1
EXHIBIT 10.20
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of September 27, 1999, between Buildnet,
Inc., a corporation organized and existing under the laws of the State of North
Carolina ("Buildnet") and Xxxxxxx X. Xxxxxxxx ("Employee").
WHEREAS, Buildnet desires to employ Employee and Employee desires to
accept such employment on the terms and conditions hereinafter set forth; and
WHEREAS, the parties hereby acknowledge that the goodwill, continued
patronage, names, addresses and specific business requirements of Buildnet's
clients and customers, and the designs, procedures, systems, strategies,
business methods and know-how of Buildnet, having been acquired through
Buildnet's efforts and/or the expenditure of considerable time and money, are
among the principal assets of Buildnet; and
WHEREAS, the parties hereby acknowledge that as a result of the
position in which Employee will be employed by Buildnet, Employee will develop
special skills and knowledge peculiar to Buildnet's business, whereby Employee
has become and will continue to become, through Employee's employment with
Buildnet, acquainted with the identities of the clients and customers of
Buildnet, and has acquired and will continue to acquire access to the techniques
of Buildnet in carrying on its business, as well as other confidential and
proprietary information; and
WHEREAS, the parties hereto acknowledge that the covenants set forth in
Sections 8 through 11 (the "Covenants") of this Agreement are necessary for the
reasonable and proper protection of Buildnet's confidential and proprietary
information (as defined herein), customer relationships, and the goodwill of
Buildnet's business, and that such Covenants constitute a material portion of
the consideration for Employee's employment hereunder;
NOW, THEREFORE, in consideration of the premises and mutual promises
and covenants contained herein, and for other good and valuable consideration,
the receipt and legal sufficiency of which are hereby acknowledged, the parties
agree as follows.
1. Position; Employment. Buildnet agrees to employ Employee, and
Employee agrees to be employed, as Executive Vice President of Sales and
Marketing of Buildnet, or in such other position of comparable seniority and
status suitable to Employee's knowledge and experience as the Board of Directors
may from time to time assign. The employment of Employee shall commence as of
the date of this Agreement and continue for the period beginning on the date
hereof and ending as provided in Section 6 hereof.
2. Performance of Duties. Employee agrees to use his best efforts to
devote his entire time and best efforts, skill, ability and attention to the
business and affairs of Buildnet and to the performance of the services and
duties consistent with his position with the Company as he may be assigned from
time to time by the Board of Directors of Buildnet.
2
In the performance of his responsibilities as Chief Financial Officer,
Employee shall be subject to all of Buildnet's policies, rules and regulations
applicable to its employees of comparable status. Employee shall report directly
to and be subject to the direction of the President and Board of Directors of
Buildnet. Employee shall perform the duties consistent with Employee's
knowledge, experience, and position and the duties of Buildnet employees of
comparable status and shall participate with other comparable senior executive
management employees in programs and policies of Buildnet. Employee shall have
such other duties and responsibilities consistent with his position as the Board
of Directors of Buildnet shall from time to time reasonably assign to him. In
performing such duties, Employee shall be subject to and shall substantially
abide by all policies and procedures developed by Buildnet.
3. Compensation.
(a) Base Salary. In consideration of Employee's services
hereunder, Buildnet shall pay Employee a minimum annual base salary of Two
Hundred Thousand Dollars ($200,000) per annum, less applicable statutory
deductions, payable in accordance with Buildnet's normal payroll practices (the
"Base Salary"). Employee's Base Salary shall be reviewed by the Board of
Directors of Buildnet on an annual basis with a view to the increase thereof
based on Employee's performance, the performance of Buildnet, inflation,
comparable industry salaries and other relevant factors. The Base Salary, as
increased from time to time, shall not be decreased without Employee's consent.
(b) Bonus. Employee shall be entitled to participate in any
bonus plan or program which may currently exist or be developed in the future by
Buildnet for its executives generally or for its sales and marketing personnel
specifically.
4. Stock Options. Upon the commencement of Employee's employment by
Buildnet, Buildnet shall grant to Employee incentive stock options to purchase
up to an aggregate of Seventy-Two Thousand (72,000) shares of the Common Stock
of Buildnet, with an exercise price of $3.30. Options to purchase all such
shares shall begin to vest upon the effective date of this Agreement in monthly
installments over four (4) years. Such options shall become fully exercisable in
the event of (a) a sale of all or substantially all the assets of Buildnet or a
merger or consolidation involving Buildnet in which the shareholders of Buildnet
prior to such transaction own less than a majority of the voting securities of
the entity surviving such transaction, (b) any transaction or series of related
transactions pursuant to which a person, entity or persons or entities under
common control or acting as a group within the meaning of Section 13(d) of the
Securities Exchange Act of 1934, as amended, acquires securities constituting at
least a majority of the voting power of Buildnet, or (c) if the employee is
terminated without cause.
5. Employee Benefits.
(a) During Employee's Term of Employment (as defined in
Section 6 herein), Employee shall be eligible to receive and/or participate in
all employee benefits that are offered by Buildnet to its employees generally
and to senior executives specifically.
2
3
(b) If during the term of this agreement, Buildnet and the
employee agree that it would be beneficial for him to relocate to the
Raleigh/Durham area, Buildnet will reimburse the employee for the cost
associated with selling his residence and purchasing one in the Raleigh/Durham
area as well as the costs to move his household goods.
6. Term and Termination. The term of the Employee's employment under
this Agreement (the "Term of Employment") shall commence as of the date hereof
and continue through the date four (4) years from such date, unless earlier
terminated in accordance with the provisions of this Agreement. The Term of
Employment shall automatically be extended for successive one (1) year terms
after the initial four-year term unless either party gives notice of nonrenewal
at least ninety (90) days prior to the end of the then-current term. This
Agreement shall terminate prior to the expiration of the Term of Employment upon
the occurrence of any one of the following events:
(a) Cause. Buildnet may terminate this Agreement, at any time,
for Cause, upon prior written notice to Employee and after giving Employee the
right to be heard before the Board prior to any such termination, in which event
all payments under this Agreement shall cease, except as provided in Section
6(d) below. The term "Cause" as used herein shall mean (i) Employee, in carrying
out his duties hereunder, has been guilty of gross negligence or willful and
wanton misconduct which in either case results in material harm to the financial
condition, business, assets, or prospects of Buildnet; (ii) the conviction of,
or the entering of a plea of no contest by, Employee for a felony or crime
involving moral turpitude, (iii) any act involving dishonesty in the performance
of Employee's duties hereunder, including, without limitation, fraud,
misappropriation or embezzlement, (iv) any material breach of this Agreement by
Employee, which failure cannot be cured or shall not have been cured within
thirty (30) days after receipt by Employee of written notice from Buildnet
specifying in reasonable detail the nature of such breach; or (v) Employee fails
to carry out legitimate written policy directions (consistent with his position
as set forth in Section 1 above) of the Board of Directors of Buildnet, which
failure cannot be cured or shall not have been cured within thirty (30) days
after receipt by Employee of written notice from Buildnet specifying in
reasonable detail the failure to so carry out such directions.
(b) Death. This Agreement shall terminate if Employee dies
during the Term of Employment. In such event, Buildnet shall pay to the
Employee's executors, legal representatives or administrators an amount as set
forth in Section 6(d) below.
(c) Disability. Buildnet may terminate this Agreement if
Employee shall suffer a Disability, in which event all payments under this
Agreement shall cease, except as provided in Section 6(d) below. For purposes of
this Agreement, "Disability" shall mean that Employee has not performed his
full-time duties with Buildnet for six (6) consecutive months or an aggregate of
six (6) months within a twelve (12) month period as a result of his incapacity
due to physical or mental illness.
(d) Certain Payments Upon Termination. If, during the Term of
Employment, Buildnet terminates the employment of Employee for Cause, Employee
voluntarily terminates his
3
4
employment with Buildnet, or upon the death or Disability of Employee during the
Term of Employment, the Term of Employment shall terminate immediately
thereafter, and Buildnet shall pay Employee or his beneficiary such Base Salary
and any accrued bonus as he may be entitled to receive for services rendered
prior to the date of such termination. If, during the Term of Employment,
Buildnet terminates the employment of Employee without Cause, then Buildnet
shall pay the employee an amount equal to one half his annual salary. An
exception to this will occur if a change on control of the company as defined in
4(a) above occurs. If such a change of control occurs and the employee is
terminated without cause then a payment equivalent to the employees salary
through the term of this agreement will be made in lieu of one half of the
annual salary. In the event of any such termination, Buildnet shall not be
liable for any other payments to Employee.
7. Restrictive Covenants.
(a) Noncompetition. During the term of his employment, and for
a period of two (2) years after the termination or cessation of Employee's
employment with Buildnet, regardless of manner or cause of termination, Employee
agrees that, within the geographic area described in Section 8(e) hereof, he
will not: (i) engage in, manage, operate, control or supervise, or participate
in the management, operation, control or supervision of, any business or entity
which provides products or services competitive with those then currently
provided by Buildnet; or (ii) have any ownership or financial interest, directly
or indirectly, in any entity which provides products or services competitive
with those then currently provided by Buildnet, including, without limitation,
as an individual, partner, shareholder (other than as a shareholder of a
publicly-owned corporation in which Employee owns less than 5% of the
outstanding shares of such corporation), officer, director, employee, member,
associate, principal, agent, representative or consultant, and shall not in any
other manner, directly or indirectly, compete to any extent with such business
of Buildnet.
Notwithstanding the foregoing, after termination of Employee's
employment, Employee shall be permitted to be employed by or be otherwise
involved with an entity consisting of more than one separate and distinct
operating divisions, one of which is engaged in business competitive with the
business of Buildnet, provided that Employee's employment by or involvement with
such entity is not in any aspect related to, connected with or affected by such
operating division that is engaged in business competitive with Buildnet's
business.
(b) Restriction on Solicitation of Customers. Employee agrees
that he will not (in addition to any other restriction on his activities), for a
period of two (2) years immediately following Employee's termination, on his own
behalf or on behalf of any other person or entity, directly or indirectly call
on or otherwise contact customers of Buildnet on or prior to the date of
termination or cessation of Employee's employment with Buildnet (the "Restricted
Customers") within the geographic area described in Section 8(e) hereof, for the
purpose of selling products or services to the Restricted Customers that are
competitive with those provided by Buildnet.
(c) Restriction on Solicitation of Employees. Employee agrees
that he will not, for a period of two (2) years immediately following Employee's
termination, directly or indirectly contact,
4
5
solicit, interfere with or attempt to entice in any form, fashion or manner any
employee of Buildnet: (i) for the purpose of inducing that employee to work with
or for Employee (or with a person or business entity with which employee is
affiliated); or (ii) to terminate his employment with Buildnet.
(d) Confidentiality. Employee will not at any time, whether
during or after the termination of his employment, reveal to any person or
entity any of the trade secrets or confidential information concerning the
organization, business or finances of Buildnet or of any third party that
Buildnet is under an obligation to keep confidential (including but not limited
to trade secrets or confidential information respecting inventions, research,
products, designs, methods, know-how, formulae, techniques, systems, processes,
software programs, works of authorship, customer lists, projects, plans and
proposals), except as may be required in the ordinary course of performing his
duties as an employee of Buildnet, and Employee shall keep secret all matters
entrusted to him and shall not use or attempt to use any such information in any
manner that may injure or cause loss to Buildnet. The foregoing shall not apply
to any information that (i) is in the public domain, (ii) is already known to
Employee prior to its disclosure by Buildnet or (iii) is disclosed to Employee
by a third party under no obligation of confidentiality to Buildnet.
(e) Geographic Scope of Restrictive Covenants. The geographic
area in which Employee shall not engage in any of the prohibited activities
listed in subsections 7(a) and 7(b) hereof shall be limited to the United
States.
8. Employee Developments. If at any time or times during Employee's
employment, Employee shall (either alone or with others) make, conceive,
discover or reduce to practice any invention, modification, discovery, design,
development, improvement, process, software program, work of authorship,
documentation, formula, data, technique, know-how, secret or intellectual
property right whatsoever or any interest therein (whether or not patentable or
registrable under copyright or similar statutes or subject to analogous
protection) (herein called "Developments") that relates to the business of
Buildnet or any of the products or services being developed, manufactured or
sold by Buildnet or that may be used in relation therewith, such Developments
and the benefits thereof shall immediately become the sole and absolute property
of Buildnet and its assigns, and Employee shall promptly disclose to Buildnet
each such Development and hereby assigns any rights Employee may have or acquire
in the Developments and benefits and/or rights resulting therefrom to Buildnet
and its assigns without further compensation and shall communicate, without cost
or delay, and without publishing the same, all available information relating
thereto to Buildnet. Upon the request of Buildnet, the Employee will execute and
deliver all documents and do other acts which are or may be necessary to
document such transfer or to enable Buildnet to file and prosecute applications
for and to acquire, maintain, extend and enforce any and all patents, trademark
registrations or copyrights under United States or foreign law with respect to
any such developments.
Notwithstanding the foregoing, this Agreement shall not be construed to
apply to, and shall not create any assignment of, any Developments of the
Employee that are covered by Section 66-57.1 of the North Carolina General
Statutes, a copy of which is attached hereto as Exhibit A.
5
6
9. Existing Developments. Employee represents that the Developments, if
any, identified on Exhibit B attached hereto comprise all the unpatented and
uncopyrighted Developments that Employee has made or conceived prior to or
otherwise not in connection with Employee's employment by Buildnet, which
Developments are excluded from this Agreement. Employee understands that it is
necessary only to list the title and purpose of such Developments but not
details thereof.
Employee further represents that Employee's performance of all the
terms of this Agreement and as an employee of Buildnet does not and will not
breach any agreement to keep in confidence proprietary information acquired by
Employee in confidence or in trust prior to Employee's employment by Buildnet.
Employee has not entered into, and Employee agrees he will not enter into, any
agreement either written or oral in conflict herewith.
10. Return of Buildnet Property. Upon the termination of Employee's
employment with Buildnet for any reason, Employee shall leave with or return to
Buildnet all personal property belonging to Buildnet ("Buildnet Property") that
is in Employee's possession or control as of the date of such termination of
employment, including, without limitation, all records, papers, drawings,
notebooks, specifications, marketing materials, software, reports, proposals,
equipment, or any other device, document or possession, however obtained,
whether or not such Buildnet Property contains confidential or proprietary
information of Buildnet as described in Section 7(d) hereof.
11. Enforcement of the Covenants. Employee acknowledges and agrees that
the Covenants contained in Sections 7 through 10 of this Agreement are
reasonably necessary to the protection of Buildnet's business, that a violation
of any of the Covenants contained in Sections 7 through 10 of this Agreement
would result in immediate and irreparable harm to Buildnet and that Buildnet's
remedies at law and/or the award of monetary damages would be inadequate relief
for such a violation. Therefore, Employee's violation or threatened violation of
any of the Covenants contained in Sections 7 through 10 of this Agreement will
give Buildnet the right to enforce such Covenants through specific performance,
temporary restraining order, preliminary or permanent injunction, and other
equitable relief. These remedies will be cumulative and in addition to any other
remedies that Buildnet may have. In addition, Employee agrees that the Covenants
contained in Sections 7 through 10 will be extended by a length of time equal to
the period of time running from the filing of any action to enforce or challenge
the validity of the Covenants to the date of a final judgment (after appeals, if
any) or settlement of said litigation, or the expiration of all applicable
appeal periods after the entry of judgment in said litigation, whichever event
last occurs.
12. Waiver of Breach. Any waiver by Buildnet of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach of such provision or any other provision hereof.
13. Validity and Survival of the Covenants. Employee acknowledges and
agrees that the Covenants contained in this Agreement are exchanged for valid
and reasonable consideration, are reasonably necessary to protect Buildnet's
legitimate interests, are reasonable with respect to time
6
7
duration and geographic scope, do not interfere with the interests of the
public, and that the descriptions of prohibited activities contained in the
covenants are sufficiently precise and definite to inform me of the scope of the
Covenants. The Covenants contained in Sections 7 through 10 of this Agreement
will survive termination of Employee's employment. Employee agrees that the
existence of any claim or cause of action that he may have against Buildnet,
whether based on this Agreement or otherwise, will not constitute a defense to
Buildnet's enforcement of the Covenants.
14. Severability. Employee hereby agrees that each provision herein
shall be treated as a separate and independent clause, and the unenforceability
of any one clause shall in no way impair the enforceability of any of the other
clauses herein. Moreover, if one or more of the provisions contained in this
Agreement shall for any reason be held to be excessively broad as to scope,
duration, territory, activity or subject so as to be unenforceable at law, such
provision or provisions shall be construed by the appropriate judicial body by
limiting and reducing it or them, so as to be enforceable to the extent
compatible with the applicable law as it shall then appear. In particular, in
the event that the provisions of Sections 7(a) and 7(b) are found to be
unenforceable or void (either in whole or in part) then the offending portion
shall be construed as valid and enforceable only to the extent permitted by law,
and the balance of this Agreement will remain in full force and effect. It is
the intention of the parties to restrict the activities of Employee only to the
extent necessary to protect the legitimate business interests of Buildnet and
not to deprive Employee of the right to earn a livelihood. Employee agrees that
this Agreement is reasonably necessary to protect Buildnet's legitimate business
interests.
15. Binding Effect. Employee's obligations under this Agreement shall
survive the termination of Employee's employment regardless of the manner of
such termination and shall be binding upon Employee's heirs, executors,
administrators and legal representatives.
16. Assignment. Buildnet shall have the right to assign this Agreement
to its successors and assigns, and all covenants and agreements hereunder shall
inure to the benefit of and be enforceable by said successors or assigns. As a
condition of any such assignment, Buildnet shall cause the assignee to assume
all of Buildnet's obligations hereunder. This Agreement may be amended only in a
writing signed by each of the parties hereto.
17. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of North Carolina. This Agreement may be
executed in counterparts.
18. Entirety. This Agreement, including any exhibits hereto, as it may
be amended pursuant to the terms hereof, represents the complete and final
agreement of the parties and shall control over any other statement,
representation or agreement by Buildnet (e.g., as may appear in employment or
policy manuals). This Agreement supersedes any prior negotiations or discussions
between the parties with regard to the subject matter hereof.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
7
8
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and their seals affixed hereto as of the day and year first
above written.
BUILDNET INC.
By: /s/ Xxxxxx X Xxxxxx, III
----------------------------
Name: Xxxxxx X. Xxxxxx, III
--------------------------
Title: President
-------------------------
EMPLOYEE
/s/ Xxxxxxx X. Xxxxxxxx (SEAL)
--------------------------
Xxxxxxx X. Xxxxxxxx
8
9
EXHIBIT A
SECTION 66-57.1 OF THE NORTH CAROLINA GENERAL STATUTES
Any provision in an employment agreement which provides that the
[employee] shall assign or offer to assign any of his rights in an invention to
his employer shall not apply to an invention that the employee developed
entirely on his own time without using the employer's equipment, supplies,
facility or trade secret information except for those inventions that:
(i) relate to the employer's business or actual or demonstrably
anticipated research or development, or
(ii) result from any work performed by the employee for the employer.
To the extent a provision in an employment agreement purports to apply
to the type of invention described, it is against the public policy of this
State and [is] unenforceable. The employee shall bear the burden of proof in
establishing that his invention qualifies under this section.
10
EXHIBIT B
PRIOR DEVELOPMENTS BY EMPLOYEE
The following is a complete list of all unpatented and uncopyrighted
Developments relevant to the subject matter of my employment by Buildnet that
have been made or conceived by me prior to or otherwise not in connection with
my employment by Buildnet.
No inventions or improvements.
------
All such inventions as are described below:
------
Additional sheets attached.
-------
/s/ Xxxxxxx X. Xxxxxxxx
-----------------------
Xxxxxxx X. Xxxxxxxx
