1
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made as of the First day of May, 1999 (the "Effective
Date"), between XXXXX ONLINE, INC. with its principal office at 00 Xxxxxxxxxx
Xxxxxx, Xxxxxxx, Xxxxxxxxxxx ("Company"), and XXXXX X XXXXXX, an individual
having an address at 000 Xxxxxxxxxx Xxxx, Xxx. 0, Xxxxxxxxx, Xxxxxxxxxxx 00000
("Employee").
W I T N E S S E T H:
WHEREAS, the Company operates an Internet financial information business;
and
WHEREAS, the Employee desires to be employed by the Company and
acknowledges that the execution of the Agreement is a condition of such
employment.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements hereinafter set forth, the parties agree as follows:
1. Employment. The Company shall employ the Employee and the Employee
shall serve the Company, upon the terms and conditions hereinafter set forth.
2. Term. The employment of Employee hereunder shall be for a period of
three years from the date hereof (the "Employment Term"). Upon the expiration of
the initial term and on each anniversary date thereafter, the employment of
Employee shall be renewed and extended for an additional year unless either
party terminates this agreement on thirty (30) days written notice prior to the
renewal date.
3. Duties. During the Employment Term, Employee shall hold the position of
Vice President of Operations with have such duties, functions and
responsibilities on behalf of the Company as are assigned to him by the Chief
Executive Officer or the President and Chief Operating Officer, provided,
however, that Employee shall not cause the Company to engage in
Page 1 of 11
2
any activity that is illegal, immoral or unethical or that is outside the
ordinary course of its business.
4. Compensation and Employee Benefits. Employee shall receive, as full
compensation for his services to the Company, payment based on an annual salary
of Eighty Thousand ($80,000) Dollars, paid by the Company in accordance with its
standard payroll practices. The payment due Employee hereunder shall be reviewed
annually by the Company. The annual salary and each of the cash payments listed
below shall be subject to applicable withholding taxes as reflected on the W-9
completed by the Employee.
(a) Severance in Connection with a Change of Control. (i)
Notwithstanding anything contained herein to the contrary, in the
event that there is a change of control of the Company (as defined
below), and the Agreement is terminated by either the Employee or
the Company for whatever reason within one year of such a change of
control, the Company shall pay to the Employee, in addition to
accrued salary and benefits payable to the Employee through the date
of termination of employment, a severance payment from the Company
equal to 1 1/2 times the Employee's then applicable base salary. In
addition, all stock options and other awards under the Company's
1996 and 1999 stock option plans shall immediately vest and remain
exercisable for a period of the lesser of the original term of the
stock option and five years.
(ii) For purposes of this Agreement, a "change of control of the
Company" shall mean the occurrence of (i) the acquisition by an
individual, entity, or group of the beneficial ownership of 50% or
more (other than by Marc and Xxxxx Xxxxxxxxxx and their affiliates)
of (1) the outstanding common stock, or (2) the combined voting
Page 2 of 11
3
power of the Company's voting securities; provided, however, that
the following acquisitions will not constitute a "change of
control": (x) any acquisition by any employee benefit plan of the
Company or any affiliate or (y) any acquisition by any corporation
if, immediately following such acquisition, more than 50% of the
outstanding common stock and the outstanding voting securities of
such corporation is beneficially owned by all or substantially all
of those who, immediately prior to such acquisition, were the
beneficial owners of the common stock and the Company's voting
securities (in substantially similar proportions as their ownership
of such Company securities immediately prior thereto); or (ii) the
approval by the Company's stockholders of a reorganization, merger
or consolidation, other than one with respect to which all or
substantially all of those who were the beneficial owners,
immediately prior to such reorganization, merger or consolidation,
of the Common Stock and the Company's voting securities beneficially
own, immediately after such transaction, more than 50% of the
outstanding common stock and voting securities of the corporation
resulting from such transaction (in substantially the same
proportions as their ownership, immediately prior thereto, of the
Common Stock and the Company's voting securities); or (iii) the
approval by the Company's stockholders of the sale or other
disposition of all or substantially all of the assets of the
Company, other than to a subsidiary of the Company
(b) Bonus. The Employee will be entitled for consideration of an annual
bonus each year based on a performance evaluation to be determined
at the discretion of the Company in December of each year.
Page 3 of 11
4
(c) Vacation. Employee shall be entitled to paid vacation of four (4)
weeks during each year.
(d) Insurance. Employee shall receive all standard company insurance
coverage, e.g. long-term disability, medical insurance for the
employee and his dependents.
5. Disability. In the event that Employee shall be incapacitated by reason
of mental or physical disability or otherwise during the term of his employment
hereunder, such that he is prevented from performing the services required
hereunder for period of twelve (12) consecutive or non-consecutive weeks in any
period of six (6) consecutive months, the Company shall have the right, at its
option to terminate this Agreement as of the last day of such twelve (12) week
period by sending written notice of such termination to Employee in which event
the Company shall have no further obligations hereunder, other than the
obligation to pay Employee any accrued and unpaid compensation to which he is
entitled to the date of such termination.
6. Termination for Cause. The Company shall have the right to terminate
Employee's employment under this Agreement and any and all payments to be made
hereunder if Employee at any time during the term of his employment, commits any
of the following "Acts".
(a) Employee shall be convicted of any crime (whether or not involving the
Company) which (i) constitutes a felony in the jurisdiction involved or (ii) is
of such a nature as to affect adversely the reputation of the Company; or
(b) Employee shall commit an act of fraud, breach of loyalty or
malfeasance against the Company; or
(c) Employee shall cause the reputation and goodwill of the Company or its
affiliates to suffer substantial damage; or
(d) Employee shall violate any of the provisions of this Agreement; or
Page 4 of 11
5
(e) Employee shall not perform his duties as directed by the Company. The
decision of the Board of Directors of the Company in such matter shall be final.
In the event that the Company elects to terminate Employee's employment
under this Agreement for cause as set forth above, the Company shall send
written notice of such termination to Employee and thereupon no further payments
of any type shall be made or shall be payable to Employee hereunder except for
any accrued and unpaid compensation earned by him or to which he is entitled
prior to the date of such termination.
7. Confidentiality; Noncompetition.
(a) The Company and the Employee acknowledge that the services to be
performed by the Employee under this Agreement are unique and extraordinary and,
as a result of such employment, the Employee will be in possession of
confidential information relating to the business practices of the Company. The
term "confidential information" shall mean any and all information (oral or
written) relating to the Company or any of its affiliates, or any of their
respective activities, other than such information which can be shown by the
Employee to be in the public domain (such information not being deemed to be in
the public domain merely because it is embraced by more general information
which is in the public domain) other than as the result of breach of the
provisions of this Section 7(a), including, but not limited to, information
relating to: trade secrets, proprietary information, personnel lists, financial
information, research projects, services used, pricing, customers, customer
lists and prospects, product sourcing, marketing and selling and servicing. The
Employee agrees that he will not, during his employment or subsequent to the
termination of employment, directly or indirectly, use, communicate, disclose or
disseminate to any person, firm or corporation any confidential information
regarding the clients, customers or business practices of the Company
Page 5 of 11
6
acquired by the Employee during his employment by Company, without the prior
written consent of Company; provided, however, that the Employee understands
that he will be prohibited from misappropriating any trade secret at any time
during or after the termination of employment. At no time during the Employment
Term, or thereafter shall the Employee directly or indirectly, disparage the
commercial, business or financial reputation of the Company.
(b) In consideration of Company's hiring Employee, the payment by
the Company to the Employee of the compensation described herein and for other
good and valuable consideration, the Employee hereby agrees that he shall not,
during the Employment Term and for a period of one (1) year following such
employment (the "Restrictive Period"), directly or indirectly, take any action
which constitutes an interference with or a disruption of any of the Company's
business activities.
(c) For purposes of clarification, but not of limitation, the
Employee hereby acknowledges and agrees that the provisions of Section 7(b)
above shall serve as a prohibition against him, during the Restrictive Period :
(1) directly or indirectly, contacting, soliciting or
directing any person, firm, or corporation to contact or solicit,
any of the Company's customers, prospective customers, or business
partners for the purpose of selling or attempting to sell, any
products and/or services that are the same as or similar to the
products and services provided by the Company to its customers
during the Restrictive Period. In addition, the Employee will not
disclose the identity of any such business partners, customers, or
prospective customers, or any part thereof, to any person, firm,
corporation, association, or other entity for any reason or purpose
whatsoever; and
Page 6 of 11
7
(2) directly or indirectly, engaging or carrying on in any
manner (including, without limitation, as principal, shareholder,
partner, lender, agent, employee, consultant, or investor (other
than a passive investor with less than a five percent (5%) interest)
trustee or through the agency of any corporation, partnership,
limited liability company, or association) in any business that is
in competition with the engaged in any business in competition with
the business of the Company; and
(3) soliciting on his own behalf or on behalf of any other
person, the services of any person who is an employee of the
Employer, and soliciting any of the Employer's employees to
terminate employment with the Employer.
(d) Upon the termination of the Employee's employment for any reason
whatsoever, all documents, records, notebooks, equipment, price lists,
specifications, programs, customer and prospective customer lists and other
materials which refer or relate to any aspect of the business of the Company
which are in the possession or under the control of the Employee including all
copies thereof, shall be promptly returned to the Company.
(e) The parties hereto hereby acknowledge and agree that (i) the
Company would be irreparably injured in the event of a breach by the Employee of
any of his obligations under this Section 7, (ii) monetary damages would not be
an adequate remedy for any such breach, and (iii) the Company shall be entitled
to injunctive relief, in addition to any other remedy which it may have, in the
event of any such breach .
Page 7 of 11
8
(f) The rights and remedies enumerated in Section 7(e) shall be
independent of the other, and shall be enforceable, and all of 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 in equity.
(g) If any provision contained in this Section 7 is hereafter
construed to be invalid or unenforceable, the same shall not affect the
remainder of the covenant or covenants, which shall be given full effect,
without regard to the invalid portions.
(h) If any provision contained in this Section 7 is found to be
unenforceable by reason of the extent, duration or scope thereof, or otherwise,
then the court making such determination shall have the right to reduce such
extent, duration, scope or other provision and in its reduced form any such
restriction shall thereafter be enforceable as contemplated hereby.
(i) It is the intent of the parties hereto that the covenants
contained in this Section 7 shall be enforced to the fullest extent permissible
under the laws and public policies of each jurisdiction in which enforcement is
sought (the Employee hereby acknowledging that said restrictions are reasonably
necessary for the protection of the Company). Accordingly, it is hereby agreed
that if any of the provisions of this Section 7 shall be adjudicated to be
invalid or unenforceable for any reason whatsoever, said provision shall be
(only with respect to the operation thereof in the particular jurisdiction in
which such adjudication is made) construed by limiting and reducing it so as to
be enforceable to the extent permissible, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of said
provision in any other jurisdiction
Page 8 of 11
9
8. Severability. If any covenant of Employee set forth in this Agreement
shall be invalid or unenforceable in any jurisdiction because of its duration or
geographic area or both, as the case may be, such covenant shall reduce in
duration or geographic area, or both, as the case may be, to such extent as to
make it valid and enforceable in such jurisdiction and in all other respects it
shall remain in full force and effect.
9. Prior Agreements. This Agreement cancels and supersedes any and all
prior agreements and understandings between the parties hereto respecting the
employment of Employee by the Company.
10. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be delivered personally or sent by
registered or certified mail, return receipt requested, to the other party
hereto at his or its address as set forth in the beginning of this Agreement.
Either party may change the address to which notices, requests, demands and
other communications hereunder shall be sent by sending written notice of such
change of address to the other party in the manner above provided.
11. Assignability and Binding Effect. This Agreement shall inure to the
benefit of and shall be binding upon the executors, administrators, successors
and legal representatives of Employee and shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
12. Waiver. Waiver by either party hereto of any breach or default by the
other party in respect of any of the terms and conditions of this Agreement
shall not operate as a waiver of any other breach or default, whether similar to
or different from the breach or default waived.
13. Complete Understanding: Amendment and Termination. This Agreement
constitutes the complete understanding between the parties with respect to the
employment of
Page 9 of 11
10
Employee hereunder and no statement, representation, warranty or covenant has
been made by either party with respect thereto except as expressly set froth
herein. This Agreement shall not be altered, modified, amended or terminated
except by written instrument signed by each of the parties hereto; provided,
however, that the waiver by either party hereto of compliance with any provision
hereof or of any breach or default by the other party hereto need be signed only
by the party waiving such provision, breach or default.
14. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which taken together
shall constitute one and the same Agreement.
15. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Connecticut.
16. Paragraph Headings. The paragraph headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
17. Execution of Agreement. Employee shall execute this Agreement no later
than May 1, 1999. In the event said Agreement is not executed by Employee by
said date, the non-signing of the Agreement constitutes Employee's choice to
terminate his employment with the Company.
18. Consideration. Employee hereby acknowledges and agrees that the
employment opportunity encompassed in this Agreement is contingent upon the
execution of this Agreement and that such employment, in addition to the mutual
promises herein, constitutes adequate consideration for this Agreement.
Page 10 of 11
11
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
XXXXX ONLINE, INC.
By: /s/ Xxx Xxx
--------------------------
Its: President and Chief Operating Officer
Date: May 3, 1999
------------------------
/s/ Xxxxx X. Xxxxxx
------------------------------
Xxxxx X. Xxxxxx
Date: May 3, 1999
------------------------
Page 11 of 11
