EXHIBIT 10.2
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT, dated as of August 13, 1997 (this
"Agreement"), by and between WebGenesis, Inc., a Delaware corporation (the
"Company") and Xxxxxxx Xxxxxxxx (the "Executive").
WHEREAS, pursuant to a Stock Purchase Agreement (the "Stock
Purchase Agreement"), Dancing Bear Investments, Inc., a Florida corporation
("Investor"), is purchasing from the Company 51% of the fully diluted
capital stock of the Company and warrants to purchase 10% of the fully
diluted capital stock of the Company;
WHEREAS, the Executive possesses an intimate knowledge of the
business and affairs of the Company, and its policies, procedures, methods
and personnel; and
WHEREAS, the Company has determined that it is in its best
interest to secure the continued services and employment of the Executive
on behalf of the Company in accordance with the terms of this Agreement and
the Executive is willing to render such services on the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements herein set forth, the
parties hereto agree as follows:
1. Employment Term.
---------------
Subject to the terms and provisions of this Agreement, the
Company hereby agrees to employ the Executive, and the Executive hereby
agrees to be employed by the Company, for the period commencing on the date
hereof and ending on the fifth anniversary of the date hereof (the
"Employment Term"); or such earlier date as provided in Section 7 hereof.
The location of such employment shall be at the principal place of business
of the Company, which shall be determined from time to time by the board of
directors of the Company (the "Board").
2. Duties.
------
While the Executive is employed by the Company pursuant to this
Agreement, the Executive shall serve as the President of the Company, and
in such other positions as may be agreed upon between the Executive and the
Board. The Executive shall perform the duties, undertake the
responsibilities and exercise the authority customarily performed,
undertaken and executed by persons employed in a similar executive
capacity, including, but not limited to, managing the day-to-day operations
of the Company, securing and supervising the employees, agents and
consultants of the Company and terminating any employees, agents and
consultants of the Company, establishing compensation levels for such
employees, agents and consultants of the Company in accordance with
pre-established parameters established by the Board, allocating stock
options in conjunction with the terms set forth in the Company's Bylaws and
the 1995 Stock Option Plan, and overseeing the compliance with the
Company's financial arrangements in accordance with the parameters
established in the Company's annual budget (the "Budget") approved by the
Board. In addition, the Executive shall perform such other duties, services
and responsibilities incident to such position as determined from time to
time by the Board and commensurate with the Executive's position. Except in
the case of Executive's death or Disability (as defined herein), the
demotion of the Executive, a change in the Executive's title, or
appointment of other officers (other than Xxxx Xxxxxxxxx or his properly
appointed successor) to perform a significant portion of the Executive's
duties as described in this Section, without the Executive's prior written
consent, shall be deemed a termination of the Executive's employment
without Cause (as defined below).
The Executive shall devote his full business time, attention and
skill to the performance of his duties, services and responsibilities as an
executive officer of the Company. The Executive will not, without the prior
written approval of the Board, engage in any other corporate, civic or
charitable activity which would interfere with the performance of his
duties as an executive officer of the Company, is in violation of policies
established in good faith from time to time by the Board of Directors with
the approval of not less than 66-2/3% of the directors, is in violation of
applicable law, or would create a conflict of interest with respect to the
Executive's obligations as an executive officer of the Company.
During the period that the Executive is employed by the Company
pursuant to this Agreement, other than pursuant to the terms hereof or in
accordance with stock option grants approved by the Board in its sole
discretion, the Executive shall not receive any form of compensation
(including, but not limited to, consulting fees and sales commissions) from
the Company or any Subsidiary (as defined below) of the Company in his
capacity as a director, officer, manager or executive of the Company or any
of its Subsidiaries. As used herein, "Subsidiary" when used with respect to
any person means any corporation or organization, whether incorporated or
unincorporated, of which such person owns or controls at least a majority
of the securities or other interests having by their terms ordinary voting
power to elect a majority of the board of directors or others performing
similar functions with respect to such corporation or other organization,
or any organization of which such person is a general partner.
3. Compensation.
------------
In consideration of the performance by the Executive of his
obligations hereunder (including any services as an officer, director,
executive, member of any committee of the Company or any Subsidiary, or
otherwise), the Company shall compensate the Executive as follows:
(a) A base salary (the "Base Salary") at an initial annual rate
of $125,000.00 per year effective as of the date hereof, payable in
accordance with the normal payroll practices of the Company then in effect.
Over the course of the Employment Term, the Executive will be eligible to
receive annual increases in the Base Salary as determined by the Board;
provided that in no event will any annual increase be less than 15% of the
Executive's then-current Base Salary.
(b) An annual cash bonus ("Annual Bonus"), to be determined in
part at the discretion of the Board and in part based on the achievement of
certain target performance objectives set forth in the Budget and approved
by the Board.
(c) A signing bonus of $500,000, payable on execution of this
Agreement.
(d) The Executive shall be solely responsible for taxes imposed
on the Executive by reason of any compensation and benefits provided under
this Agreement (except those taxes normally borne by the Company) and all
such compensation and benefits shall be subject to applicable withholding
taxes.
4. Disability.
----------
If the Executive is unable, as reasonably determined by the
Board, to substantially perform his duties as an executive officer
hereunder by reason of a physical or mental infirmity for a total of 90
calendar days in any twelve-month period during the Employment Term
("Disability"), the Company shall be entitled to terminate the Executive's
employment hereunder in accordance with Section 7.
5. Benefits and Stock Options.
--------------------------
In addition to the payments described in Section 3 of this
Agreement, during the period that the Executive is employed by the Company
pursuant to this Agreement, the Executive shall be entitled to participate
in all health, welfare and other plans and to receive all benefits that are
provided by the Company to its most senior executives from time to time, to
the extent the Executive meets the eligibility requirements for any such
plan or benefit; provided, that Executive shall be entitled to receive at a
minimum the benefits currently provided by the Company to its highest level
executives.
Executive shall be entitled to participate in the stock option
plans of the Company in which the senior executives of the Company are
entitled to participate.
6. Vacations.
---------
Subject to compliance with Section 2, for each full calendar year
during the period that the Executive is employed by the Company pursuant to
this Agreement, the Executive shall be entitled to 20 paid vacation days.
7. Termination.
-----------
(a) The Executive's employment with the Company pursuant to this
Agreement shall terminate upon the earliest to occur of any of the events
specified in subparagraphs (i) through (iv) below:
(i) the fifth anniversary of the date hereof;
(ii) the date of the Executive's death;
(iii) the Termination Date (as defined below) specified in the
Notice of Termination (as defined below) which the Company shall have
delivered to the Executive due to the Executive's Disability;
(iv) the Termination Date specified in the Notice of Termination
which the Company shall have delivered to the Executive to terminate the
Executive's employment for Cause. The term "Cause" as used herein shall
mean that the Executive: (A) has been convicted of an act which is defined
as a felony under federal or state law; (B) committed one or more acts of
willful misappropriation from the Company; (C) willfully failed to perform
his duties as an executive of the Company and such failure to perform
adversely affects the Company or performed such duties and obligations in a
grossly negligent manner; (D) is the subject of any order, judgment, or
decree of any court or regulatory authority of competent jurisdiction which
is final and non-appealable, permanently or temporarily enjoining him from,
or otherwise limiting his engaging in any activity in connection with the
purchase or sale of any security or commodity or in connection with any
violation of federal or state securities laws or federal commodities law;
or (E) is found by a court of competent jurisdiction in a civil action or
by the Securities and Exchange Commission (the "SEC") to have violated any
federal or state securities law, and the judgment in such civil action or
finding by the SEC has not been subsequently reversed, suspended, or
vacated during the Employment Term;
(b) Any purported termination of the Executive by the Company
(other than by reason of Executive's death) shall be communicated by
written Notice of Termination to the Executive. As used herein, the term
"Notice of Termination" shall mean a notice which indicates the specific
termination provision in this Agreement relied upon and sets forth in
reasonable detail the facts and circumstances claimed to provide a basis
for termination of the Executive's employment under the provision so
indicated. In the event the Executive leaves the employ of the Company in
breach of this Agreement or is removed for Cause, the Executive shall, at
the Company's option, continue to be available to the Company for a period
of one month following departure, for up to ten hours per week, at
reasonable and customary hourly rates to assist in the necessary
transition. As used herein, the term "Termination Date" shall mean the
earlier of (i) the fifth anniversary of this Agreement in the case of a
termination pursuant to Section 7(a)(i), (ii) the date of the Executive's
death in the case of a termination pursuant to Section 7(a)(ii), (iii) the
date specified in the Notice of Termination for termination of the
Executive's employment in the case of a termination pursuant to Section
7(a)(iii) or 7(a)(iv), and (iv) the date of termination of Executive's
employment in the case of a termination under Section 7(c). The Executive
shall be entitled to a hearing related to any such termination described in
Section 7(a)(iii) or 7(a)(iv) above before the Board or a committee thereof
established for such purpose and to be accompanied by his counsel at such
hearing. Such hearing will be held within 30 days of notice to the Board by
the Executive provided he requests such hearing within 30 days of the
Notice of Termination.
(c) In the event that more than 50% of the then issued and
outstanding equity securities or more than 50% of the voting rights of the
Company is acquired by someone other than Xxxxxxx Xxxx and his Controlled
Entities and Family Transferees (each as defined in the Stockholders
Agreement, dated as of the date hereof, among the Company, Xxxxxxx Xxxx,
Investor and certain stockholders of the Company) (other than in connection
with a public offering) or in the event this Agreement is assigned by the
Company in connection with a sale of the Company's assets (a "Change of
Control"), the Executive may terminate his employment by delivering to the
Company a notice within 60 days after a Change of Control; provided that in
the event the Executive provides such notice, the Executive's employment
hereunder shall terminate on the earlier of the first anniversary of the
Change of Control and the date of termination pursuant to any other
provision of this Section 7.
(d) This Agreement shall automatically terminate upon the
dissolution, winding-up or liquidation of the Company.
8. Termination Payments.
--------------------
(a) If the Executive's employment with the Company is terminated
(a) by the Company for Cause, (b) by the Executive upon a Change of Control
or (c) upon the dissolution of the Company, the Company will pay the
Executive (i) any accrued and unpaid Base Salary as of the Termination Date
and (ii) an amount to reimburse the Executive for any and all monies
advanced or expenses incurred in connection with the Executive's employment
for reasonable and necessary expenses incurred by the Executive on behalf
of the Company prior to the Termination Date. The Executive's entitlement
to other benefits shall be delivered in accordance with the Company's
benefit plans then in effect.
(b) If the Executive's employment with the Company is terminated
by reason of the Executive's death or Disability, the Company's sole
obligation under this Agreement shall be to pay or provide the Executive or
his estate: (i) the payments required by Section 8(a) hereof and (ii) a pro
rata portion of the Annual Bonus for the year of termination based on the
Company's performance for the full calendar year in which termination
occurs and on the number of days elapsed in such year through the date of
termination.
(c) If the Company terminates Executive's employment without
Cause, all stock options held by the Executive that have not vested shall
automatically vest and the Company shall (i) pay or provide the Executive
the payments required by Section 8(b) hereof, (ii) continue to pay the
Executive the Base Salary for one year following such termination or the
remainder of the Employment Term, whichever is less, and (iii) provide to
the Executive and his beneficiaries for one year following such termination
or the remainder of the Employment Term, whichever is less, employee
benefits substantially similar in the aggregate to those provided to the
other most senior executives of the Company; provided, however, that the
Company's obligation with respect to the foregoing benefits shall be
reduced to the extent the Executive or his beneficiaries obtains any such
benefits pursuant to a subsequent employer's benefit plans.
9. Executive Covenants.
-------------------
(a) Unauthorized Disclosure. The Executive agrees and understands
that in the Executive's position with the Company, the Executive has been
and will be exposed to and receive information relating to the confidential
affairs of Investor, the Company, their Subsidiaries and/or Affiliates (as
defined below), including but not limited to technical information,
intellectual property, business and marketing plans, strategies, customer
information, other information concerning the products, promotions,
development, financing, expansion plans, business policies and practices of
Investor, the Company, their Subsidiaries and/or Affiliates and other forms
of information considered by Investor or the Company to be confidential or
in the nature of trade secrets (collectively, the "Confidential
Information"). Confidential Information shall not include information which
is (a) now, or hereafter becomes, through no act or failure to act on the
part of Executive (except those performed in the ordinary course of the
Company's business), generally known or available to the public, (b)
rightfully received by the Executive from a third party without
confidentiality restrictions, and (c) is independently developed by the
Executive without reference to the Confidential Information. The Executive
agrees that during the Employment Term and thereafter, the Executive will
keep the Confidential Information confidential and not disclose such
information, either directly or indirectly, except in the ordinary course
of performance of the Company's business, to any third person or entity
without the prior written consent of the Chairman of the Board or the
Board, unless required to do so by law or court order. This confidentiality
covenant has no temporal, geographical or territorial restriction. Upon
termination of this Agreement, the Executive will promptly surrender to the
Company all property, keys, notes, memoranda, writings, lists, files,
reports, customer lists, correspondence, tapes, disks, cards, surveys,
maps, logs, machines, technical data or any other tangible product or
document which has been produced by, received by or otherwise submitted to
the Executive after the date on which he was first employed by the Company
and is still in the Executive's possession or control. As used herein,
"Affiliate" means, with respect to any person, any person directly or
indirectly controlling, controlled by, or under common control with such
person.
For a period of 6 months following the end of the Executive's
employment with the Company, the Company will redirect all personal email
received at xxxxxxx@xxxxxxxxxx.xxx or xxxxxxx@xxxxxxxx.xxx to an email
address specified by the Executive.
(b) Non-competition. By and in consideration of Investor's and
the Company's entering into the Stock Purchase Agreement and the
transactions contemplated thereby, the Company's entering into this
Agreement, and the Executive's exposure to the Confidential Information,
until the earlier of (i) the fifth anniversary of the date hereof, or (ii)
if the Executive's employment is terminated in accordance with Section 7(c)
or (d), the date of such termination, or (iii) if the Executive's
employment is terminated without Cause, the earlier of the first
anniversary of such termination and the fifth anniversary of the date
hereof (the "Non-Competition Date"), the Executive will not, directly or
indirectly, own, manage, operate, join, control, be employed by, or
participate in the ownership, management, operation or control of, or hold
the position of shareholder, director, officer, consultant, independent
contractor, executive, partner, investor or advisor (whether or not
formally appointed), (x) in the case of clause (b)(i) or (b)(ii), in any
Class A Restricted Enterprise (as defined below), or (y) in the case of
clause (b)(iii), in any Class B Restricted Enterprise (as defined below);
provided that in no event shall ownership of less than 1% of the
outstanding equity securities of any issuer whose securities are registered
under the 1934 Act, standing alone, be prohibited by this Section 9(b). For
purposes of this paragraph, (A) the term "Class A Restricted Enterprise"
shall mean any person, corporation, partnership or other entity engaged in
the computer or internet industries, and (B) the term "Class B Restricted
Enterprise" shall mean any person, corporation, partnership or other entity
engaged in the virtual community business. Following termination of this
Agreement and until the Non-Competition Date, upon request, the Executive
shall notify the Company of the Executive's then-current employment status.
(c) Non-solicitation. Until the Non-Competition Date, the
Executive shall not interfere with or harm, or intentionally attempt to
interfere with or harm, the relationship of the Company, its Subsidiaries
and/or Affiliates with, or endeavor to entice away from the Company, its
Subsidiaries and/or Affiliates, any person who is an employee, customer or
supplier of the Company, its Subsidiaries and/or Affiliates.
(d) Remedies. The Executive agrees that any breach of the terms
of this Section 9 would result in irreparable injury and damage to Investor
and the Company for which Investor and the Company would have no adequate
remedy at law; the Executive therefore also agrees that, in the event of
said breach or any threat of breach, Investor and the Company shall be
entitled to an immediate injunction and restraining order to prevent such
breach and/or threatened breach and/or continued breach by the Executive
and/or any and all persons and/or entities acting for and/or with the
Executive, without having to prove damages, and to all costs and expenses,
including reasonable attorneys' fees and costs (provided, that such fees
and expenses shall be awardable only in the event of an adjudication that
there was a breach or a legitimate threat of breach), in addition to any
other remedies to which Investor or the Company may be entitled at law or
in equity. The terms of this paragraph shall not prevent Investor or the
Company from pursuing any other available remedies for any breach or
threatened breach hereof, including but not limited to the recovery of
damages from the Executive. The Executive, Investor and the Company further
agree that the provisions of the covenant not to compete are reasonable.
The Executive hereby acknowledges that due to the global aspects of the
Company's business and competitors it would not be appropriate to include
any geographic limitation on this Section 9. Should a court or arbitrator
determine, however, that any provision of the covenant not to compete is
unreasonable, either in period of time, geographical area, or otherwise,
the parties hereto agree that the covenant should be interpreted and
enforced to the maximum extent which such court or arbitrator deems
reasonable.
The provisions of this Section 9 shall survive any termination of
this Agreement and the Employment Term, and the existence of any claim or
cause of action by the Executive against either Investor or the Company,
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by either Investor or the Company of the
covenants and agreements of this Section 9.
10. Intellectual Property.
---------------------
The Executive agrees that all Intellectual Property (as
hereinafter defined) which is or was at any time made or conceived by the
Executive or the Company, acting alone or in conjunction with others after
the date on which he was first employed by the Company, is and shall be the
property of the Company since its inception and which was used by the
Company since its inception, free of any reserved or other rights of any
kind on the Executive's part and the Executive hereby assigns to the
Company all of his right, title and interest in and to any such
Intellectual Property. During the Employment Term and thereafter, the
Executive shall promptly make full disclosure of any such Intellectual
Property to the Company and do all reasonable acts and things (including,
among others, the execution and delivery under oath of patent and copyright
applications and instruments of assignment) deemed by the Company to be
necessary or desirable at any time in order to effect the full assignment
to the Company of the Executive's right and title, if any, to such
Intellectual Property and to protect the Company's interests in such
Intellectual Property. For purposes of this Agreement, "Intellectual
Property" means any discovery, development, program, concept, idea, process
or improvement, whether or not patentable, patent, patent application,
copyright, copyright registration, license, trademark or trade name,
service xxxx or service name, trade secret or other intellectual property
rights, in each case, made during the term of employment (including
employment prior to execution of this Agreement) relating in any respect to
the present or planned future activities, business, products or services of
the Company, its Subsidiaries and/or Affiliates.
11. Insurance.
---------
The Company reserves the right to obtain and maintain key man
life insurance policies with respect to the Executive naming the Company as
the primary beneficiary thereunder ("Key Man Life Insurance Policies") at
the expense of the Company. The Executive shall use his best efforts to
cooperate with the Company and any insurance company approached by the
Company with respect to the obtaining and the maintenance of Key Man Life
Insurance Policies.
When commercially reasonable, the Company shall obtain and
maintain directors' and officers' liability insurance sufficient to cover
the Executive's performance in accordance with this Agreement.
12. Non-Waiver of Rights.
--------------------
The failure to enforce at any time the provisions of this
Agreement or to require at any time performance by the other parties of any
of the provisions hereof shall in no way be construed to be a waiver of
such provisions or to affect either the validity of this Agreement or any
part hereof, or the right of any party to enforce each and every provision
in accordance with its terms.
13. Amendment and Waiver.
--------------------
No modification, amendment or waiver of any provision of this
Agreement shall be effective against any party hereto unless such
modification, amendment or waiver is approved in writing by all of the
parties hereto.
14. Severability.
------------
Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal
or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not
affect any other provision or any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained
herein.
15. Entire Agreement.
----------------
This Agreement embodies the complete agreement and understanding
among the parties hereto with respect to the subject matter hereof and
supersedes and preempts any prior understandings, agreements or
representations by or among the parties, written or oral, which may have
related to the subject matter hereof in any way. Notwithstanding the
foregoing, the Proprietary Information and Invention Agreement between the
Company and the Executive (the "Information Agreement") shall continue in
accordance with its terms, provided that to the extent of any conflict
between the terms of Information Agreement and this Agreement, the terms of
this Agreement shall control.
16. Successors and Assigns; Assignment; Third Party Beneficiary.
-----------------------------------------------------------
This Agreement shall bind and inure to the benefit of, and be
enforceable by, the parties hereto and their respective successors
(including, without limitation, by way of merger), assigns, heirs and
personal representatives. Notwithstanding the provisions of the immediately
preceding sentence, the Executive shall not delegate any duty under this
Agreement without the prior written consent of the Company. This Agreement
is not intended to be for the benefit of any person not a party hereto
except that the Investor shall be deemed a third party beneficiary of
Section 9 hereof and shall be entitled to enforce the provisions of Section
9 as if a party hereto and the parties hereto may not amend Section 9 in
any manner adverse to the Investor without the Investor's prior written
consent.
17. Notice.
------
Any notice provided for in this Agreement shall be in writing and
shall be either personally delivered, sent by facsimile transmission or
sent by first class mail or sent by reputable commercial overnight delivery
service (charges prepaid) to the address set forth below, or at such
address or to the attention of such other person as the recipient party has
specified by prior written notice to the sending party. Notices will be
deemed to have been given hereunder when delivered personally, on the date
of facsimile transmission with confirmed answer back, two business days
after deposit with a reputable overnight commercial delivery service or on
the date of actual receipt if given by any other method of delivery.
To the Company: WebGenesis, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Board of Directors
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to: Dancing Bear Investments, Inc.
The 110 Tower
Box 70, 000 X.X. 0xx Xxxxxx
Xx. Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxx
- with a separate copy to the
attention of Xxxxxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to: Xxxxx, Xxxxx, Xxxxxxx & Xxxxx
The 000 Xxxxx, 00xx Xxxxx
000 X.X. 0xx Xxxxxx
Xx. Xxxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To the Executive: 000 Xxxxxxxx Xxxxxx, Xxx.0
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
With a copy to: Xxxxxx Godward LLP
5 Palo Alto Square
0000 Xx Xxxxxx Xxxx
Xxxx Xxxx, XX 00000
Attn: Xxxx Xxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
18. Descriptive Headings.
--------------------
The descriptive headings of the several sections and paragraphs
of this Agreement are inserted for reference only and shall not limit or
otherwise affect the meaning hereof.
19. Governing Law.
-------------
This Agreement shall be governed by and construed in accordance
with the laws of the State of Florida without giving effect to the
principles of conflicts of laws.
20. Counterparts.
------------
This Agreement may be executed in two counterparts, all of which
together shall be considered one and the same agreement, and shall become
effective when one or more of the counterparts have been signed by each
party and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by authority of its Board of Directors, and the Executive has
hereunto set his hand, the day and year first above written.
WEBGENESIS, INC.
By: /s/ Xxxx Xxxxxxxxx
-------------------------------
Name: Xxxx Xxxxxxxxx
Title: Chief Executive Officer
/s/ Xxxxxxx Xxxxxxxx
-------------------------------
Xxxxxxx Xxxxxxxx
