EXHIBIT 10.12
[LETTERHEAD OF JAGFN]
December 14, 2000
Xxxxxx X. Xxxxxxxxx
0000 Xxxxx Xxxx Xxxx, #000
Xxxx Xxxxx, XX 00000
Dear Xxx:
This letter will set forth our agreement relating to your continued employment
with XxxXxxxx.xxx Inc. ("Company") and the Company's Webcast subsidiary, JAGfn
Broadband LLC, or any successor entity ("Webcast Subsidiary").
1. Term. This letter will govern the principal terms and conditions of
your employment from November 1, 2000 until October 31, 2003 (the
"Term"), and the termination thereof that occurs during, and in certain
cases as specified below, upon or following the expiration of the Term.
2. Positions; Duties. You will be employed by the Company as Executive
Vice President & General Counsel. You will also serve as a member of
the board of managers and Executive Vice President & General Counsel of
our Webcast Subsidiary and as a member of the board of directors (or
other management body) of the Latin American Subsidiary (as hereinafter
defined), if and when that subsidiary is established by the Company or
the Webcast Subsidiary. The foregoing executive and board positions are
referred to collectively as the "Executive Positions." You may at any
time, while continuing to serve in your other Executive Positions,
resign your position as General Counsel of the Company and/or the
Webcast Subsidiary without invalidating this agreement or affecting
your compensation, stock options or any of your rights under this
agreement. You will report to the Chief Executive Officer of the
Company and/or the Board of Directors of the Company, and will perform
such reasonable duties as may be assigned to you. Your duties will
include overseeing executive matters of the Company, the Webcast
Subsidiary, the Latin American Subsidiary, as well as all legal matters
of the Company and its subsidiaries. You agree to use your best efforts
to perform your duties faithfully, to devote all of your working time,
attention and energies to the business of the Company, and while you
remain employed with the Company, you will not engage in any other
business activity that is in conflict with your duties and obligations
to the Company.
3. Base Salary. You will be paid a base salary at an annual rate as
follows, payable in accordance with the normal payroll practices
established by the Company:
November 1, 2000 - October 31, 2001 ("Year 1") - $150,000
November 1, 2001 - October 31, 2002 ("Year 2") - $175,000
November 1, 2002 - October 31, 2003 ("Year 3") - $200,000
4. Annual Bonus. For each calendar year that ends during the Term, you
will be entitled to such bonus as determined by the Company in its
discretion ("Annual Bonus"), provided that your bonus for each such
year shall be no less than $25,000 (the "Minimum Bonus"). The Annual
Bonus or Minimum Bonus will be paid on the first business day of the
following January, with the first of such bonuses to be paid on the
first business day of January 2001. You may, in your discretion, defer
your Annual Bonus and/or Minimum Bonus from time to time (and for such
periods of time) as you may determine without waiving your right to
such accrued bonus or any subsequent bonus.
5. Benefits. The Company will, at all times throughout the Term, provide
you with health insurance coverage no less favorable than the health
insurance coverage currently provided by the Company to its employees
through Oxford Health Insurance, as well as such other fringe benefits
and insurance coverages as it may establish for similarly situated
employees.
6. Stock Options. You are hereby granted options to purchase shares of
XxxXxxxx.xxx Inc. common stock, as more particularly set forth in the
three (3) Option Grant Certificates contained in Annex 1 to this
agreement. The options are granted pursuant to the Company's 1999
Long-Term Incentive Plan (the "Plan"), and shall be subject to the
terms thereof. You shall at all times during the Term have the right to
exercise your options (in whole or in part) in a broker-assisted
cashless transaction. To facilitate this process, the Company shall
maintain its current cashless exercise program with Xxxxxxx Xxxxx
Xxxxxx for your benefit.
7. Subsidiary Ownership Interests. (a) You are hereby granted a 5%
ownership interest in the Webcast Subsidiary, which interest shall not
be subject to dilution of any kind. Should there subsequently occur any
transaction or series of related transactions in which additional units
or interests are issued (or securities exchangeable, convertible or
exercisable for or into units or interests), you will be granted such
additional units or interests as may be necessary to maintain your 5%
ownership interest. Simultaneous with the execution of this agreement,
you and the Webcast Subsidiary shall enter into an amended and restated
Operating Agreement, and execute such other agreements and documents as
are necessary or desirable to establish properly your ownership
interest in the Webcast Subsidiary.
(b) In addition, you will be granted a 5% ownership interest in the
Company's (or Webcast Subsidiary's) subsidiary for its Latin America
operations, if and when such subsidiary is established ("Latin America
Subsidiary"), which interest shall not be subject to dilution of any
kind. Should there subsequently occur any transaction or series of
related transactions in which additional units or interests are issued
(or securities exchangeable, convertible or exercisable for or into
units or interests), you will be granted such additional units or
interests as may be necessary to maintain your 5% ownership interest.
Upon the establishment of the Latin America Subsidiary, you and the
Latin America Subsidiary shall execute such agreements and documents as
are necessary or desirable to establish properly your ownership
interest in the Latin America Subsidiary.
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8. Executive Equipment & Company Credit Card. To assist you in rendering
your duties in a more efficient and productive manner the Company shall
provide you (at the Company's sole cost and expense) a laptop computer,
portable color printer, digital mobile telephone (and related account),
personal digital assistant, portable digital dictation device, and such
other equipment, accessories and software as you may require from time
to time ("Executive Equipment"). The Executive Equipment shall be
provided for your exclusive use throughout the Term and shall be
upgraded once during the Term at your discretion, except for software,
which shall be upgraded as and when the software publishers issue
upgrades. You shall also be provided a Company credit card for use by
you in connection with Company travel, entertainment and other Company
matters.
9. Boca Raton Office. During the Term, and any renewal term (s), you shall
be assigned to the Company's current offices at 0000 X. Xxxxxxx
Xxxxxxx, Xxxxx 000, Xxxx Xxxxx, Xxxxxxx ("Boca Raton Office") and the
Company may not require you to work from any other location, without
your prior written consent. You shall at all times during the Term be
provided an executive assistant of your choosing in the Boca Raton
Office, who shall (a) work exclusively for you, (b) be paid a salary
and other compensation determined by you, and (c) be provided a
separate office and equipment in the Boca Raton Office.
10. Vacation. For each calendar year of the Term you shall be entitled to
five (5) weeks paid vacation, which (a) shall fully accrue on January
1st of each year of the Term and (b) you may take at your discretion.
You may accrue and carry forward up to three (3) weeks of unused
vacation time during any calendar year to the following calendar year.
Upon (x) your removal from any of the Executive Positions "without
cause," (y) your resignation from any of the Executive Positions for
"good reason" or (z) the expiration of the Term, you shall receive a
lump sum cash payment for all accrued and unused vacation time computed
at your then current salary rate.
11. Termination. (a) You are free to resign from the Company at any time,
and the Company is free to terminate your employment at any time. Upon
any such termination or resignation, you will be entitled to any
amounts earned and accrued but not yet paid. In addition, if you resign
for "good reason", or if the Company or Webcast Subsidiary terminates
your employment "without cause", you will be entitled to the following
severance payments and benefits: (i) continued medical and life
insurance coverage for a period equal to the greater of one year or the
number of years and fractions thereof between the date of such
termination and the end of the Term (the "Severance Period"), (ii) a
lump sum cash payment equal to your highest rate of annual base salary
in effect during the Term multiplied by the Severance Period, (iii) a
lump sum cash payment equal to the Severance Period, which, if not a
whole number, shall be rounded up to the nearest whole number,
multiplied by the greater of the Minimum Bonus or the highest Annual
Bonus previously paid to you during the Term, (iv) a lump sum cash
payment equal to the number of accrued and unused vacation days
calculated at your then current salary rate and (v) accelerated vesting
of all your outstanding stock options. Such cash payments will be made
within 10 days of your termination of employment, and shall not be
subject to offset for amounts earned by you in respect of any
subsequent employment, nor shall you be required to seek any such
subsequent employment.
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(b) For purposes of this paragraph 11, your employment will be treated
as having been terminated by the Company or the Webcast Subsidiary
"without cause" if the Company or the Webcast Subsidiary initiates your
termination of employment during the Term or upon the expiration of the
Term, other than by reason of (i) your material dishonesty, (ii) your
material failure, refusal or neglect to perform your job functions
(other than by reason of a disability described below) that continues
after you have been provided adequate and specific written notice
thereof, (iii) your material breach of a Company or Webcast Subsidiary
policy that either cannot be cured or is not cured after adequate and
specific written notice thereof, (iv) your conviction of a felony; (v)
your willful unauthorized disclosure of confidential information that
is likely to result in material harm to the Company or the Webcast
Subsidiary, or (vi) your inability, by reason of a physical or mental
impairment, to substantially perform your job functions for a period of
six (6) consecutive months.
(c) For purposes of this paragraph 11, you will be treated as having
resigned for "good reason" if you resign (i) following any material
breach by the Company or the Webcast Subsidiary of its obligations
under this letter that continues after you have provided adequate and
specific written notice thereof, (ii) in connection with any proposed
or actual relocation of the Company's or Webcast Subsidiary's
headquarters from its current New York City location or the Company's
and Webcast Subsidiary's Florida office from the current Boca Raton
Office, or any requirement that you work from an office other than the
Boca Raton Office (iii) within the one year period following (x) a
change in control (as defined in the Plan) with respect to the Company
or a change in control (as defined below) with respect to the Webcast
Subsidiary that occurs during the Term or (y) your removal from any of
the Executive Positions or (z) your removal from any other executive or
board position you currently or may hereafter hold for the Company, the
Webcast Subsidiary or any of their subsidiaries, whether or not such
resignation occurs during the Term, or (iv) upon expiration of the
Term, if the Company and the Webcast Subsidiary have failed to offer
you continued employment on terms at least as favorable to you as those
set forth in this agreement. With respect to the Webcast Subsidiary, a
"change in control" shall mean any transaction whereby, after giving
effect to such transaction, the beneficial owners of the Webcast
Subsidiary's voting securities (or interest) prior to such transaction
cease to beneficially own, either singly or in the aggregate, at least
60% of the voting power of the Webcast Subsidiary or any successor to
substantially all of the business or assets of the Webcast Subsidiary.
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12. Certain Taxes. The Company will pay to you an amount that, on an
after-tax basis (including federal income, excise and social security
taxes, and state and local income taxes), equals any excise tax that is
determined to be payable by you pursuant to Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code") (and any
interest or penalties related to the imposition of such excise tax), by
reason of entitlements under this letter (including this paragraph 12)
, as well as entitlements outside of this letter that are described in
Section 280G(b)(2)(A)(i) of the Code. For purposes of this paragraph
12, you shall be deemed to pay federal, state and local income taxes at
the highest marginal rate of taxation. The determination as to the
amount payable pursuant to this paragraph 12 shall be made by such
nationally recognized consulting or accounting firm as may be agreed to
by the parties.
13. Withholding. The Company shall have the right to withhold from any
amount payable hereunder an amount necessary in order for the Company
to satisfy any withholding tax obligation it may have under applicable
law.
14. Company Policies. You agree to abide by the Company's policies as may
be implemented from time to time, including the Company's Policy and
Procedures regarding Securities Transactions and Personal Conduct,
Ethics and Business Transactions, a copy of which is attached to this
Agreement as Annex 2 and which shall be executed by you simultaneous
with your execution of this agreement.
15. Confidentiality. You agree that at no time (neither during nor after
the Term) will you (i) use or disclose, or authorize any other person
or entity to use or disclose, any information relating to the Company
or its affiliates of a confidential nature (e.g., strategic plans,
specifications for existing or future technology) other than as
necessary to further the business objectives of the Company in
accordance with the terms of your employment, or (ii) take or cause to
be taken any action which disparages the Company or any of its
personnel or is likely to expose the Company or any of its personnel to
any material liability to any person.
16. Governing Law. The terms of this letter agreement and the restricted
stock grant letter, and any action arising thereunder, shall be
governed by and construed in accordance with the domestic laws of the
State of New York, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of New York or
any other jurisdiction) that would cause the application of the laws of
any jurisdiction other than the State of New York.
* * * *
[Signatures Appear On Following Page]
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If the foregoing is acceptable to you, kindly sign and return to me one copy of
this letter.
Sincerely yours,
XXXXXXXX.XXX INC. AGREED TO AND ACCEPTED BY:
By: /s/ Xxxx Xxxxxxxx /s/ Xxxxxx X. Xxxxxxxxx
----------------------------------- -----------------------------------
Name: Xxxx Xxxxxxxx Xxxxxx X. Xxxxxxxxx
Title: President & CEO
JAGfn BROADBAND LLC
Agrees to the foregoing terms and conditions
and to be jointly and severally liable for
any and all obligations of XxxXxxxx.xxx Inc.
By: /s/ Xxxxxxx X. Xxxxxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: President
6
ANNEX 1
to
Employment Agreement dated December 14, 2000
Between
XxxXxxxx.xxx Inc. and Xxxxxx X. Xxxxxxxxx
================================================================================
OPTION GRANT CERTIFICATES
================================================================================
7
XXXXXXXX.XXX INC
1999 LONG-TERM INCENTIVE PLAN
Option Grant Certificate #1
This Grant Certificate evidences the grant of an option pursuant to the
provisions of the 1999 Long-Term Incentive Plan (the "Plan") of XxxXxxxx.xxx Inc
(the "Company") to the individual whose name appears below (the "Grantee"),
covering the specific number of shares of Common Stock of the Company ("Stock")
set forth below, pursuant to the provisions of the Plan and on the following
express terms and conditions:
1. Name of Grantee:
Xxxxxx X. Xxxxxxxxx
2. Number of shares of Stock of the Company which are subject to this
option:
400,000 shares
3. Exercise price of shares subject to this option:
$.25 per share
4. Date of grant of this option:
December 14, 2000
5. Vesting:
400,000 shares shall vest on December 14, 2000
6. Termination date of this option:
The earlier of the tenth anniversary of the date of grant, or
the 90th day following termination of employment/services;
provided that during such 90 day period, the option will be
exercisable only to the extent it was vested as of the date of
such termination. Notwithstanding the foregoing, this option
shall terminate immediately if such termination is for cause,
as determined by the Committee.
The Grantee hereby acknowledges receipt of a copy of the Plan as presently in
effect. The text and all of the terms and provisions of the Plan are
incorporated herein by reference, and this option is subject to these terms and
provisions in all respects.
At any time when the Grantee wishes to exercise this option, in whole or in
part, the Grantee shall submit to the Company a written notice of exercise,
specifying the exercise date and the number of shares to be exercised. Upon
exercise, the Grantee shall remit to the Company the exercise price, plus an
amount sufficient to satisfy any withholding tax obligation of the Company that
arises in connection with such exercise.
XxxXxxxx.xxx Inc. AGREED TO AND ACCEPTED BY:
By: /s/ Xxxx Xxxxxxxx /s/ Xxxxxx X. Xxxxxxxxx
----------------------------------- -----------------------------------
Name: Xxxx Xxxxxxxx Xxxxxx X. Xxxxxxxxx
Title: President & CEO
8
XXXXXXXX.XXX INC
1999 LONG-TERM INCENTIVE PLAN
Option Grant Certificate #2
This Grant Certificate evidences the grant of an option pursuant to the
provisions of the 1999 Long-Term Incentive Plan (the "Plan") of XxxXxxxx.xxx Inc
(the "Company") to the individual whose name appears below (the "Grantee"),
covering the specific number of shares of Common Stock of the Company ("Stock")
set forth below, pursuant to the provisions of the Plan and on the following
express terms and conditions:
1. Name of Grantee:
Xxxxxx X. Xxxxxxxxx
2. Number of shares of Stock of the Company which are subject to this
option:
250,000 shares
3. Exercise price of shares subject to this option:
The greater of $.25 per share or 25% of the average closing
bid price for the 5 trading days immediately preceding the
date of grant of this option.
4. Date of grant of this option:
December 14, 2000
5. Vesting:
250,000 shares shall vest on January 1, 2001
6. Termination date of this option:
The earlier of the tenth anniversary of the date of grant, or
the 90th day following termination of employment/services;
provided that during such 90 day period, the option will be
exercisable only to the extent it was vested as of the date of
such termination. Notwithstanding the foregoing, this option
shall terminate immediately if such termination is for cause,
as determined by the Committee.
The Grantee hereby acknowledges receipt of a copy of the Plan as presently in
effect. The text and all of the terms and provisions of the Plan are
incorporated herein by reference, and this option is subject to these terms and
provisions in all respects.
At any time when the Grantee wishes to exercise this option, in whole or in
part, the Grantee shall submit to the Company a written notice of exercise,
specifying the exercise date and the number of shares to be exercised. Upon
exercise, the Grantee shall remit to the Company the exercise price, plus an
amount sufficient to satisfy any withholding tax obligation of the Company that
arises in connection with such exercise.
XxxXxxxx.xxx Inc. AGREED TO AND ACCEPTED BY:
By: /s/ Xxxx Xxxxxxxx /s/ Xxxxxx X. Xxxxxxxxx
----------------------------------- -----------------------------------
Name: Xxxx Xxxxxxxx Xxxxxx X. Xxxxxxxxx
Title: President & CEO
9
XXXXXXXX.XXX INC
1999 LONG-TERM INCENTIVE PLAN
Option Grant Certificate #3
This Grant Certificate evidences the grant of an option pursuant to the
provisions of the 1999 Long-Term Incentive Plan (the "Plan") of XxxXxxxx.xxx Inc
(the "Company") to the individual whose name appears below (the "Grantee"),
covering the specific number of shares of Common Stock of the Company ("Stock")
set forth below, pursuant to the provisions of the Plan and on the following
express terms and conditions:
1. Name of Grantee:
Xxxxxx X. Xxxxxxxxx
2. Number of shares of Stock of the Company which are subject to this
option:
250,000 shares
3. Exercise price of shares subject to this option:
The greater of $.25 per share or 25% of the average closing
bid price for the 5 trading days immediately preceding the
date of grant of this option.
4. Date of grant of this option:
December 14, 2000
5. Vesting:
250,000 shares shall vest on June 1, 2001
6. Termination date of this option:
The earlier of the tenth anniversary of the date of grant, or
the 90th day following termination of employment/services;
provided that during such 90 day period, the option will be
exercisable only to the extent it was vested as of the date of
such termination. Notwithstanding the foregoing, this option
shall terminate immediately if such termination is for cause,
as determined by the Committee.
The Grantee hereby acknowledges receipt of a copy of the Plan as presently in
effect. The text and all of the terms and provisions of the Plan are
incorporated herein by reference, and this option is subject to these terms and
provisions in all respects.
At any time when the Grantee wishes to exercise this option, in whole or in
part, the Grantee shall submit to the Company a written notice of exercise,
specifying the exercise date and the number of shares to be exercised. Upon
exercise, the Grantee shall remit to the Company the exercise price, plus an
amount sufficient to satisfy any withholding tax obligation of the Company that
arises in connection with such exercise.
XxxXxxxx.xxx Inc. AGREED TO AND ACCEPTED BY:
By: /s/ Xxxx Xxxxxxxx /s/ Xxxxxx X. Xxxxxxxxx
----------------------------------- -----------------------------------
Name: Xxxx Xxxxxxxx Xxxxxx X. Xxxxxxxxx
Title: President & CEO
10
ANNEX 2
to
Employment Letter dated December 14, 2000
between
XxxXxxxx.xxx Inc. and Xxxxxx X. Xxxxxxxxx
================================================================================
Company Policy and Procedures
Regarding
Securities Transactions
And
Personal Conduct, Ethics and Business Transactions
================================================================================
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XxxXxxxx.xxx Inc.
Acknowledgement of Receipt of Company Policy and Procedures
Enclosed is the Company's Policy and Procedures for Securities
Transactions.
References in the enclosed documents to "the Company" include
XxxXxxxx.xxx Inc. and its subsidiaries.
Please read the enclosed carefully. Violation of the policies
and procedures set forth in these materials could result in termination
of your relationship with the Company or, in some cases, civil or
criminal penalties. Once you have read the enclosed document, please
sign below and return this form to the Company's General Counsel.
If you have any Questions about the enclosed policies, please
contact:
Xxxxxx X. Xxxxxxxxx, Esq.
Executive Vice President
& General Counsel
XxxXxxxx.xxx Inc.
0000 X. Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxx Xxxxx, XX 00000
Tel. #: (000) 000-0000
Fax # : (000) 000-0000
E-mail: xxxxxxxxxx@xxxxx.xxx
I acknowledge that I have read and understand the policy and
procedures described above and I further agree to fully comply with all the
policies and procedures set forth therein.
Dated: December 14, 2000 Xxxxxx X. Xxxxxxxxx
--------------------------------
Print Name
/s/ Xxxxxx X. Xxxxxxxxx
--------------------------------
Signature
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XxxXxxxx.xxx Inc.
------------------------
Policy and Procedures for Securities Transactions
------------------------
The policies and procedures set forth herein are established to xxxxxx
compliance with Federal securities laws and prevent any appearance of
impropriety by key personnel of the Company. Accordingly, these policies and
procedures apply to all officers, directors and employees of the Company, as
well as to certain consultants to the Company.
In addition, such policies and procedures apply to all securities
accounts and trading by the spouse, minor children or household relatives of,
and all securities accounts and trading which can be controlled or influenced
by, any of the foregoing individuals.
I. SECURITIES TRANSACTIONS IN THE COMPANY'S SHARES
A. Prohibition against Short Sales
Short sales of the Company's shares are prohibited.
B. Prohibitions Against Xxxxxxx Xxxxxxx
1. General Rules
1.1 Under Rule 10b-5, a director, officer, employee or
consultant who is aware of material information
relating to the Company which has not been publicly
disclosed is prohibited from trading in the Company's
securities, or directly or indirectly disclosing such
information to any person so that such person may
trade in the Company's securities. The prohibition
against xxxxxxx xxxxxxx extends to giving casual
"tips" to friends, relatives and others. Both the
"tipper" and his "tippee" can be held liable if
trades result from such unauthorized disclosures. In
a few instances, disclosures made in casual
conversation during a golf game or cocktail party
have resulted in liability, so caution is advised.
Xxxxxxx xxxxxxx and the "tipping" of material
non-public information may also compel the Company to
disclose certain matters prematurely, such as pending
negotiations, that are not yet ripe for disclosure.
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1.2 It is difficult to describe exhaustively what
constitutes material information, but the term
generally includes any information -- positive or
negative -- which if disclosed might have an effect
on the market price of the Company's securities or
might be of significance to an investor in
determining whether to purchase, sell, or hold such
securities. Information may be significant for this
purpose even if alone it would not determine the
investor's decision. Examples of material information
include a potential business acquisition, earnings
results, internal financial information which departs
in any way from what the market would expect,
important "product" developments, the acquisition or
loss of a major contract or an important financing
transaction. Obviously this is not an exhaustive
list, and other types of information may be deemed
material at particular times.
1.3 Information is generally considered public when it
has been distributed in a manner designed to make the
information accessible to the investing public at
large. Distribution through wire services and normal
business news channels is usually sufficient.
Material information should not be considered public
until the market has had a chance to absorb it -- a
process that can take several days if the matter
disclosed is complex or the information is not widely
distributed.
2. Consequences of Xxxxxxx Xxxxxxx
2.1 The consequences of xxxxxxx xxxxxxx are serious. They
include civil suits for rescission or damages by
private parties and SEC civil and criminal
enforcement actions.
2.2 The SEC may also bring an action in federal court to
impose a civil penalty against a person who
"controlled" the violating person, if the
"controlling person" knew or recklessly disregarded
the fact that a controlled person (e.g., an employee
of the Company) was likely to engage in xxxxxxx
xxxxxxx and failed to take action to prevent the
violation. The term "controlling person" in this
context means the Company and any person with power
to influence or control the direction or management,
policies or activities of another person, and
arguably includes directors and officers of the
Company.
2.3 A person who engages in xxxxxxx xxxxxxx may be
penalized up to three times the profit gained or loss
avoided, in addition to being required to disgorge
all wrongfully obtained profits. Controlling persons
may be penalized up to the greater of $1,000,000 or
three times the amount of profit gained or loss
avoided as a result of a director's, officer's or
employee's xxxxxxx xxxxxxx violation, except that in
the case of "tipping" the maximum penalty is the
profit gained or loss avoided by the "tippee." Good
faith is not a defense if the controlling person knew
or had reason to know that a director, officer or
employee was engaging in xxxxxxx xxxxxxx (or acted
with reckless disregard) and failed to take
appropriate action. The SEC has up to five years from
the date of the purchase or sale to bring an action
against a controlling person.
C. Additional Restrictions on Sales by Certain Persons - Rule 144
1. The Securities Act of 1933 generally deals with the offering
and sale of securities by issuers and certain persons related
to the issuer and prohibits sales of securities by
"affiliates" (generally, persons who "control" an issuer)
without registration under the 1933 Act unless an exemption is
available. As a practical matter, these affiliates are treated
for these purposes as if they were the issuer itself and must,
in the absence of an exemption, register any sale of the
issuer's securities -- even if they bought the securities on
the open market or in a registered transaction.
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2. Rule 144 under the 1933 Act exempts affiliates from the
registration requirements of the 1933 Act in connection with
their sale of shares if the requirements of Rule 144 are met.
The Rule 144 requirements for an affiliate's sale to be exempt
from registration include: (i) there must be adequate
information about the Company in the public market, (ii) the
sales must be normal broker transactions or made directly to a
"market-maker," (iii) the volume of shares sold in any
three-month period may not exceed 1 percent of the Company's
outstanding shares, or, if higher, the average weekly reported
trading volume for the Company's shares for the preceding four
calendar weeks, and (iv) the selling stockholder must file
Form 144 with the SEC (three copies) at the time the order is
placed with the broker, unless no more than 500 shares having
an aggregate market value of not more than $10,000 are being
sold in any three-month period. For purposes of these quantity
limits, certain sales (such as those of certain close
relatives or of any other person selling in concert, as well
donees or pledges in certain cases) are aggregated with the
sales of an affiliate.
3. The 1933 Act also imposes restrictions on the sale of
securities purchased from an issuer or an affiliate of the
issuer with a view to distribution, including securities
purchased from an issuer or an affiliate in a chain of
transactions not involving a registered public offering. These
securities are "restricted securities" and may not be sold
unless the securities are registered under the Securities Act
for sale or an exemption from registration can be claimed.
Rule 144 establishes a safe harbor for the sale of restricted
securities if certain conditions are met. Rule 144 requires
that persons seeking to sell restricted securities must have
held the securities before a sale for at least one year from
the acquisition from the Company or an affiliate. The Rule
allows for "tacking" some holding periods. After one year, the
holder is permitted to sell restricted securities without
filing a registration statement covering the securities to be
sold if the requirements described in C.2 (i)-(iv) above have
been met. After holding the securities for two years, persons
who are not deemed "affiliates" may sell their shares without
restriction.
D. Ownership of the Company's Shares
1. Employees, Officers and Directors are encouraged to invest in
the Company. Nevertheless, any purchase or sale of the
Company's shares must be cleared in advance by the Company's
General Counsel. Requests for trades must be in writing or via
e-mail and no trades may be effected unless or until the
General Counsel has approved it in writing or by e-mail. A
transaction may only be effected within 5 business days from
such approval or such shorter period as may be specified by
the General Counsel when approving the transaction.
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2. To avoid even an appearance of impropriety, you should not
engage in short-term trading in the Company's shares. Any
investment in the Company's shares must be held for at least
six months. In cases of special hardship, you may request (in
writing or via e-mail) a specific exemption from this policy
in writing from the General Counsel, whose decision must be in
writing (or delivered via e-mail) and shall be final and
conclusive.
II. SECURITIES TRANSACTIONS IN PUBLICLY TRADED SECURITIES OTHER
THAN THOSE OF THE COMPANY
A. Prohibited Investments
All investments in publicly traded securities (directly or
through puts, calls or other securities based thereon or
derivative thereof) are prohibited except as expressly
permitted below.
B. Permitted Securities Investments
1. Investments in privately held securities for which there is no
public market are permitted, but the Company's General Counsel
should be informed in writing (or via e-mail) of any such
holding or investment and further notified in advance of any
initial public offering of such an investment.
2. Investment in the following publicly traded securities is
permitted at all times:
(a) United States Treasury securities and all other
government obligations issued by any country, state,
municipality or other political subdivision.
(b) Investment-grade, non-convertible debt securities.
(c) All broad based mutual funds or closed-end funds
available generally to the public.
(d) All index-based securities (such as Standard and
Poor's 500, Major Markets, Value Line and Euro Top
100).
(e) Foreign currencies and foreign currency options,
warrants, futures and futures options.
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C. Special Requests
1. Any special requests for permission to make or continue any
investment upon becoming subject to these policies not
expressly permitted by these policies in light of special
circumstances or hardship that might be caused by liquidation
or failure to make such an investment shall be addressed in
writing (or via e-mail) to the General Counsel of the Company.
The General Counsel shall have the right, in his sole
discretion, to approve or disapprove any such investment or
divestiture and to impose any condition to any approval as he
may deem required.
2. The General Counsel shall also have the right to approve any
blind trust or alternative arrangement that protects the
Company's interests.
D. Compliance
1. At least annually, and at the Company's request, each person
subject to these policies will execute and submit an
acknowledgment of compliance with these policies for the
relevant period.
2. In the event that the Company, in its non-reviewable
discretion, determines that it is necessary or appropriate to
inspect the financial, tax, and/or accounting records of any
person to assure compliance with this policy, such person
shall provide the Company with any and all financial
information requested. The Company will make arrangements for
any such review to be done at the Company's expense by an
outside accounting or law firm under conditions which protect
the privacy of the person involved.
III. ADDITIONAL RESTRICTIONS
The policies and procedures set forth herein are the Company's general
policies only. The Company reserves the right to adopt supplemental policies or
impose additional restrictions or requirements as the Company may deem necessary
or useful to effect the purposes of these policies and procedures.
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XxxXxxxx.xxx Inc.
------------------------
Policy with Respect to Personal Conduct and Integrity and Ethical
Business Practices
------------------------
The Company expects its personnel to meet a high standard of personal
integrity and ethical business practices.
You should not profit, directly or indirectly, from ideas or
information learned or contacts developed in the course of employment
with the Company, without prior disclosure to and approval by the
Company's President. This includes not making any use of financial or
other information learned during the course of your employment.
You should generally not accept gifts or favors from business contacts,
except trinkets of nominal value. This includes discounted merchandise
or services not available to the general public. The acceptance of cash
or its equivalent is strictly prohibited. The Company's President or
his designee must approve any gift valued at $100 or more which cannot
appropriately be refused.
You should not participate in any outside activity that could or might
appear to interfere with your objectivity or commitment to the Company,
including
o accepting any employment outside the Company, even on personal
time, without prior approval by the President of the Company
or his designee;
o making any paid appearances without prior approval by the
President of the Company or his designee.
You should not at any time during or after your employment with the
Company communicate or disclose confidential information (information
of a secret or confidential nature relating to the business of the
Company or its affiliates) to any person, corporation or entity.
You should retain only reputable firms and representatives to represent
the Company and make sure they comply with both applicable law and
Company policies.
You should not hire, supervise or do any kind of Company business with
relatives or friends without prior approval by the Company's President.
You should not use Company resources (e.g., equipment, e-mail, Internet
access, and telephones) or the Company's name (e.g., use of Company
letterhead) in any way with respect to personal outside activities.
This includes the use of Company time for outside activities.
Your expense reports and all other business records must be promptly
submitted, completely accurate and reflect only legitimate business
expenses.
You should only provide business entertainment and gifts that are
ordinary, reasonable, and lawful. They must comply with the policies of
the Company and also the customer/supplier. If gifts, entertainment,
games and promotions violate customer/supplier policies or are offered
to their employees, without the employer's permission, they can look
like bribes. All gifts should be approved and properly reported.
You should never offer or give bribes or kickbacks.
You should not make contributions on behalf of the Company to political
candidates or political parties. It may be against the law.
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