EXHIBIT 10.7
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and
entered into this 30th day of July, 1999 by and between U.S. Interactive, Inc.,
a corporation (the "Company") and Xxxxxxx X. Xxxxxxxx (the "Executive").
RECITALS
WHEREAS, the Company engages in the business information
technology services, principally web-based technologies associated with,
internet, intranet and extranet design, consultation, installation and
maintenance professional services (the "Business");
WHEREAS, the Executive possesses an intimate knowledge of the
business and affairs of the Company and its policies, procedures, methods and
personnel; and
WHEREAS, the Company desires to continue to employ the
Executive as its Chief Executive Officer and President on the terms and
conditions hereinafter set forth and the Executive desires to accept such
continued employment on such terms and conditions.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, the parties agree as follows:
1. Employment. Subject to and pursuant to the terms of this
Agreement, effective as of the date of this Agreement (the "Effective Date"),
the Company shall employ the Executive, and the Executive shall be employed by
and shall serve the Company, in the capacity of Chief Executive Officer and
President, reporting directly to the Board of Directors (the "Board") pursuant
to the terms and conditions of this Agreement.
2. Term and Renewals. Subject to the provisions for earlier
termination provided herein, the term of this Agreement (the "Initial Term")
shall commence on the Effective Date and shall terminate on December 31, 2000.
The Initial Term shall be renewed for a one (1)-year period (the "Initial
Renewal Term") if at least thirty (30) days prior to the expiration of the
Initial Term either party hereto shall not have given the other party written
notice not to renew this Agreement. The Initial Renewal Term and each "Renewal
Term" (as defined in this Section 2) shall be renewed for successive one
(1)-year periods (each, a "Renewal Term") if at least thirty (30) days prior to
the expiration of the Initial Renewal Term or a Renewal Term, as the case may
be, either party hereto shall not have given the other party written notice not
to renew this Agreement. The Initial Term, together with any Initial Renewal
Term and all Renewal Terms, if any, is referred to herein as the "Term." Nothing
in this Agreement shall be construed to require either party hereto to renew
this Agreement and either party hereto has the sole discretion not to renew this
Agreement.
3. Duties. During the Term, the Executive shall be employed at
the offices of the Company in Gulph Xxxxx, Pennsylvania, and shall serve as and
have the title of Chief Executive Officer and President of the Company reporting
directly to the Board, and shall have all duties and responsibilities
customarily associated with such positions, including duties determined by the
Board and appropriate for persons in such positions, as limited or expanded
pursuant to this Agreement. The Executive shall also serve as a member of the
Board of Directors, subject to removal pursuant to the terms of the Company's
Certificate of Incorporation and Bylaws. The Executive shall devote
substantially all of his working time and effort during normal business hours to
the business and affairs of the Company, and shall use his reasonable best
efforts to perform his duties and responsibilities hereunder faithfully and
efficiently. Notwithstanding the foregoing, the Executive may devote a portion
of his working time and effort during normal business hours to charitable
activities, the management of his investments, other business activities that do
not compete with the Business, and to such other matters as the Executive may
determine, so long as such activities do not prevent the Executive from
performing his duties hereunder.
4. Compensation. For services rendered by the Executive during
the Term pursuant to this Agreement, the Company shall pay or award compensation
to the Executive as follows:
(a) Base Compensation. The Company shall pay to the
Executive a base salary ("Base Compensation") of $235,000 per annum, payable in
accordance with the Company's customary payroll practices for its officers. The
amount of Base Compensation shall be reviewed by the Board annually; provided,
however, that Base Compensation may not be decreased.
(b) Bonus Compensation. In addition to the Base
Compensation, the Board of Directors of the Company (or the Compensation
Committee of the Board) may in its discretion award the Executive a performance
bonus (the "Performance Bonus") in cash or stock options commensurate with the
Executive's performance as Chief Executive Officer and President. An Executive
Committee, comprised of the Chairman of the Board, the Executive, and Chief
Financial Officer of the Company, the purpose of which, in part, will be to
create a Management Compensation Incentive Program in which the Executive and
other management personnel will be participants, will be formed. The Management
Compensation Incentive Program will be administered by the Compensation
Committee of the Board of Directors.
(c) Withholding. The Company shall deduct and withhold from
the compensation payable to the Executive hereunder any and all applicable
federal, state and local income and employment withholding taxes and any other
amounts required to be deducted or withheld by the Company under applicable
statute or regulation.
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5. Additional Benefits.
(a) Fringe Benefits; Reimbursement; Vacation. In addition
to Base Compensation and Performance Bonus provided for in Section 4 above, in
connection with the Executive's employment by the Company, the Executive shall
be entitled to receive:
(i) all fringe benefits customarily offered by the
Company to its senior executive officers, including without limitation, health
plan benefits, expense accounts, participation in any Company stock compensation
plan and the various employee benefit plans or programs (collectively, the
"Benefit Plans") provided to the employees of the Company in general, subject to
the eligibility requirements with respect to each such Benefit Plan, and to such
other benefits or perquisites as may be approved by the Board during the Term;
(ii) reimbursement from the Company for all customary,
ordinary and necessary business expenses incurred by the Executive in the
performance of his duties and responsibilities hereunder;
(iii) four (4) weeks' paid vacation benefits, or such
greater amount as may be available under the Company's vacation policy in effect
for its senior executive officers, which may not be carried over to the
following year;
(iv) annual membership dues for a country club not to
exceed $4500, and such other annual membership dues for professional or business
organizations (not to include social clubs) reasonably requested by Executive
and approved by the Compensation Committee in an aggregate amount up to $5,500
per year;
(v) a monthly automobile allowance in the amount of
$500.00; and
(vi) use of up-to-date computer equipment and facsimile
machine for Executive's home office and connectivity to the Company's offices
and the Internet.
6. Termination of Employment.
(a) Termination. Except as otherwise provided in this
Agreement, the Executive's employment by the Company hereunder shall terminate
upon the earliest to occur of the dates specified below (as applicable, the
"Termination Date"):
(i) The close of business on the date of expiration of
the Term.
(ii) The close of business on the date of the
Executive's death ("Death").
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(iii) The close of business on the date specified as
the effective date of termination of the Executive's employment in a "Notice of
Termination" (as defined below) delivered by the Company to the Executive due to
the Executive's "Disability" (as defined below). For purposes of this Agreement,
the term "Disability" shall mean the inability or incapacity of the Executive,
due to any medically determined physical or mental impairment, to perform his
duties and responsibilities for the Company for a total of one hundred eighty
(180) calendar days in any consecutive twelve (12) month period during the Term,
that has been verified in a written opinion from a physician.
(iv) The close of business on the date specified as the
effective date of termination of the Executive's employment by the Executive in
a Notice of Termination delivered by the Executive to the Company (a "Voluntary
Termination").
(v) The close of business on the date specified as the
effective date of termination of the Executive's employment by the Company for
"Cause" (as defined below) in a Notice of Termination delivered by the Company
to the Executive. For purposes of this Agreement, the term "Cause" shall mean
termination based on
(A) the Executive's material breach of this
Agreement which, if capable of cure, is not cured fully within thirty (30) days
after written notice from the Board to the Executive identifying such breach,
provided, that such thirty (30)-day period shall be extended to sixty (60) days
if such breach is not reasonably susceptible to cure within thirty (30) days and
the Executive shall have commenced to cure within such thirty (30) day period
and is then proceeding with due diligence to cure such breach;
(B) conviction of the Executive for (x) any crime
constituting a felony in the jurisdiction in which committed, (y) any crime
involving moral turpitude (whether or not a felony) or (z) any other criminal
act against the Company involving dishonesty whether or not a felony or willful
misconduct intended to injure the Company;
(C) substance abuse (including drunkenness) by the
Executive which is repeated after written notice from the Board to the Executive
identifying such abuse;
(D) the failure or the refusal of the Executive to
follow lawful and proper directives of the Board, which is not corrected within
thirty (30) days after written notice from the Board to the Executive
identifying such failure or refusal;
(E) willful malfeasance or gross misconduct by the
Executive which discredits or damages the Company; or
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(F) conviction of the Executive for a violation of
the federal securities laws.
(vi) The close of business on the date specified as the
effective date of termination of the Executive's employment by the Company other
than for Death, Disability or Cause in a Notice of Termination delivered by the
Company to the Executive.
(b) Notice of Termination. Any termination of the
Executive's employment hereunder (other than termination as a result of Death)
by the Company or by the Executive shall be communicated by a Notice of
Termination to the other party hereto given in accordance with the provisions of
Section 9(c) below. For purposes of this Agreement, a "Notice of Termination"
shall mean a written notice which (i) indicates the specific termination
provision in this Agreement relied upon, and (ii) if applicable, sets forth the
facts and circumstances claimed to provide a basis for termination of the
Executive's employment, including, in the case of a Voluntary Termination,
whether such Voluntary Termination constitutes a "Constructive Voluntary
Termination" (as defined below).
7. Payment Upon Termination of Employment.
(a) Voluntary Termination, Termination for Cause or
Expiration of Term. If the Executive's employment is terminated pursuant to a
Voluntary Termination, a termination for Cause or the expiration of the Term,
then, without limiting any other rights or remedies available to the Company at
law or in equity, the Company shall pay or provide to the Executive, his legal
representatives, heirs, eligible dependents, if any, or permitted assigns, as
applicable,
(i) on the Termination Date, all Base Compensation
earned but unpaid as of the Termination Date; and
(ii) all benefits to which such persons may be entitled
under any of the Benefit Plans which provide for benefits after termination of
employment, in accordance with the terms thereof or as otherwise required by
law.
(b) Other Terminations. Subject to the provisions of
Section 7(c) below, if the Executive's employment is terminated other than
pursuant to a Voluntary Termination, a termination for Cause or the expiration
of the Term:
(i) the Company shall pay to the Executive, his legal
representatives, heirs or permitted assigns, on the Termination Date, all Base
Compensation (in the event of Disability, less any disability payments made to
Executive pursuant to a Company disability plan or policy, and Performance Bonus
(other than the Performance Bonus, if any, for the fiscal year in which the
Termination Date occurs, the payment of which is governed by clause (iv) of this
Section 7(b)) earned but unpaid as of the Termination Date;
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(ii) during the period beginning on the Termination
Date and extending until the date this Agreement otherwise would have terminated
had the employment of the Executive not been earlier terminated (such period is
referred to herein as the "Remaining Term"), the Company shall provide to the
Executive, his legal representatives, heirs, eligible dependents, if any, or
permitted assigns, as applicable, all benefits to which such persons may be
entitled under any of the Benefit Plans, and specifically, without limitation,
shall provide the Executive and his eligible dependents, if any, with life,
disability, accident and group health insurance benefits substantially similar
to those which the Executive and his dependents were receiving immediately prior
to the Notice of Termination, provided that the Executive or his legal
representatives, heir or permitted assigns pay the regular premium required of
active employees for such coverage, and provided further that following the
expiration of the Remaining Term, the Executive shall be eligible to purchase
health insurance benefits in accordance with applicable federal law;
(iii) during the Remaining Term, the Company shall pay
the Executive the Base Compensation that would have been payable had the
Executive's employment not been terminated, and such Base Compensation shall be
payable in accordance with the Company's customary payroll practices for its
officers, less the amount, if any, of monthly disability income paid to the
Executive pursuant to any Company-sponsored long-term disability plan;
(iv) on the Termination Date the Company shall pay to
the Executive, his legal representatives, heirs or permitted assigns, a pro-rata
portion of his Performance Bonus for such fiscal year (the "Pro Rata Bonus"),
such payment to be made within thirty (30) days following the date on which a
bonus is declared in which the Executive would have participated but for his
termination; and
(v) all stock options, warrants, rights and other
Company stock-related awards granted to the Executive by the Company
(collectively, the "Stock Awards") that otherwise would have vested and become
exercisable during the Remaining Term, shall become upon the Termination Date
fully vested and nonforfeitable, all restrictions (except for restrictions
required by law), if any, thereon shall lapse, all performance goals, if any,
associated therewith shall be deemed met in full, and the Executive shall be
entitled to exercise any or all such Stock Awards in accordance with the terms
of the documentation pursuant to which such Stock Awards were granted (as such
Stock Awards are amended by this clause (v)).
Notwithstanding any other provision of this Agreement to the contrary,
the Executive shall not be required to mitigate the amount of any payment
provided for in this Section 7(b) by seeking other employment or otherwise, and
the amount of any payment provided for in this Section 7(b) shall not be reduced
by any compensation earned by the Executive as a result of his employment by
another employer after the Termination Date or otherwise.
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(c) Termination Following the Effective Date or a Change in
Control. Notwithstanding any other provision of this Agreement to the contrary,
if within six (6) months following the Effective Date or a "Change in Control"
(as defined below) of the Company, as applicable, the employment of the
Executive terminates pursuant to a "Constructive Involuntary Termination" (as
defined below), the Executive shall be entitled to the compensation and benefits
described in Section 7(b) above (including the vesting of Stock Awards and the
proration of a Performance Bonus) as if the Executive's employment had been
terminated other than pursuant to a Voluntary Termination, a termination for
Cause or the expiration of the Term, during the period beginning on the date of
termination by the Executive and extending through the Remaining Term.
Notwithstanding any other provision of this Agreement to the contrary, the
Executive shall not be required to mitigate the amount of any payment provided
for in this Section 7(c) by seeking other employment or otherwise, and the
amount of any payment provided for in this Section 7(c) shall not be reduced by
any compensation earned by the Executive as a result of his employment by
another employer after the Termination Date or otherwise.
For purposes of this Section 7(c), the following terms shall have the following
meanings:
(i) "Change in Control" shall mean and be determined to
have occurred if (i) any person (as such term is used in Sections 13(b) and
14(b) of the Securities Exchange Act of 1934, as amended) (the "Exchange Act")
is or becomes the beneficial owner (as defined in Rule 13d-3 promulgated under
the Exchange Act), directly or indirectly, of securities of the Company
representing 40% or more of the combined voting power of the then outstanding
securities of the Company; (ii) during any period of twenty-four (24) months, a
majority of the members of the Board who are elected by the holders of the
Company's Common Stock are replaced by directors who were not nominated and
approved by the directors previously elected by such holders of the Common
Stock; (iii) the Company, or substantially all of the assets of the Company on a
consolidated basis, shall be combined with or acquired by another company,
entity or individual; or (iv) a majority of the members of the Board are
represented by, or appointed by or affiliated with, any person (as such term is
used in Sections 13(b) and 14(b) of the Exchange Act) whom the Board has
determined is seeking to effect a Change in Control of the Company of the type
described in clauses (i), (ii) or (iii) of this definition.
(ii) "Constructive Involuntary Termination" shall mean
voluntary termination of employment by the Executive as a result of a
significant reduction or adverse change in the duties, responsibilities,
reporting relationship, job description, compensation, perquisites, office or
location of employment of the Executive without the written consent of the
Executive, which is not cured fully within thirty (30) days after written notice
from Executive to the Board identifying such significant reduction or adverse
change, provided, that such thirty (30) day period shall be extended to sixty
(60) days if such significant reduction or adverse change is not reasonably
susceptible to cure within thirty (30) days and the Company shall have commenced
cure within such thirty (30) day period and is then proceeding with due
diligence to cure such breach.
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(d) Exclusive Payments. The payments upon termination made
by the Company to the Executive pursuant to Sections 7(b) and (c) above shall
constitute the exclusive payments due to the Executive upon termination under
this Agreement.
(e) The Board of Directors of the Company have approved
this Agreement and the Company shall submit to the stockholders of the Company
for approval any payments to be made hereunder that would be parachute payments
(as defined in Section 280G of the Internal Revenue Code) to the extent such
approval avoids the characterization of such payments as excess parachute
payments. Notwithstanding any such submission for stockholders approval, or if
such approval is not obtained, if any payments required under this Agreement are
not deductible by the Company as a result of Section 280G of the Internal
Revenue Code, and any regulations thereunder (or any successor statute or
regulation), then such amounts will be reduced to the extent the payments will
be deductible by the Company.
8. Executive Covenants.
(a) Unauthorized Disclosure. The Executive agrees and
understands that due to the Executive's position with the Company, the Executive
has been and will be exposed to, and will receive confidential and proprietary
information relating to the businesses of the Company, including but not limited
to technical information, computer software (including source and object code
data and related documentation), research and development results, know-how,
product information, formulae, processes, business and marketing plans,
strategies, customer information, other information concerning the Company's
products, promotions, development, financing, expansion plans, business policies
and practices (collectively, the "Trade Secrets"). The Executive agrees that
during the Term and at all times thereafter the Executive will keep such Trade
Secrets confidential and will not disclose such Trade Secrets, either directly
or indirectly, to any third person or entity without the prior written consent
of the Company. This confidentiality covenant has no geographical or territorial
restriction. On the Termination Date, the Executive promptly will return to the
Company such Trade Secrets. Disclosure of Trade Secrets by the Executive shall
not be construed to be unauthorized when disclosure is made in the course of
performance of the Executive's duties and responsibilities, in the course of
employment, in compliance with instructions of the Board, in compliance with
law, or as may be required by the government.
Notwithstanding the foregoing, the Executive's obligation of
confidentiality shall not apply to any information, whether or not it is within
the meaning of Trade Secret, if such information (i) was known to the Executive
prior to his employment by the Company, or (ii) was or becomes generally
available to the public other than as a result of a disclosure by the Executive
in violation of the provisions of this Section 8(a), or (iii) was or is
disclosed to third parties by the Company without the obligation of
confidentiality, except in connection with the Business of the Company.
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(b) Prohibited and Competitive Activities. The Executive
and the Company recognize that due to the nature of the Executive's engagement
hereunder and the relationship of the Executive to the Company, subsequent to
the Effective Date, the Executive will have access to, and will acquire, and may
assist in developing Trade Secrets. The Executive acknowledges that Trade
Secrets will be of central importance to the Company and its affiliates and that
disclosure of it to, or its use by, others could cause substantial loss to the
Company. If the disclosure by the Executive is not within the exceptions
enumerated in the Section 8(a) above, the Executive accordingly agrees as
follows:
(i) Prohibited Activities. The Executive will not at
any time during the Term and at all times thereafter, other than in the course
of his employment with the Company, disclose or furnish to any other person or,
directly or indirectly, use for his own account or the account of any other
person, any Trade Secrets, and he shall retain all such Trade Secrets in trust
for the benefit of the Company, its affiliates and the successors and assigns;
(ii) Non-Competition. By and in consideration of the
Company's entering into this Agreement and providing the compensation and
benefits to be provided by the Company to the Executive, and further in
consideration of the Executive's continued exposure to Trade Secrets, the
Executive agrees that he will not, from the Effective Date until the Termination
Date, engage in any "Competitive Activity" as defined below. For purposes of
this Agreement, the term "Competitive Activity" shall mean engaging in any of
the following activities: (A) serving as a director of any "Competitor" (as
defined below); (B) directly or indirectly through one or more intermediaries,
either (x) controlling any Competitor or (y) owning any equity or debt interests
in any Competitor (other than equity or debt interests which are publicly traded
and, at the time of any acquisition, when combined with other holdings, do not
exceed 5% of the particular class of interests outstanding) (it being understood
that, if interests in any Competitor are owned by an investment vehicle or other
entity in which the Executive owns an equity interest, a portion of the
interests in such Competitor owned by such entity shall be attributed to the
Executive, such portion determined by applying the percentage of the equity
interest in such entity owned by the Executive to the interests in such
Competitor owned by such entity); (C) employment by (including serving as an
officer or partner of), providing consulting services to (including, without
limitation, as an independent contractor), or managing or operating the business
or affairs of, any Competitor; or (D) participating in the ownership,
management, operation or control of or being connected in any manner with any
Competitor. For purposes of this Agreement, the term "Competitor" shall mean any
person (other than the Company or any wholly-owned subsidiary of the Company)
that engages in the Business (as determined at the time of termination of
employment) at the time of determination, in any "Restricted Area" (as defined
below) in competition with the Company. For purposes of this Agreement, the term
"Restricted Area" shall mean the United States and any territory thereof.
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(iii) In the event of termination of Executive's
employment hereunder pursuant to a Voluntary Termination (other than in
connection with a Constructive Involuntary Termination) or for Cause, the
Executive agrees that he will not, from the Termination Date to the scheduled
expiration of the Term, engage in any Competitive Activity;
(iv) In the event of termination of Executive's
employment hereunder for any reason (other than a termination by the Company
prior to expiration of the then current term, which termination is not pursuant
to Section 6(a)(ii) or 6(a)(v) hereof), the Company shall have the option to
extend the obligation of the Executive not to engage in any Competitive Activity
for a period of twelve (12) months beyond the Termination Date (or twelve (12)
months beyond the scheduled expiration of the Term if Executive is subject to
(iii) above) by payment to Executive of Executive's Base Compensation and
providing to Executive the benefits to be provided to Executive hereunder, all
in accordance with the terms of this Agreement.
(v) Inventions and Patents. Executive acknowledges that
all inventions, innovations, improvements, developments, methods, designs,
analyses, drawings, reports and all similar or related information, if
patentable, which relate to the Business and which have been or are made by
Executive while employed by the Company ("Work Product") belong to the Company.
(vi) Non-solicitation. The Executive agrees that during
the Term and for a period of three (3) years thereafter, Executive shall not
directly through another entity (i) induce or attempt to induce any key employee
of the Company to leave the employ of the Company, or in any way interfere with
the relationship between the Company and any employee thereof, or (ii) induce or
attempt to induce any customer, supplier, licensee, licensor, franchisee or
other business relation of the Company to cease doing business with the Company,
or in any way interfere with the relationship between any such customer,
supplier, licensee or business relation and the Company. For purposes of this
Agreement, a customer, supplier, licensee, licensor, franchisee or business
relation means any person or entity which at the time of determination is, or
has been within two (2) years prior to such time, a customer, supplier,
licensee, licensor, franchisee or business relation of the Company or Digital
Evolution, Inc.
9. Miscellaneous.
(a) Prior Agreement. This Agreement replaces and supersedes
the Employee Non-Disclosure, Assignment of Developments, Non-Solicitation and
Non-Competition Agreement in favor of the Company executed by the Executive on
June 28, 1996.
(b) Binding Effect; Assignment. Except as otherwise
provided herein, the terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective successors and assigns of the
parties. Nothing in this Agreement, express or implied, is intended to confer
upon any party other than the parties hereto or their respective successors and
assigns any rights, remedies, obligations, or liabilities under or by reason of
this Agreement, except as expressly provided in this Agreement. The Executive,
or any beneficiary or legal representative of the Executive, shall not assign
all or any portion of the Executive's rights or obligations under this Agreement
without the prior written consent of the Company.
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(c) Notices. Any notice, request, instruction or other
document to be given hereunder by any party to any other party shall be in
writing and shall be deemed to have been given (i) if mailed with the United
States Postal Service by prepaid, first class, certified mail, return receipt
requested, at the time of receipt by the intended recipient, or (ii) if sent by
facsimile transmission, when so sent and receipt acknowledged by an appropriate
telephone or facsimile receipt (followed by a hard copy mailed in accordance
with clause (i) of this Section 9(c)) addressed as follows:
If to the Company, addressed to:
U.S. Interactive, Inc.
0000 Xxxxxxxxxxx Xxxxxxxxx
Xxxx xx Xxxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Chairman
If to the Executive:
Xx. Xxxxxxx X. Xxxxxxxx
000 Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
or such other address as may be given from time to time under the terms of this
notice provision.
(d) Entire Agreement. This Agreement and the documents
referred to herein constitute the entire agreement among the parties and no
party shall be liable or bound to any other party in any manner by any
warranties, representations, or covenants except as specifically set forth
herein or therein.
(e) Amendments and Waivers. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto. No amendment or waiver may be charged against a party without
that party's prior written consent. Any amendment or waiver effected in
accordance with this paragraph shall be binding upon each transferee of any
party hereto.
(f) Titles and Subtitles. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
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(g) Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and each of which shall be deemed an original.
(h) Severability. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, such provision
shall be excluded from this Agreement and the balance of this Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
(i) Governing Law. This Agreement shall be governed by and
construed under the laws of the state of incorporation of the Company as applied
to agreements among residents entered into and to be performed entirely within
such state.
(j) Mediation and Arbitration. Any dispute (except for
disputes with respect to the Executive's obligations under Section 8 hereof)
which may arise between the parties hereto as to the construction,
interpretation or effect of this Agreement which is not resolved by mutual
agreement between the parties, shall first be submitted to nonbinding mediation
on terms and conditions to be mutually agreed upon by the parties. In the event
that a dispute is not resolved by nonbinding mediation, the disputing party may
give the other party notice of such party's intention to cause the same to be
submitted to arbitration. After fifteen (15) days have elapsed from the giving
of such notice, but not before such time, the party who gave such notice may
cause any such dispute which then remains unresolved to be submitted to
arbitration by submitting the same to the office of the American Arbitration
Association (the "AAA") acting in the state of incorporation of the Company as
determined by the Company (or any successor thereto, but if no organization is
then performing a function reasonably similar to the AAA, then to a court of
competent jurisdiction in accordance with the rules of such court) with a
request for arbitration to be conducted in accordance with the rules thereof by
one (1) arbitrator to be jointly selected by the parties. The Company shall pay
the reasonable travel expenses of the Executive to attend the arbitration
hearing. The prevailing party's expenses, including without limitation
attorneys' fees, in connection with such arbitration shall be borne by the
losing party; provided, however, that if liability is allocated by the
arbitrator between the parties, the expenses of such arbitration, including
without limitation the parties' attorneys' fees, shall be borne by the parties
in proportion to their respective percentages or proportions of liability
assessed by the arbitrator. The decision of the arbitrator as to all matters
properly submitted to such arbitrator and as to the apportionment of expenses of
arbitration shall be conclusive and binding upon the parties and judgment upon
any award may be entered in any court of competent jurisdiction.
[END OF PAGE]
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
U.S. INTERACTIVE, INC.
By: /s/ Xxxxxxxx X. Xxxx
----------------------------
Xxxxxxxx X. Xxxx
Senior Vice-President Legal
and Corporate Affairs
/s/ Xxxxxxx X. Xxxxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxxxx
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