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EXHIBIT 10.14
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of May, 1999, between BUILDNET INC., a
corporation organized and existing under the laws of the State of North Carolina
("BuildNet") and Xxxxxx Xxxxxx ("Employee").
WHEREAS, Employee is currently employed by BuildNet as its Chairman of
the Board; and
WHEREAS, both BuildNet and Employee desire to continue such employment
relationship and are willing to do so upon the terms and conditions hereinafter
set forth; and
WHEREAS, the parties hereby acknowledge that the goodwill, continued
patronage, names, addresses and specific business requirements of BuildNet's
clients and customers, and the designs, procedures, systems, strategies,
business methods and know-how of BuildNet, having been acquired through
BuildNet's efforts and/or the expenditure of considerable time and money, are
among the principal assets of BuildNet; and
WHEREAS, the parties hereby acknowledge that as a result of the
position in which Employee will be employed by BuildNet, Employee has and will
develop special skills and knowledge peculiar to BuildNet's business, whereby
Employee has become and will continue to become, through Employee's employment
with BuildNet, acquainted with the identities of the clients and customers of
BuildNet, and has acquired and will continue to acquire access to the techniques
of BuildNet in carrying on its business, as well as other confidential and
proprietary information; and
WHEREAS, the parties hereto acknowledge that the covenants set forth in
Sections 8 through 11 (the "Covenants") of this Agreement are necessary for the
reasonable and proper protection of BuildNet's confidential and proprietary
information (as defined herein), customer relationships, and the goodwill of
BuildNet's business, and that such Covenants constitute a material portion of
the consideration for Employee's employment hereunder;
NOW, THEREFORE, in consideration of the premises and mutual promises
and covenants contained herein, and for other good and valuable consideration,
the receipt and legal sufficiency of which are hereby acknowledged, the parties
agree as follows.
1. Position; Employment. BuildNet agrees to employ Employee, and
Employee agrees to be employed, as Chairman of the Board of BuildNet, or in such
other position as the Board of Directors may from time to time reasonably
assign. The employment of Employee shall commence as of the date of this
Agreement and continue for the period beginning on the date hereof and ending as
provided in Section 7 hereof.
2. Relocation; Performance of Duties. Employee agrees to use his best
efforts to relocate his residence to the Raleigh/Durham area as soon as is
practicable. Employee shall devote sufficient time to adequately discharge his
duties as Chairman of the Board, and in any event Employee shall devote more
time to BuildNet than to any other company for which Employee performs services,
it being understood that Employee will devote his best efforts, skill,
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ability and attention to the business and affairs of BuildNet. Employee agrees
that during the term of his employment, Employee will not be employed by or
perform services for any new company for which he is not currently employed by
or performing services for as of the date hereof, without the prior consent of
the Board of Directors of BuildNet. In his capacity as Chairman, Employee shall
be one of the executive officers of BuildNet (or any successor, or entity
directly or indirectly controlling BuildNet), and his duties in such position
shall be consistent with that status as a senior executive officer, and he shall
be accorded the benefits, facilities, staff assistance, perquisites and other
privileges accorded such executives.
In the performance of his responsibilities as Chairman of the Board,
Employee shall be subject to all of BuildNet's policies, rules and regulations
applicable to its employees of comparable status. Employee shall report directly
to and be subject to the direction of the Chief Executive Officer and Board of
Directors of BuildNet. Employee shall perform the duties consistent with
Employee's knowledge, experience, and position and the duties of BuildNet
employees of comparable status. Employee shall have such other duties and
responsibilities consistent with his position as the Board of Directors of
BuildNet shall from time to time reasonably assign to him. In performing such
duties, Employee shall be subject to and shall substantially abide by all
policies and procedures developed by BuildNet.
3. Compensation.
(a) Base Salary. In consideration of Employee's services hereunder,
BuildNet shall pay Employee a minimum annual base salary of Four Hundred
Thousand Dollars ($400,000) per annum, less applicable statutory deductions,
payable in accordance with BuildNet's normal payroll practices (the "Base
Salary"). Employee's Base Salary shall be reviewed by the Board of Directors of
BuildNet on an annual basis and may be increased as the Board of Directors of
BuildNet deems appropriate in its sole discretion.
(b) Bonus. Employee may receive a bonus each calendar year during his
continued employment comparable to bonuses paid to other similarly situated
officers of BuildNet and as determined by the Board of Directors in its sole
discretion.
4. Stock Options. Upon the commencement of Employee's employment by
BuildNet, BuildNet shall grant to Employee incentive stock options to purchase
up to an aggregate of Two Hundred Fifty Thousand (250,000) shares of the Common
Stock of BuildNet, with an exercise price equal to the fair market value of the
Common Stock of BuildNet at the time of such grant. Options to purchase all such
shares shall begin to vest upon the effective date of employment in monthly
installments over four (4) years. Such options shall become fully exercisable in
the event of (a) a sale of all or substantially all the assets of BuildNet or a
merger or consolidation involving BuildNet in which the shareholders of BuildNet
prior to such transaction own less than a majority of the voting securities of
the entity surviving such transaction, or (b) any transaction or series of
related transactions pursuant to which a person, entity or persons or entities
under common control or acting as a group within the meaning of Section 13(d) of
the Securities Exchange Act of 1934, as amended, acquires securities
constituting at least a majority of the voting power of BuildNet.
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5. Employee Benefits. During the Term of this Agreement, Employee shall
be eligible to receive and/or participate in all employee benefits that are
offered by BuildNet to its employees generally.
6. Reimbursement of Expenses. BuildNet shall reimburse Employee for
reasonable and documented expenses associated with Employee's relocation to the
Raleigh/Durham area, including, without limitation (a) fees paid to any
relocation service; (b) moving expenses, which shall include packing and moving
of household items and up to sixty (60) days' temporary living expenses for
Employee and his family; and (c) reasonable closing costs incurred by Employee
in connection with the sale of his home in Dallas, Texas (including but not
limited to sales commissions not to exceed six percent (6%) of the selling
price) and the purchase of a home in the Raleigh/Durham area. Notwithstanding
the provisions of this Section 6, no expense will be reimbursed by BuildNet
without prior consent of the Chief Executive Officer of BuildNet if such expense
is greater than $5,000.
7. Term and Termination. The term of the Employee's employment under
this Agreement (the "Term of Employment") shall commence as of the date hereof
and continue through the date four (4) years from such date, unless earlier
terminated in accordance with the provisions of this Agreement. The Term of
Employment shall automatically be extended for successive one (1) year terms
after the initial four-year term unless either party gives notice of nonrenewal
at least ninety (90) days prior to the end of the then-current term. This
Agreement shall terminate prior to the expiration of the Term of Employment upon
the occurrence of any one of the following events.
(a) Cause. BuildNet may terminate this Agreement, at any time,
with or without Cause, and with or without prior notice to Employee, in which
event all payments under this Agreement shall cease, except as provided in
Section 7(d) below. The term "Cause" as used herein shall mean (i) Employee, in
carrying out his duties hereunder, has been guilty of gross negligence or
willful and wanton misconduct which in either case results in material harm to
the financial condition, business, assets, or prospects of BuildNet; (ii) the
conviction of, or the entering of a plea of no contest by, Employee for a felony
or crime involving moral turpitude, (iii) any act involving dishonesty in the
performance of Employee's duties hereunder, including, without limitation,
fraud, misappropriation or embezzlement, (iv) any material breach of this
Agreement by Employee, which failure cannot be cured or shall not have been
cured within thirty (30) days after receipt by Employee of written notice from
BuildNet specifying in reasonable detail the nature of such breach; or (v)
Employee fails to carry out reasonable directions (consistent with his position
as set forth in Section 1 hereof and the provisions of this Agreement) of the
Board of Directors of BuildNet, which failure cannot be cured or shall not have
been cured within thirty (30) days after receipt by Employee of written notice
from BuildNet specifying in reasonable detail the failure to so carry out such
directions.
(b) Death. This Agreement shall terminate if Employee dies
during the Term of Employment. In such event, BuildNet shall pay to the
Employee's executors, legal representatives or administrators an amount as set
forth in Section 7(d) below.
(c) Disability. BuildNet may terminate this Agreement if
Employee shall suffer a Disability, in which event all payments under this
Agreement shall cease, except as
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provided in Section 7(d) below. For purposes of this Agreement, "Disability"
shall mean that Employee has not performed his full-time duties with BuildNet
for six (6) consecutive months or an aggregate of six (6) months within a twelve
(12) month period as a result of his incapacity due to physical or mental
illness.
(d) Certain Payments Upon Termination. If, during the Term of
Employment, BuildNet terminates the employment of Employee for Cause, Employee
voluntarily terminates his employment with BuildNet unless such termination
promptly follows a substantial reduction in Employee's duties, responsibility or
authority, or upon the death or Disability of Employee during the Term of
Employment, the Term of Employment shall terminate immediately thereafter, and
BuildNet shall pay Employee or his beneficiary such Base Salary as he may be
entitled to receive for services rendered prior to the date of such termination
and for all accrued and unused vacation and reimbursements of expenses owing to
Employee. If, during the Term of Employment, BuildNet terminates the employment
of Employee without Cause or Employee voluntarily terminates his employment with
BuildNet promptly after (i) there has occurred (without Employee's prior written
consent) a substantial reduction in his duties, responsibilities or authority,
or (ii) BuildNet has breached any term of this Agreement, which breach has not
been cured within thirty (30) days after receipt by BuildNet of written notice
from Employee specifying in reasonable detail the nature of such breach, then
BuildNet shall pay to Employee, within thirty (30) days after the effective date
of such termination, an amount equal to Employee's Base Salary determined
immediately prior to the effective date of such termination, for a period from
the effective date of such termination until the end of the Term of Employment
specified by this Agreement as if such termination had not occurred, plus such
Base Salary as he may be entitled to receive for services rendered prior to the
date of such termination and for all accrued and unused vacation and
reimbursements of expenses owing to Employee. In the event of any such
termination, BuildNet shall not be liable for any other payments to Employee.
8. Restrictive Covenants.
(a) Noncompetition. During the term of his employment, and for a period
of two (2) years after the termination or cessation of Employee's employment
with BuildNet, regardless of manner or cause of termination, Employee agrees
that, within the geographic area described in Section 8(e) hereof, he will not:
(i) engage in, manage, operate, control or supervise, or participate in the
management, operation, control or supervision of, any business or entity which
provides products or services as a substantial part of its business directly
competitive with those then currently provided by BuildNet; or (ii) have any
ownership or financial interest, directly or indirectly, in any entity which
provides products or services as a substantial part of its business directly
competitive with those then currently provided by BuildNet, including, without
limitation, as an individual, partner, shareholder (other than as a shareholder
of a publicly-owned corporation in which Employee owns less than 1% of the
outstanding shares of such corporation), officer, director, employee, member,
associate, principal, agent, representative or consultant, and shall not in any
other manner, directly or indirectly, compete to any extent with such business
of BuildNet.
(b) Restriction on Solicitation of Customers. Employee agrees that he
will not (in addition to any other restriction on his activities), for a period
of two (2) years immediately following Employee's termination, on his own behalf
or on behalf of any other person or entity,
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directly or indirectly call on or otherwise contact customers of BuildNet on or
prior to the date of termination or cessation of Employee's employment with
BuildNet (the "Restricted Customers") within the geographic area described in
Section 8(e) hereof, for the purpose of selling products or services to the
Restricted Customers that are competitive with those provided by BuildNet.
(c) Restriction on Solicitation of Employees. Employee agrees that he
will not, for a period of two (2) years immediately following Employee's
termination, directly or indirectly contact, solicit, interfere with or attempt
to entice in any form, fashion or manner any employee of BuildNet: (i) for the
purpose of inducing that employee to work with or for Employee (or with a person
or business entity with which employee is affiliated); or (ii) to terminate his
employment with BuildNet.
(d) Confidentiality. Employee will not at any time, whether during or
after the termination of his employment, reveal to any person or entity any of
the trade secrets or confidential information concerning the organization,
business or finances of BuildNet or of any third party that BuildNet is under an
obligation to keep confidential (including but not limited to trade secrets or
confidential information respecting inventions, research, products, designs,
methods, know-how, formulae, techniques, systems, processes, software programs,
works of authorship, customer lists, projects, plans and proposals), except as
may be required in the ordinary course of performing his duties as an employee
of BuildNet, and Employee shall keep secret all matters entrusted to him and
shall not use or attempt to use any such information in any manner that may
injure or cause loss to BuildNet. The provisions of this clause (d) shall not
apply to any information that is not treated as confidential by BuildNet or that
has come into the public domain through no fault of Employee.
(e) Geographic Scope of Restrictive Covenants. The geographic area in
which Employee shall not engage in any of the prohibited activities listed in
subsections 8(a) and 8(b) hereof shall be limited to the United States.
9. Employee Developments. If at any time or times during Employee's
employment, Employee shall (either alone or with others) make, conceive,
discover or reduce to practice any invention, modification, discovery, design,
development, improvement, process, software program, work of authorship,
documentation, formula, data, technique, know-how, secret or intellectual
property right whatsoever or any interest therein (whether or not patentable or
registrable under copyright or similar statutes or subject to analogous
protection) (herein called "Developments") that relates to the business of
BuildNet or any of the products or services being developed, manufactured or
sold by BuildNet or that may be used in relation therewith, such Developments
and the benefits thereof shall immediately become the sole and absolute property
of BuildNet and its assigns, and Employee shall promptly disclose to BuildNet
each such Development and hereby assigns any rights Employee may have or acquire
in the Developments and benefits and/or rights resulting therefrom to BuildNet
and its assigns without further compensation and shall communicate, without cost
or delay, and without publishing the same, all available information relating
thereto to BuildNet. Upon the request of BuildNet, the Employee will execute and
deliver all documents and do other acts which are or may be necessary to
document such transfer or to enable BuildNet to file and prosecute applications
for and to acquire, maintain, extend and enforce any and all patents, trademark
registrations or copyrights under United States or foreign law with respect to
any such developments.
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Notwithstanding the foregoing, this Agreement shall not be construed to
apply to, and shall not create any assignment of, any Developments of the
Employee that are covered by Section 66-57.1 of the North Carolina General
Statutes, a copy of which is attached hereto as Exhibit A.
10. Existing Developments. Employee represents that the Developments,
if any, identified on Exhibit B attached hereto comprise all the unpatented and
uncopyrighted Developments that Employee has made or conceived prior to or
otherwise not in connection with Employee's employment by BuildNet, which
Developments are excluded from this Agreement. Employee understands that it is
necessary only to list the title and purpose of such Developments but not
details thereof.
Employee further represents that Employee's performance of all the
terms of this Agreement and as an employee of BuildNet does not and will not
breach any agreement to keep in confidence proprietary information acquired by
Employee in confidence or in trust prior to Employee's employment by BuildNet.
Employee has not entered into, and Employee agrees he will not enter into, any
agreement either written or oral in conflict herewith.
11. Return of BuildNet Property. Upon the termination of Employee's
employment with BuildNet for any reason, Employee shall leave with or return to
BuildNet all personal property belonging to BuildNet ("BuildNet Property") that
is in Employee's possession or control as of the date of such termination of
employment, including, without limitation, all records, papers, drawings,
notebooks, specifications, marketing materials, software, reports, proposals,
equipment, or any other device, document or possession, however obtained,
whether or not such BuildNet Property contains confidential or proprietary
information of BuildNet as described in Section 8(d) hereof.
12. Enforcement of the Covenants. Employee acknowledges and agrees that
the Covenants contained in Sections 8 through 11 of this Agreement are
reasonably necessary to the protection of BuildNet's business, that a violation
of any of the Covenants contained in Sections 8 through 11 of this Agreement
would result in immediate and irreparable harm to BuildNet and that BuildNet's
remedies at law and/or the award of monetary damages would be inadequate relief
for such a violation. Therefore, Employee's violation or threatened violation of
any of the Covenants contained in Sections 8 through 11 of this Agreement will
give BuildNet the right to enforce such Covenants through specific performance,
temporary restraining order, preliminary or permanent injunction, and other
equitable relief. These remedies will be cumulative and in addition to any other
remedies that BuildNet may have. In addition, Employee agrees that the Covenants
contained in Sections 8 through 11 will be extended by a length of time equal to
the period of time running from the filing of any action to enforce or challenge
the validity of the Covenants to the date of a final judgment (after appeals, if
any) or settlement of said litigation, or the expiration of all applicable
appeal periods after the entry of judgment in said litigation, whichever event
last occurs.
13. Waiver of Breach. Any waiver by BuildNet of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach of such provision or any other provision hereof.
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14. Validity and Survival of the Covenants. The parties acknowledge and
agree that the obligations contained in this Agreement are exchanged for valid
and reasonable consideration, are reasonably necessary to protect BuildNet's and
Employee's legitimate interests, are reasonable with respect to time, duration,
geographic scope, dollar amounts and other provisions, and do not interfere with
the interests of the public, and that the descriptions of prohibited activities
contained in the covenants of Sections 8 through 11 hereof are sufficiently
precise and definite to inform Employee of the scope of the covenants. The
covenants contained in Sections 7(d) and 8 through 11 of this Agreement will
survive termination of Employee's employment. The parties agree that the
existence of any claim or cause of action that one may have against the other,
whether based on this Agreement or otherwise, will not constitute a defense to
the enforcement of any obligation hereunder.
15. Severability. Employee hereby agrees that each provision herein
shall be treated as a separate and independent clause, and the unenforceability
of any one clause shall in no way impair the enforceability of any of the other
clauses herein. Moreover, if one or more of the provisions contained in this
Agreement shall for any reason be held to be excessively broad as to scope,
duration, territory, activity or subject so as to be unenforceable at law, such
provision or provisions shall be construed by the appropriate judicial body by
limiting and reducing it or them, so as to be enforceable to the extent
compatible with the applicable law as it shall then appear. In particular, in
the event that the provisions of Sections 8(a) and 8(b) are found to be
unenforceable or void (either in whole or in part) then the offending portion
shall be construed as valid and enforceable only to the extent permitted by law,
and the balance of this Agreement will remain in full force and effect. It is
the intention of the parties to restrict the activities of Employee only to the
extent necessary to protect the legitimate business interests of BuildNet and
not to deprive Employee of the right to earn a livelihood. Employee agrees that
this Agreement is reasonably necessary to protect BuildNet's legitimate business
interests.
16. Binding Effect. Employee's obligations under this Agreement shall
survive the termination of Employee's employment regardless of the manner of
such termination and shall be binding upon Employee's heirs, executors,
administrators and legal representatives and upon BuildNet's successors and
assigns.
17. Assignment. BuildNet shall have the right to assign this Agreement
to its successors and assigns, and all covenants and agreements hereunder shall
inure to the benefit of and be enforceable by said successors or assigns. This
Agreement may be amended only in a writing signed by each of the parties hereto.
18. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of North Carolina. This Agreement may be
executed in counterparts.
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19. Entirety. This Agreement, including any exhibits hereto, as it may
be amended pursuant to the terms hereof, represents the complete and final
agreement of the parties and shall control over any other statement,
representation or agreement by BuildNet (e.g., as may appear in employment or
policy manuals). This Agreement supersedes any prior negotiations or discussions
between the parties with regard to the subject matter hereof.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their seals affixed hereto as of the day and year first above
written.
BUILDNET INC.
By: /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: CEO
EMPLOYEE
/s/ Xxxxxx Xxxxxx (SEAL)
Xxxxxx Xxxxxx
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EXHIBIT A
SECTION 66-57.1 OF THE NORTH CAROLINA GENERAL STATUTES
Any provision in an employment agreement which provides that the
[employee] shall assign or offer to assign any of his rights in an invention to
his employer shall not apply to an invention that the employee developed
entirely on his own time without using the employer's equipment, supplies,
facility or trade secret information except for those inventions that:
(i) relate to the employer's business or actual or demonstrably
anticipated research or development, or
(ii) result from any work performed by the employee for the employer.
To the extent a provision in an employment agreement purports to apply
to the type of invention described, it is against the public policy of this
State and [is] unenforceable. The employee shall bear the burden of proof in
establishing that his invention qualifies under this section.
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EXHIBIT B
PRIOR DEVELOPMENTS BY EMPLOYEE
The following is a complete list of all unpatented and uncopyrighted
Developments relevant to the subject matter of my employment by BuildNet that
have been made or conceived by me prior to or otherwise not in connection with
my employment by BuildNet.
X No inventions or improvements.
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All such inventions as are described below:
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Additional sheets attached.
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/s/ Xxxxxx Xxxxxx
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Xxxxxx Xxxxxx
