EXHIBIT 10.13
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made by and between Xxxxx.xxx, Inc., a Washington
corporation (hereafter, Company) and Xxxxx Xxxxxxxxxxxx (hereafter, Xxxxxxxxxxxx
or Employee).
1. Position: The Company hires Xxxxxxxxxxxx to serve as its Vice President of
Operations. Xxxxxxxxxxxx will report directly to the Company's President and
Chief Operating Officer, Xxxx Xxxxxxx. The position will be located in the
Company's headquarters in Seattle, Washington.
2. Duties & Performance: Xxxxxxxxxxxx will perform the duties and
responsibilities of the Vice President of Operations inclusive of, but not
limited to: An executive level corporate leadership position, reporting directly
to the President and a member of his senior management committee, and serving in
the capacity of a vice president responsible for all direct report staff
management activities, domestic and/or international e-marketplace exchange
operations and Purchase Now operations, corporate strategic planning, customer
care, merger integration, enterprise resource planning and exchange systems
design and other systems design. To the best of his ability and experience,
Xxxxxxxxxxxx will loyally and conscientiously perform all of the duties and
obligations required by the Company at all times. Xxxxxxxxxxxx will devote all
of his business time and attention to the business of the Company. The Company
will be entitled to all of the benefits and profits arising incident to all such
work services and advice, and Xxxxxxxxxxxx will not render commercial or
professional services of any nature to any person or organization, whether or
not for compensation, without the prior written consent of the Company's Board
of Directors. Xxxxxxxxxxxx will not, during the course of his employment,
directly or indirectly, engage or participate in any business that is
competitive in any manner with the business of the Company. Xxxxxxxxxxxx may,
without written consent from the Company's Board of Directors, accept speaking
or presentation engagements in exchange for honoraria, may serve on boards and
committees of charitable organizations and may own no more than one percent (1%)
of the outstanding equity shares of a corporation whose stock is listed on a
national stock exchange or NASDAQ excepting when ownership of such shares was
held prior to the company being listed on a national stock exchange or NASDAQ.
3. Commencement of Employment: The start date for the position is no later
than October 16, 2000.
4. Compensation and Benefits: In consideration of Xxxxxxxxxxxx'x performance
under this Agreement, Xxxxxxxxxxxx shall be entitled to the following
compensation:
(a) Salary: Employee shall receive an annual salary of $200,000.00, paid
twice monthly in equal amounts pursuant to the Company's regular payroll policy.
The base salary shall be reviewed and will be increased but not decreased
consistent with the compensation of other executives of the Company by January
31 of the current year, to be effective as of January 1 of that current year.
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(b) Bonus: Xxxxxxxxxxxx will receive a bonus of Thirty-Seven Thousand Five
Hundred Dollars ($37,500.00) payable on January 21, 2001.
(c) Performance Bonuses: Xxxxxxxxxxxx shall receive another bonus of
Seventy Five Thousand dollars ($75,000.00) payable on March 31, 2001 upon
satisfaction of performance objectives mutually agreed upon and negotiated in
good faith by Xxxxxxxxxxxx and the President of the Company for performance
during the first quarter of 2001. Xxxxxxxxxxxx shall also receive quarterly
bonuses in the amount of 6.25% of annual gross salary each quarter beginning in
the second quarter of 2001 to be paid at the end of each quarter of a year upon
satisfaction of performance objectives mutually agreed upon and negotiated in
good faith by Xxxxxxxxxxxx and the President of the Company. The performance
objectives shall contain threshold levels at which a portion of the bonus is to
be paid.
(d) Stock Options: Xxxxxxxxxxxx will be granted stock options in
Xxxxx.xxx, Inc. in Two Hundred Fifty Thousand (250,000) shares of the Company at
the commencement of employment. The exercise price shall be the fair market
value of each share as of the date that the stock option is granted. Twenty-five
percent (25%) of said option shares will vest and become exercisable on March 6,
2001. The remainder of the options will vest and become exercisable in equal
installments on a monthly basis on the last day of each month at a rate of 1/48
of the total number of Shares subject to the Option and shall become exercisable
and vest, including fractional shares, each month beginning March 31, 2001 until
all such shares are completely vested. The options will be incentive stock
options to the maximum extent allowed by the Internal Revenue Code and will be
subject to the terms of the Company's Amended and Restated 1999 Stock Option
Plan and Stock Option Agreement and Notice of Stock Option Grant. The term of
each option shall be ten (10) years. The method of payment for exercise of the
options may be any method set forth in paragraph 4 of the Stock Option Agreement
of the Amended and Restated 1999 Stock Option Plan or paragraph 9(b) of the
Amended and Restated 1999 Stock Option Plan or, in addition, by canceling vested
options with the payment calculated by crediting the amount due from Employee at
the then fair market value per share minus the exercise price per share,
multiplied by the number of options cancelled.
In the event that the Company, prior to full vesting of all shares in the
initial stock option grant, terminates Xxxxxxxxxxxx other than for Cause (as
defined below) or constructively discharges him as defined in paragraph 6, a
certain number of shares shall vest and become exercisable immediately as of the
date of termination. If the termination occurs before March 6, 2001, the
accelerated vesting consists of a pro-rated amount of the shares which would
have otherwise vested on March 6, 2001 (i.e., termination between November 6,
2000 and December 6, 2000 results in the monthly vesting of 12,500 shares, with
an additional 12,500 shares as of the 6th day of each month thereafter
continuing through March 6, 2001) plus an additional 46,875 shares. If the
termination occurs after March 6, 2001, the vesting consists of all shares
already vested plus an accelerated vesting of 46,875 shares that immediately
vest and become exercisable as of the date of termination. The above provision
shall not apply in the event of a Change of Control. In the event of death or
disability as defined in paragraph 5(c), the option(s)
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may be exercised at any time within twelve months following the date of death or
date of termination of employment due to disability. Section 10(c)(ii) of the
Stock Option Plan does not apply. Nothing in this paragraph prohibits the
granting of additional stock options at any time. In the event additional stock
options are granted and the Company terminates Xxxxxxxxxxxx other than for Cause
(as defined below) or constructively discharges him as defined in paragraph 6,
regardless of the vesting schedule attached to the additional stock options,
immediately as of the date of termination, 9 months of unvested additional
options will accelerate and vest (for purposes of calculating 9 months of the
unvested additional options, total unvested additional options will be deemed to
vest pro-rata on a monthly basis over the term of the vesting schedule). The
preceding sentence shall not apply in the event of a Change in Control. In the
event of termination with cause, Xxxxxxxxxxxx retains all vested options and all
unvested options terminate.
The Board of Directors shall approve the grant of the stock options no
later than October 26, 2000. The Board shall include the terms of paragraph 4(d)
and paragraph 7 of this Employment Agreement in the Notice of the Stock Option
Grant. To the extent that any provision of this Employment Agreement conflicts
with the Amended and Restated 1999 Stock Option Plan, Stock Option Agreement,
Notice of Stock Option Grant or the Exercise Notice, the terms of the Employment
Agreement shall govern. Nothing in this Agreement prevents amendment of the
Amended and Restated 1999 Stock Option Plan, Stock Option Agreement, the
Exercise Notice and/or the Notice of Stock Option Grant to include provisions
more favorable to Xxxxxxxxxxxx. The Company cannot change any vesting or
exercise schedule without the written consent of Xxxxxxxxxxxx.
(e) Insurance: As of October 16, 2000, Employee shall be entitled to
participate in any health insurance benefits, including medical, dental and
vision benefits, Life Insurance/Accidental Death and Dismemberment Insurance,
Disability Insurance, Group Legal Services and other insurance or fringe benefit
plans offered to other executives of the Company, after satisfying all
eligibility requirements other than length of employment.
(f) Retirement Plans: When available, Employee may be entitled to
participate in a 401(k) or other retirement savings plan, pension plans or other
plan offered to other salaried employees, subject to satisfying the eligibility
requirements of such plan[s]. Employee's eligibility to participate in said
plans shall be governed by the terms of those plans.
(g) Expense Reimbursement: Employee shall be reimbursed within 20 business
days of submission of documentation for reasonable expenses incurred by him in
the performance of his duties under this Agreement (including without limitation
mileage and other travel expenses), upon compliance with any applicable
reimbursement policies. Xxxxxxxxxxxx shall be entitled to reimbursement for dues
and membership costs for professional organizations, costs of educational
seminars and costs for educational or college courses, subject to prior approval
and such approval shall not be unreasonably withheld. Xxxxxxxxxxxx is not
responsible for payment of any relocation
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expenses arising out of his prior employment at xxxxxxxx.xxx, and the Company
assumes responsibility for any unpaid relocation expenses or other unpaid
expenses.
(h) Vacation: Prior to Xxxxx 0, 0000, Xxxxxxxxxxxx will receive two (2)
weeks of paid vacation leave. In the second and third years of employment,
Xxxxxxxxxxxx shall receive three (3) weeks of paid vacation leave. In the fourth
through tenth years of employment, Xxxxxxxxxxxx shall receive four (4) weeks of
paid vacation leave.
5. Termination: Xxxxxxxxxxxx'x employment shall terminate immediately on the
occurrence of any of the following, whichever shall occur first:
(a) Upon sixty (60) days prior written notice by either party;
(b) Immediately, "for Cause" defined as fraud; embezzlement; gross
negligence; or conviction of a felony against the Company or any felony
involving dishonesty. Gross negligence is defined as the lack of even slight
care in the performance of the duties and responsibilities of the position. The
Company must notify the employee of any event constituting Cause within thirty
(30) days following the Company's knowledge of its existence.
(c) Upon the death or permanent disability of Xxxxxxxxxxxx. Permanent
disability shall be defined as the inability of Xxxxxxxxxxxx to perform his
duties under this Agreement because of illness or incapacity for a continuous
period which is not less than the qualification period to enable Xxxxxxxxxxxx to
qualify for the maximum disability coverage provided under the Company's
disability insurance policy. Xxxxxxxxxxxx shall continue to receive compensation
and benefits pursuant to paragraph 4 of this Agreement until he qualifies for
disability insurance coverage under the terms of the Company's policy.
6. Severance Pay: If the Company terminates Xxxxxxxxxxxx and such termination
is other than for Cause (as defined in paragraph 5) or if the Company
constructively discharges Xxxxxxxxxxxx, the Company shall pay to Xxxxxxxxxxxx a
lump sum amount equivalent to six (6) months salary and accrued vacation to be
paid on the last day of employment and the Company shall pay benefits as
described in paragraph 4 for six months, including any administrative fees under
COBRA. A constructive discharge shall be deemed to occur if the Company assigns
Xxxxxxxxxxxx any duties or reduces Xxxxxxxxxxxx'x duties to levels inconsistent
with the position of Vice President of Operations, fails to comply with any
provision of paragraph 4, requires relocation to another city, requires an out-
of-town assignment for more than 3 months consecutively in any twenty-four (24)
month period or out-of-town travel for more than 60% of the working days based
on a five day work week in any twenty-four month (24) period or engages in any
material breach of this Agreement. Upon any of the aforementioned circumstances,
Xxxxxxxxxxxx may at his option deem himself to be constructively discharged and
terminate his employment and such termination shall be considered to be a
termination for reasons other than "Cause" for all purposes under this
Agreement.
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7. Change of Control: Upon Change of Control occurring before October 16,
2001, fifty percent (50%) of any unvested shares in the Company or any successor
company shall vest immediately as of the date of notification of the transaction
that will result in Change of Control. In addition, if termination, demotion,
change in primary job duties, relocation or reduction of compensation occurs
within twelve (12) months of a Change of Control occurring before October 16,
2001, all remaining unvested shares (100%) in the Company or any successor
company shall vest and become exercisable immediately in addition to any
compensation and benefits available under paragraphs 4 and 6. Upon a Change of
Control occurring after October 16, 2001 but before October 16, 2003, twenty
five percent (25%) of any unvested shares in the Company or any successor
company shall vest immediately as of the date of notification of the transaction
that will result in Change of Control. In addition, if termination, demotion,
change in primary job duties, relocation or reduction of compensation occurs
within twelve (12) months of a Change of Control occurring after October 16,
2001 but before October 16, 2003, seventy five percent (75%) of any unvested
shares in the Company or any successor company shall vest and become exercisable
immediately in addition to any compensation and benefits available under
paragraphs 4 and 6. Change of Control is defined as including but not limited to
events described in the Stock Option Plan as constituting a Change of Control
and the following: to the sale of all or substantially all of the assets of the
Company, a change of ownership of 50% of the stock of the Company, a merger,
acquisition or consolidation of the Company with or into another corporation
other than a merger, acquisition or consolidation in which the holders of more
than 50% of the shares of the capital stock of the Company outstanding
immediately prior to such transaction continue to hold (either by the voting
securities remaining outstanding or by their being converted into voting
securities of the surviving entity) more than 50% of the total voting power
represented by the voting securities of the Company, or such surviving entity,
outstanding immediately after such transaction, or change of the President of
the Company.
8. Confidentiality of Terms: Xxxxxxxxxxxx shall not disclose, either directly
or indirectly, any information, including any of the terms of this Agreement,
regarding salary, bonuses, stock purchase or option allocations to any person,
including other employees of the Company; provided that he may discuss such
terms with members of his family, personal business advisors, or any legal, tax
or accounting specialists who are providing services to him, or as required by
law.
9. Miscellaneous Provisions:
(a) Attorneys' Fees: The Company shall pay for the costs incurred by
Xxxxxxxxxxxx for this Employment Agreement not to exceed $5,000.00.
(b) Amendments: This Agreement may only be amended by a written agreement
signed by both parties.
(c) Headings: The headings used in this Agreement are for convenience of
reference only, and are not to be considered in construing or interpreting this
Agreement.
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(d) Entire Agreement: This Agreement and the documents referenced herein
contains the entire agreement of the parties with respect to this subject
matter, and supersedes all prior understandings and agreements, whether oral or
written, between the parties with respect to such subject matter. Employee will
be bound to comply with the Company's policies, rules and procedures generally;
however, to the extent there is a conflict between this Agreement and said
policies, rules and procedures, this Agreement shall control. To the extent that
any provision of this Employment Agreement conflicts with the Amended and
Restated 1999 Stock Option Plan, Stock Option Agreement or Notice of Stock
Option Grant, the terms of the Employment Agreement shall govern.
(e) Severability: If any provision of this Agreement shall be determined
to be invalid or unenforceable for any reason, the validity and enforceability
of the remaining parts of this Agreement shall not be affected thereby.
(f) Waiver: A provision of this Agreement may be waived only by a written
instrument executed by the party waiving compliance. No waiver of any provision
of this Agreement shall operate as a waiver of any other provision. Failure to
enforce any provision of this Agreement shall not operate as a waiver of such
provision or any other provision.
(g) Successors and Assigns: The Agreement shall be binding on the
successors and assigns of the parties. All rights and obligations of the
Employee and the Company arising during the term of this Agreement shall
continue to have full force and effect after the termination of this Agreement.
(h) Governing Law: This Agreement shall be governed by and construed in
accordance with the laws of the State of Washington, without regard to its
choice of law rules.
The Board of Directors of Xxxxx.xxx, Inc. approved this Agreement at their
meeting on March 7, 2001, at which a quorum was present and acting throughout.
Xxxxx.xxx, Inc.
By:
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Xxxx Xxxxxxx, its President and Xxxxx Xxxxxxxxxxxx
Chief Operating Officer
Date: Date:
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