Exhibit 10.1
CONFIDENTIAL TREATMENT REQUESTED
UNDER 17 C.F.R. SECTIONS 200.83 AND 230.496
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into effective as
of the 22nd day of May, 2001 (the "Effective Date"), by and among Xxxxxx'x,
Inc., a Delaware corporation (the "Company") and Xxxxxxx X. Xxxx, a resident of
Xxxxxx County, Texas (the "Executive"), and the parties agree as follows:
1. RECITALS.
(a) Company desires to retain Executive as its Chief Executive
Officer and President, and Executive desires to accept such
appointment, in accordance with the terms of this Agreement; and,
(b) Each of the Company and Executive acknowledges that each has
given and received, good, valuable, present and sufficient
consideration to support each of the obligations of the parties
under this Agreement.
2. RELATIONSHIP.
The Company hereby employs Executive to serve as the Chief Executive
Officer and President of the Company, and Executive hereby agrees to such
employment, upon the terms and conditions set forth below. The Company agrees to
take such actions as are necessary to cause Executive to be nominated for
election by the Company's stockholders to the Board of Directors of the Company
(the "Board"), such nomination and election to take place in accordance with the
Bylaws of the Company no later than the next annual meeting of the stockholders
of the Company, currently scheduled for September, 2001.
3. SERVICES. During the time of his employment under this Agreement:
(a) Executive shall serve as CEO and President of the Company, and
shall perform such executive duties and responsibilities commonly
incident to such offices as may be prescribed from time to time
by the Board; and,
(b) Executive shall devote his full time, attention and energy to
the business of the Company; and
(c) Subject to reasonable travel requirements, the majority of the
services to be provided by Executive to the Company shall be
provided at its offices in Austin, Texas, and Executive shall be
required to maintain his primary residence within the Austin area
during the Term hereof (as defined below).
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The Company shall not require Executive to report to a primary
office that is greater than thirty (30) miles from its present
headquarters location.
4. TERM.
The term of this Agreement (the "Term") shall commence on the
Effective Date and shall continue until terminated in accordance with Section 7
of this Agreement.
5. COMPENSATION AND BENEFITS.
During the Term of Executive's employment under this Agreement:
(a) subject to the adjustments provided for below, the Company shall
pay to Executive a salary at the annual rate of Two Hundred Fifty
Thousand and No/100 Dollars ($250,000.00), which salary shall be
paid in installments on the Company's customary pay dates and
shall be subject to all applicable withholding required by state
or federal law; provided, that (i) Executive's salary shall be
subject to increase but not decrease during the term of this
Agreement in the discretion of the Board, and (ii) the Board will
review Executive's compensation at least once annually following
completion of the Company's fiscal year (currently March 31),
such review to occur no later than one hundred twenty (120) days
following the completion of the fiscal year; and
(b) the Company shall provide to Executive, at the expense of the
Company, such benefits as the Board or the Compensation Committee
of the Board, if any, in its sole discretion, from time to time,
determines to provide, which shall be the same benefits,
including health insurance, 401(k) and disability insurance, and
subject to the same terms and conditions (including without
limitation eligibility requirements) as received by other senior
executives of the Company; and
(c) Executive shall be eligible to receive a bonus for the Company's
fiscal year ending March 31, 2002 based on the attainment of
financial, operational and strategic goals as set forth on
EXHIBIT A attached hereto. Executive may be eligible for such
other incentive compensation and bonuses in any calendar year as
the Board or the Compensation Committee of the Board, if any,
from time to time, determines to provide in its sole discretion;
and
(d) Executive shall receive up to fifteen (15) days of
vacation per calendar year, which shall accrue and accumulate in
accordance with the Company's vacation policies.
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6. CONFIDENTIAL AND PROPRIETARY INFORMATION.
In consideration of Executive's employment by the Company, the
Company's promise to disclose to Executive its confidential and Proprietary
Information (as defined below), the compensation now and hereafter paid to
Executive, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Executive hereby agrees with the
Company as follows:
(a) Executive recognizes and acknowledges that he may have access to
certain Proprietary Information (defined below) of the Company
and its affiliates and that such information constitutes
valuable, special and unique property of the Company; the
Executive will not, during or after the term of his employment,
directly or indirectly divulge, disclose, transmit, use, lecture
upon, publish, or otherwise communicate or make available any of
such Proprietary Information to any person or firm, corporation,
association, or other entity for any reason or purpose
whatsoever, except as may be required in connection with
Executive's work for the Company or if the Company's Board of
Directors expressly authorizes such in writing.
(b) The term "Proprietary Information" shall mean trade secrets,
confidential knowledge, data, or any other proprietary
information of the Company and each of its subsidiaries or
affiliated companies. By way of illustration but not limitation,
"Proprietary Information" includes (a) information regarding
plans for research, development, new products and services,
marketing and selling, business plans, budgets and unpublished
financial statements, licenses, prices and costs, suppliers,
customer lists and customers that were learned or discovered by
Executive during the term of his employment with the Company; (b)
information regarding the skills and compensation of other
employees of the Company; and (c) "Inventions," which consist of
inventions, discoveries, developments, improvements, trade
secrets, processes, formulas, data, lists, software programs and
all other works of authorship, mask works, ideas, concepts,
know-how, designs, and techniques, relating to the business or
proposed business of the Company, whether or not patentable,
copyrightable, or registrable under patent, copyright, or similar
statutes in the United States or elsewhere, that were discovered,
developed, created, conceived, reduced to practice, made,
learned, or written by Executive, either alone or jointly with
others, in the course of his employment with the Company.
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(c) Executive understands, in addition, that the Company may from
time to time receive from third parties confidential or
proprietary information ("Third Party 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.
At all times during the term of Executive's employment and
thereafter, Executive will hold Third Party Information in the
strictest confidence and will not disclose, discuss, transmit,
use, lecture upon, or publish any Third Party Information, except
as such disclosure, discussion, transmission, use, or publication
may be required in connection with Executive's work for the
Company, or unless the Board of Directors of the Company
expressly authorizes such in writing.
(d) Executive acknowledges and agrees that all data, listings,
charts, drawings, records, files, drafts, memoranda, devices,
documents, specifications and similar items, together with all
copies thereof, relating to the business of the Company and its
affiliates or their customers, and/or any other material
containing or disclosing any Proprietary Information, Inventions,
or Third Party Information whether compiled by Executive,
furnished to Executive by the Company or its affiliates, or their
customers or clients or otherwise made accessible to Executive or
coming into his possession, while Executive is in the employ of
the Company, and copies of any such items, shall be and remain
the sole and exclusive property of the Company or its customers
or clients, as the case may be, and none of such items shall be
removed from the Company's business premises by Executive without
the prior written consent of the Company, except as required in
the course of his employment and all of such items shall be
promptly returned to the Company by Executive upon the
termination of his employment with the Company for whatever
reason.
(e) Executive understands and agrees that he shall not use the
proprietary or confidential information of any former employer or
any other person or entity in connection with his employment with
the Company. During Executive's employment with the
Company, Executive will not improperly use or disclose any
confidential or proprietary information, if any, of any former
employer or any other person or entity to whom Executive has an
obligation of confidentiality, and he will not bring onto the
premises of the Company any unpublished documents or any property
belonging to any former employer or any other person or entity to
whom Executive has an obligation of confidentiality unless
consented to in writing by that former employer, person, or
entity.
(f) Executive acknowledges that any breach by Executive of this
Section 6 will result in irreparable harm to the Company with
respect to which no adequate
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remedy at law exists. Accordingly, in addition to any other
remedies available to the Company with respect to any actual or
threatened breach of this Agreement, Executive consents to the
entry of any temporary and permanent injunctive relief.
(g) The Company's obligations under Section 7(h)(i) of this Agreement
(if any) shall cease in the event of Executive's material breach
of his obligations under this Section 6.
(h) Section 6 shall survive the termination of this Agreement, the
Term and/or the Executive's employment with the Company.
7. TERMINATION.
(a) The Company shall have the right to terminate the employment of
Executive under this Agreement at any time, and without notice,
for "Cause" as hereinafter defined. "Cause" for the purpose of
this Agreement shall mean any one or more of the following:
(i) the breach or violation by Executive of this Agreement or
the failure of Executive to perform in any material respect
any of his obligations under this Agreement for any reason
other than death or disability which failure or breach
continues after ten (10) days' written notice and
opportunity to cure,
(ii) gross neglect of duties by Executive,
(iii) misappropriation of Company assets or willful breach of
fiduciary duty as an officer of the Company,
(iv) conviction of Executive of a felony, or
(v) the willful failure or refusal of Executive to follow a
lawful and ethical direction from the Board.
(b) The Company shall have the right to terminate the employment of
Executive under this Agreement at any time without "Cause" upon
the giving to Executive of thirty (30) days written notice of
such termination; PROVIDED, HOWEVER, that during any such thirty
(30) day notice period, the Company may suspend, with no
reduction in pay or benefits, Executive from his duties as set
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forth herein (including, without limitation, Executive's position
as a representative and agent of the Company).
(c) Executive shall have the right to terminate his employment under
this Agreement for "Good Reason" (as defined below). Termination
by Executive for Good Reason includes:
(i) Failure to pay the Executive salary or benefits when due,
which breach continues after ten (10) days' written notice
and opportunity to cure;
(ii) A material reduction in Executive's duties and/or
responsibilities as the CEO, responsible for directing the
operations of the Company, which reduction in duties and/or
responsibilities continues after ten (10) days' written
notice of Executive's objection to this material reduction
in duties and/or responsibilities. A material reduction in
duties and/or responsibilities shall be considered taking
in to account all of the facts and circumstances, including
without limitation the revenues, strategic direction and
the number of employees of the operation(s) managed by
Executive prior to and following such reduction in
Executive's duties and/or responsibilities;
(iii) Other material breach of this Agreement by the Company,
which breach continues after ten (10) days' written notice
and opportunity to cure.
(iv) A "Change of Control" is defined as:
a. The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2)
of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 35% or more of either (A)
the then-outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock")
or (B) the combined voting power of the
then-outstanding voting securities of the Company
entitled to vote generally in the election of directors
(the "Outstanding Company Voting Securities");
provided, however, that, for purposes of this Section,
the following acquisitions shall not constitute a
Change of Control: (i) any acquisition directly from
the Company, (ii) any acquisition by the Company, or
(iii) any acquisition by any employee benefit plan (or
related trust)
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sponsored or maintained by the Company or any
affiliated company.
b. Individuals who, as of the date hereof, constitute the
Board (the Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided,
however, that any individual becoming a director
subsequent to the date hereof whose election, or
nomination for election by the Company's shareholders,
was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be
considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose,
any such individual whose initial assumption of office
occurs as a result of an actual or threatened election
contest with respect to the election or removal of
directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a person other
than the Board.
c. Consummation of a reorganization, merger, consolidation
or sale or other disposition of all or substantially
all of the assets of the Company (a "Business
Combination"), in each case, unless, following such
Business Combination, (A) all or substantially all of
the individuals and entities that were the beneficial
owners of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities immediately prior
to such Business Combination beneficially own directly
or indirectly, more than 60% of the then-outstanding
shares of common stock and the combined voting power of
the then-outstanding voting securities entitled to vote
generally in the election of directors, as the case may
be, of the corporation resulting from such Business
Combination (including, without limitation, a
corporation that, as a result of such transaction, owns
the Company or all or substantially all of the
Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as
their ownership immediately prior to such Business
Combination of the Outstanding Company Common Stock and
the Outstanding Company Voting Securities, as the case
may be, (B) no person (excluding any corporation
resulting from such Business Combination or any
employee benefit plan (or related trust) of the Company
or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly,
20% or more of, respectively, the then-outstanding
shares of common stock of the corporation resulting
from such Business Combination or the
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combined voting power of the then-outstanding voting
securities of such corporation, except to the extent
that such ownership existed prior to the Business
Combination, and (C) at least a majority of the members
of the board of directors of the corporation resulting
from such Business Combination were members of the
Incumbent Board at the time of the execution of the
initial agreement or of the action of the Board
providing for such Business Combination; or
d. Approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
(d) Executive shall have the right to terminate his employment under
this Agreement at any time without "Good Reason" upon giving to
the Company thirty (30) days written notice of such termination;
PROVIDED, HOWEVER, that the Company may waive all or a portion of
the thirty (30) days' notice and accelerate the effective date of
such termination.
(e) The employment of Executive under this Agreement shall terminate
automatically upon the death of Executive.
(f) For purposes of this Agreement, Disability shall mean that the
Executive is unable for a period of ninety (90) consecutive days
because of accident, illness or disease to substantially render
the services required hereunder. In such event, the Executive's
employment hereunder can be terminated upon written notice from
the Company to the Executive subject to all applicable law.
(g) In the event of the termination of the employment of Executive
under any of subsections (a), (d), (e) or (f), the Company shall
have no liability or obligation to Executive under this Agreement
except for
(i) unpaid salary compensation and any unused accrued vacation
through, and any unpaid reimbursable expenses outstanding
as of, the date of termination; and
(ii) all benefits, if any, that had accrued to the Executive
through the date of termination under the plans and
programs described in Section 5 above, or any other
applicable plans and programs in which he participated as
an employee of the Company, in the manner and in accordance
with the terms of such plans and programs.
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(h) In the event of a termination by Company without Cause on or
prior to the Expiration Date, or the termination by Executive for
Good Reason on or prior to the Expiration Date, the Executive
shall be entitled to the following:
(i) as severance compensation, his then applicable salary
compensation (payable monthly) for a period of twelve (12)
months from the date of such termination, less all
applicable withholdings required by state or federal law
(and the Executive shall be under no obligation to
mitigate his/her damages or seek other employment) (the
"Severance Payments");
(ii) any unpaid reimbursable expenses outstanding, and any
unused accrued vacation, as of the date of termination;
(iii) all benefits, if any, that had accrued to the Executive
through the date of termination under the plans and
programs described in Section 5 above, or any other
applicable benefit plans and programs in which he
participated as an employee of the Company, in the manner
and in accordance with the terms of such plans and
programs.
(iv) The making of any Severance Payments set forth in Section
7(h)(i) is expressly conditioned upon the Employee signing
a general release drafted in a commercially reasonable
fashion (the "Release") of the Company, and its respective
affiliates, successors and assigns, officers, directors,
employees, agents, attorneys and representatives, of any
claims (including without limitation any claims of
discrimination) relating solely to Executive's employment
with the Company, or the termination thereof, and not to
any rights that Executive may have as a stockholder. If the
Executive breaches the Release, in addition to any other
remedies available to it, the Company may cease making any
severance payments and providing the other benefits
provided for in Section 7(h)(i), without affecting the
Company's rights under this Agreement.
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8. NONCOMPETITION.
In consideration of the premises hereof and in further consideration
of the Company's promise to disclose to Executive confidential
information and Proprietary Information of the Company as set forth in
Section 6, and the experience Executive will gain throughout his
employment with the Company, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the Executive expressly agrees, confirms, represents and
covenants for the benefit of the Company, as follows:
(a) During the Non-Compete Period (as defined below), the
Executive shall not engage either directly or indirectly in
competition with the Company, or any of its successors or
affiliates, within the Applicable Territory (defined below), and
in particular, the Executive shall not, as owner, operator,
manager, employee, consultant, independent contractor, agent,
salesperson, officer, director, shareholder, investor, guarantor,
partner or member of a joint venture, or otherwise, directly or
indirectly, engage in any manner in the Business (defined below)
within the Applicable Territory. For purposes of this Agreement,
the term "Applicable Territory" shall mean and include all of the
United States of America, Western Europe and Canada and any other
country in which the Company is engaged in Business during the
term hereof, and the term "Business" shall mean any enterprise
whose primary business is selling information about companies,
people and industries to other businesses in direct competition
with Company, including but not limited to [*], as well as any
new entities (including entities that Executive may found), that
are actively engaged in the provision of business information to
users on a paid, subscription basis; provided that in order to
enforce this non-competition restriction as against such an
additional entity, the Company shall have given notice to
Executive of the inclusion of such additional entity to the
restricted employer list at least thirty (30) days prior to the
date on which Executive was terminated; provided that if the
existence of such new company does not become generally known
within the business community until after Executive's
termination, the Company shall have thirty (30) days from the
earlier of the date on which it became aware of the existence of
such entity, or the date on which it should reasonably have
become aware of the existence of such entity based on publicly
available information, to inform Executive of the application of
this provision to such entity; and any other business engaged in
by the Company or any of its subsidiaries or affiliates during
the Term other than any business incidental to the operations of
the Company or any of its subsidiaries taken together as a whole;
------------
[*] Indicates that material has been omitted and confidential treatment
requested therefor. All such material has been filed separately with the
Commission pursuant to Rule 406.
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(b) The "Noncompete Period" shall begin on the Effective Date of
this Agreement and ends twelve (12) months after the termination
of the Executive's employment with the Company for any
reason whatsoever;
(c) During the Non-Compete Period, the Executive shall not contact or
solicit or encourage any of the following to discontinue his, her
or its relationship with the Company or any subsidiary of the
Company: (i) employees, (ii) suppliers, distributors or
customers, (iii) former employees whose employment has been
terminated for less than six (6) months, or (iv) potential
suppliers, distributors or customers Executive had contact with
or performed services for during his employment with the Company;
(d) Notwithstanding anything set forth in this Agreement to the
contrary, it shall not be a violation of this Agreement for the
Executive to own, in the aggregate, less than two percent (2%) of
any publicly traded entity competitive with the Company, if and
only if the Executive does not provide services or information to
that entity directly or indirectly, and does not act as officer,
director, Executive, consultant or contractor, nor receive any
economic benefit from such competitive business other than as a
result of his ownership interest, and then only to the extent
that the other owners receive the same economic benefit;
(e) The covenants and agreements of the Executive set forth in this
Section 8 are ancillary to an otherwise enforceable agreement and
supported by independent valuable consideration and are necessary
to enforce the confidentiality provisions hereof, and the
limitations as to time, geographic area and scope of activity to
be restrained are reasonable and acceptable to the Executive and
do not impose any greater restraint than is reasonably necessary
to protect the goodwill and other business interests of the
Company;
(f) If, at some later date, a court of competent jurisdiction or any
arbitrator determines that any of the provisions set forth in
this Agreement do not meet the criteria for enforceability under
applicable law, the Executive agrees that this Agreement may be
reformed by such court or arbitrator pursuant to, and enforced to
the maximum extent permitted by, applicable law;
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(g) The Executive acknowledges that any breach by him of this
Agreement will result in irreparable harm to the Company
with respect to which no adequate remedy at law shall exist.
Accordingly, in addition to any other remedies available to the
Company with respect to any actual or threatened breach of this
Agreement, the Executive consents to the entry of any temporary
and permanent injunctive relief, together with temporary
restraining orders ancillary to the same;
(h) The Company's obligations under Section 7(h)(i) of this Agreement
(if any) shall cease in the event of Executive's material breach
of his obligations under this Section 8; and
(i) Section 8 shall survive the termination of this Agreement, the
Term and/or the Executive's employment with the Company.
9. OPTIONS.
In addition to the compensation described above, Executive will
receive options to purchase 225,000 shares of the Company's common
stock at an exercise price equal to the Company's closing stock price
on the NASDAQ National Market System ("NASDAQ NMS") on the date of the
option grant, such options to be granted pursuant to the Company's
1999 Stock Incentive Plan (the "Plan") in accordance with the Option
Agreement attached hereto as EXHIBIT B. Executive will also receive
options to purchase 150,000 shares of the Company's common stock at an
exercise price equal to the greater of $5.00 per share or the
Company's closing stock price on the NASDAQ NMS on the date of the
option grant, such options to be granted pursuant to the Plan in
accordance with the Option Agreement attached hereto as EXHIBIT C. The
options granted as described above have been approved by the Company's
Board of Directors and will be governed in all respects by the Plan,
and Executive and the Company agree to act in accordance with the
terms of the Plan. The options shall vest in accordance with the
Company's standard vesting schedule in effect on the date of grant.
10. NO CONFLICTING OBLIGATIONS. Executive represents and warrants to the
Company that (i) this Agreement is valid and binding upon and
enforceable against him in accordance with its terms, (ii) Executive
is not bound by or subject to any contractual or other obligation that
would be violated by his execution or performance of this Agreement,
including, but not limited to, any non-competition agreement presently
in effect, and (iii) Executive is not subject to any pending or, to
Executive's knowledge, threatened claim, action, judgment, order,
or investigation that could adversely affect
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his ability to perform his obligations under this Agreement or the
business reputation of the Company.
11. NONTRANSFERABILITY.
Neither this Agreement nor any rights or obligations hereunder may be
assigned by the Executive without the prior written consent of the
Company.
12. WAIVER.
The parties acknowledge and agree that the failure of either party to
enforce any provision of this Employment Agreement shall not
constitute a waiver of that particular provision, or of any other
provisions of this Employment Agreement.
13. NOTICE.
Any notice required or permitted to be given hereunder shall be in
writing and delivered personally or mailed by prepaid registered mail
to the party to be notified at the following addresses (or such other
addresses as one party may notify the other of:
(a) To the Company at:
0000 Xx Xxxxxx Xxxxx, Xxxxx 000.
Xxxxxx, Xxxxx 00000
Attention: General Counsel
Following May 15, 2001:
0000 Xxxxxxx Xxxx.
Xxxxxx, Xxxxx 00000
(b) To the Executive at:
Xxxxxxx X. Xxxx
[*]
[*]
Any notice mailed as aforesaid shall be deemed to have been received on the
third day following the mailing thereof.
------------
[*] Indicates that material has been omitted and confidential treatment
requested therefor. All such material has been filed separately with the
Commission pursuant to Rule 406.
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14. GOVERNING LAW AND FORUM FOR DISPUTES.
This Agreement shall be interpreted in accordance with the laws
of the State of Texas. The parties agree that any dispute arising
hereunder shall be subject to final and binding arbitration
conducted pursuant to the rules of the American Arbitration
Association and the arbitration shall take place in Austin,
Texas; provided that following a Change of Control, either party
may, at their discretion, seek to resolve a dispute arising
hereunder through arbitration, as described above, or by filing
suit subject to the jurisdiction and venue provisions described
below. The parties further agree that all disputes and/or
proceedings which are not subject to final and binding
arbitration or to enforce the results of such arbitration shall
be submitted to the District Court of Xxxxxx County, Texas, which
shall have exclusive jurisdiction and venue of any such dispute
and/or proceeding and, also, shall have jurisdiction to enter any
and all equitable relief ancillary to any such proceeding. The
Executive acknowledges that a material portion of the business of
the Company is conducted in Texas, and consents to the
jurisdiction of, and service of process by, such court. Executive
understands and agrees that the arbitration shall be instead of
any jury trial and that the arbitrator's decision shall be final
and binding to the fullest extent permitted by law and
enforceable by any court having jurisdiction thereof. Each party
will split the cost of the arbitration filing and hearing fees,
and the cost of the arbitrator; each side will bear its own
attorneys' fees; that is, the arbitrator will not have authority
to award attorneys' fees UNLESS a statutory section at issue in
the dispute authorizes the award of attorneys' fees to the
prevailing party, in which case the arbitrator has authority to
make such award as permitted by the statute in question. The only
claims or disputes not covered by this paragraph are disputes
related to (i) claims for benefits under the unemployment
insurance or workers' compensation laws, and (ii) issues
affecting the validity, infringement or enforceability of any
trade secret or patent rights held or sought by the Company or
which the Company could otherwise seek and (iii) issues
pertaining to the validity, enforceability or breach Sections 6
or 8 of this Agreement; in the foregoing cases such claims or
disputes shall not be subject to arbitration and will be resolved
pursuant to applicable law.
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15. FINAL AGREEMENT.
Both parties acknowledge and agree that this Agreement constitutes the
complete and entire agreement between the parties with respect to the
subject matter hereof; that the parties have executed this Agreement
based upon the express terms and provisions set forth herein; that the
parties have not relied on any representations, oral or written, which
are not set forth in this Agreement; that no previous agreement,
either oral or written, shall have any effect on the terms or
provisions of this Agreement; and, that all previous employment
agreements, either oral or written, are expressly superseded and
revoked by this Agreement.
16. MODIFICATION.
Both parties acknowledge and agree that the covenants and/or
provisions of this Agreement may not be modified by any subsequent
agreement unless the modifying agreement (i) is in writing, (ii)
contains an express provision referencing this Agreement and (iii) is
signed by the Company and the Executive.
17. BINDING EFFECT.
This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective heirs, executors, administrators,
successors and permitted assigns.
18. LEGAL CONSULTATION.
The Executive and the Company acknowledge and agree that both parties
have been accorded a reasonable opportunity to review this Agreement
with legal counsel prior to the execution of this Agreement.
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IN WITNESS WHEREOF the parties hereto have executed this Agreement.
"COMPANY"
XXXXXX'X, INC., a Delaware corporation
By: /s/ Xxxx Xxx
Name: Xxxx Xxx
Title: Vice President and General Counsel
"EXECUTIVE"
/s/ Xxxxxxx X. Xxxx
XXXXXXX X. XXXX
SOCIAL SECURITY #: [*]
----------------
-------------------
[*] Indicates that material has been omitted and confidential treatment
requested therefor. All such material has been filed separately with
the Commission pursuant to Rule 406.
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EXHIBIT A
Name: Xxxxxxx X. Xxxx
Position CEO and President
Annual Salary $250,000
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GOOD SUPERIOR EXCELLENT
BONUS % 15% 30% 50%
TOTAL BONUS DOLLARS AVAILABLE AT LEVEL $37,500 $75,000 $125,000
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WEIGHTING
GOALS [*] FACTOR
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Meet or Beat Revenue Targets
for your department [*] 7.5% [*] [*] [*]
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Meet or Beat Gross Profit Targets 7.5% [*] [*] [*]
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Meet or Beat Overall Corporate
Net Income Goals [*] 18.75% [*] [*] [*]
Net: [*]
-----------------------------------------------------------------------------------------------------------------------------------
Build Employee Talent, Loyalty and Esprit 7.5% Board evaluation Board evaluation Board evaluation
-----------------------------------------------------------------------------------------------------------------------------------
Develop / Communicate / Execute Strategy 11.25% Board evaluation
-----------------------------------------------------------------------------------------------------------------------------------
Specific Operational Goals
(as referenced below) 22.5% Board evaluation
-----------------------------------------------------------------------------------------------------------------------------------
17
Meet Additional Board Initiatives and Directives 25.0% Board evaluation Board evaluation Board evaluation
-----------------------------------------------------------------------------------------------------------------------------------
Assumptions
1. The above assumes no acquisitions or divestitures. If an acquisition
or divestiture is made, the CEO and the Compensation Committee will
agree on appropriate changes to revenue and [*] targets to reflect
such acquisition(s) and/or divestiture(s).
2. [*]
3. This plan applies to the full FY 2002, and the executive must be in
place at the conclusion of FY 2002 (March 31, 2002) to collect any
benefits under it, except in the event of termination for any reason
following a change in control in which case bonus will be paid pro
rata following fiscal year end. Except in the case of a change of
control, this restriction will apply regardless of the cause of
executive's termination of employment, subject to the provisions of
executive's
Employment Agreement with the Company.
4. The determination of whether non-quantitative targets have been made
and if so, whether they were at the Good, Superior or Excellent levels
shall be made by the Chairman and Compensation Committee.
------------
[*] Indicates that material has been omitted and confidential treatment
requested therefor. All such material has been filed separately with the
Commission pursuant to Rule 406.
18
Operational Goals
1. Improve individual subscription, EWS subscription, and advertiser
retention by 10 percentage points from March 01 quarter to
March 02 quarter.
2. Define final organizational structure for FY 2002 and onwards by
October 1, 2001.
3. Keep turnover across the company to a rate 10% lower than FY 2001.
4. Achieve multiple of revenue and P/E ratios [*]
5. Put in place systems to measure employee satisfaction and demonstrate
improvement in those levels from Q2 to Q4 of FY 2002.
6. Maintain or improve analyst coverage. Maintain or improve
institutional ownership as a percent of total ownership, measured
by 13F filings. Base will be ownership filed by July 15, 2001.
7. Develop a sophisticated performance measurement program to use for FY
2003 and beyond, e.g., balanced scorecard, MBO plan, etc.
8. Position the company for revenue and [*] growth in FY 2003 equal to
or greater than budgeted growth for FY 2002.
-------------------
[*] Indicates that material has been omitted and confidential treatment
requested therefor. All such material has been filed separately with the
Commission pursuant to Rule 406.
19
EXHIBIT B
XXXXXX'X, INC.
STOCK OPTION AGREEMENT
RECITALS
A. The Board has adopted the Plan for the purpose of retaining the services
of selected Employees, non-employee members of the Board or of the board of
directors of any Parent or Subsidiary and consultants and other independent
advisors who provide services to the Corporation (or any Parent or Subsidiary).
B. Optionee is to render valuable services to the Corporation (or a Parent
or Subsidiary), and this Agreement is executed pursuant to, and is intended to
carry out the purposes of, the Plan in connection with the Corporation's grant
of an option to Optionee.
C. All capitalized terms in this Agreement shall have the meaning assigned
to them in the attached Appendix.
NOW, THEREFORE, it is hereby agreed as follows:
1. GRANT OF OPTION. The Corporation hereby grants to Optionee, as of
the Grant Date, an option to purchase up to the number of Option Shares
specified in the Grant Notice. The option shares shall be purchasable from time
to time during the option term specified in Paragraph 2 at the Exercise Price.
2. OPTION TERM. This option shall have a maximum term of ten (10)
years measured from the Grant Date and shall accordingly expire at the close of
business on the Expiration Date, unless sooner terminated in accordance with
Paragraph 5 or 6.
3. LIMITED TRANSFERABILITY. This option shall be neither transferable
nor assignable by Optionee other than by will or by the laws of descent and
distribution following Optionee's death and may be exercised, during Optionee's
lifetime, only by Optionee. However, if this option is designated a
Non-Statutory Option in the Grant Notice, then this option may be assigned in
whole or in part during Optionee's lifetime either as (i) a gift to one or more
family members of Optionee's Immediate Family, to a trust in which Optionee
and/or one or more such family members hold more than fifty percent (50%) of the
beneficial interest or an entity in which more than fifty percent (50%) of the
voting interests are owned by Optionee and/or one or more such family members,
or (ii) pursuant to a domestic relations order. The assigned portion shall be
exercisable only by the person or persons who acquire a proprietary interest in
the option pursuant to such assignment. The terms applicable to the assigned
portion shall be the same as
those in effect for this option immediately prior to such assignment and shall
be set forth in such documents issued to the assignee as the Plan Administrator
may deem appropriate.
4. DATES OF EXERCISE. This option shall become exercisable for the
Option Shares in one or more installments as specified in the Grant Notice. As
the option becomes exercisable for such installments, those installments shall
accumulate, and the option shall remain exercisable for the accumulated
installments until the Expiration Date or sooner termination of the option term
under Paragraph 5 or 6.
5. CESSATION OF SERVICE. The option term specified in Paragraph 2
shall terminate (and this option shall cease to be outstanding) prior to the
Expiration Date should any of the following provisions become applicable:
(i) Should Optionee cease to remain in Service for any
reason (other than death, Permanent Disability or Misconduct) while this
option is outstanding, then this option shall remain exercisable until the
EARLIER of (i) the expiration of the three (3)-month period measured from
the date of such cessation of Service or (ii) the Expiration Date.
(ii) Should Optionee die while holding this option, then
Optionee's Beneficiary shall have the right to exercise this option until
the EARLIER of (A) the expiration of the twelve (12)-month period measured
from the date of Optionee's death or (B) the Expiration Date.
(iii) Should Optionee cease Service by reason of Permanent
Disability while this option is outstanding, then this option shall remain
exercisable until the earlier of (i) the expiration of the twelve
(12)-month period measured from the date of such cessation of Service or
(ii) the Expiration Date.
(iv) During the applicable post-Service exercise period,
this option may not be exercised in the aggregate for more than the number
of vested Option Shares for which the option is exercisable on the date of
Optionee's cessation of Service. Upon the expiration of the applicable
exercise period or (if earlier) upon the Expiration Date, this option shall
terminate and cease to be outstanding for any vested Option Shares for
which the option has not been exercised. However, this option shall,
immediately upon Optionee's cessation of Service for any reason, terminate
and cease to be outstanding to the extent this option is not otherwise at
that time exercisable for vested shares.
(v) Should Optionee's Service be terminated for Misconduct
or should Optionee engage in Misconduct while this option is outstanding,
then this option shall terminate immediately and cease to be outstanding.
6. SPECIAL ACCELERATION OF OPTION.
(a) In the event of a Change in Control, this option, to the
extent outstanding at that time but not otherwise fully exercisable, shall
automatically accelerate so that this option shall, immediately prior to the
effective date of the Change in Control, become
2
exercisable for all of the Option Shares at the time subject to this option and
may be exercised for any or all of those Option Shares as fully-vested shares of
Common Stock. No such acceleration of this option, however, shall occur if and
to the extent: (i) this option is, in connection with the Change in Control,
assumed or otherwise continued in full force and effect by the successor
corporation (or parent thereof) pursuant to the terms of the Change in Control
or (ii) this option is replaced with a cash incentive program of the successor
corporation which preserves the spread existing at the time of the Change in
Control on the Option Shares for which this option is not otherwise at that time
exercisable (the excess of the Fair Market Value of those Option Shares over the
aggregate Exercise Price payable for such shares) and provides for subsequent
pay-out in accordance with the same option exercise schedule set forth in the
Grant Notice.
(b) Immediately following the consummation of the Change in
Control, this option shall terminate and cease to be outstanding, except to the
extent assumed by the successor corporation (or parent thereof) or otherwise
expressly continued in full force and effect pursuant to the terms of the Change
in Control.
(c) If this option is assumed in connection with a Change in
Control, then this option shall be appropriately adjusted, immediately after
such Change in Control, to apply to the number and class of securities which
would have been issuable to Optionee in consummation of such Change in Control
had the option been exercised immediately prior to such Change in Control, and
appropriate adjustments shall also be made to the Exercise Price, provided the
aggregate Exercise Price shall remain the same.
(d) This Agreement shall not in any way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.
7. ADJUSTMENT IN OPTION SHARES. Should any change be made to the
Common Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration, appropriate adjustments shall be made to (i) the total number
and/or class of securities subject to this option and (ii) the Exercise Price in
order to reflect such change and thereby preclude a dilution or enlargement of
benefits hereunder.
8. STOCKHOLDER RIGHTS. The holder of this option shall not have any
stockholder rights with respect to the Option Shares until such person shall
have exercised the option, paid the Exercise Price and become a holder of record
of the purchased shares.
9. MANNER OF EXERCISING OPTION. In order to exercise this option
with respect to all or any part of the Option Shares for which this option is at
the time exercisable, Optionee (or any other person or persons exercising the
option) must take the following actions:
(i) Execute and deliver to the Corporation a Notice of
Exercise for the Option Shares for which the option is exercised.
3
(ii) Pay the aggregate Exercise Price for the purchased
shares in one or more of the following forms:
(A) cash or check made payable to the Corporation;
(B) a promissory note payable to the Corporation, but
only to the extent authorized by the Plan Administrator in accordance
with Paragraph 13;
(C) shares of Common Stock held by Optionee (or any
other person or persons exercising the option) for the requisite
period necessary to avoid a charge to the Corporation's earnings for
financial reporting purposes and valued at Fair Market Value on the
Exercise Date; or
(D) through a special sale and remittance procedure
pursuant to which Optionee (or any other person or persons exercising
the option) shall concurrently provide irrevocable instructions (I) to
a Corporation-approved brokerage firm to effect the immediate sale of
the purchased shares and remit to the Corporation, out of the sale
proceeds available on the settlement date, sufficient funds to cover
the aggregate Exercise Price payable for the purchased shares plus all
applicable income and employment taxes required to be withheld by the
Corporation by reason of such exercise and (II) to the Corporation to
deliver the certificates for the purchased shares directly to such
brokerage firm in order to complete the sale.
Except to the extent the sale and remittance procedure is
utilized in connection with the option exercise, payment of the
Exercise Price must accompany the Notice of Exercise delivered to the
Corporation in connection with the option exercise.
(iii) Furnish to the Corporation appropriate documentation
that the person or persons exercising the option (if other than Optionee)
have the right to exercise this option.
(iv) Make appropriate arrangements with the Corporation (or
Parent or Subsidiary employing or retaining Optionee) for the satisfaction
of all income and employment tax withholding requirements applicable to the
option exercise.
(b) As soon as practical after the Exercise Date, the Corporation
shall issue to or on behalf of Optionee (or any other person or persons
exercising this option) a certificate for the purchased Option Shares, with the
appropriate legends affixed thereto.
(c) In no event may this option be exercised for any fractional
shares.
10. COMPLIANCE WITH LAWS AND REGULATIONS.
(a) The exercise of this option and the issuance of the Option
Shares upon such exercise shall be subject to compliance by the Corporation and
Optionee with all
4
applicable requirements of law relating thereto and with all applicable
regulations of any stock exchange (or the Nasdaq National Market, if applicable)
on which the Common Stock may be listed for trading at the time of such exercise
and issuance.
(b) The inability of the Corporation to obtain approval from any
regulatory body having authority deemed by the Corporation to be necessary to
the lawful issuance and sale of any Common Stock pursuant to this option shall
relieve the Corporation of any liability with respect to the non-issuance or
sale of the Common Stock as to which such approval shall not have been obtained.
The Corporation, however, shall use its best efforts to obtain all such
approvals.
11. SUCCESSORS AND ASSIGNS. Except to the extent otherwise provided in
Paragraphs 3 and 6, the provisions of this Agreement shall inure to the benefit
of, and be binding upon, the Corporation and its successors and assigns and
Optionee and Optionee's assigns and Beneficiaries.
12. NOTICES. Any notice required to be given or delivered to the
Corporation under the terms of this Agreement shall be in writing and addressed
to the Corporation at its principal corporate offices. Any notice required to be
given or delivered to Optionee shall be in writing and addressed to Optionee at
the address indicated below Optionee's signature line on the Grant Notice. All
notices shall be deemed effective upon personal delivery or upon deposit in the
U.S. mail, postage prepaid and properly addressed to the party to be notified.
13. FINANCING. The Plan Administrator may, in its absolute discretion
and without any obligation to do so, permit Optionee to pay the Exercise Price
for the purchased Option Shares by delivering a full-recourse promissory note
payable to the Corporation. The terms of any such promissory note (including the
interest rate, the requirements for collateral and the terms of repayment) shall
be established by the Plan Administrator in its sole discretion.
14. CONSTRUCTION. This Agreement and the option evidenced hereby are
made and granted pursuant to the Plan and are in all respects limited by and
subject to the terms of the Plan. All decisions of the Plan Administrator with
respect to any question or issue arising under the Plan or this Agreement shall
be conclusive and binding on all persons having an interest in this option.
15. GOVERNING LAW. The interpretation, performance and enforcement of
this Agreement shall be governed by the laws of the State of
Texas without
resort to that State's conflict-of-laws rules.
16. EXCESS SHARES. If the Option Shares covered by this Agreement
exceed, as of the Grant Date, the number of shares of Common Stock which may
without stockholder approval be issued under the Plan, then this option shall be
void with respect to those excess shares, unless stockholder approval of an
amendment sufficiently increasing the number of shares of Common Stock issuable
under the Plan is obtained in accordance with the provisions of the Plan.
5
17. ADDITIONAL TERMS APPLICABLE TO AN INCENTIVE OPTION. In the event
this option is designated an Incentive Option in the Grant Notice, the following
terms and conditions shall also apply to the grant:
(i) This option shall cease to qualify for favorable tax
treatment as an Incentive Option if (and to the extent) this option is
exercised for one or more Option Shares: (A) more than three (3) months
after the date Optionee ceases to be an Employee for any reason other than
death or Permanent Disability or (B) more than twelve (12) months after the
date Optionee ceases to be an Employee by reason of Permanent Disability.
(ii) No installment under this option shall qualify for
favorable tax treatment as an Incentive Option if (and to the extent) the
aggregate Fair Market Value (determined at the Grant Date) of the Common
Stock for which such installment first becomes exercisable hereunder would,
when added to the aggregate value (determined as of the respective date or
dates of grant) of the Common Stock or other securities for which this
option or any other Incentive Options granted to Optionee prior to the
Grant Date (whether under the Plan or any other option plan of the
Corporation or any Parent or Subsidiary) first become exercisable during
the same calendar year, exceed One Hundred Thousand Dollars ($100,000) in
the aggregate. Should such One Hundred Thousand Dollar ($100,000)
limitation be exceeded in any calendar year, this option shall nevertheless
become exercisable for the excess shares in such calendar year as a
Non-Statutory Option.
(iii) Should the exercisability of this option be
accelerated upon a Change in Control, then this option shall qualify for
favorable tax treatment as an Incentive Option only to the extent the
aggregate Fair Market Value (determined at the Grant Date) of the Common
Stock for which this option first becomes exercisable in the calendar year
in which the Change in Control occurs does not, when added to the aggregate
value (determined as of the respective date or dates of grant) of the
Common Stock or other securities for which this option or one or more other
Incentive Options granted to Optionee prior to the Grant Date (whether
under the Plan or any other option plan of the Corporation or any Parent or
Subsidiary) first become exercisable during the same calendar year, exceed
One Hundred Thousand Dollars ($100,000) in the aggregate. Should the
applicable One Hundred Thousand Dollar ($100,000) limitation be exceeded in
the calendar year of such Change in Control, the option may nevertheless be
exercised for the excess shares in such calendar year as a Non-Statutory
Option.
(iv) Should Optionee hold, in addition to this option, one
or more other options to purchase Common Stock which become exercisable for
the first time in the same calendar year as this option, then the foregoing
limitations on the exercisability of such options as Incentive Options
shall be applied on the basis of the order in which such options are
granted.
6
18. LEAVE OF ABSENCE. The following provisions shall apply upon the
Optionee's commencement of an authorized leave of absence:
(i) The exercise schedule in effect under the Grant Notice
shall be frozen as of the first day of the authorized leave, and this
option shall not become exercisable for any additional installments of the
Option Shares during the period Optionee remains on such leave.
(ii) Should Optionee resume active Employee status within
sixty (60) days after the start date of the authorized leave, Optionee
shall, for purposes of the exercise schedule set forth in the Grant Notice,
receive Service credit for the entire period of such leave. If Optionee
does not resume active Employee status within such sixty (60)-day period,
then no Service credit shall be given for the period of such leave.
(iii) If this option is designated as an Incentive Option in
the Grant Notice, then the following additional provision shall apply:
(A) If the leave of absence continues for more than
ninety (90) days, then this option shall automatically convert to a
Non-Statutory Option at the end of the three (3)-month period measured
from the ninety-first (91st) day of such leave, unless Optionee's
reemployment rights are guaranteed by statute or by written agreement.
Following any such conversion of this option, all subsequent exercises
of this option, whether effected before or after Optionee's return to
active Employee status, shall result in an immediate taxable event,
and the Corporation shall be required to collect from Optionee the
income and employment withholding taxes applicable to such exercise.
(iv) In no event shall this option become exercisable for
any additional Option Shares or otherwise remain outstanding if Optionee
does not resume Employee status prior to the Expiration Date of the option
term.
7
EXHIBIT I
NOTICE OF EXERCISE
I hereby notify Xxxxxx'x, Inc. (the "Corporation") that I elect to
purchase _________ shares of the Corporation's Common Stock (the "Purchased
Shares") at the option exercise price of $__________________ per share (the
"Exercise Price") pursuant to that certain option (the "Option") granted to me
under the Corporation's 1999 Stock Incentive Plan on __________.
Concurrently with the delivery of this Exercise Notice to the
Corporation, I shall hereby pay to the Corporation the Exercise Price for the
Purchased Shares in accordance with the provisions of my agreement with the
Corporation (or other documents) evidencing the Option and shall deliver
whatever additional documents may be required by such agreement as a condition
for exercise. Alternatively, I may utilize the special broker-dealer sale and
remittance procedure specified in my agreement to effect payment of the Exercise
Price.
-------------------
Date
------------------------------
Optionee
Address:
----------------------
------------------------------
Print name in exact manner it is to appear on
the stock certificate: ------------------------------
Address to which certificate is to be sent, if
different from address above: ------------------------------
------------------------------
Social Security Number:
Employee Number
------------------------------
APPENDIX
The following definitions shall be in effect under the Agreement:
A. AGREEMENT shall mean this Stock Option Agreement.
B. BENEFICIARY shall mean, in the event the Plan Administrator
implements a beneficiary designation procedure, the person designated by
Optionee, pursuant to such procedure, to succeed to Optionee's rights under the
option evidenced by this Agreement to the extent the option is held by Optionee
at the time of death. In the absence of such designation or procedure, the
Beneficiary shall be the personal representative of the estate of Optionee or
the person or persons to whom the option is transferred by will or the laws of
descent and distribution.
C. BOARD shall mean the Corporation's Board of Directors.
D. CHANCE IN CONTROL shall mean a change in ownership or control of
the Corporation effected through any of the following transactions:
(i) a merger, consolidation or reorganization approved by the
Corporation's stockholders, unless securities representing more than fifty
percent (50%) of the total combined voting power of the voting securities
of the successor corporation are immediately thereafter beneficially owned,
directly or indirectly and in substantially the same proportion, by the
persons who beneficially owned the Corporation's outstanding voting
securities immediately prior to such transaction.
(ii) any stockholder-approved transfer or other disposition of
all or substantially all of the Corporation's assets, or
(iii) the acquisition, directly or indirectly by any person or
related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common
control with, the Corporation), of beneficial ownership (within the meaning
of Rule 13d-3 of the 0000 Xxx) of securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer made directly
to the Corporation's stockholders which the Board recommends such
stockholders to accept.
E. CODE shall mean the Internal Revenue Code of 1986, as amended.
F. COMMON STOCK shall mean the Corporation's common stock.
G. CORPORATION shall mean Xxxxxx'x, Inc., a Delaware corporation.
H. EMPLOYEE shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.
A-1
I. EXERCISE DATE shall mean the date on which the option shall have
been exercised in accordance with Paragraph 9 of the Agreement.
J. EXERCISE PRICE shall mean the exercise price per share as specified
in the Grant Notice.
K. EXPIRATION DATE shall mean the date on which the option expires as
specified in the Grant Notice.
L. FAIR MARKET VALUE per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing selling
price per share of Common Stock on the date in question, as the price is
reported by the National Association of Securities Dealers on the Nasdaq
National Market or any successor system. If there is no closing selling
price for the Common Stock on the date in question, then the Fair Market
Value shall be the closing selling price on the last preceding date for
which such quotation exists.
(ii) If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling price per
share of Common Stock on the date in question on the Stock Exchange
determined by the Plan Administrator to be the primary market for the
Common Stock, as such price is officially quoted in the composite tape of
transactions on such exchange. If there is no closing selling price for the
Common Stock on the date in question, then the Fair Market Value shall be
the closing selling price on the last preceding date for which such
quotation exists.
X. XXXXX DATE shall mean the date of grant of the option as specified
in the Grant Notice.
X. XXXXX NOTICE shall mean the Notice of Grant of Stock Option
accompanying the Agreement, pursuant to which Optionee has been informed of the
basic terms of the option evidenced hereby.
O. IMMEDIATE FAMILY of Optionee shall mean Optionee's child,
stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse,
sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law or sister-in-law, including adoptive
relationships.
P. INCENTIVE OPTION shall mean an option which satisfies the
requirements of Code Section 422.
Q. MISCONDUCT shall mean the commission of any act of fraud,
embezzlement or dishonesty by Optionee, any unauthorized use or disclosure by
Optionee of confidential information or trade secrets of the Corporation (or any
Parent or Subsidiary), or any intentional wrongdoing by Optionee, whether by
omission or commission, which adversely
A-2
affects the business or affairs of the Corporation (or any Parent or Subsidiary)
in a material manner. The foregoing definition shall not limit the grounds for
the dismissal or discharge of Optionee or any other individual in the Service of
the Corporation (or any Parent or Subsidiary).
R. NON-STATUTORY OPTION shall mean an option not intended to satisfy
the requirements of Code Section 422.
S. NOTICE OF EXERCISE shall mean the notice of exercise in the form
attached hereto as Exhibit I.
T. OPTION SHARES shall mean the number of shares of Common Stock
subject to the option as specified in the Grant Notice.
U. OPTIONEE shall mean the person to whom the option is granted as
specified in the Grant Notice.
V. PARENT shall mean any corporation (other than the Corporation) in
an unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
W. PERMANENT DISABILITY shall mean the inability of Optionee to engage
in any substantial gainful activity by reason of any medically determinable
physical or mental impairment which is expected to result in death or has lasted
or can be expected to last for a continuous period of twelve (12) months or
more.
X. PLAN shall mean the Corporation's 1999 Stock Incentive Plan.
Y. PLAN ADMINISTRATOR shall mean either the Board or a committee of
the Board acting in its administrative capacity under the Plan.
Z. SERVICE shall mean Optionee's performance of services for the
Corporation (or any Parent or Subsidiary) in the capacity of an Employee, a
non-employee member of the board of directors or a consultant or independent
advisor.
AA. STOCK EXCHANGE shall mean the American Stock Exchange or the New
York Stock Exchange.
BB. SUBSIDIARY shall mean any corporation (other than the Corporation)
in an unbroken chain of corporations beginning with the Corporation, provided
each corporation (other than the last corporation) in the unbroken chain owns,
at the time of the determination, stock possessing fifty percent (50%) or more
of the total combined voting power of all classes of stock in one of the other
corporations in such chain.
A-3
ADDENDUM
TO
STOCK OPTION AGREEMENT
The following provisions are hereby incorporated into, and are hereby
made a part of, that certain Stock Option Agreement (the "Option Agreement") by
and between Xxxxxx'x, Inc. (the "Corporation") and Xxxxxxx X. Xxxx ("Optionee")
evidencing the stock option (the "Option") granted on May 22, 2001 to Optionee
under the terms of the Corporation's 1999 Stock Incentive Plan (the "Plan"), and
such provisions shall be effective immediately. All capitalized terms in this
Addendum, to the extent not otherwise defined herein, shall have the meanings
assigned to them in the Option Agreement.
INVOLUNTARY TERMINATION
FOLLOWING CHANGE IN CONTROL
1. To the extent the Option does not accelerate, in connection with a
Change in Control, the Option shall continue, over Optionee's period of Service
after the Change in Control, to become exercisable for the Option Shares in one
or more installments in accordance with the provisions of the Option Agreement.
However, immediately upon an Involuntary Termination of Optionee's Service
within twelve (12) months following such Change in Control, the Option (or any
replacement grant), to the extent outstanding at the time but not otherwise
fully exercisable, shall automatically accelerate as follows: in the event that
the Involuntary Termination occurs on or prior to May 22, 2002, then the Option
Shares shall automatically accelerate such that a total of one-half (1/2) of the
Option Shares will be fully-vested as of such Involuntary Termination and may be
exercised for any or all of such accelerated Option Shares as fully-vested
shares of Common Stock. In the event that the Involuntary Termination occurs
following May 22, 2002, then the Option Shares shall accelerate such that the
total number of Option Shares that would be fully exercisable eighteen (18)
months following the date of the Involuntary Termination shall automatically
accelerate as of the date of such Involuntary Termination and may be exercised
for any or all of such accelerated Option Shares as fully-vested shares of
Common Stock.
2. The Option as accelerated under Paragraph 1 shall remain so
exercisable until the EARLIER of (i) the Expiration Date or (ii) the expiration
of the one (1)-year period measured from the effective date of Optionee's
Involuntary Termination.
3. For purposes of this Addendum, an INVOLUNTARY TERMINATION shall
mean the termination of Optionee's Service by reason of:
(A) Optionee's involuntary dismissal or discharge by the
Corporation for reasons other than Misconduct, or
(B) Optionee's voluntary resignation following (A) a change
in Optionee's position with the Corporation (or Parent or Subsidiary
employing Optionee) which materially reduces Optionee's level of
responsibility, with a material reduction in level of responsibility
to be considered taking in to account all of the facts and
circumstances, including without limitation the revenues, strategic
direction and the number of employees of the operation(s) managed by
Optionee prior to and following such Change in Control, (B) any
reduction in Optionee's base salary, or a reduction in the level of
Optionee's other compensation (including fringe benefits and target
bonus under any performance based bonus or incentive programs) by more
than fifteen percent (15%) or (C) a relocation of Optionee's place of
employment by more than thirty (30) miles, provided and only if such
change, reduction or relocation is effected by the Corporation without
Optionee's consent.
4. The provisions of Paragraph 2 of this Addendum shall govern the
period for which the Option is to remain exercisable following the Involuntary
Termination of Optionee's Service within twelve (12) months after the Change in
Control and shall supersede any provisions to the contrary in Paragraph 5 of the
Option Agreement.
5. To the extent the provisions of this Addendum are inconsistent with
the Plan, and/or the Stock Option Agreement, this Addendum shall control for all
purposes and any portions of the Plan and/or the Stock Option Agreement which
would otherwise effect Optionee's ability to exercise options referenced in this
Addendum will not apply or interfere with Optionee's rights under this Addendum.
2
[XXXXXX'X ONLINE LOGO]
XXXXXX'X, INC.
NOTICE OF GRANT OF STOCK OPTION
Notice is hereby given of the following option grant (the "Option") to
purchase shares of the Common Stock of Xxxxxx'x, Inc. (the "Corporation"):
OPTIONEE: Xxxxxxx X. Xxxx
GRANT DATE: May 22, 2001
VESTING COMMENCEMENT DATE: May 22, 2001
EXERCISE PRICE: $5.00
NUMBER OF OPTION SHARES: 150,000
EXPIRATION DATE: May 21, 2011
TYPE OF OPTION: Non-Qualified Stock Option
EXERCISE SCHEDULE: The Option shall become exercisable with respect to
six and one-quarter percent (6.25%) of the Option Shares upon Optionee's
completion of each three (3) months of service over the four (4) year
period measured from the Vesting Commencement Date (subject to acceleration
as provided in Paragraph 6(a) of the Option Grant Agreement). Vesting shall
occur on the twenty-second day of every third month following the Vesting
Commencement Date, beginning on August 22, 2001. In no event shall the
Option become exercisable for any additional Option Shares after Optionee's
cessation of Service.
Optionee understands and agrees that the Option is granted subject to
and in accordance with the terms of the Xxxxxx'x, Inc. 1999 Stock Incentive Plan
(the "Plan"). Optionee further agrees to be bound by the terms of the Plan and
the terms of the Option as set forth in the Stock Option Agreement and any
Addenda to such Stock Option Agreement attached hereto as Exhibit A. A copy of
the Plan is available upon request made to the Corporate Secretary at the
Corporation's principal offices.
NO EMPLOYMENT OR SERVICE CONTRACT. Nothing in this Notice or in the
attached Stock Option Agreement or in the Plan shall confer upon Optionee any
right to continue in Service for any period of specific duration or interfere
with or otherwise restrict in any way the rights of the Corporation (or any
Parent or Subsidiary employing or retaining Optionee) or of Optionee, which
rights are hereby expressly reserved by each, to terminate Optionee's Service at
any time for any reason, with or without cause.
DEFINITIONS. All capitalized terms in this Notice shall have the
meaning assigned to them in this Notice or in the attached Stock Option
Agreement.
DATED: May 22, 2001
XXXXXX'X, INC.
By:
---------------------------------------
Title: Chairman
-----------------------------------------
Xxxxxxx X. Xxxx
Address:
---------------------------------
-----------------------------------------
ATTACHMENTS
Exhibit A - Stock Option Agreement
[XXXXXX'X ONLINE LOGO]
XXXXXX'X, INC.
NOTICE OF GRANT OF STOCK OPTION
Notice is hereby given of the following option grant (the "Option") to
purchase shares of the Common Stock of Xxxxxx'x, Inc. (the "Corporation"):
OPTIONEE: Xxxxxxx X. Xxxx
GRANT DATE: May 22, 2001
VESTING COMMENCEMENT DATE: May 22, 2001
EXERCISE PRICE: $__.____ [CLOSING PRICE AS OF MAY 22, 2001]
NUMBER OF OPTION SHARES: 225,000
EXPIRATION DATE: May 21, 2011
TYPE OF OPTION: __________ Incentive Stock Options
and _____________
Non-Qualified Stock Options (TO BE CALCULATED BASED ON
EXERCISE PRICE)
EXERCISE SCHEDULE: The Option shall become exercisable with respect to
six and one-quarter percent (6.25%) of the Option Shares upon Optionee's
completion of each three (3) months of service over the four (4) year
period measured from the Vesting Commencement Date (subject to acceleration
as provided in the Stock Option Agreement and Addendum thereto attached
hereto as EXHIBIT A). Vesting shall occur on the twenty-second day of every
third month following the Vesting Commencement Date, beginning on August
22, 2001. In no event shall the Option become exercisable for any
additional Option Shares after Optionee's cessation of Service.
Optionee understands and agrees that the Option is granted subject to
and in accordance with the terms of the Xxxxxx'x, Inc. 1999 Stock Incentive Plan
(the "Plan"). Optionee further agrees to be bound by the terms of the Plan and
the terms of the Option as set forth in the Stock Option Agreement and Addendum
thereto attached hereto as EXHIBIT A. A
copy of the Plan is available upon request made to the Corporate Secretary at
the Corporation's principal offices.
NO EMPLOYMENT OR SERVICE CONTRACT. Nothing in this Notice or in the
attached Stock Option Agreement or in the Plan shall confer upon Optionee any
right to continue in Service for any period of specific duration or interfere
with or otherwise restrict in any way the rights of the Corporation (or any
Parent or Subsidiary employing or retaining Optionee) or of Optionee, which
rights are hereby expressly reserved by each, to terminate Optionee's Service at
any time for any reason, with or without cause.
DEFINITIONS. All capitalized terms in this Notice shall have the
meaning assigned to them in this Notice or in the attached Stock Option
Agreement.
DATED: May 22, 2001
XXXXXX'X, INC.
By:
--------------------------------
Title: Chairman
-----------------------------------
Xxxxxxx X. Xxxx
Address:
---------------------------
-----------------------------------
ATTACHMENTS
Exhibit A - Stock Option Agreement
