EXHIBIT 10.2
EMPLOYMENT AGREEMENT
This Agreement, dated as of November 9, 2001, is made and entered into
by and between Avanade Inc., a corporation organized under the laws of the State
of Delaware (the "Company"), and Xxxxxx Xxxxxx ("Employee"). For the definitions
of certain terms used in this Agreement, see Section 7 below.
The Company and Employee agree as follows:
SECTION 1. EMPLOYMENT
1.1 The Company hereby employs Employee, and Employee hereby accepts
employment, as an employee of the Company for the Term (as defined in Section
3.1), subject to and in accordance with the provisions of this Agreement.
1.2 Employee will report to the Area General Manager, Americas or his
designee ("Area GM"). From the date of this Agreement through its termination,
Employee will serve in such positions as directed by the Area GM, the Board of
Directors of the Company (the "Board") and/or the Chief Executive Officer.
1.3 During the Term, Employee will devote his best efforts, special
expertise and full business time and attention to the Company's business to the
exclusion of all other employment, engagements, consulting or other business
activities, unless otherwise approved in writing by the Board or the President.
Subject to direction of the Board, Employee will have such duties,
responsibilities, powers and authority that are prescribed by the Board, the
President or the bylaws of the Company.
SECTION 2. COMPENSATION
2.1 From the date of this Agreement until otherwise directed by the
Board, the Company will pay Employee a base salary at the annual rate of
$240,000 prorated on a daily basis for any period less than a full year. Unless
otherwise agreed upon by the parties, the Company will pay Employee's base
salary accrued in arrears twice monthly, subject to federal income tax and other
applicable withholding.
2.2 In addition to Employee's base salary under Section 2.1, the
Company will pay Employee such bonuses and other incentive compensation as may
be determined from time to time by the Board. The Employee is initially eligible
for an annual cash bonus with a target of 40% of base salary, subject to the
sole and complete discretion of the Compensation Committee of the Board.
2.3 The Company will grant Employee shares of the Company's common
stock and options to purchase shares of the Company's common stock as set forth
in this Section
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EXHIBIT 10.2
2.3. Employee's stock and option grants will be subject in all cases to Board or
Compensation Committee approval, and subject to the definitions and other terms
and conditions of the Company's 2000 Stock Incentive Plan (as the same may be
amended from time to time, the "SIP") and Employee's stock option agreement.
(a) A grant of 50,000 shares of common stock of the Company (the
"Grant Shares") at a fair market valuation to be determined by
the Board on the date the Board makes the grant and subject to
the terms and conditions set forth by the Board in a grant
letter to accompany the Grant Shares.
(b) An option to purchase 50,000 shares of the Company's common
stock at a price equal to the fair market value of the common
stock on the date the Board makes the grant. This option is
subject to a vesting schedule of 25% at the end of year 1 and
1/48th every month thereafter (a four-year vesting schedule).
(c) The stock grant, the options and any shares acquired upon
exercise of the options will not be transferable or assignable
until the earliest of a qualified IPO of the Company, July 1,
2005, or in the event of certain transactions (as further
defined in the SIP, the stock option agreements and/or the
grant letter accompanying the Grant Shares).
(e) The options will be for a term of ten (10) years, subject to
earlier termination in the event of any termination of
Employee's employment and certain other events as provided for
in the SIP or the stock option agreement.
(f) If Employee's employment terminates prior to a qualified IPO
of the Company, July 1, 2005, or certain corporate
transactions (as defined in the SIP or the stock option
agreements), other than for death or disability, then all of
Employee's options will terminate regardless of whether they
are vested or unvested, and any shares acquired upon exercise
of an option will be subject to repurchase, at Company's
discretion, by the Company at the exercise price paid.
(g) Employee's stock option agreement will provide that vesting
will be accelerated
(i) one year in the event of certain corporate
transactions (excluding, for this purpose,
acquisitions of control by existing Company
shareholders), and
(ii) one-hundred percent (100%) if (i) Employee's options
are not assumed or replaced by comparable options or
cash equivalents
2
EXHIBIT 10.2
of the acquiring company in certain corporate
transactions or (ii) Employee's options are assumed
in certain corporate transactions, but Employee's
employment is terminated by the acquiring company
without Cause or if Employee leaves for good reason
within three years after the corporate transaction,
except that such acceleration will not occur if it would
prevent the corporate transaction from otherwise qualifying as
a pooling of interests for financial accounting purposes.
2.4 Upon Employee's receipt of the Grant Shares, the Company will loan
Employee the amount of Employee's income and payroll tax liability arising from
the receipt of the Grant Shares, which loan will be made pursuant to a
full-recourse promissory note in the form of Exhibit A hereto (the "Note"). The
Note shall provide for interest at the applicable federal rate on the date of
the execution of the Note, and the principal amount payable under the Note shall
be amortized as follows: 25% after the first year, and 2.0833% (1/48th) per
month thereafter; corresponding interest payments will be made at the time of
the principal payments. The Note will be secured by the shares of stock received
under Section 2.3(a) pursuant to the pledge agreement attached hereto as Exhibit
B.
(a) During the term of Employee's employment with the Company,
immediately prior to the due date of any payment of principal or
interest under the Note, the Company will pay to Employee a cash bonus
such that, after setting aside an amount equal to Employee's income tax
liability on the cash bonus, Employee is left with an amount equal to
the loan payment then owed to the Company. The Company's obligations
under this Section 2.4(a) shall terminate as of the date of termination
of Employee's employment, and any bonus amounts owed by the Company
with respect to the first loan payment due following the date of
termination shall be prorated through the date of termination.
(b) For purposes of calculating Employee's income tax
liability under this Section 2.4, Employee will be deemed to be subject
to taxation at the highest marginal income tax rates imposed on
individuals under federal and any applicable state tax laws.
2.5 Termination of Employment
(a) Upon the termination of Employee's employment by the
Company for Cause prior to the earlier of (i) a qualified IPO or (ii)
July 1, 2005 (such earlier date, a "Share Trigger Event"), all of the
Grant Shares shall be returned to the Company in exchange for the
cancellation of all amounts owing under the Note and the corresponding
loan, and neither the Company nor the Employee shall owe any further
amounts to the other with respect to the Grant Shares, such loan or the
Note.
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EXHIBIT 10.2
(b) Upon the termination of Employee's employment, other than
by the Company for Cause prior to a Share Trigger Event, the Company
shall have the right, at its election, to purchase from Employee, and
Employee shall have the right, at his or her election, to cause the
Company to purchase, the Grant Shares at a purchase price equal to
their fair market value. Either party may elect to exercise his, her or
its right under this Section 2.5(b) by a written notice to the other
party. Upon receipt of such written notice by either party, the loan
underlying the Note shall accelerate and the principal amount of the
Note plus any accrued unpaid interest shall be immediately due and
payable in full by Employee. If the Company and the Employee are unable
to determine the fair market value of the Grant Shares within 15
business days of the termination of Employee's employment, then each
party shall retain an investment banking firm of national reputation to
provide a determination of such valuation within 20 business days after
the expiration of such 15 business day period. Each of these investment
banks shall be directed to consider the value a willing buyer would pay
a willing seller for the Company's shares as on an ongoing business
entity, without any discount for minority interests but considering all
other known facts, events and circumstances as then existing relevant
to the value of such interest. In the event that the difference between
the valuations provided by the two investment banking firms to the
parties (which amount shall be referred to as the "Valuation
Difference") does not exceed twenty percent (20%) of the larger of the
two valuations, the "fair market value" for purposes hereof shall be
the average of the two valuations. If the Valuation Difference exceeds
twenty percent (20%) of the larger of the two valuations, the two
investment banking firms shall select a third investment banking firm
of national reputation to calculate the valuation. If the difference
between the valuation determined by the third investment bank (the
"Benchmark") and the lower of the two initial valuations is less than
one-third of the Valuation Difference, "Fair Market Value" for purposes
hereof shall be the average of the Benchmark and the lower of the two
initial valuations. If the difference between the Benchmark and the
higher of the two initial valuations is less than one-third of the
Valuation Difference, "Fair Market Value" for purposes of this Section
2.5(b) shall be the average of the Benchmark and the higher of the two
initial valuations. In the event fair market value is not determined by
either of the previous two sentences, the fair market value for
purposes of this Section 2.5(b) shall be the average of the three
valuations. Notwithstanding the foregoing, in no event shall "fair
market value" as determined hereunder be greater than the larger of the
two initial valuations, or less than the lower of the two initial
valuations. The fees and expenses of the initial investment banks
selected by each of Employee and the Company in accordance with this
provision shall be borne by the party selecting such bank. The fees and
expenses of the third investment bank, if any, selected in accordance
with this provision shall be shared equally by Employee and the
Company.
(c) Upon the termination of Employee's employment after a
Share Trigger Event, the loan shall accelerate and all amounts owed
under the Note shall be immediately due and payable in full by
Employee.
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EXHIBIT 10.2
2.6 During the Term, the Company will make available to Employee such
additional benefits (such as medical, dental, disability and life insurance;
vacation, leave and holidays) as the Company may make available to its other
employees, all subject to any terms, conditions and other requirements that may
be generally applicable to other executive employees of the Company or
prescribed by the Board.
2.7 Except as otherwise provided in Section 3.2 or required by
applicable law, all compensation and benefits set forth in Section 2 will cease
accruing upon termination of the Term.
2.8 As a condition to Employee's employment with the Company, Employee
shall sign concurrently with this Agreement the attached Employee Stockholders
Agreement, which provides that prior to a Qualified IPO (as that term is defined
in the SIP), Employee agrees to vote all his or her Grant Shares according to
the terms thereof, and grants certain drag-along and tag-along rights.
SECTION 3. TERM AND TERMINATION
3.1 Employee's employment with the Company is "at will" and may be
terminated by the Company or Employee at any time. Accordingly, the Term will
commence as of the date of this Agreement and will terminate upon the first of
the following to occur:
(a) either party gives the other notice of termination;
(b) the Company gives Employee notice of termination for
Dissatisfactory Performance;
(c) the Company gives Employee notice of termination for
Cause;
(d) the Company gives Employee notice of termination in the
event of any disability of Employee, whether physical or mental, that
prevents Employee from satisfactorily performing his or her duties
under this Agreement; or
(e) the death of Employee.
3.2 If the Company terminates the Term pursuant to Section 3.1(a) or
(b), then the Company will either
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EXHIBIT 10.2
(a) pay to Employee a severance payment in the amount of
Employee's then-current annual base salary. Employee acknowledges and
agrees, however, that Employee must abide by the terms and conditions
of the Business Protection Agreement, including Employee's obligations
under Section 4.1 of the Business Protection Agreement and the the
Employee will not engage in, be employed by, perform service for,
participate in the ownership, management, control or operation of, or
otherwise be connected with, either directly or indirectly, any
competing business for a period of one year. Furthermore, Employee
agrees that this severance payment is forfeitable in full if the
Employee does not abide by said agreements. Employer reserves the right
to pursue any other damages as a result of the Employee's breach; or
3.3 Employee will not be entitled to any other severance payments,
other compensation, or release of any obligation under the Business Protection
Agreement upon termination of employment or in any other circumstance. Unless
otherwise agreed upon by the parties, any severance payments under Section 3.2
will be payable in a lump sum subject to federal income tax and any other
applicable withholding.
SECTION 4. NO CONFLICTING OBLIGATIONS
4.1 Employee represents and warrants that Employee's execution,
delivery and performance of this Agreement and the performance of Employee's
other obligations and duties to the Company will not cause any breach, default
or violation under any other employment, nondisclosure, confidentiality,
consulting or other agreement to which Employee is a party or by which Employee
may be bound.
4.2 Employee will not use in performance of Employee's work for the
Company or disclose to the Company any trade secret or other confidential or
proprietary information of any prior employer or other Person if and to the
extent that such use or disclosure may cause a breach, default or violation
under any obligation or duty that Employee owes to such other Person (e.g.,
under any agreement or applicable law). Employee represents and warrants that
Employee's compliance with this Section 4 will not prohibit, restrict or impair
the performance of Employee's work, obligations and duties to the Company.
SECTION 5. MISCELLANEOUS
5.1 This Agreement will be enforced to the fullest extent permitted by
applicable law. If for any reason any provision of this Agreement is held to be
invalid or unenforceable to any extent, then
(a) such provision will be interpreted, construed or reformed
to the extent reasonably required to render the same valid, enforceable
and consistent with the original intent underlying such provision;
6
EXHIBIT 10.2
(b) such provision will be void to the extent it is held to be
invalid or unenforceable;
(c) such provision will remain in effect to the extent that it
is not invalid or unenforceable; and
(d) such invalidity or unenforceability will not affect any
other provision of this Agreement or any other agreement.
If the invalidity or unenforceability is due to the unreasonableness of the
scope or duration of the provision, the provision will remain effective for such
scope and duration as may be determined to be reasonable.
5.2 Employee will not assign this Agreement or any of his or her rights
or obligations hereunder, either during or after the Term, without the prior
written consent of the Company. Subject to the foregoing, this Agreement will be
enforceable by and binding upon each of the parties and their respective
successors and assigns.
5.3 The failure of either party to insist upon or enforce strict
performance of any of the provisions of this Agreement or to exercise any of its
rights or remedies under this Agreement will not be construed as a waiver or a
relinquishment to any extent of such party's rights to assert or rely upon any
such provision, right or remedy in that or any other instance; rather, the same
will be and remain in full force and effect.
5.4 This Agreement will be interpreted, construed and enforced in all
respects in accordance with the laws of the State of Washington. Employee hereby
irrevocably consents to personal jurisdiction and venue in the state and federal
courts located in the State of Washington, King County, in connection with any
action to interpret or enforce, or otherwise arising out of or relating to, this
Agreement. Employee will not bring any action to interpret or enforce, or
otherwise arising out of or relating to, this Agreement, other than in the
courts specified in this Section 5.4.
5.5 Any notice required or permitted under this Agreement will be given
in writing and will be deemed effectively given upon personal delivery or upon
delivery by confirmed fax to the party to be notified, two (2) business days
after deposit with recognized overnight courier service, or three (3) business
days after deposit with the United States Post Office, by registered or
certified mail, postage prepaid and addressed to the party to be notified at the
following address, or at such other address as such party may designate by
notice under this paragraph 5.5:
Company: Employee:
Xxxxx Xxxx Xxxxxx Xxxxxx
Chief Executive Officer Address Redacted
Avanade Inc.
0000 Xxxxxxx Xxx.
Xxxxxxx, XX 00000
7
EXHIBIT 10.2
5.6 This Agreement sets forth the entire agreement, and supersedes any
and all prior agreements, of the parties with regard to Employee's employment
with the Company, with the exception of the Business Protection/Confidentiality
Agreement, which shall constitute a material term of, and is hereby incorporated
into, this Agreement. This Agreement may not be amended, except by a writing
signed by both parties.
SECTION 6. ARBITRATION OF DISPUTES
6.1 Any dispute among the parties arising out of or relating to
Employee's employment relationship with the Company, or to the termination of
that relationship, will be settled by final and binding arbitration as set forth
in this Agreement. The following are examples of allegations, claims or disputes
that may be arbitrated under this Agreement: constructive discharge or wrongful
discharge under statutory or common law; torts or breaches of contract;
employment discrimination or retaliation in violation of any applicable federal,
state or local statute, ordinance or regulation; violation of any other
applicable statute, ordinance or regulation affecting Employee's employment
relationship with the Company; or any other claims or disputes that arise out of
or relate to the termination of Employee's employment relationship with the
Company. However, nothing in this Agreement will require arbitration of any
statutory claim that Employee may have if the applicable law precludes entering
into a pre-dispute agreement for binding arbitration of that claim. Further,
either party may commence litigation within thirty (30) days prior to the date
after which the commencement of litigation could be barred by any applicable
statute of limitations or other law, rule, regulation or order of similar import
or in order to request injunctive or other equitable relief necessary to prevent
irreparable harm or any breach or default under, or any threat of any breach or
default under, the Confidentiality Agreement dated August 1, 2000 by Employee.
In such event, the parties will (except as may be prohibited by judicial order)
nevertheless continue to follow the procedures set forth in this Section 6.
6.2 The arbitration will be conducted under the National Rules for the
Resolution of Employment Disputes published by the AAA that are in effect at the
time the arbitration notice is given, to the extent that those rules do not
conflict with any provision of this Agreement. A copy of the current rules may
be obtained from the AAA.
6.3 Either party may initiate the procedures under this Section 6 by
giving the other party written notice of the dispute and invoking the provisions
of this Section 6. If, within thirty (30) days after such notification, the
parties cannot resolve the dispute, then
8
EXHIBIT 10.2
either party may submit a written demand for arbitration to the other party and
to the AAA regional office serving Seattle, which will administer the
arbitration. The notice must be received within the applicable statute of
limitations if the dispute involves a statutory claim. The written notice will
contain a statement setting forth the nature of the dispute, the dollar amount
involved, if any, and the specific remedy sought.
6.4 Upon written demand for arbitration, the parties will attempt to
agree upon a mutually acceptable arbitrator. If they cannot arrive at such an
agreement, either party may request a list of seven (7) labor and employment
arbitrators from the AAA's panel of potential arbitrators. The parties will then
alternatively strike potential arbitrators from such list until one remains.
6.5 The arbitrator will have the authority only to interpret and apply
the applicable provisions of this Agreement, and will not add to, subtract from,
reform or modify any of the provisions of this Agreement.
6.6 The arbitrator will determine what discovery will be allowed,
consistent with the relevant AAA rules and the expedited nature of arbitration.
All discovery allowed will be completed within sixty (60) days of the
arbitration notice unless the parties agree otherwise or the arbitrator grants
an extension for good cause shown.
6.7 The arbitration will be held in King County, Washington. If the
Company and Employee cannot agree on a specific location or a date and time for
the arbitration hearing, the AAA will set the specific location in King County,
or the hearing date and time, as necessary.
6.8 The Company and Employee each have the right to be represented
during the arbitration process by legal counsel, or by another representative of
its own choosing. Unless applicable law provides otherwise, each party will bear
any and all costs associated with its representation. The arbitrator may compel
the attendance of witnesses in accordance with RCW 7.04.110 and the relevant AAA
rules.
6.9 Each party will bear the costs of preparing and presenting its case
in the arbitration (e.g., costs of its witnesses and attorneys). All other costs
of the arbitration (e.g., any fees payable to the AAA, the arbitrator, and court
reporter, and the costs of any hearing room or facilities) will be divided
equally between the parties.
6.10 The arbitrator's decision will be final and binding on the parties
and their respective successors and assigns; provided, however, that the
arbitrator's decision will be subject to judicial review, and the reviewing
court may vacate, modify or correct the arbitrator's decision as appropriate,
(i) where the arbitrator's findings of fact are not supported by substantial
evidence, (ii) where the arbitrator's conclusions of law are clearly erroneous
or (iii) as otherwise provided by applicable law. The arbitrator will have the
authority to grant temporary or injunctive relief, specific performance, damages
and such other relief as may be
9
EXHIBIT 10.2
appropriate in the circumstances. Judgment upon the arbitration award may be
entered in any court having jurisdiction.
SECTION 7. DEFINITIONS
Whenever used in this Agreement with initial letters capitalized, the
following terms will have the following specified meanings:
"AAA" means the American Arbitration Association, its successor or
another arbitration service agreed upon by the parties.
"BOARD" means the Company's board of directors.
"CAUSE" means (a) willful misconduct on the part of Employee that has a
materially adverse effect on the Company and its Subsidiaries, taken as a whole,
(b) Employee's engaging in conduct that could reasonably result in his or her
conviction of a felony or a crime against the Company or which would materially
compromise the Company's reputation, as determined in good faith by the Board,
or (c) unreasonable refusal by Employee to perform the duties and
responsibilities of his or her position in any material respect and the failure
of Employee to remedy such nonperformance within 30 days after receipt of
written notice from the Company. No action, or failure to act, will be
considered "willful" if it is done by Employee in good faith and with reasonable
belief that the action or omission was in the best interests of the Company.
"COMPETING BUSINESS" means any business whose commercial efforts
involve the development, marketing, sale, provision, or distribution of products
or services in competition with products or services developed, under
development, marketed, sold, provided or distributed by the Company.
"CONFIDENTIALITY AGREEMENT" means the attached Business Protection
Agreement.
"DISSATISFACTORY PERFORMANCE" means dissatisfactory performance other
than Cause. Dissatisfactory Performance may include, without limitation, the
failure of the Company to achieve revenue, profit, growth, customer satisfaction
or other goals established by the Board.
"PERSON" means any corporation, partnership, trust, association,
governmental authority, educational institution, individual or other entity.
"QUALIFIED PUBLIC OFFERING" shall have the meaning set forth in the
Avanade Inc. 2000 Stock Incentive Plan.
"TERM" means the term of Employee's employment as an employee of the
Company pursuant to this Agreement.
* * *
10
EXHIBIT 10.2
Employee hereby acknowledges that he or she has carefully read this
Agreement, understands its terms and that (i) the same are necessary for the
reasonable and proper protection of the Company's business; (ii) the Company has
been induced to enter into and continue its relationship with Employee in
reliance upon Employee's compliance with the provisions of this Agreement; (iii)
every provision of this Agreement is reasonable with respect to its scope and
duration; (iv) Employee has had ample opportunity to discuss this Agreement with
legal counsel of his or her own choosing, and has entered into this Agreement
knowingly and voluntarily, without relying on any promises or representations by
the Company other than those contained in the text of this Agreement; and (v)
Employee has received a copy of this Agreement.
In witness whereof, the parties have duly executed and entered into
this Agreement as of the date first set forth above.
Employee: AVANADE INC.:
By
-----------------------------
Its:
----------------------------------- ---------------------------
Xxxxxx Xxxxxx
11
EXHIBIT 10.2
EXHIBIT A
PROMISSORY NOTE
$31,200
Seattle, Washington
For value received, the undersigned promises to pay Avanade
Inc., a Delaware corporation (the "Company"), at its principal office the
principal sum of $31,200 with interest from the date hereof at a rate of 6.37%
per annum, simple interest, on the unpaid balance of such principal sum. The
principal shall be due and payable as follows: 25% percent shall be due and
payable on the first anniversary of the date of this promissory note (this
"Note"), and 2.0833% shall be due and payable each month thereafter.
Corresponding interest shall be due and payable at the time principal payments
are made.
If the undersigned's employment with the Company terminates, this Note
shall become due and payable in accordance with the terms of Section 2.5 of that
Employment Agreement dated as of November 9, 2001 between the undersigned and
the Company.
Principal and interest are payable in lawful money of the United States
of America. AMOUNTS DUE UNDER THIS NOTE MAY BE PREPAID AT ANY TIME WITHOUT
INTEREST OR PENALTY.
Should suit be commenced to collect any sums due under this Note, such
sum as a court may deem reasonable shall be added hereto as attorneys' fees. The
makers and endorsers have severally waived presentment for payment, protest,
notice of protest and notice of nonpayment of this Note.
This Note, which is full recourse, is secured by a pledge of certain
shares of Common Stock of the Company and is subject to the terms of a Pledge
and Security Agreement between the undersigned and the Company of even date
herewith. The undersigned, however, shall remain personally liable for payment
of this Note, and assets of the undersigned, in addition to the collateral under
the Pledge and Security Agreement, may be applied to the satisfaction of the
undersigned's obligations hereunder.
12
EXHIBIT 10.2
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO
FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON
LAW.
Dated:
---------------------------------
---------------------------------------
Signature
---------------------------------------
Printed Name
13
EXHIBIT 10.2
EXHIBIT B
PLEDGE AND SECURITY AGREEMENT
This Pledge and Security Agreement (this "Pledge Agreement") is entered
into this First day of October by and between Avanade Inc., a Delaware
corporation (the "Company"), and Xxxxxx Xxxxxx ("Employee").
RECITALS
In connection with the Company's grant to Employee of Shares of the
Company's Common Stock (the "Grant Shares") pursuant to an Employment Agreement
dated as of November 9, 2001, between Employee and the Company (the "Employment
Agreement"), Company is making a loan (the "Loan") and Employee is delivering a
promissory note of even date herewith (the "Note") in an amount equal to the
Employee's income and payroll tax liability arising from receipt of the Grant
Shares. The Company requires that the Note be secured by a pledge of the Grant
Shares and on the terms set forth below.
AGREEMENT
In consideration of the Company's acceptance of the Note as full or
partial payment of the Loan, and for other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties hereto agree as follows:
1. The Note shall become payable in full upon the voluntary or
involuntary termination of Employee's employment with the Company for any
reason.
2. Employee shall deliver to the Secretary of the Company, or his or
her designee (hereinafter referred to as the "Pledge Holder"), all certificates
representing the Grant Shares, together with an Assignment Separate from
Certificate in the form attached to this Agreement as ATTACHMENT A executed by
Employee and by Employee's spouse (if required for transfer), in blank, for use
in transferring all or a portion of the Grant Shares to the Company if, as and
when required pursuant to this Pledge Agreement. In addition, if Employee is
married, Employee's spouse shall execute the signature page attached to this
Pledge Agreement.
3. As security for the payment of the Note and any renewal, extension
or modification of the Note, Employee hereby grants to the Company a security
interest in, and pledges to the Company, the Grant Shares (sometimes referred to
herein as the "Collateral").
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EXHIBIT 10.2
4. In the event that Employee prepays all or a portion of the Note, in
accordance with the provisions thereof, Employee intends, unless written notice
to the contrary is delivered to the Pledge Holder, that the Grant Shares
represented by the portion of the Note so repaid, including annual interest
thereon, shall continue to be so held by the Pledge Holder, to serve as
independent collateral for the outstanding portion of the Note.
5. In the event of any foreclosure of the security interest created by
this Pledge Agreement, the Company may sell the Grant Shares at a private sale
or may itself repurchase the Grant Shares. The parties agree that, prior to the
establishment of a public market for the Common Stock of the Company, the
securities laws affecting sale of the Grant Shares make a public sale of the
Grant Shares commercially unreasonable. The parties further agree that the
repurchase of such Grant Shares by the Company, or by any person to whom the
Company may have assigned its rights under this Pledge Agreement, is
commercially reasonable if made at a price determined by the Board of Directors
in its discretion, fairly exercised, representing what would be the fair market
value of the Grant Shares reduced by any limitation on transferability, whether
due to the size of the block of Grant Shares or the restrictions of applicable
securities laws.
6. In the event of default in payment when due of any indebtedness
under the Note, the Company may elect then, or at any time thereafter, to
exercise all rights available to a secured party under the Washington Commercial
Code including the right to sell the Collateral at a private or public sale or
repurchase the Grant Shares as provided above. The proceeds of any sale shall be
applied in the following order:
(a) To the extent necessary, proceeds shall be used to pay all
reasonable expenses of the Company in enforcing this Pledge Agreement and the
Note, including, without limitation, reasonable attorneys' fees and legal
expenses incurred by the Company.
(b) To the extent necessary, proceeds shall be used to satisfy
any remaining indebtedness under Employee's Note.
(c) Any remaining proceeds shall be delivered to Employee.
7. Upon full payment by Employee of all amounts due under the Note,
Pledge Holder shall deliver to Employee all Grant Shares in Pledge Holder's
possession belonging to Employee, and Pledge Holder shall thereupon be
discharged of all further obligations under this Pledge Agreement; provided,
however, that Pledge Holder shall nevertheless retain the Grant Shares as escrow
agent if said Grant Shares are still subject to a repurchase right under the
terms of the Employment Agreement (as defined in the grant letter accompanying
the Grant Shares) in favor of the Company.
15
EXHIBIT 10.2
The parties have executed this Pledge Agreement as of the date first
set forth above.
AVANADE INC.
By:
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Title:
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EMPLOYEE
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Printed Name:
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16
EXHIBIT 10.2
ATTACHMENT A
STOCK POWER AND ASSIGNMENT
SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED and pursuant to that certain Pledge and Security
Agreement dated as of November 9, 2001, the undersigned hereby sells, assigns
and transfers unto Xxxxxx Xxxxxx 50,000 Shares of the Common Stock of Avanade
Inc., a Delaware corporation, standing in the undersigned's name on the books of
said corporation represented by Certificate No. ___ delivered herewith, and does
hereby irrevocably constitute the Secretary of said corporation as
attorney-in-fact, with full power of substitution, to transfer said stock on the
books of said corporation.
Dated:
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Signature:
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Please print name:
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Spouse's signature, if any:
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Please print name:
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17
EXHIBIT 10.2
Per Section 2.8: Attach Employee Stockholders Agreement
See (hyperlink redacted)
18
