EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "AGREEMENT") is made and entered into
by and between INTERLAND, INC., a Georgia corporation having its principal
executive offices located at the business address of 000 Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000 (the "COMPANY"), and XXXXXXX X. XXXX,
an individual residing at 00000 Xxxxxxx Xxxxxx, Xxxxxxx Xxxx, XX 00000
("EXECUTIVE"). Company and Executive enter into this Agreement as of the date
they each have signed it, but the Agreement shall be effective as of the date
established pursuant to Section 2.1, below.
WHEREAS, Company desires to employ Executive as the Vice President
Sales and Marketing - Resellers Channel as of August 5, 2002, and whereas the
parties wish to establish certain terms and conditions of such employment by
entering into this Agreement; and
WHEREAS, Executive desires such employment with Company on the terms
and conditions set forth in this Agreement.
NOW THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, the parties hereby agree as follows:
1. Employment; Regular Compensation. Company agrees to employ
Executive as Vice President Sales and Marketing - Resellers Channel, and
Executive agrees to serve in such capacity on the terms and conditions set forth
in this Agreement. Company shall pay Executive an initial base salary (the "BASE
SALARY") as set forth in Company's offer letter dated July 12, 2002 and attached
hereto as EXHIBIT 1. The Base Salary is expressed as an annual amount solely for
reference purposes, and shall be payable to Executive on a bi-weekly basis. In
its sole discretion, the Company may change Executive's compensation.
2. Effective Date; Indefinite Term.
2.1 This Agreement shall be deemed in full force and
effect as of the date it is executed by the parties below, along with the
execution of any exhibits hereto;
2.2 This Agreement has an indefinite term, and
Executive's employment by Company hereunder may be terminated at will by either
party at any time, with or without Cause (as defined in Section 6.1, below) or
any reason, voluntary or involuntary, and with or without prior notice. Certain
provisions of this Agreement, however, as more fully set forth in Section 5,
below, provide for the payment of benefits to Executive upon the specified
circumstances of termination of Executive's employment with Company, and certain
other provisions, as more fully set forth below in Section 11, below, may
continue in effect beyond the date of such termination. Executive expressly
acknowledges and agrees that employment with Company is on an "at will" basis,
and that this Agreement does not provide a guarantee of continued employment,
notwithstanding any other provision in this Agreement.
3. Duties. Executive shall report to Xxxx Xxxxxx, Chairman and
Chief Executive Officer, or such other individual as may be designated from time
to time by Xxxx Xxxxxx or the Board of Directors (the "BOARD"). Executive shall
faithfully and diligently perform all such acts
1
and duties, and furnish such services, as are assigned to Executive by Xxxx
Xxxxxx, Chairman and Chief Executive Officer, or such other individual as may be
designated by Xxxx Xxxxxx or the Board.
4. Efforts; Conflicts of Interest. During Executive's employment
by Company, Executive shall devote his full business time and efforts to Company
and its business during normal business hours, and shall safeguard and promote
its lawful interests. During Executive's employment by Company, Executive shall
not, either directly or indirectly, engage in or enter into any business or
perform any services for any other person, firm, association, or corporation
that conflicts with Executive's efforts to Company or with Company's business
interests, except for: (a) serving on the board of directors of any other entity
that is not in competition with Company (subject to Company's approval, which
shall not be unreasonably withheld or delayed); (b) activities approved in
writing in advance by Xxxx Xxxxxx or the Board, which approval shall not be
unreasonably withheld or delayed; or (c) passive investments in entities that do
not involve Executive providing any advice or services to the businesses in
which the investments are made, or which do not violate Company policy,
including without limitation any policy relating to conflicts of interest or
business ethics.
5. Benefits Upon Termination of Employment.
5.1 By Company for Cause or by Executive Without Good
Reason. If Executive's employment is terminated by Company for Cause or by
Executive Without Good Reason (as defined in Section 6.5, below), then Company's
obligation to pay compensation and benefits under this Agreement shall
immediately terminate, except that: (a) Company shall pay to Executive and, if
applicable, Executive's heirs, any earned but unpaid Base Salary through such
termination date; and (b) Company shall permit Executive to receive continuation
of the benefits as set forth in Section 5.5, below, to the extent applicable.
Under such circumstances, no further payments or benefits (except as otherwise
required by law) shall be provided to Executive. The terms "Cause" and "Without
Good Reason" shall have the meaning set forth in Section 6, below.
5.2 By Company for Nonperformance Due to Disability. If
Executive's employment is terminated by Company for Nonperformance Due to
Disability, then Company's obligation to pay compensation and benefits under
this Agreement shall immediately terminate, except that: (a) Company shall pay
to Executive and, if applicable, Executive's heirs, any earned but unpaid Base
Salary through such termination date; (b) Company shall provide Executive with
such other payments and benefits as may be permitted under the Company's short-
or long-term disability plans, to the extent applicable, and subject to the
terms and conditions of such plans, including without limitation any eligibility
requirements; and (c) Company shall permit Executive to receive continuation of
the benefits as set forth in Section 5.5, below, to the extent applicable. The
term "Nonperformance Due to Disability" shall have the meaning set forth in
Section 6, below.
5.3 By Company Other Than for Cause or by Executive for
Good Reason. If Executive's employment is terminated by Company other than for
Cause or by Executive for Good Reason (as defined in Section 6.3, below), then
Company's obligation to pay compensation and benefits under this Agreement shall
immediately terminate, except that: (a) Company shall pay to Executive and, if
applicable, Executive's heirs, any earned but unpaid
2
Base Salary through such termination date; (b) Company shall pay to Executive
any earned but unpaid incentive compensation or bonuses through the termination
date, subject to the terms of the applicable bonus plan, including without
limitation any eligibility requirements or any limitations on such payment under
applicable law; (c) Company shall permit Executive to receive continuation of
the benefits as set forth in Section 5.5, below, to the extent applicable; and
(d) Company shall pay to Executive, as severance benefits, an amount equal to 6
months of Base Salary (the "SEVERANCE BENEFITS"). The Severance Benefits shall
be paid in a lump sum, as soon as practicable following such termination date,
subject to the following conditions: (x) Executive shall execute a written,
complete waiver and release of all claims relating to Company, or Executive's
employment by Company or any termination thereof, within any applicable
consideration or execution periods and in a form that is acceptable to Company;
and (y) subject to confirmation by Company that Executive does not later revoke
such waiver and release of claims within any revocation period required by
applicable law.
5.4 Death of Executive. In the event of Executive's
death, Executive's employment and all other obligations hereunder shall
automatically terminate and the Company's obligation to pay compensation and
benefits under this Agreement shall immediately terminate, except that Company
shall pay to Executive's estate: (a) Executive's Base Salary through the end of
the calendar month in which Executive's death occurs; (b) Executive's earned but
unpaid incentive compensation or bonuses through the date of Executive's death,
subject to the terms and conditions of the applicable Bonus Plan, including
without limitation any eligibility requirements or any limitations on such
payment under applicable law; and (c) Company shall permit Executive's heirs to
receive continuation of the benefits as set forth in Section 5.5, below, to the
extent applicable and allowed by law and subject to the terms of such plans.
5.5 Benefits Continuation. Upon termination of
Executive's employment, Company shall permit Executive and, if applicable,
Executive's family members, to continue to participate in Company's employee
benefits plans, to the extent required or allowed by law and subject to the
terms of such plans and applicable law.
3
6. Definitions.
6.1 "CAUSE" shall mean termination of Executive's
employment by Company for one or more of the following reasons: (a) Executive
has breached or threatens to breach a fiduciary duty owed to Company; (b)
Executive has engaged or threatens to engage in dishonesty, fraud, gross
negligence, willful malfeasance or other acts of misconduct in the performance
of Executive's duties or during the course of Executive's employment; (c) upon
the willful and continued failure by Executive substantially to perform
Executive's duties with the Company (other than by reason of Nonperformance Due
to Disability as defined below); (d) Executive has willfully violated or
threatens to violate Company policies, or has willfully violated or threatens to
violate any law, rule or regulation (other than traffic violations or similar
offenses) which result in material injury to Company; or (e) Executive has
violated or threatens to violate the terms of Sections 4, 7, or 8 of this
Agreement or the material terms of the Confidentiality and Non-Competition
Agreement, or any other material breach of this Agreement.
6.2 "DISABILITY" shall have the meaning ascribed to such
term or its variations, such as "Disabled," in Company's long-term disability
plan, or in the absence of such plan, a meaning consistent with the definition
of permanent and total disability under Section 22(e)(3) of the Internal Revenue
Code of 1986, as amended.
6.3 "GOOD REASON" shall mean that one or more of the
following events has occurred and, after giving Company written notice of the
occurrence and of Executive's intention to resign from employment and Company
not curing the event within 30 days of receipt of such written notice: (a) a
substantial adverse change in Executive's duties or responsibilities, without
Executive's consent; (b) a reduction in Executive's Base Salary (at the
annualized rate), without Executive's consent, by more than 25%; or (c) a
relocation of Executive's principal place of employment by more than a 50 mile
radius surrounding Atlanta, Georgia, without Executive's consent.
6.4 "NONPERFORMANCE DUE TO DISABILITY" shall mean that,
if because of Disability, Executive is unable to perform the essential functions
of Executive's job, with or without reasonable accommodation, for a period of 30
consecutive days in any calendar year.
6.5 "WITHOUT GOOD REASON" shall mean termination or
resignation of Executive's employment by Executive other than for Good Reason.
7. Non-Disparagement. Executive shall not at any time make false,
misleading or disparaging statements about the Company, its parent, subsidiaries
or affiliates, including any of their products, services, management, directors,
officers, employees, and customers.
8. Confidential Information and Covenants Not to Compete. The
parties agree that Executive's services to Company are of a unique value and
that confidential and proprietary information about Company has been or will be
obtained by, disclosed or otherwise made available to Executive as a result of
Executive's employment with Company. Accordingly, as a condition to Executive's
employment, Executive and Company also are entering into the
4
Confidentiality, Invention Assignment, and Non-Competition Agreement attached
hereto as EXHIBIT 2 (the "CONFIDENTIALITY AND NON-COMPETITION AGREEMENT").
9. Dispute Resolution Process. All disputes between Executive and
Company that otherwise could be resolved in court shall be resolved instead by
the following alternative dispute resolution process (the "PROCESS").
9.1 Disputes Covered. This Process applies to all
disputes between Executive and Company, including those arising out of or
related to this Agreement or Executive's employment by Company. Disputes subject
to this Process include but are not limited to pay disputes, contract disputes,
legal disputes, wrongful termination disputes, and discrimination, harassment or
civil rights disputes. This Process applies to disputes Executive may have with
Company and also applies to disputes Executive may have with any of Company's
employees or agents so long as the person with whom Executive has the dispute is
also bound by or consents to this Process. This Process applies regardless of
when the dispute arises and will remain in effect after Executive's employment
with Company ends, regardless of the reason it ends. This Process does not
apply, however, to any workers' compensation or unemployment compensation
claims, to the extent applicable under the circumstances.
9.2 Negotiation and Mediation. Executive and Company
agree to attempt to resolve all disputes first by direct negotiations. If direct
negotiations are not successful, the parties shall then use mediation. They
shall first attempt to agree upon a mediator. If unable to agree upon a
mediator, the parties shall request and conduct mediation under the American
Arbitration Association's National Rules for the Resolution of Employment
Disputes. Unless otherwise agreed by the parties, any mediation sessions shall
be held in Atlanta, Georgia. Temporary or interim injunctive relief may be
sought without mediating first. Any failure to mediate shall not affect the
validity of an arbitration award or the obligation to arbitrate.
9.3 Arbitration. If the dispute is not resolved through
negotiation and mediation, the parties shall request, and either party may
demand, arbitration pursuant to the American Arbitration Association's National
Rules for the Resolution of Employment Disputes. Unless otherwise agreed by the
parties, any arbitration hearing shall be held in Atlanta, Georgia. The decision
of the arbitrator shall be final and binding on the parties and on all persons
and entities claiming through the parties. Submission of their dispute to
arbitration shall be the exclusive means for resolving the dispute, to the
exclusion of any trial by a court or jury. All disputes that are not resolved by
agreement (in mediation or otherwise) shall be determined by binding
arbitration.
9.4 Injunctive Relief. Either party may request a court
to issue such temporary or interim relief (including temporary restraining
orders and preliminary injunctions) as may be appropriate, either before or
after mediation or arbitration is commenced. The temporary or interim relief
shall remain in effect pending the outcome of mediation or arbitration. No such
request shall be a waiver of the right to submit any dispute to mediation or
arbitration.
9.5 Employment Status. This Process does not affect the
status of the employment relationship between the parties, which as stated above
in Section 2.2 shall be "at
5
will;" nor does this Process guarantee continued employment by the Company,
require discharge only for cause, or require any particular corrective action or
discharge procedures.
10. Notification. Executive hereby authorizes the Company, or any
of its employees or designated representatives or counsel, to notify Executive's
actual or future employers or any governmental agency of any terms of this
Agreement or the Confidentiality and Non-Competition Agreement and Executive's
responsibilities or obligations hereunder.
11. Severability; Survival of Provisions. If any part of this
Agreement or any part of the Confidentiality and Non-Competition Agreement is
held by any legal authority to be unenforceable or is severed by any legal
authority, the remainder of such agreement shall be enforced to the maximum
extent allowed by applicable law. Certain provisions of this Agreement,
including confidential information and covenants not to compete (Section 8),
dispute resolution process (Section 9), notification (Sections 10 and 21), and
governing law (Section 18) of this Agreement, and all of the provisions of the
Confidentiality and Non-Competition Agreement, shall survive after any such
legal determination, after Executive's employment by Company ends regardless of
the reason it ends, and shall be enforceable regardless of any such
determination or any claim Executive may have against Company.
12. Relief for Breach. Because any breach or threatened breach by
Executive of Sections 4, 7, and 8 of this Agreement or of the Confidentiality
and Non-Competition Agreement would result in continuing material and
irreparable harm to Company, and because it would be difficult or impossible to
establish the full monetary value of such damage, Company shall be entitled to
injunctive relief in the event of any such breach or threatened breach by
Executive. Injunctive relief is in addition to any other available remedy,
including termination of this Agreement and damages. In the event of any
threatened breach of this Agreement by Executive, Company may suspend any
payment of Base Salary, incentives, bonuses, Severance Benefits and other
compensation due to Executive under this Agreement and, if Executive has
breached this Agreement, any remaining amounts to be paid under this Agreement
shall be forfeited. In the event of any breach or threatened breach by either
party which results in court-ordered relief, the breaching party shall reimburse
the non-breaching party for its reasonable attorneys' fees and other expenses
incurred to obtain such relief.
13. Waiver. No waiver of any provision of this Agreement shall be
valid unless in writing, signed by the party against whom the waiver is sought
to be enforced. The waiver of any breach of this Agreement or failure to enforce
any provision of this Agreement shall not waive any later breach.
14. Binding Effect. This Agreement is binding upon the parties and
their personal representatives, heirs, successors and permitted assigns.
15. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original and all of which, taken
together, shall constitute a single agreement.
16. Complete Agreement. This Agreement, together with the attached
Confidentiality and Non-Competition Agreement, is the final and complete
expression of the parties(1) agreement
6
relating to Executive's employment by the Company. Without limiting the
foregoing, this Agreement replaces and supersedes any prior employment
agreements between Executive and Company, or its parent, subsidiaries,
predecessors or affiliates, and each party to this Agreement hereby releases and
holds harmless the other party from any obligations or liability with respect
thereto. The parties acknowledge and agree that they are not entering into this
Agreement in reliance on anything not set out in this Agreement. This Agreement
shall control over any inconsistent policies or procedures of Company affecting
Executive's employment, whether in effect now or adopted later, but Company's
policies and procedures that are consistent with this Agreement, whether in
effect now or adopted later, shall apply to Executive's employment according to
the terms thereof.
17. Payroll Withholding. All payments of Base Salary, incentives,
bonuses, Severance Benefits and other compensation payable to Executive pursuant
to this Agreement or otherwise shall be subject to the customary withholding for
income taxes as determined appropriate by the Company, and shall be subject to
other withholdings or deductions as required with respect to such compensation
paid by a corporation to any employee.
18. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Georgia, without giving
effect to the provisions thereof relating to choice of laws. Each party hereby
irrevocably (a) consents to the jurisdiction and venue for any legal action with
the state courts in Xxxxxx County, Georgia and federal courts in the Northern
District of Georgia, Atlanta Division, unless injunctive relief is sought by
Company and, in Company's judgment, that relief might not be effective unless
obtained in some other venue; and (b) waives any jurisdictional defenses
(including personal jurisdiction and venue) to any such action. These provisions
do not give any party a right to proceed in court in violation of the Dispute
Resolution Process under Section 9, above.
19. Successors And Assigns. All rights and duties of Company under
this Agreement shall be binding on and inure to the benefit of its successors,
assigns or any company which purchases or otherwise acquires it or all or
substantially all of its operating assets by any method. This Agreement shall
not be assignable by Executive other than the right to receive benefits being
passed by will or by the laws of descent and distribution.
20. Amendment. This Agreement contains the entire agreement of the
parties relating to the subject matter and may not be amended except by an
instrument in writing signed by both parties; it shall not be amended orally or
by course of dealing.
21. Notices. All notices required or permitted under this
Agreement shall be in writing and may be personally served or mailed by
registered or certified U.S. mail, postage prepaid and addressed as follows:
If to Company: Interland, Inc.
000 Xxxxxxxxx Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
7
If to Executive: Xxxxxxx X. Xxxx
00000 Xxxxxxx Xxxxxx
Xxxxxxx Xxxx, XX 00000
Any of the above addresses may be changed at any time by notice given as
provided above; provided, however, that any such notice of change of address
shall be effective only upon receipt. All notices, requests or instructions
given in accordance herewith shall be deemed received on the date of delivery,
if hand delivered or telecopied, and 3 business days after the date of mailing,
if mailed by registered or certified mail, return receipt requested.
INTERLAND, INC. EXECUTIVE
By: /s/ Xxx Xxxxxxxx /a/ Xxxxxxx X. Xxxx
---------------------------- -----------------------------
Name: Xxx Xxxxxxxx Name: Xxxxxxx X. Xxxx
--------------------------
Title: SVP - Human Resources Date: 8-5-02
---------------------------- -----------------------------
Date 7-25-02
----------------------------
REVIEWED INLD
LEGAL
JBW
8
EXHIBIT 1
July 12, 2002
Xxxxxxx X. Xxxx
00000 Xxxxxxx Xxxxxx
Xxxxxxx Xxxx, XX 00000
Re: Offer of Employment
Dear Xxxxxxx:
On behalf of Interland, I am pleased to offer you the position of Vice President
Sales and Marketing - Resellers Channel, reporting to Xxxx Xxxxxx, CEO and
Chairman of the Board. Your anticipated start date is Monday, August 5, 2002
("Start Date"), unless otherwise approved by Interland in advance. The following
highlights the essential terms of your employment, which will become final once
you have accepted this offer.
You will have the opportunity to enter into an employment agreement with
Interland. Your Employment Agreement and appointment as an officer will be
subject to final approval by the Board of Directors. Your base salary will be
$6,538.46 per bi-weekly pay period based on an annual salary of $170,000. Your
Total Target Compensation (TTC) will be comprised of a 60/40 split, base to
commission, of $283,333.33. Your Q4FY02 incentive for August and your Q1FY03
incentive will be guaranteed upon achievement of MBO's established by you and
Xxxx Xxxxxx with an approximate value of $28,333.00 at plan. You will also be
granted an option to purchase 130,000 shares of Interland, Inc. stock. The grant
will be effective the later of the date approved by the Board of Directors, or
your Start Date.
Within ten days of your start date, you will receive a one time sign-on bonus in
the amount of $25,000.00 (less appropriate taxes and withholdings). Your sign-on
bonus is subject to repayment in full if you resign your employment within six
(6) months from your start date. Payment of your starting bonus is contingent
upon your execution of our standard form necessary to evidence your 6-month
repayment obligation.
To assist you with your relocation from Xxxxxxx Oaks, CA we will offer you a
relocation package as outlined in the enclosed Relocation Summary. We will
provide up to 6 months temporary housing for a one bedroom apartment, and the
cost of shipping one vehicle to Atlanta. We will also pay for the cost of the
commuting flights during the six month period booked through Interland's travel
agency. Your relocation expenses may be subject to repayment if you resign your
employment within twelve (12) months after your start date. Please note that the
expenses paid by Interland will be considered as compensation on your W-2 at the
end of the year. We suggest you consult your tax advisor for further details.
9
Interland offers a variety of health care plans and other benefits programs to
eligible team members and their dependents. Additional information concerning
these plans and programs will be provided to you upon your start date.
This offer is contingent upon completion of references checks and approval by
the Board of Directors. In addition, your employment is subject to completion of
all aspects of our standard application and hiring processes for new team
members. We also will need you to provide us with documentation that you are
legally authorized to work in the United States. Further, we will require that
you execute our standard new team member forms, including, but not limited to, a
Confidentiality Agreement, and an acknowledgment with respect to Interland's
Employment Policy Manual.
Our offer of employment will remain open until close of business on Monday, July
22, 2002. Please acknowledge your receipt of this letter and desire to begin
work on your anticipated start date by signing where indicated below, and then
responding by immediately returning this signed letter by fax under cover letter
to me at (000) 000-0000. If I do not receive such a response from you by Monday,
July 22, 2002, this offer will be withdrawn.
This letter is not a contract of employment. Further, the length or duration of
your employment is not guaranteed. In accordance with our policies, your
employment with us will be on an "at-will" basis, meaning that both you and we
have the right to end your employment at any time, for any reason, with or
without cause or prior notice.
Please call me at (000) 000-0000 if you have any questions about your offer of
employment.
We are excited that you will be joining the Interland team!
Sincerely,
/s/ Xxx Xxxxxxxx
Xxx Xxxxxxxx
Senior Vice President and Chief Human Resource Officer
Interland
Fax: (000) 000-0000
Phone: (000) 000-0000
I hereby acknowledge receipt of this offer letter, accept the terms, and express
my intent to begin work on the anticipated start date set forth above.
By: /s/ Xxxxxxx Xxxx Date: 8/5/02
-------------------------------------- --------------------------
Xxxxxxx Xxxx
00
