Exhibit 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made and entered into as of
the 7th day of September, 1999 by and between NETCREATIONS, INC., a New York
corporation (the "Company"), and Xxxxxxxx Xxxxxxx (hereinafter called the
"Executive").
R E C I T A L S
A. The Executive desires to continue to be employed as the President,
Chief Executive Officer, and Chief Operating Officer of the Company.
B. The Company desires to continue to employ the President, Chief
Executive Officer, and Chief Operating Officer of the Company.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and mutual covenants
set forth herein, the parties agree as follows:
1. EMPLOYMENT.
1.1 EMPLOYMENT. The Company hereby agrees to employ the
Executive and the Executive hereby agrees to serve the Company on the terms and
conditions set forth herein.
1.2 DUTIES OF EXECUTIVE. During the Term of Employment under
this Agreement, the Executive shall serve as the President, Chief Executive
Officer, and Chief Operating Officer of the Company, shall diligently perform
all services as may be assigned to the Executive by the Board of Directors (the
"Board") of the Company which are reasonable and appropriate for an Executive of
such stature, and shall exercise such other power and authority as may from time
to time be delegated to the Executive by the Board. The Executive acknowledges
and agrees that the Company and the Executive may mutually agree to assign some
of the foregoing specific duties to other persons as the Company's management
team expands, and that assignments of duties to other persons will not be viewed
by the Executive as constituting a diminution in the Executive's office, title,
and duties and responsibilities hereunder. The Executive shall devote the
Executive's time and attention during normal business hours to the business and
affairs of the Company, render such services to the best of the Executive's
ability, and use the Executive's best efforts to promote the interests of the
Company. It shall not be a violation of this Agreement for the Executive to (i)
serve on corporate, civic or charitable boards or committees, (ii) deliver
lectures, fulfill speaking engagements or teach at educational institutions, or
(iii) manage personal investments, so long as such activities do not
significantly interfere with the performance of the Executive's responsibilities
to the Company in accordance with this Agreement. The Executive`s duties will
require the Executive's regular presence during normal working hours on business
days Monday through Friday at the Company's principal
executive offices, currently located at 000 Xxxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx,
but the Executive's duties will also involve some business travel.
2. TERM.
2.1 INITIAL TERM. The initial Term of Employment under this
Agreement, and the employment of the Executive hereunder, shall commence on the
date hereof (the "Commencement Date") EXCEPT that no provision concerning
compensation of the Executive shall be effective to the extent that the same
might adversely affect the Executive's ability to receive distributions from the
Company as a shareholder of an S Corporation without adverse tax consequences
until such date as the earlier of (i) the date on which the Company terminates
its election to be taxed as an S Corporation and (ii) the date on which the
Company's initial public offering is consummated, and shall expire on December
31, 2002, unless sooner terminated in accordance with Section 5 hereof (the
"Initial Term").
2.2 RENEWAL TERMS. At the end of the Initial Term, the Term of
Employment automatically shall renew for successive one year terms (subject to
earlier termination as provided in Section 5 hereof), unless the Company or the
Executive delivers written notice to the other at least 90 days prior to the
last day of the Initial Term or any such applicable renewal period (in either
case, the "Expiration Date") of its or the Executive's election not to renew the
Term of Employment. For purposes of this Agreement, if the Term of Employment
expires as a result of the Company delivering written notice to the Executive
stating its intention not to renew the Term of the Employment pursuant to this
Section 2.2, the Executive shall be treated as if the Executive was terminated
by the Company without Cause, in accordance with Section 5.4 hereof, upon the
Expiration Date. In addition, if the Term of Employment expires as a result of
the Executive delivering written notice to the Company stating the Executive's
intention not to renew the Term of Agreement pursuant to this Section 2.2, the
Executive shall be treated as if the Executive had terminated the Executive's
employment with the Company without Good Reason, in accordance with Section
5.5(b) hereof, upon the Expiration Date.
2.3 TERM OF EMPLOYMENT. The period during which the Executive
shall be employed by the Company pursuant to the terms of this Agreement is
sometimes referred to in this Agreement as the "Term of Employment."
3. COMPENSATION.
3.1 BASE SALARY. The Executive shall receive a base salary at
the annual rate (prorated for any applicable period of less than one year) of
$175,000 (the "Base Salary") during the Term of Employment, with such Base
Salary payable in installments consistent with the Company's normal payroll
schedule, subject to applicable withholding and other taxes. The Base Salary
shall be reviewed, at least annually, for merit increases and may, by action and
in the discretion of the Board, be increased (but not decreased) at any time or
from time to time.
3.2 BONUSES. During the term of this Agreement, the Executive
shall be eligible to receive
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performance and annual incentive awards (the "Bonuses") of up to a maximum
potential limit of $175,000 per annum as described below. The Bonuses shall be
reviewed at least annually for merit increases and, by action and in the
discretion of the Compensation Committee of the Board, the limit on the
potential size of Bonuses can be increased, but not decreased, at any time or
from time to time.
The Executive shall also be eligible to receive performance
and annual incentive awards (the "Additional Bonuses") as may be determined
from time to time by the Compensation Committee of the Board.
Each period for which Bonuses or Additional Bonuses are
payable is sometimes hereinafter referred to as a "Bonus Period." Unless
otherwise specified by the Compensation Committee of the Board, the Bonus
Period shall be the designated fiscal year or fiscal quarter of the Company.
The amount of the Bonuses or Additional Bonuses that may be awarded for any
period, if any, shall be determined prior to the commencement of the relevant
Bonus Period by the Compensation Committee of the Board in accordance with this
Agreement. However, any bonus plan for the Executive shall be predicated on the
establishment of quarterly goals, referred to as "Key Initiatives,:" to be
mutually developed and signed off on between the Executive and the Compensation
Committee of the Company's Board prior to and/or adjusted during a quarter.
Key Initiatives will comprise, among other things, specific sales objectives,
business development goals, and Company results. All Bonuses and Additional
Bonuses shall be payable to the Executive quarterly in cash and/or to the
extent determined by the Board and agreed upon by the Executive, with common
stock ("Common Stock") of the Company by no later than ten (10) business
days after the Company has completed its financial statements, approved by the
Company's Chief Financial Officer and its Chief Executive Officer, for the
preceding fiscal period. Bonuses and Additional Bonuses shall be subject to
proration for periods of less than one quarter. Any Bonuses or Additional
Bonuses payable pursuant to this Section 3.2 are sometimes hereinafter
referred to as "Incentive Compensation."
4. EXPENSE REIMBURSEMENT AND OTHER BENEFITS.
4.1 REIMBURSEMENT OF EXPENSES. Upon the submission of proper
substantiation by the Executive, and subject to such rules and guidelines as the
Company may from time to time adopt, the Company shall reimburse the Executive
for all reasonable expenses actually paid or incurred by the Executive during
the Term of Employment in the course of and pursuant to the business of the
Company. The Executive shall account to the Company in writing for all expenses
for which reimbursement is sought and shall supply to the Company copies of all
relevant invoices, receipts or other evidence reasonably requested by the
Company.
4.2 COMPENSATION/BENEFIT PROGRAMS. During the term of
Employment, the Executive shall be entitled to participate in all medical,
dental, hospitalization, accidental death and dismemberment, disability, travel
and life insurance plans applicable to the Company's senior executives
generally, and any and all other plans as are presently and hereinafter offered
by the Company generally to its executives, including savings, pension,
profit-sharing and deferred compensation plans, subject to the general
eligibility and participation provisions set forth in such plans.
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4.3 TRANSPORTATION ALLOWANCE. The Executive will not be
entitled to reimbursement for his expenses in commuting to and from the
Company's offices.
4.4 STOCK OPTIONS. During the Term of Employment, the
Executive shall be eligible to be granted options (the "Stock Options") to
purchase the Common Stock of the Company under (and therefore subject to) all
terms and conditions of) the Company's Stock Option Plan. The number of Stock
Options and terms and conditions of the Stock Options shall be determined by the
Committee appointed pursuant to the Stock Option Plan, or by the Board of
Directors of the Company, in its discretion and pursuant to the Stock Option
Plan.
4.5 VACATION BENEFITS. The Executive shall be entitled to four
(4) weeks of vacation time each calendar year during the term of this Agreement,
to be taken at such times as the Executive and the Company shall mutually
determine and provided that no vacation time shall interfere with the duties
required to be rendered by the Executive hereunder.
4.6 OTHER BENEFITS. The Executive shall receive such
additional benefits, if any, as the Board of the Company shall from time to time
determine.
5. TERMINATION.
5.1 TERMINATION FOR CAUSE. The Company shall at all times have
the right, upon written notice (which shall describe in general terms the basis
for dismissal per this Section) to the Executive, to terminate the Term of
Employment, for Cause. For purposes of this Agreement, the term "Cause" shall
mean (i) an action or omission of the Executive which constitutes a willful and
material breach of, or failure or refusal (other than by reason of the
Executive's disability) to perform the Executive's duties under, this Agreement
which is not cured within fifteen (15) days after receipt by the Executive of
written notice of same if such action or omission is capable of being so cured,
(ii) habitual insobriety or use of controlled substances (other than under the
supervision of a licensed physician); (iii) habitual absenteeism; (iv) fraud,
non-disclosed self-dealing, embezzlement or misappropriation of funds or
property or breach of trust in connection with the Executive's services
hereunder, (v) conviction of a felony or conviction of any other crime or
misdemeanor involving moral turpitude; or (vi) gross negligence in connection
with the performance of the Executive's duties hereunder, which is not cured, to
the extent that the same is curable, within fifteen (15) days after receipt by
the Executive of written notice of same. Upon any termination pursuant to this
Section 5.1, the Company shall pay to the Executive the Executive's Base Salary
to the date of termination. The Company shall have no further liability
hereunder (other than for reimbursement for reasonable business expenses
incurred prior to the date of termination, subject, however, to the provisions
of Section 4.1).
5.2 DISABILITY. The Company shall at all times have the right,
upon written notice to the Executive, to terminate the Term of Employment, if
the Executive shall as the result of mental or physical incapacity, illness or
disability, become unable to perform the Executive's obligations hereunder for a
total of 180 days in any 12-month period. The Company shall have
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sole discretion based upon advice of a licensed medical doctor to determine
whether the Executive continues to be disabled provided that if the Executive
does not submit to examination by a licensed medical doctor for such purpose (if
requested by the Company) then the Company may terminate the Executive's
employment if the Executive shall become entitled to benefits under the
Company's disability plan as then in effect. Upon any termination pursuant to
this Section 5.2, the Company shall (i) pay to the Executive any unpaid Base
Salary through the effective date of termination specified in such notice, (ii)
pay to the Executive the Executive's accrued but unpaid Incentive Compensation,
if any, for any Bonus Period ending on or before the date of termination of the
Executive's employment with the Company, (iii) continue to pay the Executive
through the later of (x) the date which is one year after the termination but no
later than the Expiration Date), or (y) one year from the date of termination
(the "Continuation Period"), an amount equal to the Base Salary the Executive
was receiving at the time of the Executive's Disability, such amount to be paid
in the manner and at such times as the Base Salary otherwise would have been
payable to the Executive, and (iv) continue to pay the Executive Incentive
Compensation and continue to provide the Executive with the benefits the
Executive was receiving under Section 4.2 hereof (the "Benefits") through the
Continuation Period (to the extent permitted under the terms of applicable
insurance and other benefit programs of the Company then in affect and covering
the Executive, and provided further that the Company shall not take any
affirmative action from the time of giving notice of termination to the
Executive through the end of the Continuation Period which would cause the
relevant insurance and other benefits available to the Executive to be reduced
or eliminated) following the termination of the Executive's employment with the
Company, in the manner and at such times as the compensation or Benefits
otherwise would have been payable or provided to the Executive, provided that
the amounts payable to the Executive pursuant to the foregoing clauses (i)
through (iv) shall be reduced by the amount actually paid to the Executive
pursuant to the disability insurance referred to in Section 4.2 hereof. The
Company shall have no further liability hereunder (other than for reimbursement
for reasonable business expenses incurred prior to the date of termination,
subject, however to the provisions of Section 4.1).
5.3 DEATH. Upon the death of the Executive during the Term of
Employment, the Company shall (i) pay to the estate of the deceased Executive
any unpaid Base Salary through the Executive's date of death, (ii) pay to the
estate of the deceased Executive the Executive's accrued but unpaid Incentive
Compensation, if any, for any Bonus Period ending on or before the Executive's
date of death, (iii) continue to pay to the estate of the deceased Executive the
Base Salary the Executive was receiving prior to the Executive's death under
Section 3.1 hereof through the Continuation Period following the Executive's
death, in the manner and at such times as the Base Salary otherwise would have
been payable to the Executive, and (iv) continue to pay to the estate of the
deceased Executive Incentive Compensation through the Continuation Period
following the termination of the Executive's employment with the Company, in the
manner and at such times as the compensation would have been payable or provided
to the Executive. The Company shall have no further liability hereunder (other
than for reimbursement for reasonable business expenses incurred prior to the
date of the Executive's death, subject, however to the provisions of Section
4.1).
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5.4 TERMINATION WITHOUT CAUSE. At any time the Company shall
have the right to terminate the Executive's employment hereunder without Cause
by written notice to the Executive. Upon any termination pursuant to this
Section 5.4, the Company shall (i) pay to the Executive any unpaid Base Salary
through the effective date of termination specified in such notice, (ii) pay to
the Executive the accrued but unpaid Incentive Compensation, if any, for any
Bonus Period ending on or before the date of the termination of the Executive's
employment with the Company, and a prorated portion of the Bonus earned, if any,
for the quarterly Bonus Period, if any, in which the termination occurs, (iii)
continue to pay the Executive's Base Salary and Incentive Compensation through
the Continuation Period, in the manner and at such time as the Base Salary and
Incentive Compensation otherwise would have been payable to the Executive, and
(iv) continue to provide the Executive with the Benefits the Executive was
receiving under Section 4.2 hereof (to the extent permitted under the terms of
applicable insurance and other benefit programs of the Company then in affect
and covering the Executive, and provided further that the Company shall not take
any affirmative action from the time of giving notice of termination to the
Executive through the end of the Continuation Period which would cause the
relevant insurance and other benefits available to the Executive to be reduced
or eliminated) during the Continuation Period, in the manner and at such times
as the Benefits otherwise would have been payable or provided to the Executive.
In the event that the Executive has remained with the Company for five (5) years
or more the Continuation Period shall be two (2) years. The Company shall have
no further liability hereunder (other than for reimbursement for reasonable
business expenses incurred prior to the date of termination, subject, however,
to the provisions of Section 4.1).
5.5 TERMINATION BY EXECUTIVE.
a. The Executive shall at all times have the right,
upon ninety (90) days written notice to the Company, to terminate the Term of
Employment.
b. Upon termination of the Term of Employment
pursuant to this Section 5.5 (that is not a termination under Section 5.6) by
the Executive without Good Reason, the Company shall pay to the Executive any
unpaid Base Salary through the effective date of termination specified in such
notice. The Company shall have no further liability hereunder (other than for
reimbursement for reasonable business expenses incurred prior to the date of
termination, subject, however, to the provisions of Section 4.1).
c. Upon termination of the Term of Employment
pursuant to this Section 5.5 (that is not a termination under Section 5.6) by
the Executive for Good Reason, the Company shall pay to the Executive the same
amounts that would have been payable by the Company to the Executive under
Section 5.4 of this Agreement if the Term of Employment had been terminated by
the Company without Cause. The Company shall have no further liability hereunder
(other than for reimbursement for reasonable business expenses incurred prior to
the date of termination, subject, however, to the provisions of Section 4.1).
d. For purposes of this Agreement, "Good Reason"
shall mean any of
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the following:
(i) the assignment to the Executive of any material
duties inconsistent in any material respect with the Executive's duties as
defined hereunder or any other action by the Company which results in a material
diminution in the Executive's position, authority, duties or responsibilities
from those contemplated by Section 1.2 of this Agreement, which is not remedied
by the Company within fifteen (15) days after receipt of written notice from the
Executive of the same, excluding for this purpose any isolated, insubstantial
and inadvertent action not taken in bad faith;
(ii) any material failure by the Company to comply
with any of the provisions of Article 3 of this Agreement which is not remedied
by the Company within fifteen (15) days after receipt of written notice thereof
given by the Executive, other than an isolated, insubstantial and inadvertent
failure not occurring in bad faith and which is remedied by the Company promptly
after receipt of notice thereof given by the Executive;
(iii) the Company's requiring the Executive to be
based at any office or location more than 60 miles outside of New York City, NY,
except for business trips reasonably required in the performance of the
Executive's responsibilities; or
(iv) any purported termination by the Company of the
Executive's employment otherwise than pursuant to Sections 5.1 - 5.4 of this
Agreement.
5.6 CHANGE IN CONTROL OF THE COMPANY.
a. Unless otherwise provided in this Agreement, in
the event that a Change in Control (as defined in paragraph (b) of this Section
5.6) in the Company shall occur during the Term of Employment, and prior to the
first anniversary of the date of the Change in Control, either (x) the Term of
Employment is terminated by the Company without Cause, pursuant to Section 5.4
hereof or (y) the Executive terminates the Term of Employment for Good Reason
pursuant to Section 5.5(c) hereof, the Company shall (1) pay to the Executive
any unpaid Base Salary through the effective date of termination, (2) pay to the
Executive the Incentive Compensation, if any, not yet paid to the Executive for
any Bonus Period prior to such termination, at such time as the Incentive
Compensation otherwise would have been payable to the Executive, and (3) pay to
the Executive in a lump sum payment an amount equal to the amount of the
Executive's Base Salary for the six (6 months preceding such termination. If,
during the Term of Employment, any Change in Control should occur and, prior to
the first anniversary of the date of the Change in Control, either (x) the Term
of Employment is terminated by the Company without Cause, pursuant to Section
5.4 herof or (y) the Executive terminates the Term of Employment for Good Reason
pursuant to Section 5.5(c) hereof, the Executive's unvested Stock Options shall
be vested and become immediately exercisable. In addition, if a Change in
Control transaction shall occur in which the Company is not the surviving entity
and the acquiror does not agree to assume the obligations represented by the
Stock Option rights of the Executive on or prior to the closing of the Change in
Control
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transaction on such terms and conditions as shall be reasonably satisfactory to
the Company, THEN the Executive's unvested Stock Options shall be vested and
become immediately exercisable immediately prior to the consummation of the
closing of such Change in Control transaction so as to permit the Executive to
dispose of the shares of common stock underlying such Stock Options in that
Change in Control transaction on substantially the same terms and conditions as
are applicable to shareholders of the Company generally. If any of the
Executive's Stock Options shall vest according to the applicable vesting
schedule, the options which shall have vested after any such Change in Control
shall continue to be exercisable for a period of three months from the date of
any termination of the Executive's employment by the Company following such
Change in Control. The Company shall have no further liability hereunder (other
than for reimbursement for reasonable business expenses incurred prior to the
date of termination, subject, however, to the provisions of Section 4.1).
b. For purposes of this Agreement, the term "Change
in Control" shall mean:
(i) Approval by the shareholders of the
Company of (x) a reorganization, merger, consolidation or other form of
corporate transaction or series of transactions, in each case, with respect to
which persons who were the shareholders of the Company immediately prior to such
reorganization, merger or consolidation or other transaction do not, immediately
thereafter, own more than 50% of the combined voting power entitled to vote
generally in the election of directors of the reorganized, merged or
consolidated company's then outstanding voting securities, in substantially the
same proportions as their ownership immediately prior to such reorganization,
merger, consolidation or other transaction, or (y) a liquidation or dissolution
of the Company or (z) the sale of all or substantially all of the assets of the
Company (unless such reorganization, merger, consolidation or other corporate
transaction, liquidation, dissolution or sale is subsequently abandoned);
(ii) Individuals who, as of the Commencement
Date of this Agreement, constitute the Board (the "Incumbent Board") cease for
any reason to constitute at least a majority of the Board, provided that any
person becoming a director subsequent to the Commencement Date of this Agreement
whose election, or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board (other than an election or nomination of an individual whose
initial assumption of office is in connection with an actual or threatened
election contest relating to the election of the Directors of the Company, as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Securities Exchange Act) shall be, for purposes of this Agreement, considered as
though such person were a member of the Incumbent Board; or
(iii) the acquisition by any person, entity
or "group", within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act, of more than 30% of either the then outstanding shares of the
Company's Common Stock or the combined voting power of the Company's then
outstanding voting securities entitled to vote generally in the
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election of directors (hereinafter referred to as the ownership of a
"Controlling Interest") excluding, for this purpose, any acquisitions by (1) the
Company, (2) any person, entity or "group" that as of the Commencement Date of
this Agreement owns beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act) of a Controlling Interest, (3)
Xxxxxxxx Xxxxxxx and/or Xxxx Xxxxx Xxxxxxxxxxxxx or their respective affiliates,
or (4) any employee benefit plan of the Company.
c. Notwithstanding the foregoing, the term "Change in
Control" shall NOT include (i) any transaction, event or circumstance as a
result of which or after which Xxxxxxxx Xxxxxxx, Xxxx Xxxxx Xxxxxxxxxxxxx, and
their respective affiliates continue to own, in the aggregate, the largest
percentage of shares of the Company owned by any shareholder of the Company,
(ii) the IPO, (iii) the above-referenced strategic or financial investments
which are contemplated to occur prior to the IPO, or (iii) any transaction
entered into by the Company and its stockholders prior to the IPO primarily for
the purpose of facilitating estate planning of Xxxxxxxx Xxxxxxx or Xxxx Xxxxx
Xxxxxxxxxxxxx or converting the Company from an "S Corp" to a "C Corp" in
preparation for the IPO.
5.7 RESIGNATION. Upon any termination of employment pursuant
to this Article 5, the Executive shall be deemed to have resigned as an officer,
and if the Executive was then serving as a director of the Company, as a
director, and if required by the Board, the Executive hereby agrees to
immediately execute a resignation letter to the Board.
5.8 SURVIVAL. The provisions of this Article 5 shall survive
the termination of this Agreement, as applicable.
6. RESTRICTIVE COVENANTS.
6.1 NON-COMPETITION. At all times while the Executive is
employed by the Company and for a three (3) year period after the termination
of the Executive's employment with the Company for any reason (other than (a)
termination by the Company without Cause or (b) termination by the Executive
for Good Reason (as defined in Section 5.5(d) hereof) or (c) termination by the
Company prior to the first anniversary of a Change in Control other than for
Cause), the Executive shall not, directly or indirectly, engage in or have any
interest in any sole proprietorship, partnership, corporation or business or any
other person or entity (whether as an employee, officer, director, partner,
agent, security holder, creditor, consultant or otherwise) that directly engages
in competition with the Company (for this purpose, any business unit or division
that provides e-mail direct marketing services to third parties for compensation
shall be deemed to be in competition with the Company); provided that such
provision shall not apply to the Executive's ownership of Common Stock of the
Company or the acquisition by the Executive, solely as an investment, of
securities of any issuer that is registered under Section 12(b) or 12(g) of the
Securities Exchange Act of 1934, as amended, and that are listed or admitted for
trading on any United States national securities exchange or that are quoted on
the Nasdaq, or any similar system or automated dissemination of quotations of
securities prices in common use, so long as the Executive does not control,
acquire a controlling interest in or
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become a member of a group which exercises direct or indirect control or, more
than one percent (1%) of any class of capital stock of such corporation.
6.2 NONDISCLOSURE. The Executive shall not during the
Executive's employment under this Agreement or after the termination of such
employment divulge, communicate, use to the detriment of the Company or for the
benefit of any other person or persons, or misuse in any way, any Confidential
Information (as hereinafter defined) pertaining to the business of the Company.
Any Confidential Information or data now or hereafter acquired by the Executive
with respect to the business of the Company (which shall include, but not be
limited to, information concerning the Company's financial condition, prospects,
technology, customers, suppliers, sources of leads and methods of doing
business) shall be deemed a valuable, special and unique asset of the Company
that is received by the Executive in confidence and as a fiduciary, and
Executive shall remain a fiduciary to the Company with respect to all of such
information. For purposes of this Agreement, "Confidential Information" means
information disclosed to the Executive or known by the Executive as a
consequence of or through the Executive's employment by the Company (including
information conceived, originated, discovered or developed by the Executive)
prior to or after the date hereof (up to the date of termination of the
Executive's employment pursuant to this Agreement), and whose existence or
significance or utility in respect of the Company or its business is not
generally known. Notwithstanding the foregoing, nothing herein shall be deemed
to restrict the Executive from disclosing Confidential Information to the extent
required by law or in the valid performance of the Executive's duties.
6.3 NONSOLICITATION OF EMPLOYEES AND CLIENTS. At all times
while the Executive is employed by the Company and for a one (1) year period
after the termination of the Executive's employment with the Company for any
reason, the Executive shall not, directly or indirectly, for the Executive or
for any other person, firm, corporation, partnership, association or other
entity (a) employ or attempt to employ or enter into any contractual arrangement
with any employee or former employee of the Company, until a period of at least
six (6) months has elapsed from the date of termination of the employment of
such person with the Company, and/or (b) call on or solicit any of the actual or
targeted prospective clients of the Company on behalf of any person or entity in
connection with any business competitive with the business of the Company, while
the Executive is employed by the company, or in connection with any email direct
marketing business for a one-year period after the termination of the
executive's employment, nor shall the Executive make known the names and
addresses of such clients or any information relating in any manner to the
Company's trade or business relationships with such customers, other than in
connection with the performance of the Executive's duties under this Agreement.
6.4 OWNERSHIP OF DEVELOPMENTS. Except for any poetry, short
stories, novels, plays, movies or other literary works that the Executive might
create either on or off the Web as well as any non-fiction books that the
Executive might write about Internet marketing or email marketing, all
copyrights, patents, trade secrets, or other intellectual property rights
associated
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with any ideas, concepts, techniques, inventions, processes, or works of
authorship developed or created by the Executive in performing the Executive's
duties for the Company's email direct marketing business or its email direct
marketing clients (collectively, the "Work Product") shall belong exclusively to
the Company and shall, to the extent possible, be considered a work made by the
Executive for hire for the Company within the meaning of Title 17 of the United
States Code. To the extent the Work Product may not be considered work made by
the Executive for hire for the Company, the Executive agrees to assign, and
automatically assigns at the time of creation of the Work Product, without any
requirement of further consideration, any right, title, or interest the
Executive may have in such Work Product. Upon the request of the Company, the
Executive shall take such further actions, including execution and delivery of
instruments of conveyance, as may be appropriate to give full and proper effect
to such assignment.
6.5 BOOKS AND RECORDS. All books, records, and accounts
relating in any manner to the customers or clients of the Company, whether
prepared by the Executive or otherwise coming into the Executive's possession,
shall be the exclusive property of the Company and shall be returned immediately
to the Company on termination of the Executive's employment hereunder or on the
Company's request at any time, upon which the Executive shall not retain any
copies of the same in any media whatsoever.
6.6 DEFINITION OF COMPANY. Solely for purposes of this Article
6, the term "Company" also shall include any existing or future subsidiaries of
the Company that are operating during the time periods described herein and any
other entities that directly or indirectly, through one or more intermediaries,
control, are controlled by or are under common control with the Company during
the periods described herein.
6.7 ACKNOWLEDGMENT BY EXECUTIVE. The Executive acknowledges
and confirms that (a) the restrictive covenants contained in this Article 6 are
reasonable and necessary to protect the legitimate business interests of the
Company, and (b) the restrictions contained in this Article 6 (including without
limitation the length of the term of the provisions of this Article 6) are not
overbroad, overlong, or unfair and are not the result of overreaching, duress or
coercion of any kind. The Executive further acknowledges and confirms that the
Executive's full, uninhibited and faithful observance of each of the covenants
contained in this Article 6 will not cause the Executive any undue hardship,
financial or otherwise, and that enforcement of each of the covenants contained
herein will not impair the Executive's ability to obtain employment commensurate
with the Executive's abilities and on terms fully acceptable to the Executive or
otherwise to obtain income required for the comfortable support of the Executive
and the Executive's family and the satisfaction of the needs of the Executive's
creditors. The Executive acknowledges and confirms that the Executive's special
knowledge of the business of the Company is such as would cause the Company
serious injury or loss if the Executive were to use such ability and knowledge
to the benefit of a competitor or were to compete with the Company in violation
of the terms of this Article 6. The Executive further acknowledges that the
restrictions contained in this Article 6 are intended to be, and shall be, for
the benefit of and shall be enforceable by, the Company and its successors and
assigns,
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including, without limitation, any successor to the Company, whether by merger,
consolidation, sale of stock, sale of assets or otherwise.
6.8 REFORMATION BY COURT. In the event that a court of
competent jurisdiction shall determine that any provision of this Article 6 is
invalid or more restrictive than permitted under the governing law of such
jurisdiction, then only as to enforcement of this Article 6 within the
jurisdiction of such court, such provision shall be interpreted and enforced as
if it provided for the maximum restriction permitted under such governing law.
6.9 EXTENSION OF TIME. If the Executive shall be in violation
of any provision of this Article 6, then each time limitation set forth in this
Article 6 shall be extended for a period of time equal to the period of time
during which such violation or violations occur. If the Company seeks injunctive
relief from such violation in any court, then the covenants set forth in this
Article 6 shall be extended for a period of time equal to the pendency of such
proceeding including all appeals by the Executive.
6.10 SURVIVAL. The provisions of this Article 6 shall survive
the termination of this Agreement, as applicable.
7. INJUNCTION. It is recognized and hereby acknowledged by the parties
hereto that a breach by the Executive of any of the covenants contained in
Article 6 of this Agreement will cause irreparable harm and damage to the
Company, the monetary amount of which may be virtually impossible to ascertain.
As a result, the Executive recognizes and hereby acknowledges that the Company
shall be entitled, without the necessity of proving damages or posting a bond,
to an injunction from any court of competent jurisdiction enjoining and
restraining any violation of any or all of the covenants contained in Article 6
of this Agreement by the Executive or any of the Executive's affiliates,
associates, partners or agents, either directly or indirectly, and that such
right to injunction shall be cumulative and in addition to whatever other
remedies the Company may possess. If the Company should fail to obtain any
injunction when the Company seeks an injunction pursuant to this Section (other
than due to the fact that the parties reach a settlement or the Executive ceases
the activities complained of by the Company without need of an injunction), then
the Company shall reimburse the Executive for the Executive's reasonable
attorney's fees and expenses pertaining to the proceedings to seek the
injunction.
8. MEDIATION. In the event a dispute arises out of or relates to this
Agreement, or the breach thereof, and if the dispute cannot be settled through
negotiation, the parties hereby agree first to attempt in good faith to settle
the dispute by mediation administered by the American Arbitration Association
under its Employment Mediation Rules before resorting to arbitration as set
forth in Section 8 below. Notwithstanding the foregoing, (i) the Company has the
right to seek an injunction under Section 7 hereof, and (ii) either party may
seek an injunction or entry of judgment on an arbitration award under Section 9
of this Agreement. The cost and expenses of mediators (but not the fees and
expenses of any counsel or other professional representing any party other than
the Company) shall be borne by the Company. If any dispute is settled by
mediation pursuant to this Section and the Company fails to achieve any decision
in its favor,
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then the Company shall reimburse the Executive for the Executive's reasonable
attorneys' fees and expenses pertaining to the mediation proceedings.
9. ARBITRATION. In the event that mediation pursuant to Section 8 of
this Agreement has failed after thirty (30) days or the parties to this
Agreement both agree not to mediate, any dispute or controversy arising under or
in connection with this Agreement shall be settled exclusively by arbitration in
New York County, New York, in accordance with the Rules of the American
Arbitration Association then in effect with respect to arbitration of commercial
matters (except to the extent that the procedures outlined below differ from
such rules). Within ten (10) days after written notice by either party has been
given that a dispute exists and that arbitration is required, each party must
select an arbitrator and those two arbitrators shall promptly, but in no event
later than ten (10) days after their selection, select a third arbitrator. The
parties agree to act as expeditiously as possible to select arbitrators and
conclude the dispute. The selected arbitrators must render their decision in
writing. The cost and expenses of the arbitrators (but not the fees and expenses
of any counsel or other professional representing any party other than the
Company) shall be borne by the Company. Judgment may be entered on the
arbitrators' award in any court having jurisdiction. Pursuit of an injunction
shall not impair arbitration on all remaining issues. If any dispute is settled
by arbitration pursuant to this Section and the Company fails to achieve any
decision in its favor, then the Company shall reimburse the Executive for the
Executive's reasonable attorneys' fees and expenses pertaining to the
arbitration proceedings.
10. ASSIGNMENT. Neither party shall have the right to assign or
delegate their rights or obligations hereunder, or any portion thereof, to any
other person, except that the rights of the Company may be assigned by the
Company to any person or entity acquiring a substantial portion of the Company's
assets or to any successor of the Company.
11. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
12. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and, upon
its effectiveness, shall supersede all prior agreements, understandings and
arrangements, both oral and written, between the Executive and the Company (or
any of its affiliates) with respect to such subject matter. This Agreement may
not be modified in any way unless by a written instrument signed by both the
Company and the Executive.
13. NOTICES: All notices required or permitted to be given hereunder
shall be in writing and shall be personally delivered by courier, sent by
registered or certified mail, return receipt requested or sent by confirmed
facsimile transmission addressed as set forth herein. Notices personally
delivered, sent by facsimile or sent by overnight courier shall be deemed given
on the date of delivery and notices mailed in accordance with the foregoing
shall be deemed given upon the earlier of receipt by the addressee, as evidenced
by the return receipt thereof, or three (3) days after deposit in the U.S. mail.
Notice shall be sent (i) if to the
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Company, addressed to NetCreations, Inc., 000 Xxxx Xxxxxxxx, Xxxxx 000, Xxx
Xxxx, Xxx Xxxx 00000, attention: Chief Executive Officer, with a copy to
Xxxxxxxxx Xxxxxxx, Met Life Building, 000 Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: Xxxxxx X. Xxxxxxxxx, Esq.; and (ii) if to the Executive,
to the Executive's address as reflected on the payroll records of the Company,
or to such other address as either party hereto may from time to time give
notice of to the other.
14. BENEFITS; BINDING EFFECT. This Agreement shall be for the benefit
of and binding upon the parties hereto and their respective heirs, personal
representatives, legal representatives, and successors, including, without
limitation, any successor to the Company, whether by merger, consolidation, sale
of stock, sale of assets or otherwise.
15. SEVERABILITY. The invalidity of any one or more of the words,
phrases, sentences, clauses or sections contained in this Agreement shall not
affect the enforceability of the remaining portions of this Agreement or any
part thereof, all of which are inserted conditionally on their being valid in
law, and, in the event that any one or more of the words, phrases, sentences,
clauses or sections contained in this Agreement shall be declared invalid, this
Agreement shall be construed as if such invalid word or words, phrase or
phrases, sentence or sentences, clause or clauses, or section or sections had
not been inserted. If such invalidity is caused by length of time or size of
area, or both, the otherwise invalid provision will be considered to be reduced
to a period or area which would cure such invalidity.1
16. WAIVERS. The waiver by either party hereto of a breach or violation
of any term or provision of this Agreement shall not operate nor be construed as
a waiver of any subsequent breach or violation.
17. DAMAGES. Subject to compliance with Sections 7, 8 and 9 of this
Agreement, to the extent applicable, nothing contained herein shall be construed
to prevent the Company or the Executive from seeking and recovering from the
other damages sustained by either or both of them as a result of its or the
Executive's breach of any term or provision of this Agreement. In the event that
either party hereto brings suit for the collection of any damages resulting
from, or the injunction of any action constituting, a breach of any of the terms
or provisions of this Agreement, then the party found to be at fault shall pay
all reasonable court costs and attorneys' fees of the other.
18. SECTION HEADINGS. The section headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
19. NO THIRD PARTY BENEFICIARY. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
any rights or remedies under or by reason of this Agreement, other than the
Company, the parties hereto and their respective heirs, personal
representatives, legal representatives, and successors, including, without
limitation, any successor to the Company, whether by merger, consolidation, sale
of stock, sale
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of assets or otherwise.
20. INDEMNIFICATION.
a. The Company shall indemnify and hold harmless the
Executive to the fullest extent permitted by law from and against any and all
claims, damages, expenses (including reasonable attorneys' fees), judgments,
penalties, fines, settlements, and all other liabilities incurred or paid by the
Executive in connection with the investigation, defense, prosecution, settlement
or appeal of any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative and to which the
Executive was or is a party or is threatened to be made a party by reason of the
fact that the Executive is or was an officer, employee or agent of the Company,
or by reason of anything done or not done by the Executive in any such capacity
or capacities, provided that the Executive acted in good faith, in a manner that
was not grossly negligent and did not constitute willful misconduct and in a
manner the Executive reasonably believed to be in or not opposed to the best
interests of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe the Executive's conduct was
unlawful. The Company also shall pay any and all reasonable expenses (including
attorney's fees) incurred by the Executive as a result of the Executive being
called as a witness in connection with any matter involving the Company and/or
any of its officers or directors (other than an action or suit by the Company
against the Executive).
b. The Company shall pay any reasonable expenses
(including attorneys' fees), judgments, penalties, fines, settlements, and other
liabilities incurred by the Executive in investigating, defending, settling or
appealing any action, suit or proceeding described in this Section 20 (other
than an action or proceeding by the Company against the Executive) in advance of
the final disposition of such action, suit or proceeding. The Company shall
promptly pay the amount of such expenses to the Executive, but in no event later
than ten (10) days following the Executive's delivery to the Company of a
written request for an advance pursuant to this Section 20, together with a
reasonable accounting of such expenses.
c. The Executive hereby undertakes and agrees to
repay to the Company any advances made pursuant to this Section 20 if and to the
extent that it shall ultimately be agreed by the parties or determined by a
court that the Executive is not entitled to be indemnified by the Company for
such amounts.
d. The Company shall make the advances contemplated
by this Section 20 regardless of the Executive's financial ability to make
repayment, and regardless of whether indemnification of the Indemnitee by the
Company will ultimately be required. Any advances and undertakings to repay
pursuant to this Section 20 shall be unsecured and interest-free.
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[THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
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e. The provisions of this Section 20 shall survive
the termination of this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
COMPANY:
NETCREATIONS, INC.
By:
--------------------------------
Name: Xxxx Xxxxxxx
Title: Chief Financial Officer
EXECUTIVE:
-----------------------------------
Xxxxxxxx Xxxxxxx, individually
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