EMPLOYMENT AGREEMENT
AGREEMENT dated September 6, 1999 between XXXX XXXXXXX,
residing at 00000 00xx Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000 ("Executive"), and
X0XXXXXXX.XXX INC., a Delaware corporation having its principal office at 000
Xxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxx 00000 ("Company").
WHEREAS, Executive possesses expertise in the areas of
corporate finance and corporate accounting;
WHEREAS, the Company desires to avail itself of Executive's
expertise; and
WHEREAS, the Company desires to employ Executive, and
Executive desires to be employed by Company, commencing September 6, 1999 (the
"Start Date"), on the terms set forth in this Agreement.
IT IS AGREED:
1. Employment, Duties and Acceptance.
1.1 Commencing on the Start Date, the Company shall employ
Executive as its Chief Financial Officer ("CFO") and Chief Operating Officer
("COO"). All of Executive's powers and authority in any capacity shall at all
times be subject to the direction and control of the Company's Board of
Directors. Executive shall report directly to the Chief Executive Officer
("CEO").
1.2 The Board, the Chairman of the Board and/or CEO may assign
to Executive such responsibilities and executive duties for the Company or any
subsidiary of the Company as are consistent with Executive's status as CFO and
COO. The Company and Executive acknowledge that Executive's primary functions
and duties as CFO and COO shall be the supervision of the Company's financings,
accounting and day-to-day office operations of the Company and its subsidiaries
and divisions.
1.3 Executive accepts such employment and agrees to devote
substantially all of his business time, energy and attention to the performance
of his duties hereunder beginning on the Start Date. Nothing herein shall be
construed as preventing Executive from making and supervising personal
investments, provided they will not (a) require any substantial services on his
part in the operation of the affairs of the companies in which such investments
are made, (b) interfere with the performance of Executive's duties hereunder or
(c) violate the provisions of paragraph 5.4 hereof.
2. Compensation and Benefits.
2.1 Commencing on the Start Date, the Company shall pay to
Executive a salary at the minimum annual rate of $120,000, increasing to
$140,000 on the earlier of (a) the date an initial public offering ("IPO") of
the Company's Common Stock is consummated and (b) November 1, 1999. Executive's
compensation shall be paid in equal, periodic installments in accordance with
the Company's normal payroll procedures.
2.2 As additional compensation for services to be
rendered by Executive hereunder:
(a) (i) On the date ("Effective Date") the
registration statement relating to the IPO is declared effective by the SEC, the
Company shall issue to Executive options ("Options") to purchase 175,000 shares
of its common stock ("Common Stock") for a price equal to 80% of the per-share
offering price in the IPO. The Options shall be evidenced by a Stock Option
Agreement, in the form of Exhibit A and dated the Effective Date, between the
Company and Executive ("Stock Option Agreement"). The Options will vest in three
annual installments of 87,500 shares, 43,750 shares and 43,750 shares,
respectively, on the first three anniversaries of the Start Date.
(ii) The shares of Common Stock
underlying the Options shall be included in the next Registration Statement on
Form S-8 filed by the Company after the date hereof, to the extent the Company
is legally able to include such shares.
(b) The Company also shall pay Executive:
(i) $20,000 on the date the IPO is
consummated;
(ii) for each calendar quarter during
calendar year 2000 in which the criteria set forth on Schedule 1 hereto
have been satisfied, $12,500 and options to purchase 12,500 shares of
Common Stock at a per-share price equal to the average last sale price
of the Common Stock for the last 20 trading days of the quarter (such
cash and options to be paid and granted promptly after it is determined
that the criteria have been satisfied); and
(iii) such additional bonuses as may be
determined from time to time by the Board of Directors.
2.3 Commencing on the Start Date, Executive shall be entitled
to such medical, life, disability and other benefits as are generally afforded
to other senior executives of the Company, subject to applicable waiting periods
and other conditions.
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2.4 Executive shall be entitled to two weeks of vacation in
each calendar year and to a reasonable number of other days off for religious
and personal reasons.
2.5 Executive shall maintain a suitable automobile for
business use. The Company shall reimburse Executive for the costs of leasing
such automobile and for all other costs associated with the use of the vehicle,
including insurance costs, repairs and maintenance (such lease and all other
costs not to exceed $1,000 per month in the aggregate). These reimbursements
shall be considered taxable income to Executive except to the extent that it is
documented to have been used by him for business purposes.
2.6 Commencing on the Start Date, the Company will pay or
reimburse Executive for all transportation, hotel and other expenses reasonably
incurred by Executive on business trips and for all other ordinary and
reasonable out-of-pocket expenses actually incurred by him in the conduct of the
business of the Company against itemized vouchers submitted with respect to any
such expenses and approved in accordance with customary procedures.
2.7 Executive acknowledges that he will be obligated to render
services hereunder wherever such services are reasonably required by the
Company, which will necessitate substantial travel by Executive, primarily in
North America.
3. Term and Termination.
3.1 The term of Executive's employment shall commence on the
Start Date and shall continue until September 6, 2002, unless sooner terminated
as herein provided. In the event of a termination of employment for any reason,
Executive's rights with respect to the Options shall be governed by the Stock
Option Agreement.
3.2 Executive's employment hereunder shall terminate on the
date of his death, in which case the Company shall pay to the legal
representative of Executive's estate (i) the base salary due Executive pursuant
to paragraph 2.1 hereof through the date of Executive's death, (ii) all earned
and previously approved but unpaid bonuses, (iii) all valid expense
reimbursements through the date of the termination of this Agreement, (iv) all
accrued but unused vacation pay and (v) all costs associated with terminating
the lease for Executive's automobile.
3.3 The Company, by notice to Executive, may terminate
Executive's employment hereunder if Executive shall fail because of illness or
incapacity to render, for six consecutive months, services of the character
contemplated by this Agreement. Notwithstanding such termination, the Company
shall pay to Executive (i) the base salary due Executive pursuant to paragraph
2.1 hereof through the date of such notice, less any amount Executive receives
for such period from any Company-sponsored or Company-paid source of insurance,
disability compensation or government program, (ii) all earned and previously
approved but unpaid bonuses, (iii) all valid expense
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reimbursements through the date of the termination of this Agreement, (iv) all
accrued but unused vacation pay and (v) all costs associated with terminating
the lease for Executive's automobile.
3.4 The Company, by notice to Executive, may terminate
Executive's employment hereunder for cause. As used herein, "Cause" shall mean:
(a) the refusal or failure by Executive to carry out specific directions of the
Board or the Chairman which are of a material nature and consistent with his
status as CTO, or the refusal or failure by Executive to perform a material part
of Executive's duties hereunder; (b) the commission by Executive of a material
breach of any of the provisions of this Agreement; (c) fraud or dishonest action
by Executive in his relations with the Company or any of its subsidiaries or
affiliates, or with any customer or business contact of the Company or any of
its subsidiaries or affiliates ("dishonest" for these purposes shall mean
Executive's knowingly or recklessly making of a material misstatement or
omission for his personal benefit); or (d) the conviction of Executive of any
crime involving an act of moral turpitude. Notwithstanding the foregoing, no
"Cause" for termination shall be deemed to exist with respect to Executive's
acts described in clauses (a) or (b) above, unless the Company shall have given
written notice to Executive specifying the "Cause" with reasonable particularity
and, within thirty calendar days after such notice, Executive shall not have
cured or eliminated the problem or thing giving rise to such "Cause;" provided,
however, that a repeated breach after notice and cure of any provision of
clauses (a) or (b) above involving the same or substantially similar actions or
conduct, shall be grounds for termination for "Cause" without any additional
notice from the Company.
3.5 The Executive, by notice to the Company, may terminate
Executive's employment hereunder if a "Good Reason" exists. For purposes of this
Agreement, "Good Reason" shall mean the occurrence of any of the following
circumstances without the Executive's prior express written consent: (a) a
substantial and material adverse change in the nature of Executive's title,
duties or responsibilities with the Company that represents a demotion from his
title, duties or responsibilities as in effect immediately prior to such change;
(b) the commission by the Company of a material breach of any of the provisions
of this Agreement, and (c) a transaction or related series of transactions that
have not been approved by the Company's Board of Directors resulting in any
person or group of persons acquiring more than 35% the outstanding voting stock
of the Company. Notwithstanding the foregoing, no Good Reason shall be deemed to
exist with respect to the Company's acts described in clauses (a) or (b) above,
unless the Executive shall have given written notice to the Company specifying
the Good Reason with reasonable particularity and, within thirty calendar days
after such notice, the Company shall not have cured or eliminated the problem or
thing giving rise to such Good Reason; provided, however, that a repeated breach
after notice and cure of any provision of clauses (a) or (b) above involving the
same or substantially similar actions or conduct, shall be grounds for
termination for Good Reason without any additional notice from the Executive.
3.6 In the event that Executive terminates his employment
hereunder for Good Reason, pursuant to the provisions of paragraph 3.5, or the
Company terminates his employment hereunder without "Cause," as defined in
paragraph 3.4, the Company shall continue to pay to Executive (or in the case of
his death, the legal
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representative of Executive's estate or such other person or persons as
Executive shall have designated by written notice to the Company), all payments
required under paragraph 2.1 hereof through the longer of (a) a period of 12
months and (b) the then remaining term of this Agreement; provided, however,
that (i) Executive's insurance coverage shall terminate upon the Executive
becoming covered under a similar program by reason of employment elsewhere, and
(ii) the cash payments owed to Executive hereunder shall be reduced by any
compensation received by Executive for his services after the date of
termination.
4. Executive Indemnity
4.1 The Company agrees to indemnify Executive and hold
Executive harmless against all costs, expenses (including, without limitation,
reasonable attorneys' fees) and liabilities (other than settlements to which the
Company does not consent, which consent shall not be unreasonably withheld)
(collectively, "Losses") reasonably incurred by Executive in connection with any
claim, action, proceeding or investigation brought against or involving
Executive with respect to, arising out of or in any way relating to Executive's
employment with the Company or Executive's service as a director of the Company;
provided, however, that the Company shall not be required to indemnify Executive
for Losses incurred as a result of Executive's intentional misconduct or gross
negligence (other than matters where Executive acted in good faith and in a
manner he reasonably believed to be in and not opposed to the Company's best
interests). Executive shall promptly notify the Company of any claim, action,
proceeding or investigation under this paragraph and the Company shall be
entitled to participate in the defense of any such claim, action, proceeding or
investigation and, if it so chooses, to assume the defense with counsel selected
by the Company; provided that Executive shall have the right to employ counsel
to represent him (at the Company's expense) if Company counsel would have a
"conflict of interest" in representing both the Company and Executive. The
Company shall not settle or compromise any claim, action, proceeding or
investigation without Executive's consent, which consent shall not be
unreasonably withheld; provided, however, that such consent shall not be
required if the settlement entails only the payment of money and the Company
fully indemnifies Executive in connection therewith. The Company further agrees
to advance any and all expenses (including, without limitation, the fees and
expenses of counsel) reasonably incurred by the Executive in connection with any
such claim, action, proceeding or investigation, provided Executive first enters
into an appropriate agreement for repayment of such advances if indemnification
is found not to have been available.
5. Protection of Confidential Information; Non-Competition.
5.1 Executive acknowledges that:
(a) As a result of Executive's employment with
the Company, he has obtained and will obtain secret and confidential information
concerning the business of the Company and its subsidiaries and affiliates
(referred to collectively in Sections 5 and 6 as the "Company"), including,
without limitation, financial
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information, designs and other proprietary rights, trade secrets and "know-how,"
customers and sources ("Confidential Information").
(b) The Company will suffer substantial damage which
will be difficult to compute
if, during the term of this Agreement or thereafter, Executive should enter a
business competitive with the Company, or divulge Confidential Information, or
breach his obligations under Section 6.
(c) The provisions of this Agreement are
reasonable and necessary for the protection of the business of the Company.
5.2 Executive agrees that he will not at any time, either
during the term of this Agreement or thereafter, divulge to any person or entity
any Confidential Information obtained or learned by him as a result of his
employment with the Company, except (i) in the course of performing his duties
hereunder, (ii) with the Company's express written consent; (iii) to the extent
that any such information is in the public domain other than as a result of
Executive's breach of any of his obligations hereunder; or (iv) where required
to be disclosed by court order, subpoena or other government process. If
Executive shall be required to make disclosure pursuant to the provisions of
clause (iv) of the preceding sentence, Executive promptly, but in no event more
than 72 hours after learning of such subpoena, court order, or other government
process, shall notify, by personal delivery or by electronic means, confirmed by
mail, the Company and, at the Company's expense, Executive shall: (a) take all
reasonably necessary and lawful steps required by the Company to defend against
the enforcement of such subpoena, court order or other government process, and
(b) permit the Company to intervene and participate with counsel of its choice
in any proceeding relating to the enforcement thereof.
5.3 Upon termination of his employment with the Company,
Executive will promptly deliver to the Company all memoranda, notes, records,
reports, manuals, drawings, blueprints and other documents (and all copies
thereof) relating to the business of the Company and all property associated
therewith, which he may then possess or have under his control; provided,
however, that Executive shall be entitled to retain copies of such documents
reasonably necessary to document his financial relationship (both past and
future) with the Company.
5.4 During the period commencing on the date hereof and ending
on the Non-Competition Termination Date (as hereafter defined), Executive,
without the prior written permission of the Company, shall not, anywhere in the
world, (i) be employed by, or render any services to, any person, firm or
corporation engaged in any business which is directly or indirectly in
competition with the Company in the businesses described on Schedule 5.4
("Competitive Business"); (ii) engage in any Competitive Business for him or its
own account; (iii) be associated with or interested in any Competitive Business
as an individual, partner, shareholder, creditor, director, officer, principal,
agent, employee, trustee, consultant, advisor or in any other relationship or
capacity; (iv) employ or retain, or have or cause any other person or entity to
employ or retain, any person who was employed or retained by the
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Company while Executive was employed by the Company; or (v) solicit, interfere
with, or endeavor to entice away from the Company, for the benefit of a
Competitive Business, any of its customers or other persons with whom the
Company has a contractual relationship. Notwithstanding the foregoing, this
provision shall not preclude Executive from investing his personal assets in the
securities of any corporation or other business entity which is engaged in a
Competitive Business if such ownership is in compliance with the requirements
set forth in the last sentence of Section 1.3 hereof, such securities are traded
on a national stock exchange or in the over-the-counter market and if such
investment does not result in him beneficially owning, at any time, more than 1%
of the publicly-traded equity securities of such Competitive Business. The
"Non-Competition Termination Date" shall be September 6, 2003; provided,
however, that (a) if this Agreement is terminated for "Good Reason" by Executive
or the Company without "Cause," the Non-Competition Termination Date shall be
the later of the one-year anniversary of such termination and September 6, 2002,
and (b) if Executive's employment is terminated with "Cause" or Executive
terminates his employment without "Good Reason," the Non-Competition Termination
Date shall be September 6, 2004.
5.5 If Executive commits a breach, or threatens to commit a
breach, of any of the provisions of Sections 5.2, 5.4 or 6, the Company shall
have the right and remedy:
(a) to have the provisions of this Agreement
specifically enforced by any court having equity jurisdiction, it being
acknowledged and agreed by Executive that the services being rendered hereunder
to the Company are of a special, unique and extraordinary character and that any
such breach or threatened breach will cause irreparable injury to the Company
and that money damages will not provide an adequate remedy to the Company; and
(b) to require Executive to account for and pay
over to the Company all monetary damages suffered by the Company as the result
of any transactions constituting a breach of any of the provisions of Sections
5.2, 5.4 or 6, and Executive hereby agrees to account for and pay over such
damages to the Company.
Each of the rights and remedies enumerated in this Section 5.5
shall be independent of the other, and shall be severally enforceable, and such
rights and remedies shall be in addition to, and not in lieu of, any other
rights and remedies available to the Company under law or equity.
In connection with any legal action or proceeding arising out
of or relating to this Agreement, the prevailing party in such action or
proceeding shall be entitled to be reimbursed by the other party for the
reasonable attorneys' fees and costs incurred by the prevailing party.
5.6 If Executive violates any covenant contained in Section
5.4, the duration of such covenant so violated shall be automatically extended
for a period of time equal to the period of such violation.
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5.7 If any provision of Sections 5.2 or 5.4 is held to be
unenforceable because of the scope, duration or area of its applicability, the
tribunal making such determination shall have the power to modify such scope,
duration, or area, or all of them, and such provision or provisions shall then
be applicable in such modified form.
5.8 The provisions of this paragraph 5 shall survive the
termination of this Agreement for any reason.
6. Inventions, Patents and Copyrights.
(a) All inventions and other creative works,
including any patent, copyright, trade secret, trademark or other intellectual
property rights developed or produced by Executive either alone or jointly with
others during Executive's employment with the Company and which relate to the
Company's business or technology or which are derived in the context of the
Company's business or operations (collectively, the "Intellectual Property")
shall be considered to have been prepared for the Company as a part of and in
the course of Executive's role as consultant to, and thereafter, employment
with, the Company. Any such Intellectual Property shall be owned by the Company
regardless of whether it would otherwise be considered a work made for hire.
Such Intellectual Property shall include, among other things, software and
documentation therefor.
(b) The Company shall have full ownership of the
Intellectual Property, with no rights of ownership vested in Executive.
Executive agrees that in the event any Intellectual Property is determined by a
court of competent jurisdiction not to be a work for hire under the federal
copyright laws, this Agreement shall operate as an irrevocable assignment by him
to the Company of the copyright in the works, including all rights thereunder in
perpetuity. Under this irrevocable assignment, Executive hereby assigns to the
Company the sole and exclusive right, title, and interest in and to the
Intellectual Property, without further consideration, and agrees to assist the
Company in registering and from time to time enforcing all copyrights and other
rights and protections relating to the Intellectual Property in any and all
countries. Executive agrees that in the event of any dispute arising out of or
concerning this section, no actions by the Company or Executive undertaken for
the purpose of securing, maintaining, or preserving the copyright in the works,
including but not limited to recordation of this section with the United States
Copyright Office, shall be considered by any finder of fact or determiner of law
in determining the character of the work as work made for hire, unless expressly
authorized by the Company.
(c) Executive shall communicate to the Company
promptly and fully in writing, in such format as the Company may deem
appropriate, all Intellectual Property made or conceived by Executive whether
alone or jointly with others from the date hereof until the date this Agreement
is terminated and to assign to the Company all Intellectual Property.
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(d) Executive shall make and maintain adequate
permanent records of all Intellectual Property, in the form of memoranda,
notebook entries, drawings, printouts, or reports relating thereto, in keeping
with then current Company procedures. Executive agrees that these records, as
well as the Intellectual Property, shall be and remain the property of the
Company at all times.
(e) Executive shall cooperate with and assist
the Company and its nominees, at their sole expense, during the term of this
Agreement and thereafter, in securing and protecting patent, copyright or other
similar rights in the United States and foreign countries in the Intellectual
Property. In this connection, Executive specifically agrees to execute all
papers which the Company deems necessary to protect its interests including the
execution of assignments of invention and copyrights and to give evidence and
testimony, as may be necessary, to secure and enforce the Company's rights in
the Intellectual Property. Executive hereby appoints the Company as his agent
and attorney-in-fact to act for and in Executive's behalf and stead to execute,
register, and file any applications, and to do all other lawfully permitted acts
to further the registration, prosecution, issuance, renewals, and extensions of
patents, copyrights or other protections with the same legal force and effect as
if personally executed by Executive.
(f) The provisions of this Section 6 shall survive
termination of this Agreement for any reason.
7. Miscellaneous Provisions.
7.1 All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered if delivered personally or by nationally
recognized overnight courier, by certified mail or facsimile to the parties at
the following addresses and numbers (or at such other address or number for a
party as shall be specified by like notice, except that notices of changes of
address or number shall be effective upon receipt):
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If to Executive:
Xxxx Xxxxxxx
17300 00xx Xxxxxx
Xxxxxxxxx X-000
Xxxxxx, Xxxxxxxxxx 00000
If to the Company:
x0xxxxxxx.xxx Inc.
000 Xxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxx 00000
Attn: Chairman of the Board
With a copy to:
Xxxxxxxx Mollen & Xxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxx Xxxxxx, Esq.
7.2 This Agreement sets forth the entire agreement of the
parties relating to the employment of Executive and is intended to supersede all
prior negotiations, understandings and agreements. No provisions of this
Agreement may be waived or changed except by a writing by the party against whom
such waiver or change is sought to be enforced. The failure of any party to
require performance of any provision hereof or thereof shall in no manner affect
the right at a later time to enforce such provision.
7.3 This Agreement shall be governed by and construed under
the law of the State of New York, disregarding any principles of conflicts of
law that would otherwise provide for the application of the substantive law of
another jurisdiction. Each of the parties (i) agrees that any legal suit, action
or proceeding arising out of or relating to this Agreement shall be instituted
exclusively in New York State Supreme Court, County of New York, or in the
United States District Court for the Southern District of New York, (ii) waives
any objection to the venue of any such suit, action or proceeding and the right
to assert that such forum is not a convenient forum, and (iii) irrevocably
consents to the jurisdiction of the New York State Supreme Court, County of New
York, and the United States District Court for the Southern District of New York
in any such suit, action or proceeding. Each of the parties further agrees to
accept and acknowledge service of any and all process which may be served in any
such suit, action or proceeding in the New York State Supreme Court, County of
New York, or in the United States District Court for the Southern District of
New York and agrees that service of process upon it mailed by certified mail to
its address shall be deemed in every respect effective service of process upon
it in any such suit, action or proceeding.
7.4 This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of the Company. This Agreement shall not
be assignable by Executive, but shall inure to the benefit of and be binding
upon Executive's heirs and legal representatives.
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7.5 Should any provision of this Agreement become legally
unenforceable, no other provision of this Agreement shall be affected, and this
Agreement shall continue as if the Agreement had been executed absent the
unenforceable provision.
7.6 If, during the term hereof, Executive is nominated to
serve as a director of the Company but fails to be elected, he shall nonetheless
be invited to attend each meeting of the Board of Directors of the Company
through the remainder of the term hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement
on the date first above written.
X0XXXXXXX.XXX INC.
---------------------------------------------
By: Woo Xxx Xxx, Chief Executive Officer
---------------------------------------------
XXXX XXXXXXX
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SCHEDULE 1
SCHEDULE 5.4
The development and operation of Internet websites, the
primary purpose and focus of which is to sell products and services specifically
aimed at business clients.
