and (ii) the enforcement of
such covenant will not preclude Employee from being gainfully employed in
such manner and to the extent necessary to provide a standard of living for
himself, the members of his family and others dependent upon him. In
addition, Employee acknowledges and agrees that due to the global nature of
the Internet, the market in which the Company operates will be worldwide, and
that the Company shall give good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, to conduct its business free of
competition, direct or indirect, from Employee as described below. Employee
hereby agrees that he shall not, during the Employment Term and for a period
of one (1) year thereafter, directly or indirectly, provide any services
associated with the internet, intranets or extranets anywhere in the world to
any person, firm or entity that (i) is a client of the Company at any time
during the Employment Term, or (ii) is a "Prospective Client" (as defined
below) of the Company on the date of termination hereof. For purposes hereof,
the term "PROSPECTIVE CLIENT" shall mean any person, firm or entity that has
been solicited by the Company (or any employee, independent contractor,
member or agent thereof) for business during the six (6) month period prior
to the date of termination of the Employment Term.
4.3 NON-SOLICITATION. At all times during the term of this
Agreement, and for a period of one (1) year following any termination or
expiration hereof, Employee agrees that Employee shall
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not, directly or indirectly, for Employee or on behalf of any person or entity,
solicit or contact any employees, customers or clients of the Company for the
purpose of inducing them to terminate their Employment or contractual agreements
with the Company or to become employees, independent contractors, customers or
clients of Employee or such other person or entity.
4.4 CONCEPTIONS.
(a) Employee acknowledges that the Company is engaged in a
continuous program of research, development and marketing in connection with its
business and that, in the performance of his services hereunder, Employee may
participate in and support such activities. To the extent that Employee
participates in or supports such activities on behalf of the Company, Employee
hereby agrees to promptly disclose exclusively to the Company all improvements,
original works of authorship, processes, computer programs, ideas, discoveries,
techniques, data bases, trade secrets, documentation, program materials, flow
charts, notes, outlines, formulas, processes, ideas, inventions, know-how or
techniques and any other information generated by Employee (collectively,
"CONCEPTIONS"), whether or not patentable or copyrightable, that are generated,
conceived, first reduced to practice or created by Employee, either alone or
jointly with others, during the course of and in relation to Employee's
performance under this Agreement. Employee further agrees that all Conceptions
that: (a) are developed using equipment, supplies, facilities or trade secrets
of the Company; or (b) result from or are any way connected with the services
performed by Employee hereunder; or (c) relate to the business of the actual or
anticipated research or development of the Company, and the copyright, patent,
trademark, trade secret and all other proprietary rights therein and derivative
works created therefrom, including any "moral" rights under any copyright or
other similar law, shall be the sole and exclusive property of the Company, and
shall be considered "works-made-for-hire" under applicable law. Such ownership
shall inure to the benefit of the Company from the date of the conception,
creation or fixation of the Conceptions in a tangible medium of expression, as
applicable. If and to the extent the Conceptions or any part thereof are found
by a court of competent jurisdiction not to be a "work-made-for-hire" within the
meaning of the Copyright Act of 1976, as amended, or other applicable statute,
or not to be the sole and exclusive property of the Company, Employee expressly
assigns to the Company all exclusive right, title and interest in and to the
Conceptions, without further consideration, free from any claim, lien for
balance due or rights of retention thereto by Employee. Employee agrees to
assist the Company in obtaining and enforcing all rights and other legal
protections for the Proprietary Information and the Conceptions and to execute
any and all documents that the Company may reasonably request in connection
therewith, including, without limitation, any patent and/or copyright assignment
document(s); provided, however, that the Company agrees to pay Employee
reasonable consideration for time actually spent and sufficiently documented by
Employee for such assistance. Concurrently with his execution of this Agreement,
Employee shall execute the Notice that is attached hereto as EXHIBIT B thereby
acknowledging his receipt of such Notice, in accordance with the Illinois
Employee Patent Act.
(b) The provisions of SECTION 4.4(a) shall not apply to any
Conceptions developed by Employee in the performance of Employment services for
persons or entities other than the Company if the provision of such services has
been approved in writing by Warms.
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4.5 REMEDIES. Employee hereby acknowledges and agrees that the
services to be rendered by him to the Company hereunder are of a special and
unique nature and that it would be very difficult or impossible to measure
the damages resulting from a breach of this Agreement. Employee hereby
further acknowledges and agrees that the restrictions herein are reasonable
and necessary for the protection of the goodwill and the business of the
Company and that a violation by Employee of any such covenant will cause
irreparable damage to the Company. Employee therefore agrees that any breach
or threatened breach by him of any of the covenants or provisions of this
ARTICLE IV shall entitle the Company, in addition to any other legal remedy
available to it, to apply to any court of competent jurisdiction for a
temporary and permanent injunction or any other applicable decree of specific
performance, in order to enjoin such breach or threatened breach. The parties
understand and intend that each covenant, provision and restriction agreed to
in this ARTICLE IV shall be construed as separate and divisible from every
other provision and restriction and that the unenforceability of any one
provision or restriction shall not limit the enforceability, in whole or in
part, of any other provision or restriction and that one or more of all of
such provisions or restrictions may be enforced, in whole or in part, as the
circumstances warrant.
ARTICLE V
MISCELLANEOUS
5.1 INDEMNITY. Employee hereby agrees to defend, indemnify and
hold harmless the Company and its affiliates, members, managers, officers,
agents, employees, representatives, successors and assigns from and against
any and all claims, demands, causes of action, losses, damages, costs and
expenses (including, without limitation, litigation costs, reasonable
attorneys' fees and any appellate bonds) (collectively, "CLAIMS") arising out
of or relating to: (a) Employee's willful misconduct in performing his
obligations hereunder, (b) services performed by Employee at any time for any
person or entity other than the Company; or (c) the violation by Employee of
any non-competition, non-solicitation or non-disclosure agreement.
5.2 NOTICES. All notices or other communications required or
permitted hereunder shall be in writing and shall be addressed as follows:
If to Employee:
Xxxxx X. Xxxxx
0000 X. Xxxxx
Xxxxxxx, XX 00000
PH: (773) 549-6434
E-MAIL: xxxxxx@xxxxxxxxxxx.xxx
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If to the Company:
Xxxxxxxxxxx.xxx, Inc.
000 Xxxx Xxxxxx Xxxxxx, Xxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxx X. Warms, President
PH: (000) 000-0000
FAX: (000) 000-0000
E-MAIL: xxxxxx@xxxxxxxxxxx.xxx
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Attn: Page Xxxxxxxxx, Esq.
PH: (000) 000-0000
FAX: (000) 000-0000
or to such other address or addresses as may hereafter be specified by notice
given by any of the above to the others. Notices mailed in accordance with this
SECTION 5.2 shall be deemed given (i) the third day after they are mailed, (ii)
the next day after they are sent by reputable overnight courier service, (iii)
when sent, if sent by telecopy or e-mail between 9:00 A.M. and 5:00 P.M. central
standard time, or (iv) the next business day thereafter if sent by telecopy or
e-mail after 5:00 P.M. central standard time. Any written notice hereunder may
be provided via e-mail, return receipt requested.
5.3 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their successors and
permitted assigns. In the case of the Company, the successors and permitted
assigns hereunder shall include without limitation any affiliate of the
Company as well as the successors in interest to such affiliate (whether by
merger, liquidation (including successive mergers or liquidations) or
otherwise). This Agreement or any right or interest hereunder is one of
personal service and may not be assigned by Employee. Nothing in this
Agreement, expressed or implied, is intended or shall be construed to confer
upon any person other than the parties and successors and assigns permitted
by this SECTION 5.3 any right, remedy or claim under or by reason of this
Agreement.
5.4 AMENDMENTS. This Agreement shall not be amended, modified
or supplemented except by a written instrument signed by an authorized
representative of each of the parties hereto.
5.5 TERMINATION OF PRIOR AGREEMENTS; CONFIRMATION OF EXISTING
AGREEMENTS; RELEASE. Concurrently with the execution and delivery of this
Agreement, all Prior Agreements, understandings, and letters of intent
between parties hereto are hereby terminated and of no further force or
effect, except for (i) this Agreement (including the Proprietary Information
Agreement), (ii) the Agreement and Understanding dated September 16, 1999
between the parties hereto, a copy of which is attached as EXHIBIT C, (iii)
the Xxxxx X. Xxxxx Stock Vesting Agreement, dated
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September 13, 1999, between the parties hereto, a copy of which is attached
as EXHIBIT D, (iv) the voting agreement, dated September 17, 1999, executed
by Xx. Xxxxx, a copy of which attached as EXHIBIT E, and (v) the Amended and
Restated Stockholders Rights Agreement, a copy of which is attached as
EXHIBIT F. The agreements referred to in the preceding clauses (i) through
(v) are referred to as the "Existing Agreements." This Agreement and the
other Existing Agreements contain the entire understanding of the parties
hereto with regard to the subject matter contained herein and therein, and
supersede all prior agreements, understandings or letters of intent between
or among any of the parties hereto.
Employee, on behalf of himself, and his agents and representatives,
and each of them (each including Employee and "Xxxxx Party", and collectively
the "Xxxxx Parties"), hereby releases the Company and its past, present and
future employees, agents, representatives, officers, directors, and each of
them from any and all claims, rights, demands, causes of action, obligations,
damages, debts and liabilities, whether or not now known, fixed, contingent,
suspected or claimed ("Claims"), which any of the Xxxxx Parties ever had, now
has, or claims to have had, against any of the Company's parties up to and
including the date of this Agreement, including without limitation any Claim
that any Xxxxx Party has or is entitled to any right, title or interest in
any equity or debt securities of the Company (or antidilution rights or
preemptive rights regarding the same), whether asserted prior to or after the
execution of this Agreement, other than the covenants and obligations of the
Company and Employee set forth in the Existing Agreements. Employee agrees
that the release set forth above shall be and remain in effect in all
respects as a complete general release as to all matters released. This
release does not extend to any obligations incurred under this Agreement and
the other Existing Agreements.
If Employee acknowledges that he is familiar with the provisions of
Section 1542 of the Civil Code of the State of California, which Section
states as follows:
"A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at the
time of executing the release, which if known by him must have
materially effected his settlement with the debtor."
Employee acknowledges that he may have sustained damages, losses, costs
or expenses which are presently unknown and unsuspected, and which may give rise
to additional damages, lawsuits, costs or expenses in the future. Nevertheless,
Employee acknowledges that the releases contained in this Section 5.5 have been
negotiated and agreed upon, in light of this situation, and that Employee
expressly waives any rights he may have under the above referenced Code section,
as well as under any statute or common law principles of similar effect.
5.6 INTERPRETATION. Article titles and section headings
contained herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
5.7 EXPENSES. Each party hereto will pay all costs and expenses
incident to its negotiation and preparation of this Agreement and to its
performance and compliance with all
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agreements and conditions contained herein on its part to be performed or
complied with, including the fees, expenses and disbursements of its counsel and
accountants.
5.8 WAIVERS. Any term or provision of this Agreement may be
waived, or the time for its performance may be extended, by the party or
parties entitled to the benefit thereof. Any such waiver will be validly and
sufficiently authorized for the purposes of this Agreement if, as to any
party, it is authorized in writing by an authorized representative of such
party. The failure of any party hereto to enforce at any time any provision
of this Agreement shall not be construed to be a waiver of such provision,
nor in any way to affect the validity of this Agreement or any part hereof or
the right of any party thereafter to enforce each and every such provision.
No waiver of any breach of this Agreement shall be held to constitute a
waiver of any other or subsequent breach.
5.9 PARTIAL INVALIDITY. Wherever possible, each provision
hereof shall be interpreted in such manner as to be effective and valid under
applicable law, but in case any one or more of the provisions contained
herein shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such provision shall be ineffective to the extent, but only
to the extent, of such invalidity, illegality or unenforceability without
invalidating the remainder of such invalid, illegal or unenforceable
provision or provisions or any other provisions hereof, unless such a
construction would be unreasonable.
5.10 INCORPORATION OF RECITALS. The recitals set forth on page 1
hereof are hereby incorporated into and made a part of this Agreement by this
reference.
5.11 EXECUTION IN COUNTERPARTS. This Agreement may be executed
in one or more counterparts, each of which shall be considered an original
instrument, but all of which shall be considered one and the same agreement,
and shall become binding when one or more counterparts have been signed by
each of the parties hereto and delivered to each of Employee and the Company.
5.12 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws (as opposed to the conflicts
of law provisions) of the State of Illinois.
5.13 WRITTEN APPROVAL. Any written approval required pursuant to
this Agreement may be provided by E-mail.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
XXXXXXXXXXX.XXX, INC.
By:
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Xxxx X. Warms
Managing Member
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XXXXX X. XXXXX
EXHIBIT A
XXXXXXXXXXX.XXX, INC.
CONFIDENTIAL INFORMATION AND
INVENTION ASSIGNMENT AGREEMENT
As a condition of my employment with Xxxxxxxxxxx.xxx, Inc., its
subsidiaries, affiliates, successors or assigns (together the "Company"), and in
consideration of my employment with the Company and my receipt of the
compensation now and hereafter paid to me by Company,
__________________________________ agrees to the following:
(Employee Name)
1. AT-WILL EMPLOYMENT. I understand and acknowledge that my
employment with the Company is for an unspecified duration and constitutes
"at-will" employment. I acknowledge that this employment relationship may be
terminated at any time, with or without good cause or for any or no cause, at
the option either of the Company or myself, with or without notice.
2. CONFIDENTIAL INFORMATION.
(a) COMPANY INFORMATION. I agree at all times during the term
of my employment and thereafter, to hold in strictest confidence, and not to
use, except for the benefit of the Company to fulfill my employment obligations,
or to disclose to any person, firm or corporation without written authorization
of the Board of Directors of the Company, any Confidential Information of the
Company. I understand that "Confidential Information" means any Company
proprietary information, technical data, trade secrets or know-how, including,
but not limited to, research, product plans, products, services, customer lists
and customers (including, but not limited to, customers of the Company on whom I
called or with whom I became acquainted during the term of my employment),
markets, software, developments, inventions, processes, formulas, technology,
designs, drawings, engineering, hardware configuration information, marketing,
finances or other business information disclosed to me by the Company either
directly or indirectly in writing, orally or by drawings or observation of parts
or equipment. I further understand that Confidential Information does not
include any of the foregoing items which has become publicly known and made
generally available through no wrongful act of mine or of others who were under
confidentiality obligations as to the item or items involved.
(b) FORMER EMPLOYER INFORMATION. I agree that I will not,
during my employment with the Company, improperly use or disclose any
proprietary information or trade secrets of any former or concurrent employer or
other person or entity and that I will not bring onto the premises of the
Company any unpublished document or proprietary information belonging to any
such employer, person or entity unless consented to in writing by such employer,
person or entity.
(c) THIRD PARTY INFORMATION. I recognize that the Company has
received and in the future will receive from third parties their confidential or
proprietary information subject to a duty on the Company's part to maintain the
confidentiality of such information and to use it only for certain limited
purposes. I agree to hold all such confidential or proprietary information in
the strictest confidence and not to disclose it to any person, firm or
corporation or to use it except as necessary in carrying out my work for the
Company consistent with the Company's agreement with such third party.
3. INVENTIONS.
(a) INVENTIONS RETAINED AND LICENSED. I have attached hereto
as EXHIBIT A a list describing all inventions, original works of authorship,
developments, improvements, and trade secrets which were made by me prior to my
employment with the Company (collectively referred to as "Prior Inventions"),
which belong to me, which relate to the Company's proposed business, products or
research and development, and which are not assigned to the Company hereunder;
or, if no such list is attached, I represent that there are no such Prior
Inventions. If in the course of my employment with the Company, I incorporate
into a Company product, process or machine a Prior Invention owned by me or in
which I have an interest, the Company is hereby granted and shall have a
nonexclusive, royalty-free, irrevocable, perpetual, worldwide license to make,
have made, modify, use and sell such Prior Invention as part of or in connection
with such product, process or machine.
(b) ASSIGNMENT OF INVENTIONS. I agree that I will promptly
make full written disclosure to the Company, will hold in trust for the sole
right and benefit of the Company, and hereby assign and shall assign to the
Company, or its designee, all my right, title, and interest in and to any and
all inventions, original works of authorship, developments, concepts,
improvements or trade secrets, whether or not patentable or registrable under
copyright or similar laws, which I may solely or jointly conceive or develop or
reduce to practice, or cause to be conceived or developed or reduced to
practice, during the period of time I am in the employ of the Company
(collectively referred to as "Inventions"). I further acknowledge that all
original works of authorship which are made by me (solely or jointly with
others) within the scope of and during the period of my employment with the
Company and which are protected by copyright are "works made for hire," as that
term is defined in the United States Copyright Act. I shall not incorporate any
invention, original work of authorship, development, concept, improvement, or
trade secret owned, in whole or in part, by any third party, into any Invention
without the Company's prior written permission.
(c) INVENTIONS ASSIGNED TO THE UNITED STATES. I agree to
assign to the United States government all my right, title, and interest in and
to any and all Inventions whenever such full title is required to be in the
United States by a contract between the Company and the United States or any of
its agencies.
(d) MAINTENANCE OF RECORDS. I agree to keep and maintain
adequate and current written records of all Inventions made by me (solely or
jointly with others) during the term of my employment with the Company. The
records will be in the form of notes, sketches, drawings, and any other format
that may be specified by the Company. The records will be available to and
remain the sole property of the Company at all times.
(e) PATENT AND COPYRIGHT REGISTRATIONS. I agree to assist the
Company, or its designee, at the Company's expense, in every proper way to
secure the Company's rights in the Inventions and any copyrights, patents, mask
work rights or other intellectual property rights relating thereto in any and
all countries, including the disclosure to the Company of all pertinent
information and data with respect thereto, the execution of all applications,
specifications, oaths, assignments and all other instruments which the Company
shall deem necessary in order to apply for and obtain such rights and in order
to assign and convey to the Company, its successors, assigns, and nominees the
sole and exclusive rights, title and interest in and to such Inventions, and any
copyrights, patents, mask work rights or other intellectual property rights
relating thereto. I further agree that my obligation to execute or cause to be
executed, when it is in my power to do so, any such instrument or papers shall
continue after the termination of this Agreement. If the Company is unable
because of my mental or physical incapacity or for any other reason to secure my
signature to apply for or to pursue any application for any United States or
foreign patents or copyright registrations covering Inventions or original works
of authorship assigned to the Company as above, then I hereby
-2-
irrevocably designate and appoint the Company and its duly authorized officers
and agents as my agent and attorney in fact, to act for and in my behalf and
stead to execute and file any such applications and to do all other lawfully
permitted acts to further the prosecution and issuance of letters patent or
copyright registrations thereon with the same legal force and effect as if
executed by me.
4. CONFLICTING EMPLOYMENT. I agree that, during the term of my
employment with the Company, I will not engage in any other employment,
occupation, consulting or other business activity directly related to the
business in which the Company is now involved or becomes involved during the
term of my employment, nor will I engage in any other activities that
conflict with my obligations to the Company.
5. RETURNING COMPANY DOCUMENTS. I agree that, at the time of
leaving the employ of the Company, I will deliver to the Company (and will
not keep in my possession, recreate or deliver to anyone else) any and all
devices, records, data, notes, reports, proposals, lists, correspondence,
specifications, drawings blueprints, sketches, materials, equipment, source
code or software, other documents or property, or reproductions of any
aforementioned items developed by me pursuant to my employment with the
Company or otherwise belonging to the Company, its successors or assigns. In
the event of the termination of my employment, I agree to sign and deliver
the "Termination Certification" attached hereto as EXHIBIT B.
6. NOTIFICATION OF NEW EMPLOYER. In the event that I leave the
employ of the Company, I hereby grant consent to notification by the Company
to my new employer about my rights and obligations under this Agreement.
7. SOLICITATION OF EMPLOYEES. I agree that for a period of
twelve (12) months immediately following the termination of my relationship
with the Company for any reason, whether with or without cause, I shall not
either directly or indirectly solicit, induce, recruit or encourage any of
the Company's employees to leave their employment, or take away such
employees, or attempt to solicit, induce, recruit, encourage or take away
employees of the Company, either for myself or for any other person or entity.
8. CONFLICT OF INTEREST GUIDELINES. I agree to diligently
adhere to the Conflict of Interest Guidelines attached hereto as EXHIBIT C.
9. REPRESENTATIONS. I agree to execute any proper oath or
verify any proper document required to carry out the terms of this Agreement.
I represent that my performance of all the terms of this Agreement will not
breach any agreement to keep in confidence proprietary information acquired
by me in confidence or in trust prior to my employment by the Company. I have
not entered into, and I agree I will not enter into, any oral or written
agreement in conflict herewith.
10. ARBITRATION.
(a) Except as provided in Section 10(c) below, the Company
and I agree that any dispute or controversy arising out of, relating to, or
in connection with this Agreement, or the interpretation, validity,
construction, performance, breach, or termination thereof, shall be settled
by binding arbitration unless otherwise required by law, to be held in Xxxx
County, Illinois in accordance with the National Rules for the Resolution of
Employment Disputes then in effect of the American Arbitration Association
(the "Rules"). The arbitrator may grant injunctions or other relief in such
dispute or controversy. The decision of the arbitrator shall be final,
conclusive and binding on the parties to the arbitration. Judgment may be
entered on the arbitrator's decision in any court having jurisdiction.
-3-
(b) The arbitrator shall apply Illinois law to the merits
of any dispute or claim, without reference to rules of conflicts of law. I
hereby consent to the personal jurisdiction of the state and federal courts
located in Illinois for any action or proceeding arising from or relating to
this Agreement or relating to any arbitration in which the parties are
participants.
(c) The parties may apply to any court of competent
jurisdiction for a temporary restraining order, preliminary injunction, or
other interim or conservatory relief, as necessary, without breach of this
arbitration agreement and without abridgement of the powers of the arbitrator.
(d) I understand that nothing in Section 10 modifies my
at-will status. Either the Company or I can terminate the employment
relationship at any time, with or without cause.
(e) I HAVE READ AND UNDERSTAND THIS SECTION 10, WHICH
DISCUSSES ARBITRATION. I UNDERSTAND THAT BY SIGNING THIS AGREEMENT, I AGREE,
EXCEPT AS PROVIDED IN SECTION 10(c), TO SUBMIT ANY CLAIMS ARISING OUT OF,
RELATING TO, OR IN CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION,
VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH OR TERMINATION THEREOF TO BINDING
ARBITRATION, UNLESS OTHERWISE REQUIRED BY LAW, AND THAT THIS ARBITRATION
CLAUSE CONSTITUTES A WAIVER OF MY RIGHT TO A JURY TRIAL AND RELATES TO THE
RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF MY RELATIONSHIP WITH
THE COMPANY.
11. GENERAL PROVISIONS.
(a) GOVERNING LAW. This Agreement will be governed by the
internal substantive laws, but not the choice of law rules, of the State of
Delaware.
(b) ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement and understanding between the Company and me relating to the subject
matter herein and merges all prior discussions between us. No modification of or
amendment to this Agreement, nor any waiver of any rights under this agreement,
will be effective unless in writing signed by the party to be charged.
(c) SEVERABILITY. If one or more of the provisions in this
Agreement are deemed void by law, then the remaining provisions will continue in
full force and effect.
(d) SUCCESSORS AND ASSIGNS. This Agreement will be binding
upon my heirs, executors, administrators and other legal representatives and
will be for the benefit of the Company, its successors, and its assigns.
XXXXXXXXXXX.XXX, INC.
By:
------------------------------------
Title:
---------------------------------
EMPLOYEE:
---------------------------------------
Name
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EXHIBIT A
LIST OF PRIOR INVENTIONS
AND ORIGINAL WORKS OF AUTHORSHIP
IDENTIFYING NUMBER
TITLE DATE OR BRIEF DESCRIPTION
------------------------------------------------------- -------------------------- ----------------------------------------
____ No inventions or improvements
____ Additional Sheets Attached
Signature of Employee:
----------------------------------
Print Name of Employee:
---------------------------------
Date:
------------------------
EXHIBIT B
TERMINATION CERTIFICATION
This is to certify that I do not have in my possession, nor have I
failed to return, any devices, records, data, notes, reports, proposals, lists,
correspondence, specifications, drawings, blueprints, sketches, materials,
equipment, other documents or property, or reproductions of any aforementioned
items belonging to the Company.
I further certify that I have complied with all the terms of the
Company's Confidential Information and Invention Assignment Agreement signed by
me, including the reporting of any inventions and original works of authorship
(as defined therein), conceived or made by me (solely or jointly with others)
covered by that agreement.
I further agree that, in compliance with the Confidential Information
and Invention Assignment Agreement, I will preserve as confidential all trade
secrets, confidential knowledge, data or other proprietary information relating
to products, processes, know-how, designs, formulas, developmental or
experimental work, computer programs, data bases, other original works of
authorship, customer lists, business plans, financial information or other
subject matter pertaining to any business of the Company or any of its
employees, clients, consultants or licensees.
I further agree that for twelve (12) months from this date, I will not
hire any employees of the Company and I will not solicit, induce, recruit or
encourage any of the Company's employees to leave their employment.
Date: __________________________
---------------------------------------
(Employee's Signature)
---------------------------------------
(Type/Print Employee's Name)
EXHIBIT C
CONFLICT OF INTEREST GUIDELINES
It is the policy of the Company to conduct its affairs in strict
compliance with the letter and spirit of the law and to adhere to the highest
principles of business ethics. Accordingly, all officers, employees and
independent contractors must avoid activities which are in conflict, or give the
appearance of being in conflict, with these principles and with the interests of
the Company. The following are potentially compromising situations which must be
avoided. Any exceptions must be reported to the President and written approval
for continuation must be obtained.
1. Revealing confidential information to outsiders or misusing
confidential information. Unauthorized divulging of information is a
violation of this policy whether or not for personal gain and whether or not
harm to the Company is intended. (The Employment, Confidential Information
and Invention Assignment Agreement elaborates on this principle and is a
binding agreement.)
2. Accepting or offering substantial gifts, excessive
entertainment, favors or payments which may be deemed to constitute undue
influence or otherwise be improper or embarrassing to the Company.
3. Participating in civic or professional organizations that might
involve divulging confidential information of the Company.
4. Initiating or approving personnel actions affecting reward or
punishment of employees or applicants where there is a family relationship or
is or appears to be a personal or social involvement.
5. Initiating or approving any form of personal or social
harassment of employees.
6. Investing or holding outside directorship in suppliers,
customers, or competing companies, including financial speculations, where
such investment or directorship might influence in any manner a decision or
course of action of the Company.
7. Borrowing from or lending to employees, customers or suppliers.
8. Acquiring real estate of interest to the Company.
9. Improperly using or disclosing to the Company any proprietary
information or trade secrets of any former or concurrent employer or other
person or entity with whom obligations of confidentiality exist.
10. Unlawfully discussing prices, costs, customers, sales or markets
with competing companies or their employees.
11. Making any unlawful agreement with distributors with respect to
prices.
12. Improperly using or authorizing the use of any inventions which are
the subject of patent claims of any other person or entity.
13. Engaging in any conduct which is not in the best interest of the
Company.
Each officer, employee and independent contractor must take every
necessary action to ensure compliance with these guidelines and to bring problem
areas to the attention of higher management for review. Violations of this
conflict of interest policy may result in discharge without warning.
EXHIBIT B
NOTICE
Pursuant to the Illinois Employee Patent Act, Section 4.4 of the
Employment Agreement dated of even date herewith between Xxxxxxxxxxx.xxx, Inc.
(the "COMPANY") and Xxxxx Xxxxx ("EMPLOYEE") does not apply to an invention for
which no equipment, supplies, facility or trade secret information of the
Company was used and which was developed entirely on the Employee's own time,
unless (a) the invention relates (i) to the business of the Company, or (ii) to
the Company's actual or demonstrably anticipated research or development, or (b)
the invention results from any work performed by the Employee for the Company.
DATED: As of _________, 1999 RECEIPT OF THE FOREGOING NOTICE
ACKNOWLEDGED:
-------------------------------
Xxxxx X. Xxxxx
Exhibit C
XXXXXXXXXXX.XXX, INC. AND XXXXX X. XXXXX
AGREEMENT AND UNDERSTANDING
This Agreement and Understanding (this "AU") is made and entered into
as of September 17, 1999 (the "Effective Date"), by and between Xxxxxxxxxxx.xxx,
Inc., a Delaware corporation (the "Company"), and Xxxxx X. Xxxxx, an individual
("Xxxxx"). For purposes of this AU, unless otherwise specified, the term
"Company" shall include Xxxxxxxxxxx.xxx, L.L.C. and Extranet Solutions, L.L.C.,
as predecessors in interest to Xxxxxxxxxxx.xxx, Inc.
RECITALS
WHEREAS, the Company and Xxxxx are parties to an employment agreement
and other related agreements made as of January 1, 1999, including that certain
letter agreement dated February 1, 1999 (the "Prior Agreements");
WHEREAS, pursuant to the Prior Agreements, Xxxxx acquired an equity
interest in the Company, subject to the terms and conditions of the Prior
Agreements (the "Equity Interest");
WHEREAS, the Company is currently in the process of changing the legal
form of its business from that of a Delaware limited liability company to a
Delaware corporation (the "Conversion") and issuing shares of its Series B
Preferred Stock to certain investors after the consummation of the Conversion
(the "Series B Financing"); and
WHEREAS, the Company and Xxxxx wish to clarify and confirm their
agreement and understanding with respect to certain matters relating to the
Equity Interest and employment with the Company.
NOW, THEREFORE, the parties agree and acknowledge the following:
1. As of the Effective Date, the Company shall pay Xxxxx as
compensation for his services a base salary at the annualized rate of one
hundred and fifty thousand dollars ($150,000). Such salary shall be paid
periodically in accordance with normal Company payroll practices and shall be
subject to the usual, required withholding.
2. At the first Board meeting following the Effective Date,
Xxxxx shall be granted a stock option to purchase fifteen thousand (15,000)
shares of the Company's Common Stock at an exercise price equal to the then
current fair market value as determined by the Board at such meeting (the
"Option"). The Option shall vest as to 25% of the shares subject to the
Option one year after the date of grant and as to 1/36th of the remaining
shares subject to the Option monthly thereafter, so as to be fully vested and
exercisable four (4) years from the date of grant, subject to Xxxxx'x
continued service with the Company. In all other respects, the Option shall
be subject to the terms, definitions and provisions of the Company's 1999
Stock Plan.
3. Concurrent with the execution of this AU, the Company and
Xxxxx shall execute the Xxxxx Stock Vesting Agreement (the "Stock Vesting
Agreement"), which is attached hereto as Exhibit A and incorporated by
reference herein. The Stock Vesting Agreement sets forth Xxxxx'x Equity
Interest immediately following the Conversion. In addition, the Vesting Stock
Agreement describes the vesting conditions relating to such equity interest.
The parties agree and acknowledge that the Vesting Stock Agreement accurately
reflects such equity interest and vesting therein. Xxxxx further agrees and
acknowledges that neither the Vesting Stock Agreement nor any other agreement
to which Xxxxx is a party provides any anti-dilution rights in connection
with Xxxxx'x equity interest in the Company.
4. PRIOR AGREEMENTS. The parties agree that promptly following
the Series B Financing, they shall amend and restate the Prior Agreements as
necessary and appropriate to reflect the foregoing and the change in the
legal form of the Company's business from that of a Delaware limited
liability company to a Delaware corporation.
IN WITNESS WHEREOF, the parties have entered into this Agreement as of
the day and year first above set forth.
XXXXXXXXXXX.XXX, INC.
By:
------------------------------------------------
Xxxx X. Warms
Chief Executive Officer
NAME
---------------------------------------------------
Xxxxx X. Xxxxx
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Exhibit D
XXXXXXXXXXX.XXX, INC.
XXXXX X. XXXXX STOCK VESTING AGREEMENT
THIS XXXXX X. XXXXX STOCK VESTING AGREEMENT (this "AGREEMENT") is made
and entered into as of September 17, 1999 by and between Xxxxxxxxxxx.xxx, Inc.,
a Delaware corporation (the "COMPANY"), and Xxxxx X. Xxxxx, an individual
("Xxxxx").
In consideration of the mutual covenants and representations set forth
in this Agreement, the Company and Xxxxx agree as follows:
1. ISSUANCE OF STOCK. Pursuant to that certain Contribution
Agreement dated September 17, 1999, the Company has agreed to issue Xxxxx an
aggregate of 278,325 shares of the Company's Common Stock (the "XXXXX
STOCK"), subject to the terms of that certain Agreement and Understanding as
of the above date and with respect to which this Agreement is a part (the
"AU").
2. RESTRICTIONS. The Xxxxx Stock shall be subject to the
following restrictions:
(a) FORFEITURE OF XXXXX STOCK. In the event that Xxxxx'x
employment with the Company terminates for any reason prior to October 19, 2002,
Xxxxx shall forfeit a portion of the Xxxxx Stock (the "Unvested Shares"). The
Unvested Shares shall vest in accordance with subsection 2(b) below, based upon
Xxxxx'x continued employment with the Company; provided, however, that in the
event Xxxxx is terminated by the Company for "Cause" (as defined below), all of
the Xxxxx Stock shall be treated as Unvested Shares. Any such forfeiture shall
be effected upon written notice by the Company to Xxxxx or Xxxxx'x executor
(with a copy to the Escrow Holder). Upon delivery of such notice, the Company
shall become the legal and beneficial owner of the forfeited Xxxxx Stock and all
rights and interests therein or relating thereto, and the Company shall have the
right to retain and transfer to its own name such forfeited Xxxxx Stock. For
purposes of this Section 2, "Cause" shall be as defined in the employment
agreement between Xxxxx and Extranet Solutions, L.L.C., as predecessor in
interest to the Company, made as of January 1, 1999 (the "Employment
Agreement"). Notwithstanding the foregoing, the Unvested Shares shall vest in
full and shall no longer be subject to forfeiture pursuant to this subsection
2(a) upon a sale of all or substantially all of the Company's assets or a merger
of the Company that results in a change in ownership of a majority of the voting
securities of the Company.
(b) FORFEITURE PERCENTAGE. The Xxxxx Stock shall be subject to
forfeiture pursuant to Section 2(a) in accordance with the following schedule:
Unvested Shares
On the following dates: (as a percentage of Xxxxx Stock)
----------------------- --------------------------------
October 19, 1999 75.00%
January 19, 2000 68.75%
April 19, 2000 62.50%
July 19, 2000 56.25%
October 19, 2000 50.00%
January 19, 2001 43.75%
October 19, 2001 25.00%
January 19, 2002 18.75%
April 19, 2002 12.50%
July 19, 2002 6.25%
October 19, 2002 0
(c) OTHER RESTRICTIONS. The Xxxxx Stock shall be subject to
the terms and conditions of the Prior Agreements (as defined in the AU), as
modified by the AU and herein; provided, however, that the Company's "Purchase
Rights" (as defined in the Prior Agreements which are defined in the AU) shall
no longer apply to vested shares of the Xxxxx Stock.
3. XXXXX REPRESENTATIONS. Xxxxx represents to the Company the
following:
(a) Xxxxx is aware of the Company's business affairs and
financial condition and has acquired sufficient information about the Company to
reach an informed and knowledgeable decision to acquire the securities. Xxxxx is
acquiring these securities for investment for Xxxxx'x own account only and not
with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act").
(b) Xxxxx understands that the securities have not been
registered under the Securities Act by reason of a specific exemption therefrom,
which exemption depends upon, among other things, the bona fide nature of
Xxxxx'x investment intent as expressed herein. In this connection, Xxxxx
understands that, in view of the Securities and Exchange Commission, the
statutory basis for such exemption may not be present if Xxxxx'x representations
meant that Xxxxx'x present intention was to hold these securities for a minimum
capital gains period under the tax statutes, for a deferred sale, for a market
rise, for a sale if the market does not rise, or for a year or any other fixed
period in the future.
(c) Xxxxx further acknowledges and understands that the
securities must be held indefinitely unless they are subsequently registered
under the Securities Act or an exemption from such registration is available.
Xxxxx further acknowledges and understands that the Company is under no
obligation to register the securities. Xxxxx understands that the certificate
evidencing the securities will be imprinted with a legend which prohibits the
transfer of the securities unless they are registered or such registration is
not required in the opinion of counsel satisfactory to the Company.
-2-
4. STOCK CERTIFICATE LEGENDS. The stock certificates
evidencing the Xxxxx Stock issued hereunder shall be endorsed with the
following legends:
(a) THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE
OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE
SECURITIES ACT OF 1933.
(b) THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF
WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.
(c) Any legend required by any applicable state securities
laws.
5. MARKET STAND-OFF AGREEMENT. Xxxxx hereby agrees, if so
requested by the managing underwriters in such offering, that, without the
prior written consent of such managing underwriters, Xxxxx will not offer,
sell, contract to sell, grant any option to purchase, make any short sale or
otherwise dispose of or make a distribution of any capital stock of the
Company held by or on behalf of Xxxxx or beneficially owned by Xxxxx in
accordance with the rules and regulations of the Securities and Exchange
Commission for a period of up to 180 days after the date of the final
prospectus relating to the Company's initial public offering.
6. ESCROW OF SHARES.
(a) To ensure the availability for delivery of the Xxxxx Stock
upon forfeiture or repurchase thereof pursuant to Section 2, Xxxxx shall, upon
execution of this Agreement, deliver and deposit with an escrow holder
designated by the Company (the "Escrow Holder") the share certificate
representing the Xxxxx Stock, together with the Assignment Separate from
Certificate (the "Stock Assignment") duly endorsed in blank, attached hereto as
EXHIBIT A-1. The Xxxxx Stock and Stock Assignment shall be held by the Escrow
Holder, pursuant to the Joint Escrow Instructions of the Company and Xxxxx
attached as EXHIBIT A-2 hereto.
(b) The Escrow Holder shall not be liable for any act it may
do or omit to do with respect to holding the Unreleased Shares in escrow and
while acting in good faith and in the exercise of its judgment.
(c) Subject to the terms hereof, Xxxxx shall have all the
rights of a shareholder with respect to the Xxxxx Stock while they are held in
escrow, including without limitation, the right to vote the Xxxxx Stock and
receive any cash dividends declared thereon. If, from time to time during the
term of this Agreement, there is (i) any stock dividend, stock split or other
change in the Xxxxx Stock, or (ii) any merger or sale of all or substantially
all of the assets or other acquisition of the Company, any and all new,
substituted or additional securities to which Xxxxx is entitled by reason of
Xxxxx'x ownership of the Xxxxx Stock shall be immediately subject to this
escrow,
-3-
deposited with the Escrow Holder and included thereafter as "Xxxxx Stock" for
purposes of this Agreement.
7. TAX CONSEQUENCES. Xxxxx has reviewed with Xxxxx'x own tax
advisors the federal, state, local and foreign tax consequences of this
investment and the transactions contemplated by this Agreement. Xxxxx is
relying solely on such advisors and not on any statements or representations
of the Company or any of its agents. Xxxxx understands that Xxxxx (and not
the Company) shall be responsible for Xxxxx'x own tax liability that may
arise as a result of this investment or the transactions contemplated by this
Agreement. Xxxxx understands that in connection with the shares Xxxxx
receives pursuant to the Contribution Agreement, Xxxxx may recognize ordinary
income under Section 83 of the Internal Revenue Code of 1986, as amended (the
"Code"), on the difference between the fair market value of the Xxxxx Stock
issued to Xxxxx as of the date any restrictions on the Xxxxx Stock lapses,
and the value of Xxxxx'x "Equity Interest" (within the meaning of the
Contribution Agreement) as of the date of this Agreement. Xxxxx understands
that if and to the extent Section 83 applies to such Xxxxx Stock, Xxxxx may
elect to be taxed at the time the Xxxxx Stock is issued rather than when and
as the forfeiture provisions expire by filing an election under Section 83(b)
of the Code with the I.R.S. within 30 days from the date of issuance.
XXXXX ACKNOWLEDGES THAT IT IS XXXXX'X SOLE RESPONSIBILITY AND
NOT THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION 83(b), EVEN IF XXXXX
REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON HIS BEHALF.
8. GENERAL PROVISIONS.
(a) This Agreement shall be governed by the laws of the State
of Delaware as they apply to contracts entered into and wholly to be performed
in such state. This Agreement represents the entire agreement between the
parties with respect to the issuance of the Xxxxx Stock and may only be modified
or amended in writing signed by the parties.
(b) With respect to any disputes arising out of or related to
this Agreement, the parties consent to the exclusive personal jurisdiction of,
and venue in, the state courts of Delaware.
(c) Any notice, demand or request required or permitted to be
given by either the Company or Xxxxx pursuant to the terms of this Agreement
shall be in writing and shall be deemed given when delivered personally or
deposited in the U.S. mail, First Class with postage prepaid, and addressed to
the parties at the addresses of the parties set forth at the end of this
Agreement or such other address as a party may request by notifying the other in
writing.
(d) Either party's failure to enforce any provision or
provisions of this Agreement shall not in any way be construed as a waiver of
any such provision or provisions, nor prevent that party thereafter from
enforcing each and every other provision of this Agreement. The rights granted
both parties herein are cumulative and shall not constitute a waiver of either
party's right to assert all other legal remedies available to it under the
circumstances.
-4-
(e) Xxxxx agrees upon request to execute any further documents
or instruments necessary or desirable to carry out the purposes or intent of
this Agreement.
(f) Xxxxx has reviewed this Agreement in its entirety, has had
an opportunity to obtain the advice of counsel prior to executing this Agreement
and fully understands all provisions of this Agreement.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first set forth above.
XXXXXXXXXXX.XXX, INC.
a Delaware corporation
-----------------------------------------
Xxxx X. Warms, President
XXXXX
-----------------------------------------
Xxxxx X. Xxxxx
-5-
EXHIBIT A-1
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED I, __________________________, hereby sell,
assign and transfer unto _______________________________ (__________) shares
of Common Stock of Xxxxxxxxxxx.xxx, Inc. standing in my name of the books of
said corporation represented by Certificate No. _____ herewith and do hereby
irrevocably constitute and appoint Wilson, Sonsini, Xxxxxxxx & Xxxxxx,
attorney, to transfer the said stock on the books of the within named
corporation with full power of substitution in the premises.
This Stock Assignment may be used only in accordance with the Stock
Purchase Agreement between Xxxxxxxxxxx.xxx, Inc. and the undersigned dated
______________, _____.
Dated: ____________________, _______
-------------------------------------
(to be signed exactly as name is to
appear on stock certificate)
EXHIBIT A-2
JOINT ESCROW INSTRUCTIONS
_____________, 199___
Xxxx X. Xxxx
Escrow Agent
c/o Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Dear Escrow Agent:
As Escrow Agent for both Xxxxxxxxxxx.xxx, Inc., a Delaware corporation
(the "Company"), and the undersigned purchaser of stock of the Company (the
"Purchaser"), you are hereby authorized and directed to hold the documents
delivered to you pursuant to the terms of the Stock Purchase Agreement (the
"Agreement") between the Company and the undersigned, in accordance with the
following instructions:
1. In the event of a forfeiture or repurchase of Purchaser's
stock pursuant to the terms of the Agreement, the Company shall give to
Purchaser and you a written notice thereof. Purchaser and the Company hereby
irrevocably authorize and direct you to close the transaction contemplated by
such notice in accordance with the terms of said notice.
2. At the closing, you are directed (a) to date the stock
assignments necessary for the transfer in question, (b) to fill in the number
of shares being transferred, and (c) to deliver same, together with the
certificate evidencing the shares of stock to be transferred, to the Company
or its assignee.
3. Purchaser irrevocably authorizes the Company to deposit
with you any certificates evidencing shares of stock to be held by you
hereunder and any additions and substitutions to said shares as defined in
the Agreement. Purchaser does hereby irrevocably constitute and appoint you
as Purchaser's attorney-in-fact and agent for the term of this escrow to
execute with respect to such securities all documents necessary or
appropriate to make such securities negotiable and to complete any
transaction herein contemplated, including but not limited to the filing with
any applicable state blue sky authority of any required applications for
consent to, or notice of transfer of, the securities. Subject to the
provisions of this paragraph 3, Purchaser shall exercise all rights and
privileges of a shareholder of the Company while the stock is held by you.
4. If at the time of termination of this escrow you should
have in your possession any documents, securities or other property belonging
to Purchaser, you shall deliver all of the same to Purchaser and shall be
discharged of all further obligations hereunder.
5. Your duties hereunder may be altered, amended, modified or
revoked only by a writing signed by all of the parties hereto.
6. You shall be obligated only for the performance of such
duties as are specifically set forth herein and may rely and shall be
protected in relying or refraining from acting on any instrument reasonably
believed by you to be genuine and to have been signed or presented by the
proper party or parties. You shall not be personally liable for any act you
may do or omit to do hereunder as Escrow Agent or as attorney-in-fact for
Purchaser while acting in good faith, and any act done or omitted by you
pursuant to the advice of your own attorneys shall be conclusive evidence of
such good faith.
7. You are hereby expressly authorized to disregard any and
all warnings given by any of the parties hereto or by any other person or
corporation, excepting only orders or process of courts of law and are hereby
expressly authorized to comply with and obey orders, judgments or decrees of
any court. In case you obey or comply with any such order, judgment or
decree, you shall not be liable to any of the parties hereto or to any other
person, firm or corporation by reason of such compliance, notwithstanding any
such order, judgment or decree being subsequently reversed, modified,
annulled, set aside, vacated or found to have been entered without
jurisdiction.
8. You shall not be liable in any respect on account of the
identity, authorities or rights of the parties executing or delivering or
purporting to execute or deliver the Agreement or any documents or papers
deposited or called for hereunder.
9. You shall not be liable for the outlawing of any rights
under the Statute of Limitations with respect to these Joint Escrow
Instructions or any documents deposited with you.
10. You shall be entitled to employ such legal counsel and
other experts as you may deem necessary properly to advise you in connection
with your obligations hereunder, may rely upon the advice of such counsel,
and may pay such counsel reasonable compensation therefor.
11. Your responsibilities as Escrow Agent hereunder shall
terminate if you shall cease to be an officer or agent of the Company or if
you shall resign by written notice to each party. In the event of any such
termination, the Company shall appoint a successor Escrow Agent.
12. If you reasonably require other or further instruments in
connection with these Joint Escrow Instructions or obligations in respect
hereto, the necessary parties hereto shall join in furnishing such
instruments.
13. It is understood and agreed that should any dispute arise
with respect to the delivery and/or ownership or right of possession of the
securities held by you hereunder, you are authorized and directed to retain
in your possession without liability to anyone all or any part of said
securities until such disputes shall have been settled either by mutual
written agreement of the parties concerned or by a final order, decree or
judgment of a court of competent jurisdiction after the time for appeal has
expired and no appeal has been perfected, but you shall be under no duty
whatsoever to institute or defend any such proceedings.
-2-
14. Any notice required or permitted hereunder shall be given
in writing and shall be deemed effectively given upon personal delivery or
upon deposit in the United States Post Office, by registered or certified
mail with postage and fees prepaid, addressed to each of the other parties
thereunto entitled at the following addresses or at such other addresses as a
party may designate by ten days' advance written notice to each of the other
parties hereto.
COMPANY: Xxxxxxxxxxx.xxx, Inc.
000 Xxxx Xxxxxx Xxxxxx, Xxxxx Xxxxx
Xxxxxxx, XX 00000-0000
PURCHASER: -----------------------------------
-----------------------------------
-----------------------------------
ESCROW AGENT: Escrow Agent
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
15. By signing these Joint Escrow Instructions, you become a
party hereto only for the purpose of said Joint Escrow Instructions; you do
not become a party to the Agreement.
16. This instrument shall be binding upon and inure to the
benefit of the parties hereto, and their respective successors and permitted
assigns.
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17. These Joint Escrow Instructions shall be governed by, and
construed and enforced in accordance with, the laws of the State of Delaware.
Very truly yours,
XXXXXXXXXXX.XXX, INC.
By:
--------------------------------------------------
Title:
-----------------------------------------------
Purchaser
-----------------------------------------------------
(Signature)
Xxxxx X. Xxxxx
-----------------------------------------------------
(Print or type name)
ESCROW AGENT:
---------------------------------------
Xxxx X. Xxxx
-4-
EXHIBIT E
The undersigned, Xxxxx Xxxxx, hereby agrees to vote all shares of capital stock
of Xxxxxxxxxxx.xxx beneficially owned by him as of September 17, 1999 (as the
same may be changed by stock split, recapitalization and the like)(the "Shares")
as Xxxx Xxxxx shall direct. Xx. Xxxxx further agrees not to transfer his Shares
without the transferee agreeing in writing to the same voting agreement. Xx.
Xxxxx agrees to take any actions and execute any documents Xxxx Xxxxx deems
necessary or advisable to effect the foregoing, including without limitation the
execution of any proxy that may be required under law.
Dated: September 17, 1999 /s/ Xxxxx Xxxxx
--------------------------
Xxxxx Xxxxx
