EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "AGREEMENT") dated as of May 22, 1995, made
between INFONOW CORPORATION, a Delaware corporation (the "COMPANY"), and XXXXXX
X. XXXXX (the "EXECUTIVE"), a resident of Edwards, Colorado.
RECITALS
WHEREAS, the Board of Directors of the Company has determined that it is in
the best interests of the Company and its stockholders to assure that the
Company will have the service of the Executive.
AGREEMENT
NOW THEREFORE, the parties hereto agree as follows:
.
CERTAIN DEFINITIONS
When used in this Agreement, the terms specified below shall have the
following meanings:
"CHANGE OF CONTROL" means a merger of the Company in which the Company is
not the successor corporation, or a sale of substantially all of the assets of
the Company.
"EFFECTIVE DATE" means the date first set forth above.
"EMPLOYEE DISABILITY" means any medically determinable physical or mental
impairment that can be expected to last for a continuous period of not less than
six months, and that renders the Executive unable to perform the duties required
under this Agreement.
"NOTICE OF TERMINATION" means a written notice given in accordance with
Section 8.7 which sets forth (a) the specific termination provision in this
Agreement relied upon by the party giving such notice, (b) in reasonable detail
the facts and circumstances claimed to provide a basis for termination of the
Executive's employment under such termination provision (a failure to include a
fact or circumstance not precluding the notifying party from asserting such fact
or circumstance in enforcing rights under this Agreement) and (c) if the
Termination Date is other than the date of receipt of such Notice of
Termination, the Termination Date.
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"TERMINATION DATE" means the date of receipt of the Notice of Termination
or any later date specified in such notice (which date shall be not more than 15
days after the giving of such notice), as the case may be; PROVIDED, HOWEVER,
that if the Company terminates the Executive's employment other than for Cause,
then the Termination Date shall be the date of receipt of such Notice of
Termination.
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EMPLOYMENT AFTER EFFECTIVE DATE
AGREEMENT BY COMPANY. The Company agrees to employ the Executive for
the period commencing on the Effective Date and ending on the third anniversary
of such date (the "EMPLOYMENT PERIOD").
AGREEMENT BY EXECUTIVE. The Executive agrees that during the
Employment Period he will, consistent with Section 3.1(b), devote full time and
best efforts to the Company's business.
TERMS OF EMPLOYMENT
POSITION AND DUTIES.
(a) During the Employment Period, (1) the Executive shall serve
initially as Chief Executive Officer of the Company and may perform various
senior executive's duties, reporting to its Board of Directors or Chief
Executive Officer and (2) the Executive's services shall be performed at the
headquarters of the Company or Cimarron International, Inc. ("CIMARRON") at the
Effective Date or any other location less than 50 miles from such locations.
(b) During the Employment Period (other than any periods of vacation,
sick leave or disability to which the Executive is entitled), the Executive
agrees to devote the Executive's reasonable full attention and time to the
business and affairs of the Company and, to the extent necessary to discharge
the duties assigned to the Executive in accordance with this Agreement, to use
the Executive's best efforts to perform faithfully and efficiently such duties.
During the Employment Period, the Executive may (1) serve on corporate, civic or
charitable boards or committees, (2) deliver lectures, fulfill speaking
engagements or teach at educational institutions, (3) manage personal
investments and (4) serve as an advisor or officer to companies not in direct
competition with the Company's "BUSINESS", which is defined as electronic
marketing and/or distribution of computer software, related products and
consumer goods to consumers and businesses, so long as such activities do not
significantly interfere with the performance of the Executive's duties under
this Agreement. To the extent that any such activities have been conducted
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by the Executive before the Effective Date (such activities falling within
category (4) being described on Exhibit A hereto), the continued conduct of
such activities (or activities similar in nature and scope) after the
Effective Date shall not be deemed to interfere with the performance of the
Executive's duties under this Agreement.
COMPENSATION.
(a) BASE SALARY. During the Employment Period, the Company shall pay
or cause to be paid to the Executive a monthly base salary in cash ("BASE
SALARY") as set forth below:
During the first year $ 8,334/month
During the second year $ 9,584/month
During the third year $10,417/month
During the Employment Period, the Base Salary shall be reviewed in conjunction
with annual performance reviews conducted in accordance with corporate
guidelines.
(b) ANNUAL BONUS. In addition to the Base Salary, the Executive
shall be granted for each fiscal year of the Company ending during the
Employment Period the opportunity to earn an annual bonus of up to 40% of the
Base Salary ("ANNUAL BONUS") in accordance with the terms and conditions of a
bonus plan or plans to be established from time to time by the Company for its
senior management, such plan or plans to be developed in an manner consistent
with corporate objectives.
(c) EXECUTIVE COMPENSATION PLANS. In addition to the Base Salary and
Annual Bonus payable as hereinabove provided, during the Employment Period, the
Executive shall (subject to the terms and conditions of such plans and programs
as they may be in effect from time to time) be eligible to participate in all
executive compensation plans and programs of the Company which are applicable to
other senior executives of the Company, and shall be granted an option to
purchase a number of shares of the Company's common stock consistent with option
grants to other senior executives of the Company, which option grant shall
provide for an exercise price of $0.75 per share and shall be subject to three-
year annual vesting.
(d) WELFARE BENEFIT PLANS. During the Employment Period, the
Executive and the Executive's family shall be eligible to participate in, and
receive all benefits under, welfare benefit plans provided by the Company and
applicable to other senior executives of the Company and their families.
(e) EXPENSES. During the Employment Executive shall be entitled to
prompt reimbursement of reasonable employment-related expenses incurred by the
Executive upon the
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Company's receipt of accountings. During the first year of the Employment
Period, the Company shall reimburse Executives expenses, as incurred, in
connection with maintaining a secondary residence near the Company's
headquarters and related travel to his principal residence, up to $1,000 per
month.
(f) VACATION. During the Employment Period, the Executive shall be
entitled to four weeks paid vacation annually.
3.3 OTHER TERMS.
(a) RETENTION OF PERSONAL PROPERTY. The Company hereby acknowledges
and agrees that certain personal property of Executive currently resides at the
office of Cimarron, including but not limited to awards, including without
limitation, the Emmy (KCNC), Grand Gold Pick (Hospice of Metro Denver), Alfie
(Relocation Concepts), International Film Society (Ernst & Young) and Gold Spike
(Xxxxxx Xxxxxxxx); Videotape Masters of the following programs: Hospice of
Metro Denver, Xxxxxxx Xxxxx Tribute, Xxxxxx Xxxxx Tribute; all personal slide
shows stored on-site, including Nepal, California, Big Bands; Arches; that
Executive retains ownership of such property after the purchase of Cimarron, and
that Executive may remove such property from Cimarron at any time. With the
prior approval of the Company which will not be unreasonably withheld, Executive
shall be permitted, at Executive's expense, to copy any script, audio tape,
videotape or electronic media produced by or under direct supervision of the
Executive.
(b) HOME OFFICE EQUIPMENT. The Company hereby grants Executive an
option to purchase from the Company, within 30 days of his Termination Date, any
and all office equipment purchased by the Company for Executive's use in his
home, the purchase price to be the greater of the then current fair market value
of such equipment, and the depreciated value of such equipment as carried on the
Company's books.
TERMINATION OF EMPLOYMENT
CAUSE.
(a) During the Employment Period, the Company may terminate the
Executive's employment for Cause.
(b) "CAUSE" means any of the following: Employee's Death; Employee's
Disability; or commission by the Executive of any felony; the Executive's
habitual or gross neglect of the Executive's duties (other than on account of
disability); willful breach of duty by the Executive in the course of the
Executive's employment; or inability of the Executive to perform the Executive's
duties due to alcohol or drug addiction, except that Cause shall not mean:
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(1) bad judgment or negligence other than habitual or gross
neglect of duty;
(2) any act or omission believed by the Executive in good faith
to have been in or not opposed to the interest of the Company (without intent of
the Executive to gain, directly or indirectly, a profit to which the Executive
was not legally entitled);
(3) any act or omission with respect to which a determination
could properly have been made by the Board that the Executive met the applicable
standard of conduct for indemnification or reimbursement under the Company's
by-laws, any applicable indemnification agreement, or applicable law, in each
case in effect at the time of such act or omission; or
(4) any act or omission with respect to which notice of
termination of employment of the Executive is given more than 12 months after
the earliest date on which any member of the Board, not a party to the act or
omission, knew or should have known of such act or omission.
(c) Any termination of the Executive's employment by the Company for
Cause shall be communicated to the Executive by Notice of Termination.
GOOD REASON.
(a) During the Employment Period, the Executive may terminate his or
her employment for Good Reason.
(b) "GOOD REASON" means any of the following:
(1) the assignment to the Executive of any duties inconsistent
with the Executive's position as Chief Executive Officer or other senior
executive positions of the Company, or any other action by the Company which
results in a material adverse change in such position, excluding action which
the Company does not take in bad faith and does remedy promptly after its
receipt of notice of such action given by the Executive;
(2) the Company's requiring the Executive to be based at any
office or location other than the location described in Section 3.1(a); or
(3) despite anything in this Agreement to the contrary, a
termination of employment by the Executive for any reason during the 6-month
period immediately following a Change in Control.
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(c) Any termination of employment by the Executive for Good Reason
shall be communicated to the Company by Notice of Termination. A failure by the
Executive to include in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason shall not waive any right of the
Executive under this Agreement or preclude the Executive from asserting such
fact or circumstance in enforcing rights under this Agreement.
OBLIGATIONS OF THE COMPANY UPON TERMINATION
IF BY THE EXECUTIVE FOR GOOD REASON OR BY THE COMPANY OTHER THAN FOR
CAUSE. If, during the Employment Period, the Company shall terminate
Executive's employment other than for Cause, or if the Executive shall terminate
employment for Good Reason, the Company shall pay the Executive, in addition to
all vested rights arising from the Executive's employment as specified in
Article III, a cash amount equal to the sum of all amounts due under Section
3.2(a) for the remainder of the Employment Period, as and when due under those
provisions. As provided in the Employee Stock Restriction Agreement of even
date herewith, upon such termination the Company shall release the remaining
shares from the stock restriction. Until the earlier of (i) the end of the
Employment Period, and (ii) the 18 month anniversary of the Termination Date,
the Company shall continue to provide to the Executive and the Executive's
family welfare benefits due under Section 3.2(d). The cost of such welfare
benefits shall not exceed the cost of such benefits to the Executive immediately
before the Termination Date. Notwithstanding the foregoing, if the Executive
is covered under any medical, life, or disability insurance plan(s) provided by
a subsequent employer, then the amount of coverage required to be provided by
the Employer hereunder shall be reduced by the amount of coverage provided by
the subsequent employer's medical, life, or disability insurance plan(s).
IF BY THE COMPANY FOR CAUSE. If the Company terminates the
Executive's employment for Cause during the Employment Period, this Agreement
shall terminate without further obligation by the Company to the Executive.
IF BY THE EXECUTIVE OTHER THAN FOR GOOD REASON. If the Executive
terminates employment during the Employment Period other than for Good Reason,
this Agreement shall terminate without further obligations by the Company to the
Executive.
NON-EXCLUSIVITY OF RIGHTS
WAIVER OF OTHER SEVERANCE RIGHTS. To the extent that payments are
made to the Executive pursuant to Section 5.1, the Executive hereby waives the
right to receive severance payments under any other plan or agreement of the
Company.
OTHER RIGHTS. Except as provided in Section 6.1, this Agreement shall
not prevent
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or limit the Executive's continuing or future participation in any benefit,
bonus, incentive or other plans, provided by the Company or any of its
subsidiaries and for which the Executive may qualify, nor shall this
Agreement limit or otherwise affect such rights as the Executive may have
under any other agreements with the Company or any of its subsidiaries.
Amounts which are vested benefits or which the Executive is otherwise
entitled to receive under any plan of the Company or any of its subsidiaries
and any other payment or benefit required by law at or after the Termination
Date shall be payable in accordance with such plan or applicable law except
as expressly modified by this Agreement.
NO MITIGATION
NO MITIGATION. The Executive shall not have any duty to mitigate the
amounts payable by the Company under this Agreement by seeking new employment
following termination. Except as specifically otherwise provided in this
Agreement, all amounts payable pursuant to this Agreement shall be paid without
reduction regardless of any amounts of salary, compensation or other amounts
which may be paid or payable to the Executive as the result of the Executive's
employment by another employer.
MISCELLANEOUS
NO ASSIGNABILITY. This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
SUCCESSORS. This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns. The Company will
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business or
assets of the Company to assume expressly and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. Any successor to the business
and/or assets of the Company which assumes or agrees to perform this Agreement
by operation of law, contract, or otherwise shall be jointly and severally
liable with the Company under this Agreement as if such successor were the
Company.
PAYMENTS TO BENEFICIARY. If the Executive dies before receiving
amounts to which the Executive is entitled under this Agreement, such amounts
shall be paid to the beneficiary designated in writing by the Executive, or if
none is so designated, to the Executive's estate.
NON-ALIENATION OF BENEFITS. Benefits payable under this Agreement
shall not be
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subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, charge, garnishment, execution or levy of any kind, either
voluntary or involuntary, before actually being received by the Executive, and
any such attempt to dispose of any right to benefits payable under this
Agreement shall be void.
SEVERABILITY. If any one or more articles, sections or other portions
of this Agreement are declared by any court or governmental authority to be
unlawful or invalid, such unlawfulness or invalidity shall not serve to
invalidate any article, section or other portion not so declared to be unlawful
or invalid. Any article, section or other portion so declared to be unlawful or
invalid shall be construed so as to effectuate the terms of such article,
section or other portion to the fullest extent possible while remaining lawful
and valid.
AMENDMENTS. This Agreement shall not be altered, amended or modified
except by written instrument executed by the Company and Executive.
NOTICES. All notices and other communications under this Agreement
shall be in writing and delivered by hand or by first class registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Xxxxxx X. Xxxxx
000 Xxxxxxx Xxxx
Xxxxxxx, XX 00000
If to the Company:
InfoNow Corporation
0000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxx
or to such other address as either party shall have furnished to the other in
writing. Notice and communications shall be effective when actually received by
the addressee.
COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together constitute one and the same instrument.
GOVERNING LAW. This Agreement shall be interpreted and construed in
accordance
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with the laws of the State of Colorado, without regard to its choice of law
principles.
CAPTIONS. The captions of this Agreement are not a part of the
provisions hereof and shall have no force or effect.
TAX WITHHOLDING. The Company may withhold from any amounts payable
under this Agreement any federal, state or local taxes that are required to be
withheld pursuant to any applicable law or regulation.
NO WAIVER. The Executive's or the Company's failure to insist upon
strict compliance with any provision of this Agreement shall not be deemed a
waiver of such provision or any other provision of this Agreement. A waiver of
any provision of this Agreement shall not be deemed a waiver of any other
provision, and any waiver of any default in any such provision shall not be
deemed a waiver of any later default thereof or of any other provision.
IN WITNESS WHEREOF, the Executive and the Company have executed this
Agreement as of the date first above written.
INFONOW CORPORATION
By: /s/ XXXXX XXXX
-----------------------
Name: Xxxxx Xxxx
Title: Chairman
EXECUTIVE
By: /s/ XXXXXX X. XXXXX
--------------------------
Xxxxxx X. Xxxxx
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EXHIBIT A
Executive is a cofounder and investor of BOLDER Multimedia, Inc., a developer
of multimedia software, and currently serves as its Executive Vice President.
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