EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, dated as of July 13, 1998 (this
"Agreement"), by and between xxxxxxxx.xxx, inc., a Delaware corporation
(the "Company") and Xxxxx Xxxxx (the "Employee").
WHEREAS, the Employee represents that he possesses skills,
experience and knowledge that are of value to the Company; and
WHEREAS, the Company desires to enlist the services and
employment of the Employee on behalf of the Company and the Employee is
willing to render such services on the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, the parties hereto agree as follows:
1. Employment Term. Subject to the terms and provisions of this
Agreement, the Company hereby agrees to employ the Employee and Employee
hereby agrees to be employed by the Company for the period commencing on
the date of this Agreement and ending on the third anniversary of the date
of this Agreement, unless terminated sooner as hereinafter provided (the
"Employment Term").
2. Duties. During the Employment Term the Employee shall serve as
Chief Financial Officer of the Company or such other position(s) as may be
agreed upon by Company and Employee and shall perform such duties, services
and responsibilities incident to such position(s) as determined from time
to time by the Board of Directors of the Company (the "Board"). The
Employee also agrees to perform such other duties, services and
responsibilities as may from time to time be requested by the Board
commensurate with the Employee's position(s). In performing such duties
hereunder, the Employee will report directly to the Chief Executive Officer
and/or the President of the Company.
The Employee shall devote his full business time, attention and
skill to the performance of such duties, services and responsibilities, and
will use his best efforts to promote the interests of the Company. The
Employee will not, without the prior written approval of the President or
Chief Executive Officer of the Company, engage in any other corporate,
civic or charitable activity which would interfere with the performance of
his duties as an employee of the Company, is in violation of written
Company policies, is in violation of applicable law, or would create a
conflict of interest with respect to the Employee's obligations as an
employee of the Company.
3. Compensation. In consideration of the performance by the
Employee of the Employee's obligations during the Employment Term
(including any services as an officer, director, employee, member of any
committee of the Company or any subsidiary, or otherwise), the Company
shall compensate the Employee as follows:
(a) A base salary (the "Base Salary") at an annual rate of not
less than $200,000 per year, payable in accordance with the normal payroll
practices of the Company then in effect. Over the course of the Employment
Term, the Employee will be eligible to receive annual increases in the Base
Salary as determined by the Chief Executive Officer and the President of
the Company within the guidelines established by the Board of Directors.
(b) An annual cash bonus of $50,000 (the "Bonus").
(c) The Employee will be granted, as soon as practicable
following the date hereof, options to purchase shares of common stock of
the Company, par value $ __ per share (the "Common Stock"), covering the
number of shares of Common Stock, and subject to the terms and conditions,
described in Schedule 1 attached hereto; provided, however, that such
options will be granted under, and subject to the procedures set forth in,
the Company's 1998 Stock Option Plan (the "Plan").
The Employee shall be solely responsible for taxes imposed on the
Employee by reason of any compensation and benefits provided under this
Agreement (except those taxes normally borne by the Company) and all such
compensation and benefits shall be subject to applicable withholding taxes.
4. Disability. If the Employee is unable, as reasonably
determined by the Chief Executive Officer or President of the Company, to
perform his duties, services and responsibilities hereunder by reason of a
physical or mental infirmity for a total of 90 calendar days in any
twelve-month period during the Employment Term ("Disability"), the Company
shall not be obligated to pay the Employee any Base Salary for any period
of absence in excess of such 90 calendar days and, in any case, shall be
entitled to terminate the Employee's employment hereunder in accordance
with Section 7.
5. Benefits and Stock Options. In addition to the payments
described in Section 3 of this Agreement, during the period that the
Employee is employed by the Company pursuant to this Agreement, the
Employee shall be entitled to participate in any employee benefit plans
(including any stock option or similar plans) then in effect for similarly
situated employees and receive any other fringe benefits that the Company
then provides to similarly situated employees to the extent the Employee
meets the eligibility requirements for any such plan or benefit; provided,
however, that the foregoing shall not be construed as an obligation of the
Company to grant additional stock options to the Employee.
6. Vacations. During the Employment Term the Employee shall be
entitled to the number of paid vacation days in each calendar year
determined by the Company in accordance with the Company's policies in
effect from time to time.
7. Termination. The Employee's employment with the Company and
the Employment Term shall terminate upon the expiration of the Employment
Term or upon the earlier occurrence of any of the following events:
(a) The death of the Employee ("Death").
(b) The mutual agreement between the Company and the Employee on
an early termination date.
(c) The termination of employment by the Company for Cause.
Termination of employment for "Cause" shall mean termination based on: (i)
the Employee's material breach of this Agreement, (ii) conduct by the
Employee that is fraudulent or unlawful, (iii) gross negligence of or
willful misconduct by the Employee which discredits or damages the Company
or (iv) repeated failure to perform his duties and such failure to perform
adversely affects the Company.
(d) The termination of employment by the Company for Disability.
(e) The termination of employment by the Company other than for
Cause, Disability or Death.
In the event of termination of this Agreement, for whatever
reason, the Employee agrees to cooperate with the Company and to be
reasonably available to the Company with respect to continuing and/or
future matters arising out of the Employee's employment or any other
relationship with the Company, whether such matters are business-related,
legal or otherwise. The provisions of this paragraph shall survive
termination of this Agreement.
8. Termination Payments. If the Employee's employment with the
Company terminates for whatever reason, the Company will pay the Employee
(i) any accrued and unpaid Base Salary as of the Termination Date and (ii)
an amount to reimburse the Employee for any and all monies advanced or
expenses incurred in connection with the Employee's employment for
reasonable and necessary expenses incurred by the Employee on behalf of the
Company on or prior to the date of termination but not paid to the
Employee. If the Employee's employment with the Company terminates pursuant
to Section 7(e) hereof (i) all stock options held by the Employee that have
not vested shall automatically vest, (ii) the Company will continue to pay
the Employee an amount equal to the Employee's Base Salary (at the rate in
effect at the time of termination of employment) during the Non-competition
Term (as defined in Section 9(b) below) and (iii) the Company will pay the
Employee an amount equal to the pro rata portion of the Bonus in respect of
the year in which the termination of employment occurs.
The foregoing payments upon termination shall constitute the
exclusive payments due the Employee upon termination under this Agreement,
but shall have no effect on any benefits which may be due the Employee
under any plan of the Company which provides benefits after termination of
employment, other than severance pay or salary continuation which shall be
reduced by the amount of any payment received by the Employee pursuant to
this Agreement.
9. Employee Covenants.
(a) Unauthorized Disclosure. The Employee agrees and understands
that in the Employee's position with the Company, the Employee has been and
will be exposed to and receive information relating to the confidential
affairs of the Company and its subsidiaries and/or affiliates, including
but not limited to technical information, intellectual property, business
and marketing plans, strategies, customer information, other information
concerning the products, promotions, development, financing, expansion
plans, business policies and practices of the Company, its subsidiaries
and/or affiliates, and other forms of information considered by the Company
to be confidential and in the nature of trade secrets. The Employee agrees
that during the Employment Term and thereafter, the Employee will keep such
information confidential and not disclose such information, either directly
or indirectly, to any third person or entity without the prior written
consent of the Company. This confidentiality covenant has no temporal,
geographical or territorial restriction. Upon termination of this
Agreement, the Employee will promptly supply to the Company all property,
keys, notes, memoranda, writings, lists, files, reports, customer lists,
correspondence, tapes, disks, cards, surveys, maps, logs, machines,
technical data or any other tangible product or document which has been
produced by, received by or otherwise submitted to the Employee during or
prior to the Employment Term. Any material breach of the terms of this
paragraph shall be considered Cause.
(b) Non-competition. By and in consideration of the Company's
entering into this Agreement and the payments to be made and benefits to be
provided by the Company hereunder, and further in consideration of the
Employee's exposure to the proprietary information of the Company, the
Employee agrees that the Employee will not, during the Employment Term, and
thereafter during the Non-competition Term (as defined below), directly or
indirectly own, manage, operate, join, control, be employed by, or
participate in the ownership, management, operation or control of, or be
connected in any manner, including but not limited to holding, the
positions of shareholder, director, officer, consultant, independent
contractor, employee, partner, or investor, (x) in the case of a
termination other than under Section 7(e), in any Class A Restricted
Enterprise (as defined below), or (y) in the case of a termination under
Section 7(e), in any Class B Restricted Enterprise (as defined below);
provided that in no event shall ownership of less than 1% of the
outstanding equity securities of any issuer whose securities are registered
under the 1934 Act, standing alone, be prohibited by this Section 9(b). For
purposes of this paragraph, (A) the term "Class A Restricted Enterprise"
shall mean any person, corporation, partnership or other entity engaged in
the computer or internet industries, and (B) the term "Class B Restricted
Enterprise" shall mean any person, corporation, partnership or other entity
engaged in the virtual community business. Following termination of this
Agreement, upon request, the Employee shall notify the Company of the
Employee's then current employment status. For purposes of this Agreement,
the "Non-competition Term" shall mean the period beginning on the date upon
which the Employment Term ends for any reason, and ending on the first
anniversary of such date; provided, however, that the Company, in its sole
discretion, shall have the right, upon no less than fourteen (14) days
written notice to the Employee, to elect to end the Non-competition Term
(and, accordingly, end any further severance obligations under Section 8
hereof), effective as of any date which is not less than six months
following the end of the Employment Term.
(c) Non-solicitation. During the Non-competition Term, the
Employee shall not interfere with or harm, or intentionally attempt to
interfere with or harm, the relationship with the Company or its
subsidiaries, or endeavor to entice away from the Company or its
subsidiaries, any person who at any time during the Employment Term was an
employee or customer of the Company or any of its subsidiaries or otherwise
had a material business relationship with the Company or any of its
subsidiaries.
(d) Remedies. The Employee agrees that any breach of the terms of
this Section 9 would result in irreparable injury and damage to the Company
for which the Company would have no adequate remedy at law; the Employee
therefore also agrees that in the event of said breach or any threat of
breach, the Company shall be entitled to an immediate injunction and
restraining order to prevent such breach and/or threatened breach and/or
continued breach by the Employee and/or any and all persons and/or entities
acting for and/or with the Employee, without having to prove damages, in
addition to any other remedies to which the Company may be entitled at law
or in equity. The terms of this paragraph shall not prevent the Company
from pursuing any other available remedies for any breach or threatened
breach hereof, including but not limited to the recovery of damages from
the Employee. The Employee and the Company further agree that the
provisions of the covenant not to compete are reasonable. The Employee
hereby acknowledges that due to the global aspects of the Company's
business and competitors it would not be appropriate to include any
geographic limitation on this Section 9. Should a court or arbitrator
determine, however, that any provision of the covenant not to compete is
unreasonable, either in period of time, geographical area, or otherwise,
the parties hereto agree that the covenant should be interpreted and
enforced to the maximum extent which such court or arbitrator deems
reasonable.
The provisions of this Section 9 shall survive any termination of
this Agreement and the Employment Term, and the existence of any claim or
cause of action by the Employee against the Company, whether predicated on
this Agreement or otherwise, shall not constitute a defense to the
enforcement by the Company of the covenants and agreements of this Section
9.
10. Proprietary Rights. The Employee represents and warrants that
all patents, patent applications, rights to inventions, copyright
registrations and other license, trademark and trade name rights heretofore
owned by the Employee and relating to the business of the Company or any of
its subsidiaries have been duly transferred to such corporation.
11. Non-Waiver of Rights. The failure to enforce at any time the
provisions of this Agreement or to require at any time performance by the
other party of any of the provisions hereof shall in no way be construed to
be a waiver of such provisions or to affect either the validity of this
Agreement or any part hereof, or the right of either party to enforce each
and every provision in accordance with its terms.
12. Notices. Every notice relating to this Agreement shall be in
writing and shall be given by personal delivery or by registered or
certified mail, postage prepaid, return receipt requested.
13. Binding Effect/Assignment. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
heirs, executors, personal representatives, estates, successors (including,
without limitation, by way of merger) and assigns. Notwithstanding the
provisions or the immediately preceding sentence, the Employee shall not
assign all or any portion of this Agreement without the prior written
consent of the Company.
14. Entire Agreement. This Agreement sets forth the entire
understanding of the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements, written or oral, between them
as to such subject matter. This Agreement may not be amended, nor may any
provision hereof be modified or waived, except by an instrument in writing
duly signed by the party to be charged.
15. Severability. If any provision of this Agreement, or any
application thereof to any circumstances, is invalid, in whole or in part,
such provision or application shall to that extent be severable and shall
not affect other provisions or applications of this Agreement.
16. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York,
without reference to the principles of conflict of laws.
17. Modifications and Waivers. No provision of this Agreement may
be modified, altered or amended except by an instrument in writing executed
by the parties hereto. No waiver by either party hereto of any breach by
the other party hereto of any provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar
provisions at the time or at any prior or subsequent time.
18. Headings. The headings contained herein are solely for the
purposes of reference, are not part of this Agreement and shall not in any
way affect the meaning or interpretation of this Agreement.
19. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by authority of its Board of Directors, and the Employee has
hereunto set his hand, the day and year first above written.
Company:
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xxxxxxxx.xxx, inc.
By: /s/ Xxxxxxx Xxxxxxxx
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Xxxxxxx Xxxxxxxx, President
Employee:
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/s/ Xxxxx Xxxxx
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Xxxxx Xxxxx
SCHEDULE 1
STOCK OPTION
The Employee shall be granted a stock option (the "Option") to purchase
175,000 shares of Common Stock, with an exercise price per share equal to
the fair market value per share of Common Stock as of the date of grant
(which value shall be 15% below the initial public offering price). The
Option shall vest with respect to one-third of the shares subject thereto
on each of the first 3 anniversaries of the date of grant. The Option shall
be subject to the terms and conditions set forth in the Plan, a copy of
which has been provided to the Employee.
In the event that the Company's revenues in respect of fiscal year 1998
reach $7 million, the Employee shall also be granted an Option to purchase
25,000 shares of Common Stock, with an exercise price per share equal to
the fair market value per share of Common Stock as of the date of grant.
The option shall be fully vested upon grant and subject to the terms and
conditions set forth in the Plan.
In the event that the Company's revenues in respect of fiscal year 1999
reach $25 million, the Employee shall also be granted an Option to purchase
25,000 shares of Common Stock, with an exercise price per share equal to
the fair market value per share of Common Stock as of the date of grant.
The option shall be fully vested upon grant and subject to the terms and
conditions set forth in the Plan.
