EXHIBIT 10.1
EXECUTION COPY
SEVERANCE AND CHANGE IN CONTROL AGREEMENT
THIS SEVERANCE AND CHANGE IN CONTROL AGREEMENT is made effective as of
the 1st day of January, 2003 by and between ICG Commerce, Inc., a Pennsylvania
corporation (the "Company"), with its principal office at 000 Xxx Xxxx Xxxx,
Xxxxx 000, Xxxxxxxxxx, XX 00000 and Xxxxxx X. Xxxx ("Executive").
WHEREAS, Executive is currently serving as Chairman of the Board of ICG
Commerce Holdings, Inc.;
WHEREAS, the Board of Directors of the Company (the "Board") desires to
appoint Executive as Chief Executive Officer of the Company in addition to his
position as Chairman of the Board of Directors of ICG Commerce Holdings, Inc.
and to provide this Agreement to the Executive as additional compensation for
the valuable services rendered and to be rendered by the Executive to the
Company;
WHEREAS, the Board also believes that appropriate steps should be taken
to reinforce and encourage the continued attention and dedication of Executive
to the Company without distraction, notwithstanding the fact that the Company,
could be subject to a "Change in Control" (as hereinafter defined), although no
such transaction is currently being discussed, and that such possibility, and
the uncertainty and questions which it may raise among management, may result in
the departure or distraction of key management personnel to the detriment of the
Company; and
WHEREAS, in consideration for Executive agreeing to continue in
employment with the Company and agreeing to keep Company information
confidential in the event Executive's employment is terminated, the Company
agrees that Executive shall receive the compensation set forth in this Agreement
as a cushion against the financial and career impact on Executive in the event
Executive's employment with the Company is terminated without cause or if the
Executive's employment is terminated upon or after the occurrence of a Change in
Control.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter set forth and intending to be legally bound
hereby, the Company and Executive (individually a "Party" and together, the
"Parties") agree as follows:
1. Definitions.
(a) "Annual Base Salary" shall mean twelve times the
greater of (a) the highest monthly base salary paid or payable (including any
base salary which has been earned but deferred) to the Executive by the Company
and its affiliates (as defined in section 1504 of the Code without regard to
subsection (b) thereof), together with any and all salary reduction authorized
amounts under any of the Company's benefit plans or programs, in respect of the
twelve-month period immediately preceding the date of the Change in Control, or
(b) the monthly base salary paid or payable to the Executive by the Company
(including authorized deferrals and salary reduction amounts) immediately prior
to the Executive's Termination of Employment.
(b) "Board" shall mean the board of directors of ICG
Commerce Holdings, Inc.
(c) "Cause" shall mean (i) the willful and continued
failure by the Executive to substantially perform his duties with the Company
(other than any such failure resulting from incapacity due to physical or mental
illness of the Executive, or any such actual or anticipated failure after the
issuance of a Notice of Termination for Good Reason); (ii) the willful engaging
by the Executive in conduct that is demonstrably and materially injurious to the
Company, monetarily or otherwise; or (iii) the conviction of, or plea of nolo
contendere by, the Executive of a felony involving fraud or moral turpitude. For
purposes of determining whether any such Cause is present, no act or failure to
act by Executive shall be considered "willful" if done or omitted to be done by
Executive in good faith and in the reasonable belief that such act or omission
was in the best interest of the Company and/or required by applicable law.
Notwithstanding the foregoing, in no event shall "Cause" be deemed to exist
unless and until there shall have been delivered to the Executive a Notice of
Termination duly approved by the affirmative vote of not less than
three-quarters of the entire membership of the Board (excluding the Executive)
at a meeting of the Board called and held for the purpose (after reasonable
notice to the Executive and an opportunity for him to cure such Cause and,
together with his counsel, to be heard before the Board), finding that in the
good faith opinion of the Board, the Executive was guilty of conduct set forth
above in clause (i), (ii) or (iii) of the first sentence of this paragraph.
(d) "Change in Control" shall mean the occurrence of any
of the following events:
(i) Any holder(s) of capital stock of ICG
Commerce Holdings, Inc. ("ICGC") Transfers (as defined below) his
voting or economic rights to such capital stock to another "person" (as
such term is used in sections 13(d) and 14(d) of the Exchange Act) in a
single transaction or a series of related transactions (as determined
in good faith by the Board) other than to a person controlling,
controlled by or under common control with the holder (an "Affiliate"),
and such transferred securities represent at least 50% of the total
voting power represented by ICGC's then outstanding voting securities;
(ii) The stockholders of ICGC approve a merger,
consolidation or other similar transaction involving ICGC and any other
corporation, if such transaction would result in the voting securities
of ICGC outstanding immediately prior thereto representing (either by
remaining outstanding or by being converted into voting securities of
the surviving entity) 50% or less of the total voting power represented
by the voting securities of ICGC or such surviving entity outstanding
immediately after such transaction; or
(iii) The stockholders of ICGC approve (a) a plan
of liquidation or dissolution of ICGC, (b) a sale or disposition by
ICGC of all or a substantial portion of the assets of ICGC (including
through the sale or disposition of the shares of capital stock of a
direct or indirect subsidiary of ICGC), or (c) sale, spinoff, splitoff
or other disposition of a substantial portion of the assets of ICGC
(including through the sale,
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spinoff, splitoff or other disposition of the shares of stock of a
direct or indirect subsidiary of ICGC). For purposes of the foregoing
sentence, a "substantial portion" of the assets of ICGC shall mean 50%
or more of the assets of ICGC (together with all (and not less than
all) of its direct and indirect subsidiaries) as calculated based upon
a valuation methodology reasonably determined by the Board of Directors
at the time of Change in Control.
For purposes of this Agreement, "Transfer" shall mean to sell or otherwise
transfer or dispose of for consideration, excluding collateral assignments,
transfers to receivers, levying creditors, trustees or receivers in bankruptcy
proceedings, general assignments for the benefit of creditors, whether voluntary
or by operation of law, directly or indirectly, or a pledge of equity interests
in connection with a credit facility.
(e) "Code" means the Internal Revenue Code of 1986, as
amended.
(f) "Disability" shall mean Executive has been unable to
perform the material duties of his employment for a period of 6 consecutive
months in any 12-month period because of physical or mental injury or illness.
(g) "Good Reason" shall mean the resignation by the
Executive upon not less than 30 days' prior written notice to the Company upon
the occurrence of any of the following events or conditions for any reason other
than for Cause, unless Executive has expressly consented in writing thereto or
unless the event is remedied by the Company promptly after receipt of notice
thereof given by Executive: (i) a reduction in Executive's Annual Base Salary;
(ii) a demotion of Executive including, without limitation, causing Executive to
report to anyone other than directly to the Board; (iii) a material adverse
change of Executive's duties, or responsibilities as Chairman and Chief
Executive Officer; (iv) the Company's requiring Executive to be based at a
location other than in the Philadelphia, Pennsylvania metropolitan area; (v) the
Executive's election to separate from the service of the Company pursuant to
Section 4(a); or (vi) any material breach of this Agreement by the Company.
(h) "Termination of Employment" shall mean the
termination by the Company of Executive's active employment relationship with
the Company without Cause, or termination by the Executive of Executive's active
employment with the Company for Good Reason.
(i) "Termination Upon a Change in Control" shall mean
that following a Change in Control and during the Term of the Agreement, the
Executive's employment is terminated by the Company without Cause, the Executive
resigns for Good Reason, or the Executive exercises his right to terminate his
employment as described in Section 4(a).
2. Accelerated Vesting Upon a Change in Control. Immediately upon
the occurrence of a Change in Control, all outstanding options held by Executive
that have not previously become exercisable shall automatically accelerate and
become fully exercisable and all of Executive's restricted stock, if any, shall
become fully vested and payable. Subject to the provisions of Section 16(b)
hereof, notwithstanding the foregoing, the amount payable to Executive under the
Employee Equity Liquidity Plan shall in no event exceed an amount equal to
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the aggregate amount payable under the Employee Equity Liquidity Plan ("EELP")
as a result of a Change in Control, multiplied by a fraction, the numerator of
which is the total number of shares underlying stock options held by Executive,
shares of restricted stock held by Executive and shares issued to Executive upon
the exercise of stock options and the denominator of which is the aggregate
number of shares underlying stock options, shares of restricted stock and shares
issued upon the exercise of stock options held by all persons under the
Company's equity compensation plans.
3. Termination of Employment.
(a) The Company may terminate Executive's employment at
any time without Cause (as defined in Section 1(c)) from the position of
Chairman and Chief Executive Officer upon written notice to Executive; provided,
however, that, in the event that such notice is given, Executive shall be under
no obligation to render any additional services to the Company and shall be
allowed to seek other employment. In addition, Executive may initiate
termination of employment by resigning for Good Reason (as defined in Section
1(g)), and the Company may terminate Executive's employment for Cause (in
accordance with the provisions of Section 1(c)).
(b) Upon any termination of Executive's employment
described in Section 3(a) above, Executive shall be entitled to receive only the
amount due to Executive under the Company's then current severance pay plan for
employees, if any. No other payments or benefits shall be due under this
Agreement to Executive, but Executive shall be entitled to any benefits accrued
or earned in accordance with the terms of any applicable benefit plans and
programs of the Company.
(c) Notwithstanding the provisions of Section 3(b), in
the event that Executive executes and does not revoke a written release upon
such removal or resignation, substantially in the form attached hereto as
Exhibit A (the "Release"), of any and all claims against the Company and all
related parties with respect to all matters arising out of Executive's
employment by the Company, or the termination thereof (other than claims for any
entitlements under the terms of this Agreement or under any plans or programs of
the Company under which Executive has accrued a benefit), Executive shall be
entitled to receive, in lieu of the payment described in Section 3(b), the
following in connection with Executive's Termination of Employment:
i. Executive shall receive a lump sum cash
payment equal to 1.5 times (x) Executive's Annual Base Salary in effect
immediately before Executive's Termination of Employment (disregarding
for this purpose any reduction in Executive's Annual Base Salary
resulting in Good Reason for such Termination of Employment) and (y)
the target bonus applicable to Executive as of the date on which
Executive's Termination of Employment occurs. Payment shall be made
within 30 days after the effective date of the termination (or the end
of the revocation period for the Release, if later).
ii. For a period of 18 months following the date
of termination, Executive shall continue to receive the medical
coverage in effect at the date of his termination (or comparable
coverage) for himself and, where applicable, his spouse
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and dependents or, as an alternative, the Company may elect to pay
Executive cash in lieu of such coverage in an amount equal to
Executive's after-tax cost of continuing such coverage, where such
coverage may not be continued (or where such continuation would
adversely affect the tax status of the plan pursuant to which the
coverage is provided). The COBRA health care continuation coverage
period under Section 4980B of the Internal Revenue Code of 1986, as
amended, shall run concurrently with the foregoing 18 month benefit
period.
iii. A pro rated bonus for the year in which
Executive's Termination of Employment occurs, when declared by the
Board based upon business goal achievement. A pro rated bonus shall be
based on the Executive's annual bonus for the year in which Executive's
termination occurs, multiplied by a fraction, the numerator of which is
the number of days during which Executive was employed by the Company
in the year of his termination and the denominator of which is 365.
Payment shall be made within 30 days after the date of declaration by
the Board (or the end of the revocation period for the Release, if
later).
iv. For vesting of Executive's options and
restricted stock, Executive shall receive an additional twelve (12)
months service credit. All of Executive's vested options shall be
exercisable after Executive's Termination of Employment until the
earlier to occur of (x) 48 months following such Termination and (y)
the last day of the stated option term.
v. Executive shall have the right to
participate in the EELP with respect to his vested options (including
shares acquired upon the exercise of Executive's options), restricted
stock, and other equity of the Company covered by the EELP, after
Executive's Termination of Employment until the earlier to occur of (x)
48 months following such Termination and (2) in the case of unexercised
options, the last day of the stated option term.
vi. Executive shall receive any other amounts
earned, accrued or owing but not yet paid and any benefits accrued or
earned in accordance with the terms of any applicable benefit plans and
programs of the Company.
(d) Executive may, by at least 30 days prior written
notice, voluntarily terminate employment without liability at any time without
Good Reason, and shall be entitled to the benefits of Section 3(c)(v). Executive
shall be entitled to the benefits of Section 3(c)(v) if his employment shall be
terminated by the Company upon the expiration of the Term.
(e) If Executive's employment terminates on account of
his death or Disability (irrespective of whether a Change in Control has
occurred), all of Executive's vested options shall be exercisable until the
earlier to occur of (x) 48 months following such termination and (y) the last
day of the stated option term. Furthermore, if Executive's employment terminates
on account of his death or Disability, Executive (or Executive's estate) shall
have the right to participate in the EELP with respect to his vested options
(including shares acquired upon the exercise of Executive's options), restricted
stock, and other equity of the Company covered by the EELP, after Executive's
Termination of Employment until the earlier to occur of
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(x) 48 months following such Termination and (y) in the case of unexercised
options, the last day of the stated option term.
4. Termination Upon a Change in Control.
(a) If a Change in Control occurs during the Term of this
Agreement, Executive shall be entitled to the benefits provided in this Section
4 upon the subsequent termination of Executive's employment by the Company
without Cause, the Executive's resignation for Good Reason or, if during the 7th
full calendar month after the occurrence of a Change in Control, the Executive
voluntarily elects to terminate his employment for any reason. The Executive's
voluntary election to separate from service during the 7th full calendar month
after the occurrence of a Change in Control shall be deemed a termination for
Good Reason pursuant to Section 1(g), however, instead of the benefits described
under Section 3, the Executive shall be entitled to the payments and other
rights described in this Section 4. Notwithstanding anything in this Agreement
to the contrary, if Executive's employment terminates on account of his death or
Disability, Executive shall be entitled to receive the life insurance and/or
disability benefits under any life insurance policy and/or disability program
maintained by the Company for similarly situated executives on the date hereof
which shall cover Executive, and Executive shall not be considered to have
terminated employment under this Section 4(a) and shall not be entitled to
receive benefits pursuant to this Section 4; provided, if such policy or program
shall be amended to provide less favorable benefits, or shall be terminated,
then the Company shall procure comparable such coverage for Executive, or pay
Executive such amount in cash as may be required to compensate him for the cost
to purchase such coverage, as in effect immediately prior to such amendment or
termination.
(b) Upon any Termination of Employment described in
Section 4(a) above, Executive shall be entitled to receive only the amount due
to Executive under the Company's then current severance pay plan for employees,
if any. No other payments or benefits shall be due under this Agreement to
Executive, but Executive shall be entitled to any benefits accrued or earned in
accordance with the terms of any applicable benefit plans and programs of the
Company.
(c) Notwithstanding the provisions of Section 4(b), in
the event that Executive executes and does not revoke a Release, upon such
removal or resignation, of any and all claims against the Company and all
related parties with respect to all matters arising out of Executive's
employment by the Company, or the termination thereof (other than claims for any
entitlements under the terms of this Agreement or under any plans or programs of
the Company under which Executive has accrued a benefit), Executive shall be
entitled to receive, in lieu of the payment described in Section 4(b), the
following in connection with Executive's Termination of Employment:
(i) Executive shall receive a lump sum cash
payment equal to 2 times (x) Executive's Annual Base Salary in effect
immediately before Executive's Termination of Employment (disregarding
for this purpose any reduction in Executive's Annual Base Salary
resulting in Good Reason for such Termination of Employment) and (y)
the target bonus applicable to Executive as of the date on which
Executive's Termination of Employment occurs. Payment shall be made
within 30 days after the
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effective date of the termination (or the end of the revocation period
for the Release, if later).
(ii) For a period of 24 months following the date
of termination, Executive shall continue to receive the medical
coverage in effect at the date of his termination (or comparable
coverage) for himself and, where applicable, his spouse and dependents
or, as an alternative, the Company may elect to pay Executive cash in
lieu of such coverage in an amount equal to Executive's after-tax cost
of continuing such coverage, where such coverage may not be continued
(or where such continuation would adversely affect the tax status of
the plan pursuant to which the coverage is provided). The COBRA health
care continuation coverage period under section 4980B of the Code,
shall run concurrently with the foregoing 18 month benefit period.
(iii) A pro rated bonus for the year in which
Executive's Termination of Employment occurs. A pro rated bonus shall
be based on the Executive's annual target bonus for the year in which
Executive's termination occurs, multiplied by a fraction, the numerator
of which is the number of days during which Executive was employed by
the Company in the year of his termination and the denominator of which
is 365. Payment shall be made within 30 days after the date of
declaration by the Board (or the end of the revocation period for the
Release, if later).
(iv) All outstanding options held by Executive
that have not previously become exercisable shall automatically
accelerate and become fully exercisable. All of Executive's restricted
stock, if any, shall become fully vested and payable. In addition, all
outstanding options which are or have become exercisable shall remain
exercisable for the remaining portion of the applicable option. All
such options shall remain exercisable until the earlier to occur of (x)
48 months following such termination and (y) the last day of the stated
option term, and shall remain outstanding with respect to shares of
Company stock or shall be assumed by the successor to the Company (with
appropriate adjustment to reflect the terms of the transaction).
(v) Executive shall have the right to
participate in the EELP with respect to his vested options after
Executive's Termination of Employment until the earlier to occur of (x)
48 months following such Termination and (y) the last day of the stated
option term.
(vi) Executive shall receive any amounts earned,
accrued or owing but not yet paid to Executive as of the date of his
Termination of Employment, payable in a lump sum, and any benefits
accrued or earned in accordance with the terms of any applicable
benefit plans and programs of the Company.
(d) (i) Prior to or contemporaneously with the execution
of this Agreement, the Company shall seek approval by the holders of
more than 75% of all capital stock of ICGC outstanding as of such time
("Shareholder Approval"), of the terms of this Agreement, including
approval of any payment, distribution or other benefit provided by the
Company to or for the benefit of Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise (the "Payment"),
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which, in the reasonable judgment of the Company, would result in an
"excess parachute payment" within the meaning of Section 280G of the
Code if made in connection with a change in control of ICGC. In the
event that Shareholder Approval is not obtained, the Company shall have
no obligation to make such Payment to Executive. In the event that
Shareholder Approval is obtained, the Company shall have the right to
seek subsequent approval and ratification of this Agreement by the
holders of ICGC stock from time to time thereafter, provided, however,
that the failure to obtain any such subsequent approval or ratification
shall not limit the Company's obligation to make any Payment or
Gross-Up Payment (defined below) to Executive pursuant hereto.
(ii) At the time the Payment is made, Executive
shall be paid an additional amount (the "Gross-Up Payment") such that
the net amount retained by Executive after deduction of any excise tax
imposed under Section 4999 of the Code, and any federal, state and
local income and employment tax and excise tax imposed upon the
Gross-Up Payment shall be an amount such that the Executive will be in
the same after-tax position as if no excise tax under the Code had been
imposed, provided that the Gross-Up Payment results in an after-tax
payment amount to the Executive at least $5,000 greater than the
Executive's after-tax position without the Gross-Up Payment. In the
event that the after-tax benefit is less than this $5,000 threshold
amount, then the Payment will be reduced in such amount as is necessary
so that no excise tax is imposed. For purposes of determining the
amount of the Gross-Up Payment, Executive shall be deemed to pay
federal income tax and employment taxes at the highest marginal rate of
federal income and employment taxation in the calendar year in which
the Gross-Up Payment is to be made and state and local income taxes at
the highest marginal rate of taxation in the state and locality of
Executive's residence (or, if greater, the state and locality in which
Executive is required to file a nonresident income tax return with
respect to the Payment) on the relevant calculation date, net of the
maximum reduction in federal income taxes that may be obtained from the
deduction of such state and local taxes. All determinations to be made
under this Section 4(d) shall be made by a nationally recognized
independent public accountant selected by the Company immediately prior
to the Change in Control (which may be the Company's auditors) (the
"Accounting Firm"), which firm shall provide its determinations and any
supporting calculations both to the Company and Executive within ten
days before the date of the Payment (or any part thereof). If the
Accounting Firm determines that no excise tax is payable by the
Executive, it shall furnish the Company and the Executive with an
opinion to the effect that there is "substantial authority" that the
Payment does not constitute an "excess parachute payment." Subject to
any determination of an Underpayment or Overpayment, any such
determination by the Accounting Firm shall be binding upon the Company
and Executive for purposes of any dispute between the parties hereto.
All fees and expenses of the Accounting Firm in performing the
determinations and obtaining such opinion referred to above shall be
borne solely by the Company. As a result of uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm, it is possible that the Gross-Up
Payment made will have been an amount less than the Company should have
paid pursuant to this Section 4(d) (the "Underpayment") or an amount
greater than the Company should have paid pursuant to this Section 4(d)
(the "Overpayment"). In the event that it is finally determined that an
Underpayment exists and the Executive is required to make a payment
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of any excise tax or related tax, the Gross-Up Payment shall be
adjusted accordingly and the shortfall shall be promptly paid by the
Company to Executive or for his benefit. In the event that it is
finally determined that an Overpayment exists and the Company paid a
Gross-Up Payment to the Executive in excess of the amount of the
Gross-Up Payment to which he is actually entitled hereunder, such
excess shall be promptly reimbursed by the Executive to the Company.
The Company agrees to indemnify and hold harmless the Accounting Firm
of and from any and all claims, damages and expenses resulting from or
relating to its determinations pursuant to this Section 4(d), except
for claims, damages or expenses resulting from the gross negligence or
willful misconduct of the Accounting Firm.
(iii) Notwithstanding anything in this Section
4(d) to the contrary, in the event that a Gross-Up Payment is payable
by the Company pursuant to this Section 4(d), (x) to the extent that
the Gross-Up Payment relates to equity compensation received by
Executive, the Gross-Up Payment shall only be payable with respect to
equity compensation that results from stock options, restricted stock
or other equity compensation grants that are made to Executive upon his
initial employment as Chairman and Chief Executive Officer hereunder
(i.e., not including any equity grants that are made subsequent to
grants made in connection with Executive's initial employment
hereunder) and (y) in no event shall the aggregate Gross-Up Payments
payable pursuant hereto exceed an amount equal to 0.40% of the Derived
Company Equity Value (as hereinafter defined). For purposes of this
Section 4(d), the "Derived Company Equity Value" shall mean the deemed
value of all outstanding shares of capital stock of ICGC on a
fully-diluted basis, as derived from the valuation used for purposes of
calculating consideration in a Change in Control.
(iv) Notwithstanding the foregoing, in the event
that Shareholder Approval is obtained and, each time any part of the
Payment is made, counsel or an Accounting Firm that is mutually
acceptable to both the Executive and the Company delivers to the
Company and the Executive an opinion to the effect that it is "more
likely than not" that no excise tax imposed under Section 4999 of the
Code will be due in connection with such part of the Payment, then,
subject to the following provisions of this Section 4(d)(iv), the
Company shall not be obligated to make the Gross-Up Payment to the
Executive. If the Gross-Up Payment is not made pursuant to the
foregoing provision and, thereafter, the Internal Revenue Service (the
"Service") assesses an excise tax imposed under Section 4999 of the
Code against Executive in connection with all or any part of the
Payment, the Company shall promptly pay to Executive a Gross-Up Payment
in accordance with Section 4(d)(ii) and 4(d)(iii), and shall also
indemnify Executive for all expenses (including, without limitation,
professional fees) incurred in defending his reported income tax return
position, provided, however, that the Executive has notified the
Company as soon as reasonably practicable after commencement of any
examination of this matter by the Service, Executive shall consult with
the Company from time to time in connection with such proceeding with
the Service (including any resulting litigation) and, upon receipt of
the Gross-Up Payment and such indemnified expenses, Executive shall
compromise or otherwise settle such proceeding as the Company shall
direct; provided, however, that until the Company otherwise directs,
Executive shall take the
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position in all filings and communications with the Service, in
reliance upon such opinion above, that no excise tax imposed under
Section 4999 of the Code is due.
(e) Determination of Cause Post-Termination. In the event that, prior
to a Change of Control (and not in anticipation of such Change of Control) the
Company reasonably determines, after Executive's employment with Company has
terminated, that Executive, during his period of employment engaged in activity
which, had it been discovered during Executive's period of employment, would
have constituted grounds for termination of Executive's employment for Cause
only under Sections 1(c)(ii) and 1(c)(iii), and after the notice and contest
provisions of the Section 1(c) have been fully afforded to Executive, then (a)
the Company's obligations to make any further payments to Executive under this
Agreement shall immediately cease; and (b) Executive's rights to exercise any
stock options or to retain restricted stock shall immediately terminate.
5. Enforcement. In the event that the Company shall fail or
refuse to make payment of any amounts due Executive under Sections 3, 4 and 5
hereof, upon written request of the Executive, the Company shall pay to
Executive, in addition to the payment of any other sums provided in this
Agreement, interest at the prime rate published from time to time in the Wall
Street Journal plus three (3) percentage points, compounded daily, on any amount
remaining unpaid fifteen (15) days following receipt of such demand, until paid
to Executive.
6. Non-exclusivity of Rights. Except as provided in Sections 3
and 4, nothing in this Agreement shall prevent or limit Executive's continuing
or future participation in or rights under any benefit, bonus, incentive or
other plan or program provided by the Company or any of its subsidiaries or
affiliates and for which Executive may qualify.
7. Taxes. All payments required under this Agreement shall be
subject to applicable federal (including FICA), state and local tax withholding
requirements. The Company shall have the right to deduct from all amounts paid
in cash, or from other wages paid to the Grantee, any federal, state or local
taxes required by law to be withheld with respect to such payments. Any payment
required under this Agreement shall be subject to all requirements of the law
with regard to the filing, making of reports and the like, and the Company shall
use its best efforts to satisfy promptly all such requirements.
8. Confidential Information and Other Covenants.
(a) Executive shall execute, deliver and comply with the
terms of the Noncompetition, Nondisclosure and Nonsolicitation Agreement, a form
of which is attached hereto as Exhibit B, the terms of which are incorporated by
reference herein and made a part hereof.
(b) Executive acknowledges that the restrictions
contained in the Noncompetition, Nondisclosure and Nonsolicitation Agreement
referred to in this Section 9 are reasonable and necessary to protect the
legitimate interests of the Company and its affiliates, that the Company would
not have entered into this Agreement in the absence of such restrictions, and
that any violation of any provision of those Sections will result in irreparable
injury to the Company. Executive further represents and acknowledges that (i) he
has been advised by the Company to
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consult his own legal counsel in respect of this Agreement, and (ii) that he has
had full opportunity, prior to execution of this Agreement, to review thoroughly
this Agreement with his counsel.
9. Term of Agreement. This Agreement shall continue in full force
and effect until December 31, 2006, subject to the provisions of Section 3 and
Section 4. Such initial term of Executive's employment shall be extended for
successive one-year terms thereafter unless, at least 120 days prior to the end
of any such term, either Executive or the Company notifies the other of
Executive's termination of employment effective the last day of such term. The
initial Term and each successive one-year term thereafter shall be collectively
referred to as the "Term" hereunder.
10. Non-Disclosure of Terms of Agreement.
(a) To the extent that the terms of this Agreement are
not made public pursuant to applicable laws and regulations, the Parties agree
not to disclose the terms, contents or execution of the Agreement except in the
following circumstances:
(i) Executive may disclose the terms of this
Agreement to his counsel and/or immediate family, so long as such
person(s) agrees to be bound by the confidential nature of this
Agreement;
(ii) The Parties may disclose the terms of this
Agreement to (i) their tax advisors and accountants so long as such tax
advisors and accountants agree to be bound by the confidential nature
of this Agreement or (ii) taxing authorities so long as the disclosing
party advises such taxing authority of the confidential nature of this
Agreement;
(iii) Pursuant to the order of a court or
governmental agency of competent jurisdiction, or for purposes of
securing enforcement of the terms and conditions of this Agreement; and
(iv) The Parties may disclose the terms of this
Agreement as may be appropriate in connection with subparagraph (b)
below.
(b) The terms of this Agreement, the claims that have
been or could have been raised against the Company as of the date of execution
of this Agreement, and the facts and circumstances underlying any such claims
shall not be admissible in any litigation, arbitration or proceeding in any
forum for any purpose other than to secure enforcement of the terms and
conditions of this Agreement, except as required by law.
(c) The Company and Executive both agree that they will
not disparage, criticize or otherwise speak of each other in an unflattering way
during the Term and thereafter.
11. Successor Company. The Company shall require any successor or
successors (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, by agreement in form and substance satisfactory to Executive, promptly
to acknowledge expressly and in writing that this
11
Agreement is binding upon and enforceable against the Company in accordance with
the terms hereof, and to become jointly and severally obligated with the Company
to perform this Agreement in the same manner and to the same extent that the
Company would be required to perform if no such succession or successions had
taken place. Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a material breach of this
Agreement. As used in this Agreement, the Company shall mean the Company as
herein before defined and any such successor or successors to its business
and/or assets, jointly and severally.
12. Notice. All notices and other communications required or
permitted hereunder or necessary or convenient in connection herewith shall be
in writing and shall be delivered personally or mailed by registered or
certified mail, return receipt requested, or by overnight express courier
service, as follows:
If to the Company, to:
ICG Commerce, Inc.
000 Xxx Xxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
If to Executive, to the last address and telephone/fax number
listed in the Company's records as of the date of such notice.
or to such other names or addresses as the Company or Executive, as the case may
be, shall designate by notice to the other Parties hereto in the manner
specified in this Section; provided, however, that if no such notice is given by
the Company following a Change in Control, notice at the last address of the
Company or to any successor pursuant to Section 13 hereof shall be deemed
sufficient for the purposes hereof. Any such notice shall be deemed delivered
and effective when received in the case of personal delivery, five days after
deposit, postage prepaid, with the U.S. Postal Service in the case of registered
or certified mail, or on the next business day in the case of overnight express
courier service.
13. Governing Law. This Agreement shall be governed by and
interpreted under the laws of the Commonwealth of Pennsylvania without giving
effect to any conflict of laws provisions.
14. No Mitigation. Executive shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other employment
or otherwise and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Executive in any subsequent employment.
15. Indemnification. Executive shall be indemnified while serving
as Chairman and Chief Executive Officer to the same extent and in the same
manner as the more favorable of such indemnification for other senior executives
and directors of the Company.
12
16. Contents of Agreement, Amendment and Assignment.
(a) This Agreement supersedes all prior agreements, sets
forth the entire understanding between the Parties hereto with respect to the
subject matter hereof and cannot be changed, modified, extended or terminated
except upon written amendment executed by Executive and executed on the
Company's behalf by a duly authorized officer. The provisions of this Agreement
may provide for payments to Executive under certain compensation or bonus plans
under circumstances where such plans would not provide for payment thereof. It
is the specific intention of the Parties that the provisions of this Agreement
shall supersede any provisions to the contrary in such plans, and such plans
shall be deemed to have been amended to correspond with this Agreement without
further action by the Company or the Board.
(b) Unless otherwise agreed to or approved by Executive,
in no event shall an amendment to the terms of the EELP be effective with
respect to Executive's rights hereunder if such amendment materially impacts
Executive's rights under the EELP to his detriment in a manner that is
disproportionate relative to the impact such amendment has on the rights of all
other Executive Officers of the Company under the EELP (a "Disproportionately
Adverse Amendment"). For purposes of clarity, an amendment to the EELP that has
a more significant economic impact on Executive relative to the other Executive
Officers of the Company solely by virtue of Executive's greater equity position
in the Company or his greater participation rights under the EELP shall not be
deemed a Disproportionately Adverse Amendment for purposes of the foregoing
sentence.
(c) Nothing in this Agreement shall be construed as
giving Executive any right to be retained in the employ of the Company, or as
changing or modifying the "at will" nature of Executive's employment status.
(d) All of the terms and provisions of this Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
respective heirs, representatives, successors and assigns of the Parties hereto,
except that the duties and responsibilities of Executive and the Company
hereunder shall not be assignable in whole or in part by the Company. If
Executive should die after a Termination Upon a Change in Control and while any
amount payable hereunder would still be payable to Executive hereunder if
Executive had continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to
Executive's devisees, legatees or other designees or, if there is no such
designee, to Executive's estate.
17. Severability. If any provision of this Agreement or
application thereof to anyone or under any circumstances shall be determined to
be invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions or applications of this Agreement which can be given
effect without the invalid or unenforceable provision or application.
18. Remedies Cumulative. No right conferred upon Executive by this
Agreement is intended to be exclusive of any other right or remedy, and each and
every such right or remedy shall be cumulative and shall be in addition to any
other right or remedy given hereunder or now or hereafter existing at law or in
equity.
13
19. Miscellaneous. All section headings are for convenience only.
This Agreement may be executed in several counterparts, each of which is an
original. It shall not be necessary in making proof of this Agreement or any
counterpart hereof to produce or account for any of the other counterparts.
IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
have executed this Agreement as of the date first above written.
ICG COMMERCE, INC.
Attest:________________________ By: /s/ Xxxx Xxxxxxxx
-----------------
Xxxx Xxxxxxxx
Its: Vice President Human Resources &
Employment Counsel
_______________________________ /s/ Xxxxxx X. Xxxx
Witness ------------------
Xxxxxx X. Xxxx
EXECUTIVE
14
Exhibit A
ICGC RELEASES
15
UNDER 40 FORM
RELEASE AND WAIVER OF CLAIMS
THIS RELEASE is made as of this ___ day of __________, ____, by and
between ICG Commerce, Inc. (the "Company") and Xxxxxx X. Xxxx ("Executive").
WHEREAS, Executive and the Company entered into that certain Severance and
Change in
Control Agreement, dated _______________, 2002 ("Agreement");
WHEREAS, Executive's employment with the Company as Chief Executive
Officer has terminated;
WHEREAS, in connection with the termination of Executive's employment,
under the Agreement, Executive is entitled to certain payments and other
benefits.
NOW, THEREFORE, in consideration of the payments and other benefits due
Executive under the Agreement:
1. Executive, intending to be legally bound, does hereby REMISE, RELEASE
AND FOREVER DISCHARGE the Company, its affiliates, subsidiaries,
parents, joint ventures, and its and their officers, directors,
shareholders, employees, agents, predecessors, partners, and its and
their respective successors and assigns, heirs, executors, and
administrators (collectively, "Releasees") from all causes of action,
suits, debts, claims and demands whatsoever in law or in equity, which
Executive ever had, now has, or hereafter may have, or which his heirs,
executors, or administrators may have, by reason of any matter, cause
or thing whatsoever, from the beginning of his initial dealings with
the Company to the date of this Release, and particularly, but without
limitation of the foregoing general terms, any claims arising from or
relating in any way to his employment relationship with Company, the
terms and conditions of that employment relationship, and the
termination of that employment relationship, including, but not limited
to, any claims arising underTitle VII of The Civil Rights Act of 1964,
as amended, 42 U.S.C. Section 2000e et seq., the Americans with
Disabilities Act, 42 U.S.C. Section 12101 et seq., the Family and
Medical Leave Act of 1993 ("FMLA"), 29 U.S.C. Section 2601 et seq., the
Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C.
Section 1001 et seq., Pennsylvania Human Relations Act, and any other
claims under any federal, state or local common law, statutory, or
regulatory provision, now or hereafter recognized, and any claims for
attorneys' fees and costs, but not including such claims to payments,
benefits and other rights provided Executive under the Agreement. This
Release is effective without regard to the legal nature of the claims
raised and without regard to whether any such claims are based upon
tort, equity, implied or express contract or discrimination of any
sort. Except as specifically provided herein, it is expressly
understood and agreed that this Release shall operate as a clear and
unequivocal waiver by Employee of any claim for accrued or unpaid
wages, benefits or any other type of payment.
2. Executive further agrees and covenants that neither he, nor any person,
organization, or other entity on his behalf, will file, charge, claim,
xxx, or cause or permit to be filed, charged, or claimed, any civil
action, suit, or legal proceeding seeking any type of personal relief,
or
16
share in any remedy against any of the RELEASEES, involving any matter
occurring at any time in the past up to and including the date of this
Release and Waiver of Claims, or involving any continuing effects of
any actions or practices which may have arisen or occurred on or prior
to the date of this Release and Waiver of Claims.
3. Executive further agrees and covenants that he will abide by all of the
terms of the Non-competition, Non-disclosure and Non-solicitation
Agreement attached hereto.
4. Executive further agrees and covenants that, unless the Agreement has
become available to the public (other than by Executive's wrongful
act), he will keep all terms and conditions of this Release and Waiver
of Claims confidential and will not disclose them, directly or
indirectly, to any person or entity other than my spouse, immediate
family, or legal and/or financial advisor(s), or except and to the
extent required by law. If he makes any such permitted disclosure, he
will do so with a specific declaration that the information is
confidential.
5. Executive also agrees not to make any public or private statements to
anyone relating to ICG Commerce or its business that could reasonably
be deemed to be negative or disparaging. Similarly, ICG Commerce agrees
not to make any public or private statements to anyone relating to
Executive that could reasonably be deemed to be negative or
disparaging. This provision shall not apply to statements that are: (a)
required by law; or (b) related to a local, state or federal
governmental investigation, charge, complaint, or inquiry.
6. Executive further agrees and recognizes that he has permanently and
irrevocably severed his employment relationship with the Company, that
he shall not seek employment with the Company or any affiliated entity
at any time in the future, and that the Company has no obligation to
employ him in the future.
7. Executive represents that he does not have in his possession any
records and business documents, whether on computer or hard copy, and
other materials (including but not limited to computer disks and tapes,
computer programs and software, office keys, correspondence, files,
customer lists, technical information, customer information, pricing
information, business strategies and plans, sales records and all
copies thereof) (collectively, the "Corporate Records") provided by the
Company and/or its predecessors, subsidiaries or affiliates or obtained
as a result of his prior employment with the Company and/or its
predecessors, subsidiaries or affiliates, or created by Executive while
employed by or rendering services to the Company and/or its
predecessors, subsidiaries or affiliates. Executive acknowledges that
all such Corporate Records are the property of the Company. In
addition, Executive shall promptly return in good condition any and all
beepers, credit cards, cellular telephone equipment, business cards and
computers. As of the date of Executive's termination of employment, the
Company will make arrangements to remove, terminate or transfer any and
all business communication lines including network access, cellular
phone, fax line and other business numbers.
8. The parties agree and acknowledge that the Agreement, and the
settlement and termination of any asserted or unasserted claims against
the Releasees pursuant to the Agreement, are not and shall not be
construed to be an admission of any violation of any federal, state or
local statute or regulation, or of any duty owed by any of the
Releasees to Executive.
17
9. Executive certifies and acknowledges as follows:
a. That he has read the terms of this Release, and that he
understands its terms and effects, including the fact that he has
agreed to RELEASE AND FOREVER DISCHARGE all Releasees from any legal
action or other liability of any type related in any way to the matters
released pursuant to this Release other than as provided in the
Agreement and in this Release;
b. That he has signed this Release voluntarily and knowingly in
exchange for the consideration described herein, which he acknowledges
is adequate and satisfactory to him and which he acknowledges is in
addition to any other benefits to which he is otherwise entitled;
c. That he has been and is hereby advised in writing to consult
with an attorney prior to signing this Release;
d. That he does not waive rights or claims that may arise after
the date this Release is executed;
e. That he has been informed that he has the right to consider
this Release and Waiver of Claims for a period of 14 days from receipt,
and he has signed on the date indicated below after concluding that
this Release and Waiver of Claims is satisfactory to him; and
f. Neither ICG Commerce, nor any of its agents, representatives,
employees, or attorneys, has made any representations to him concerning
the terms or effects of this Release and Waiver of Claims other than
those contained herein.
10. Executive also understands that he should return this Release and
Waiver of Claims to the following:
Xxxx Xxxxxxxx
Vice President, Human Resources
and Employment Counsel
ICG Commerce, Inc.
000 Xxx Xxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
IN WITNESS WHEREOF, and intending to be legally bound hereby, the
parties execute the foregoing Release and Waiver of Claims:
___________________________ ___________________________
Date Xxxxxx X. Xxxx
___________________________ ___________________________
Date: ICG Commerce, Inc.,
By
18
40 AND OVER FORM
RELEASE AND WAIVER OF CLAIMS
THIS RELEASE is made as of this ___ day of __________, ____, by and
between ICG Commerce, Inc. (the "Company") and Xxxxxx X. Xxxx ("Executive").
WHEREAS, Executive and the Company entered into that certain Severance
and Change in Control Agreement, dated _______________, 2002 ("Agreement");
WHEREAS, Executive's employment with the Company as Chief Executive
Officer has terminated;
WHEREAS, in connection with the termination of Executive's employment,
under the Agreement, Executive is entitled to certain payments and other
benefits.
NOW, THEREFORE, in consideration of the payments and other benefits due
Executive under the Agreement:
1. Executive, intending to be legally bound, does hereby REMISE, RELEASE
AND FOREVER DISCHARGE the Company, its affiliates, subsidiaries,
parents, joint ventures, and its and their officers, directors,
shareholders, employees, agents, predecessors, and partners, and its
and their respective successors and assigns, heirs, executors, and
administrators (collectively, "Releasees") from all causes of action,
suits, debts, claims and demands whatsoever in law or in equity, which
Executive ever had, now has, or hereafter may have, or which his heirs,
executors, or administrators may have, by reason of any matter, cause
or thing whatsoever, from the beginning of his initial dealings with
the Company to the date of this Release, and particularly, but without
limitation of the foregoing general terms, any claims arising from or
relating in any way to his employment relationship with Company, the
terms and conditions of that employment relationship, and the
termination of that employment relationship, including, but not limited
to, any claims arising under the Age Discrimination in Employment Act
("ADEA"), as amended, 29 U.S.C. Section 621 et seq., Title VII of The
Civil Rights Act of 1964, as amended, 42 U.S.C. Section 2000e et seq.,
the Americans with Disabilities Act, 42 U.S.C. Section 12101 et seq.,
the Family and Medical Leave Act of 1993 ("FMLA"), 29 U.S.C. Section
2601 et seq., the Employee Retirement Income Security Act of 1974
("ERISA"), 29 U.S.C. Section 1001 et seq., Pennsylvania Human Relations
Act, and any other claims under any federal, state or local common law,
statutory, or regulatory provision, now or hereafter recognized, and
any claims for attorneys' fees and costs, but not including such claims
to payments, benefits and other rights provided Executive under the
Agreement. This Release is effective without regard to the legal nature
of the claims raised and without regard to whether any such claims are
based upon tort, equity, implied or express contract or discrimination
of any sort. Except as specifically provided herein, it is expressly
understood and agreed that this Release shall operate as a clear and
unequivocal waiver by Employee of any claim for accrued or unpaid
wages, benefits or any other type of payment.
2. Executive further agrees and recognizes that he has permanently and
irrevocably severed his employment relationship with the Company, that
he shall not seek employment with the Company or any affiliated entity
at any time in the future, and that the Company has no obligation to
employ him in the future.
19
3. Executive represents that he does not have in his possession any
records and business documents, whether on computer or hard copy, and
other materials (including but not limited to computer disks and tapes,
computer programs and software, office keys, correspondence, files,
customer lists, technical information, customer information, pricing
information, business strategies and plans, sales records and all
copies thereof) (collectively, the "Corporate Records") provided by the
Company and/or its predecessors, subsidiaries or affiliates or obtained
as a result of his prior employment with the Company and/or its
predecessors, subsidiaries or affiliates, or created by Executive while
employed by or rendering services to the Company and/or its
predecessors, subsidiaries or affiliates. Executive acknowledges that
all such Corporate Records are the property of the Company. In
addition, Executive shall promptly return in good condition any and all
beepers, credit cards, cellular telephone equipment, business cards and
computers. As of the date of Executive's termination of employment, the
Company will make arrangements to remove, terminate or transfer any and
all business communication lines including network access, cellular
phone, fax line and other business numbers.
4. The parties agree and acknowledge that the Agreement, and the
settlement and termination of any asserted or unasserted claims against
the Releasees pursuant to the Agreement, are not and shall not be
construed to be an admission of any violation of any federal, state or
local statute or regulation, or of any duty owed by any of the
Releasees to Executive.
5. Executive further agrees and covenants that he will abide by all of the
terms of the Non-competition, Non-disclosure and Non-solicitation
Agreement attached hereto.
6. Executive further agrees and covenants that, unless the Agreement has
become available to the public (other than by Executive's wrongful
act), he will keep all terms and conditions of this Release and Waiver
of Claims confidential and will not disclose them, directly or
indirectly, to any person or entity other than my spouse, immediate
family, or legal and/or financial advisor(s), or except and to the
extent required by law. If Executive makes any such permitted
disclosure, he will do so with a specific declaration that the
information is confidential.
7. Executive also agrees not to make any public or private statements to
anyone relating to ICG Commerce or its business that could reasonably
be deemed to be negative or disparaging. Similarly, ICG Commerce agrees
not to make any public or private statements to anyone relating to
Executive that could reasonably be deemed to be negative or
disparaging. This provision shall not apply to statements that are: (a)
required by law; or (b) related to a local, state or federal
governmental investigation, charge, complaint, or inquiry.
8. Executive certifies and acknowledges as follows:
a. That he has read the terms of this Release, and that he
understands its terms and effects, including the fact that he
has agreed to RELEASE AND FOREVER DISCHARGE all Releasees from
any legal action or other liability of any type related in any
way to the matters released pursuant to this Release other
than as provided in the Agreement and in this Release;
b. That he has signed this Release voluntarily and knowingly in
exchange for the consideration described herein, which he
acknowledges is adequate and satisfactory
20
to him and which he acknowledges is in addition to any other
benefits to which he is otherwise entitled;
c. That he has been and is hereby advised in writing to consult
with an attorney prior to signing this Release;
d. That he does not waive rights or claims that may arise after
the date this Release is executed;
e. That he has been informed that he has the right to consider
this Release and Waiver of Claims for a period of 21 days from
receipt, and he has signed on the date indicated below after
concluding that this Release and Waiver of Claims is
satisfactory to him; and
f. That neither ICG Commerce, nor any of its agents,
representatives, employees, or attorneys, has made any
representations to him concerning the terms or effects of this
Release and Waiver of Claims other than those contained
herein.
9. Executive also understands that he has the right to revoke this Release
and Waiver of Claims within 7 days after execution, and that this
Release and Waiver of Claims will not become effective or enforceable
until the revocation period has expired, by giving written notice to
the following:
Xxxx Xxxxxxxx
Vice President, Human Resources
and Employment Counsel
ICG Commerce, Inc.
000 Xxx Xxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
IN WITNESS WHEREOF, and intending to be legally bound hereby, the
parties execute the foregoing Release and Waiver of Claims:
___________________________ ___________________________
Date: Xxxxxx X. Xxxx
___________________________ ___________________________
Date: ICG Commerce, Inc.,
By:
21
Exhibit B
ICGC NONCOMPETE, NONDISCLOSURE
AND NONSOLICITATION AGREEMENT
AGREEMENT dated as of January 1, 2003 between ICG Commerce,
Inc., (the "Company") and Xxxxxx X. Xxxx, its Chairman and Chief Executive
Officer (the "Executive").
WHEREAS, Executive desires to be employed and to remain
employed by the Company, and acknowledges that he has been given access and will
be given access to certain confidential information and trade secrets developed
and maintained by the Company;
WHEREAS, Executive represents to the Company that he is not
subject or a party to any employment agreement, non-competition agreement,
non-disclosure agreement, or other agreement, covenant, understanding or
restriction that would prohibit Executive from executing this Agreement, and
from performing fully, and without limitation, Executive's duties and
responsibilities hereunder. Specifically, Executive represents that he will not,
during his employment with the Company, improperly use or disclose any
proprietary information or trade secrets of any former or concurrent employer or
other person or entity. Executive further represents that he will not bring onto
the premises of the Company any confidential or proprietary information
belonging to any such employer, person or entity unless consented to in writing
by such employer, person or entity.
WHEREAS, Company desires to employ and continue to employ
Executive subject to that certain Severance and Change in Control Agreement
dated as of January 1, 2003 ("Executive's Agreement"), subject to certain
restrictions on Executive's use of confidential information and trade secrets;
NOW, THEREFORE, the parties hereto, intending to be legally
bound, agree as follows:
1. Developments. All rights in and to any and all
developments, including inventions, whether patentable or otherwise, trade
secrets, discoveries, improvements, ideas and writings which either directly or
indirectly relate to or may be useful in the business of the Company or any of
its affiliates (the "Developments"), which Executive, either by himself or in
conjunction with any other person or persons, conceives, makes, develops,
acquires or acquires knowledge of during his employment by the Company shall
become and remain the sole and exclusive property of the Company. The Executive
hereby assigns, transfers and conveys, and agrees to so assign, transfer and
convey, all of his right, title and interest in and to any and all such
Developments and to disclose fully as soon as practicable, in writing, all such
Developments to the Company. At any time and from time to time, upon the request
and at the expense of the Company, the Executive will execute and deliver any
and all instruments, documents and papers, give evidence and do any and all
other acts which, in the opinion of counsel for the Company, are or may be
necessary or desirable to document such transfer or to enable the Company to
file and prosecute applications for and to acquire, maintain and enforce any and
all patents, trademark registrations or copyrights under United States or
foreign law with respect to any such Developments or to obtain any extension,
validation, re-issue, continuance or renewal of any such patent, trademark or
copyright. The Company will be responsible for the preparation of any such
instruments, documents and papers and for the prose-
22
cution of any such proceedings and will reimburse the Executive for all
reasonable expenses incurred by him in compliance with the provisions of this
Section.
2. Confidential Information. Executive recognizes and
acknowledges that by reason of his employment by and service with the Company he
will have access to confidential information of the Company, its partners, its
affiliates, and its or their customers and potential customers, including,
without limitation, information and knowledge pertaining to each of their
research activities, products and services offered, inventions, innovations,
designs, ideas, plans, trade secrets, proprietary information, advertising,
sales methods and systems, sales and profit figures, customer lists, potential
customer pipeline information, sourcing methods, supplier lists, potential
supplier pipeline information, supply chain management, procurement activities,
and relationships between the Company, its partners, its affiliates, and/or its
or their customers, suppliers and others who have had or will have business
dealings with the Company (hereinafter referred to separately and collectively
as "Confidential Information"). Executive acknowledges that such Confidential
Information is a valuable and unique asset. He therefore covenants that, except
in the ordinary course of the discharge of his duties as an officer and director
of the Company or as may be required by law, he will not, either during or after
his employment with the Company, directly or indirectly disclose or permit to be
known to, or used for the benefit of, himself or any person or entity outside of
the employ of Company, any confidential information acquired by him during the
course of or as an incident to his employment or association with Company. All
Confidential Information described in this Section shall be the exclusive
property of Company, and Executive shall use his best efforts to prevent any
publication or disclosure thereof.
3. Non-Competition/Non-Solicitation. Executive agrees
that his services to the Company are of a special, unique and extraordinary
character, and that his position places him in a position of confidence and
trust with the Company's customers, employees and investors. Executive also
recognizes that his position with the Company will give him substantial access
to Confidential Information (as that term is defined above), the disclosure of
which to the Company's competitors would cause the Company to suffer
substantial, immediate and irreparable injury. Executive recognizes, therefore,
that it is in the Company's legitimate business interest to restrict his use of
Confidential Information for any purposes other than the discharge of his
employment duties at the Company, and to limit any potential appropriation of
Confidential Information by Executive for the benefit of the Company's
competitors and to the detriment of the Company. Accordingly, Executive agrees
as follows:
3.1 Non-Competition. During his employment by
the Company and for a period of eighteen (18) months after his employment
terminates, for whatever reason, Executive shall not engage in any directly
competitive activities in any geographic area in which the Company conducts
business. For purposes of this Agreement, "directly competitive activities"
means operating, managing, owning, controlling, being employed by, providing
consulting services to, or in any way being financially connected with, any for
profit or nonprofit business that "engages in," or at the time of termination of
Executive's employment plans to "engage in," the business of providing products,
services or tools intended to address the procurement function ("Procurement
Business"). Notwithstanding the foregoing, an entity shall not be considered to
"engage in" Procurement Business if: (a) less than 5% of such entity's aggregate
annual revenues for its most recent fiscal year are derived from Procurement
Business; (b) Executive agrees in writing not to participate in any manner
whatsoever in Procurement Business (including, but not limited to, engaging in
any discussion concerning the operation of Procurement Business), and Executive
so informs the leader of Procurement Business in writing with a copy to ICG
Commerce. In addition, Procurement
23
Business shall not include procurement products, services or tools used by an
entity solely to address its own internal procurement function. Nothing
contained in this Section shall prohibit Executive from owning in the aggregate,
directly or indirectly, solely as a passive investment, less than (2%) of the
shares of any class of equity securities of a company whose securities are
traded on a national securities exchange or the NASDAQ Stock Market.
3.2. Non-Solicitation of Business. Executive
agrees that during the period beginning on the first day of his employment with
the Company and ending eighteen (18) months after he last performs services for
the Company (whether or not such services are rendered pursuant to this
Agreement), he will not, either directly or indirectly, solicit, contact, call
upon, or communicate with any person or entity who was a customer or client or
prospective customer or client of the Company at any time during the last twelve
(12) months of Executive's employment with the Company, for the purpose of
providing, selling or otherwise distributing procurement business, tools or
services other than those of the Company.
3.3. Non-Solicitation of Employees. Executive
recognizes that many employees at the Company have and will have access to
varying levels and degrees of Confidential Information, and that Executive's
solicitation or assistance in the solicitation of such persons would be
seriously disruptive to the Company, and that such solicitations would undermine
not only the confidentiality of proprietary information, but impair the
relationship between the Company and its employees. As a result, Executive
agrees that for a period of eighteen (18) months following the date he last
performs services for the Company (whether or not such services are rendered
pursuant to this Agreement), he will not, either directly or indirectly,
solicit, induce, recruit, employ or encourage any person who was on the
Company's payroll as of the date of Executive's termination of employment or for
one (1) year prior to that date, to leave their employment for any reason.
4. Returning Company Documents. Executive agrees that
when he leaves the Company's employ, for whatever reason, he will deliver to the
Company (and will not keep in his possession, recreate or deliver to anyone
else) any and all devices, records, data, notes, e-mails, reports, proposals,
lists, correspondence, specifications, drawings, blueprints, sketches,
materials, equipment, other documents or property, or reproductions of any
aforementioned items developed by the Executive pursuant to his employment with
the Company or otherwise belonging to the Company.
5. Notification of New Employer. In the event that the
Executive leaves the Company's employ, for whatever reasons, he hereby grants
consent to the Company to notify his new employer about his rights and
obligations under this Agreement.
6. Equitable Relief.
6.1. Executive acknowledges that the restrictions
contained in Sections 2 and 3 hereof are reasonable and necessary to protect the
legitimate interests of the Company, and that any violation of any provision of
those Sections will result in irreparable injury to the Company. The Executive
represents that his experience and capabilities are such that the restrictions
contained in Sections 3 and 4 hereof will not prevent the Executive from
obtaining employment or otherwise earning a living at the same general level of
economic benefit as anticipated by this Agreement. Executive further recognizes
that the Company competes and will compete on a national and international
basis, and that Executive's access to Confidential Information makes it
necessary for
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the Company to restrict his post-employment activities in any market in which
the Company competes.
6.2. Executive agrees that the Company shall be entitled
to preliminary and permanent injunctive relief, without the necessity of proving
actual damages or the posting of a bond, as well as to an equitable accounting
of all earnings, profits and other benefits arising from any violation of
Sections 1, 2 or 3 hereof, which rights shall be cumulative and in addition to
any other rights or remedies to which the Company may be entitled. In the event
that any of the provisions of Sections 2 and 3 hereof should ever be adjudicated
to exceed the time, geographic, product or service, or other limitations
permitted by applicable law in any jurisdiction, then such provisions shall be
deemed reformed in such jurisdiction to the maximum time, geographic, product or
service, or other limitations permitted by applicable law. If, despite the
foregoing waivers, a court nonetheless requires the posting of a bond, the
parties agree that a bond in the amount of $1,000 would be a fair and reasonable
amount, particularly in light of the difficulty in quantifying what the actual
loss caused by an injunction would be.
6.3. Executive agrees that if Company is obliged to resort
to the courts for the enforcement of a covenant contained in Section 1, 2 or 3,
such covenant shall be extended for a period of time equal to the period of such
breach and the extended period will commence on the later to occur of (a) the
date on which the original (unextended) term of such covenant is scheduled to
terminate or (b) the date of the final court order (without further right of
appeal) enforcing such covenant.
6.4. Executive irrevocably and unconditionally (i) agrees
that any suit, action or other legal proceeding arising out of this Agreement,
including without limitation, any action commenced by the Company for
preliminary and permanent injunctive relief and other equitable relief, shall be
brought in a court of competent jurisdiction in the Commonwealth of
Pennsylvania, (ii) consents to the exclusive jurisdiction of any such court in
any such suit, action or proceeding, and (iii) waives any objection which he may
have to the laying of venue of any such suit, action or proceeding in any such
court.
6.5. Executive agrees that he will provide, and that the
Company may similarly provide, a copy of this Agreement to any business or
enterprise (i) which he may directly or indirectly own, manage, operate,
finance, join, control or participate in the ownership, management, operation,
financing, control or control of, or (ii) with which he may be connected with as
an officer, director, Executive, partner, principal, agent, representative,
consultant or otherwise, or in connection with which he may use or permit his
name to be used; provided, however, that this provision shall not apply in
respect of Section 3 of this Agreement after expiration of the time periods set
forth therein.
7. Termination of Employment. Subject to Executive's
Agreement, Executive's employment may be terminated at the will of either party
at any time and for any reason with or without cause.
8. Successors and Assigns. The rights and protections of
the Company hereinunder shall extend to any successors or assigns of the Company
and to the Company's parents, subsidiaries, and affiliates. For purposes of this
Agreement (and not Executive's Agreement) a transfer of Executive to a new
position with the Company or to a position with the parent, subsidiary
25
or affiliate of the Company will not constitute termination of employment with
the Company. This Agreement may be assigned by the Company without Executive's
consent.
9. Notices. Any notice required or permitted to be given
under this Agreement shall be in writing and shall be delivered by hand, or be
sent by certified mail or overnight courier, as follows (or to such other
address as either party shall designate by notice in writing served upon the
other party in the manner provided herein):
(i) if to Company: Xxxx Xxxxxxxx
Vice President, Human Resources and Employment Counsel
ICG Commerce, Inc.
000 Xxx Xxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
(ii) if to Executive: Such notice address applicable under Executive's
Agreement
Any such notice shall become effective upon being mailed or, in the case of
delivery by hand or overnight courier, upon receipt.
10. Modification of Agreement. This Agreement may not be
modified or amended except by a writing executed by Executive and the Board of
Directors of ICG Commerce Holdings, Inc. Nothing in this Agreement shall be
construed as giving Executive the right to be retained in the employ of the
Company.
11. Governing Law. This Agreement shall be governed by
and interpreted under the laws of the Commonwealth of Pennsylvania without
giving effect to any conflict of laws principles.
IN WITNESS WHEREOF, the undersigned, intending to be
legally bound, have executed this Agreement as of the date first above written.
Attest: ICG COMMERCE, INC.
______________________________ By ___________________________
Name:
Title:
Witness: EXECUTIVE
______________________________ ______________________________
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