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EXHIBIT 10.11
OUTSIDE DIRECTOR'S AGREEMENT
THIS OUTSIDE DIRECTOR'S AGREEMENT (this "Agreement") is made as of the
1st day of May, 1999 (the "Effective Date") by and between 1st Net Technologies,
Inc., a Colorado corporation (the "Company"), and Xxxxxx X. Xxxxxxxxxx, an
individual residing at 0000 Xxxxxx Xxxxxxxxxx Xxxxxx, Xxxxxxxxx Xxxxx, Xxxxxxxx
00000 (the "Director").
WHEREAS, the Company desires to engage the Director and the Director
desires to accept such engagement by the Company;
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, and other good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Term. The Company hereby agrees to engage the Director, and the
Director hereby agrees to serve the Company, in the capacity of a member of the
Board of Directors and Chairman of the Executive Committee of the Company for a
period commencing on May 1, 1999 (the "Engagement Date") and ending on April 30,
2001 (such period, subject to earlier termination or extension as provided
herein, being referred to as the "Period of Engagement").
2. Duties and Services. During the Period of Engagement, Director
agrees to serve the Company as a member of the Board of Directors and as the
Chairman of the Executive Committee with the duties set forth in Exhibit A
attached hereto, and in such other offices of the Company and of its
subsidiaries and related companies (collectively, "Affiliates") to which he may
be elected or appointed, and to perform such other reasonable and appropriate
duties as may be requested of him by the Board of Directors of the Company (the
"Board of Directors"), in accordance with the terms herein set forth. Excluding
periods of vacation and sick leave to which the Director is entitled, the
Director shall devote such amount of his time and energy to the business and
affairs of the Company and its Affiliates as is necessary to fulfill his duties
hereunder and to promote the interests of the Company, but in no event less than
an average of 20 hours per month (during regular business hours). The Company
and the Director each agree and acknowledge that various factors, including the
Company's possible expansion of its operations, may require the Director to
devote a significantly greater number of hours to the Company's business from
time to time, for which the Director will not be entitled to additional
compensation. Subject to the limitations of Section 5 hereof, and provided that
such other business activities do not materially interfere with the Director's
ability to fulfill his obligations hereunder, the Director may engage in other
business activities during the Period of Engagement.
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3. Compensation.
(a) Base Salary. Commencing on the Engagement Date, the
Director shall receive a base salary hereunder of 25,000 shares of 1st Net
Technologies, Inc..
(b) Bonus. The Director shall be entitled to such bonuses and
other benefits as the Board of Directors may periodically award in its
reasonable discretion.
(c) Benefit Plans. The Director shall be entitled to
participate or continue to participate in or receive benefits under all of the
Company's director benefit plans, policies, practices and arrangements (the
"Benefit Plans"), including without limitation any pension plan, profit-sharing
plan, savings plan, deferred compensation plan, stock option plan, life
insurance, disability insurance or health-and-accident plan or arrangement, made
available by the Company now or in the future to its Directors generally,
subject to and on a basis consistent with the terms, conditions and overall
administration of such Benefit Plans.
(d) Fringe Benefits. The Director shall receive fringe
benefits not less favorable than those now and from time to time made available
to the Company's Directors generally.
(e) Expenses. All entertainment, travel and other expenses
incident to the rendering of services by the Director hereunder shall be paid or
reimbursed by the Company. If any such expenses are advanced by the Director,
the Company shall reimburse him therefor on presentation of the appropriate
documentation required by the Internal Revenue Code of 1986, as amended (the
"Code"), or Treasury Regulations promulgated thereunder, or otherwise required
under the Company's policy with respect to such expenses. If any such expenses
are paid, or are to be paid, directly by the Company, The Director shall provide
such documentation as will allow the Company to determine that such expenses are
appropriate.
(f) Vacation. The Director shall be entitled to two (2) weeks
paid vacation to be taken at time or times mutually satisfactory to the
Director and the Company.
(g) Working Facilities. The Company shall provide the
Director with an office, secretarial, administrative and other assistance, and
such other facilities and services as shall be suitable to his position and
appropriate for the performance of his duties.
4. Early Termination. Notwithstanding the provisions of Section 1
hereof, the Director's Engagement hereunder may be terminated by the Company or
the Director, as applicable, under the following circumstances:
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(a) Death. The Director's Engagement hereunder shall
terminate upon his death.
(b) Disability. If the Company determines in good faith,
after considering all relevant medical evidence, that the Director has incurred
a Disability (as defined below). During the Period of Engagement, the Company
may give the Director written notice of its intention to terminate the
Director's Engagement, subject to the provisions of the Americans with
Disabilities Act. In such event, the Director's Engagement with the Company
shall terminate effective on the 30th day after receipt of such notice by the
Director, provided that within 30 days after such receipt the Director shall not
have returned to full performance of his duties. The Director shall continue to
receive his Base Salary until the date of termination. For the purpose of this
Agreement, "Disability" shall mean the Director's failure to perform his duties
to the Company for a total of 16 consecutive weeks during any 12-month period as
a result of incapacity due to mental or physical illness which is determined to
be total and permanent by a physician selected by the Company and acceptable to
the Director or the Director's legal representative (such agreement as to
acceptability not to be withheld, delayed or conditioned unreasonably).
(c) Cause. The Company may terminate the Director's
Engagement hereunder for Cause (as defined below). For purposes of this
Agreement, the Company shall have "Cause" to terminate the Director's Engagement
hereunder upon a finding by the Board of Directors that the Director has (i)
engaged in acts or omissions with respect to the Company or any Affiliate of the
Company which constitute intentional misconduct or a knowing violation of law as
reasonably determined by the disinterested members of the Board of Directors;
(ii) personally received a benefit in money, property or services from the
Company or any Affiliate of the Company or from another person or entity dealing
with the Company in violation of this Agreement or applicable law, including any
payment from a person or entity dealing with the Company or involved in any way
in any transaction in which the Company is a party, unless previously disclosed
to, and expressly approved by, the disinterested members of the Board of
Directors; (iii) breached the provisions of Section 5 or 6 of this Agreement;
(iv) breached his fiduciary duty of loyalty to the Company or any Affiliate of
the Company; (v) engaged in gross negligence in the performance of his duties to
the Company or any Affiliate of the Company; (vi) frequently and repeatedly
failed to perform services for the Company or any Affiliate of the Company which
have been reasonably requested of him by the Board of Directors and which are
consistent with the terms of this Agreement; or (vii) been convicted of a
felony. For purposes of this Agreement, the Company shall also have "Cause" to
terminate the Director's Engagement hereunder upon the decision of the Board of
Directors to cause the Company to cease the operation of its business. In the
event of such a decision to cause the Company to cease the operation of its
business, this Agreement shall terminate as of the earlier of (i) the date that
the operations cease or (ii) thirty (30) days following notice to the Director
that the Board of Directors has determined (which determination shall be made in
good faith) that the Director's services are no longer required.
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(d) Good Reason. The Director may terminate his Engagement
for Good Reason (as defined below). For purposes of this Agreement, the Director
shall have "Good Reason" to terminate his Engagement with the Company in the
event of (i) any reduction in the Director's Base Salary, without the Director's
consent, unless such reduction is generally consistent with a reduction suffered
by all of the Company's other management level Directors; (ii) any material
breach by the Company of, or default by it under, the provisions of this
Agreement or that certain Restricted Stock Purchase Agreement by and between the
parties dated as of the Effective Date; provided, however, that in the case of
any breach or default, the Director shall not have Good Reason to terminate his
Engagement unless and until he has provided the Company with written notice of
such breach at least 15 days in advance of his intended termination date and a
reasonable opportunity and period of time to cure such breach or default
(provided, further, however, if the Company cures such breach, the Director
shall not have Good Reason to terminate this Agreement); and (iii) any
substantial diminution of duties, responsibilities or status, or other
imposition by the Company of unreasonable requirements or working conditions on
the Director which are not withdrawn or corrected in all material respects
within a 30-day period following notice by the Director to the Company of such
diminution or imposition or, if any of the foregoing arose because of conditions
or circumstances outside of the control of the Company, such longer period as
may be reasonably required under the circumstances.
(e) Mutual Agreement. The Director's Engagement may be
terminated by mutual agreement of the Director and the Company at any time.
(f) Payment of Unpaid Salary Upon Termination. In the event
of a termination pursuant to this Section 4, the Company shall pay to the
Director (or his beneficiaries, estate or legal representative, as appropriate)
promptly after the Director's termination, the unpaid Base Salary to which he is
entitled pursuant to Section 3(a) prorated through the Director's termination.
5. Confidentiality and Non-Competition.
(a) Confidential Materials. The Company and the Director
acknowledge that the services to be performed by the Director under this
Agreement are unique and extraordinary and, as a result of such Engagement, the
Director will be in possession of confidential information and trade secrets
(collectively, "Confidential Material") relating to the business practices of
the Company and its Affiliates. The Director agrees that he will not, directly
or indirectly, (i) disclose to any other person or entity either during or after
his Engagement by the Company or (ii) use, except during his Engagement by the
Company in the business and for the benefit of the Company or any of its
Affiliates, any Confidential Material acquired by the Director during his
Engagement by the Company, without the prior written consent of the Company,
which consent must be obtained by an appropriate officer of the Company other
than the Director, or as otherwise required by law or any rule or regulation of
any federal or state authority. Upon termination of his Engagement with the
Company for any reason, the
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Director shall return to the Company all tangible manifestations of Confidential
Materials and all copies thereof.
(b) Non-Competition. The Director agrees that during the term
hereof, without the prior written consent of the Board of Directors, he will not
become a stockholder (other than as a holder of less than 1% of the outstanding
stock of a public company), member, director, officer, director or agent of or
consultant to any corporation (other than an Affiliate), or member of or
consultant to any partnership or other entity, or engage in any business as a
sole proprietor or act as a consultant to any such entity, or otherwise engage,
directly or indirectly, in any enterprise, in each case which competes directly
with any business engaged in, or known by the Director to be contemplated to be
engaged in, by the Company or any of its Affiliates. As used herein, "any
business engaged in by the Company or any of its Affiliates" means the ownership
and operation of corporate Internet services, including E-mail services and the
development of corporate web sites. The Director shall be deemed to know a
business is "contemplated to be engaged in" by the Company when he is advised by
the Company's Chairman of the Board, President, Chief Executive Officer or Chief
Operation Officer that the Board of Directors has determined to pursue that
particular business activity. Notwithstanding the foregoing, in the event that
the Director desires to provide services as a consultant, agent or advisor (but
not otherwise) to any entity engaged in a competitive business or activity of
the Company as described above, the Director must provide at least three (3)
working days' advance written notice of such proposed engagement to the Company.
If the Company has not expressed, in writing, its reasonable objection to such
engagement to the Director within twenty-four (24) hours after receiving such
notice, the Director shall thereafter be deemed to be authorized by the Company
to proceed with such engagement. The Director agrees that during the non-compete
period referred to in this Section 5, neither the Director nor any person or
enterprise controlled by the Director will solicit for Engagement any person
employed by the Company or any of its Affiliates at, or at any time within three
months prior to, the time of the solicitation.
(c) Injunctive Relief. The Director agrees that the remedy at
law for any breach by him of this Section 5 will be inadequate and that the
Company shall be entitled to injunctive relief.
6. Representations and Warranties of The Director. The Director
represents and warrants to Company as follows: (a) The resume, personal history
and other information which the Director has heretofore provided to Company with
respect to the Director's prior employment, qualifications, licensing and
experience, whether orally or in writing, is true, correct and complete in all
material respects and does not omit any information which Company could
reasonably consider material to a decision to offer the Engagement; (b) The
Director has full right and authority to enter into this Agreement without the
approval of any other person; (c) The Director holds all licenses and
qualifications necessary for the performance of his duties hereunder and agrees
to keep all such licenses and qualifications in effect during the Period of
Engagement; and (d) The Director is not under any pre-existing obligation,
including nondisclosure or
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noncompetition restrictions, which would prevent, restrict or interfere with the
performance of his duties for Company under this Agreement. The Director
understands that Company is relying upon the truthfulness and accuracy of the
foregoing representations in engaging the Director.
7. General. This Agreement is further governed by the
following provisions:
(a) Notices. Any notice or other communication required or
permitted to be given hereunder shall be made in writing and shall be delivered
in person, by facsimile transmission or mailed by prepaid registered or
certified mail, return receipt requested, addressed to the parties at the
address stated above or to such other address as the party shall have furnished
in writing in accordance with this Section. Such notices or communications shall
be effective upon delivery if delivered in person or by facsimile and either
upon actual receipt or three (3) days after mailing, whichever is earlier, if
delivered by mail.
(b) Parties In Interest. This Agreement shall be binding upon
and inure to the benefit of the Director, and it shall be binding upon and inure
to the benefit of the Company and any corporation succeeding to all or
substantially all of the business and assets of the Company by merger,
consolidation, purchase of assets or otherwise.
(c) Arbitration. Any disputes arising under the terms of this
Agreement shall be settled by arbitration between the parties in or around the
City of San Diego in a proceeding held under the rules of the American
Arbitration Association. In such proceeding, each party shall choose one
arbitrator and the two so chosen shall choose a third arbitrator. The vote of
two of the arbitrators shall be sufficient to determine an award.
(d) Entire Agreement. This Agreement supersedes any and all
other agreements, either oral or in writing, between the parties hereto with
respect to the Engagement of the Director by the Company, and contains all of
the covenants and agreements between the parties with respect to such Engagement
in any manner whatsoever. Any modification of this Agreement will be effective
only if it is in writing signed by the party to be charged.
(e) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California without giving
effect to the choice of law or conflicts of laws rules and laws of such
jurisdiction.
(f) Severability. In the event that any term or condition
contained in this Agreement shall for any reason be held by a court of competent
jurisdiction to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other term or
condition of this Agreement, but this Agreement shall be construed as if such
invalid or illegal or unenforceable term or condition had never been contained
herein.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
1ST NET TECHNOLOGIES, INC., a
Colorado corporation
/s/ XXXXXXX X. WRITER, JR.
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Xxxxxxx X. Writer, Jr., Chief Executive
Officer
DIRECTOR
/s/ XXXXXX X. XXXXXXXXXX
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Xxxxxx X. Xxxxxxxxxx, an individual
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EXHIBIT "A"
DUTIES OF THE DIRECTOR
The Director shall serve as a member of the Board of Directors and as the
Chairman of the Executive Committee of the Company for a period of two years. In
such capacity, the Director shall (i) recruit and solicit prospective members to
join the Company's board of directors, (ii) procure and solicit prospective
investment bankers, underwriters and investors who may be interested in
facilitating either a debt or equity investment in the Company, and (iii)
perform such other functions which the Company may reasonably request.
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