COMPANY CONFIDENTIAL
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EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into
this December 20, 1999 (the "Effective Date"), by and between WordCruncher
Internet Technologies, Inc., a Nevada corporation, with a principal office at
000 Xxxx 00000 Xxxxx, Xxxxx X. Xxxxxx, Xxxx 00000 ("Company"), and Xxxx Xxxxxxx
("Employee").
RECITALS
1. Company is engaged in the process of developing, manufacturing and
marketing internet technologies and other products and services.
2. Employee's title will be Director, Advertising Sales.
3. In consideration of the benefits of new or continued employment by Company,
as well as to her good and valuable consideration set froth herein,
Employee agrees to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
herein contained and for good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto intending to be legally bound, hereby
agree as follow:
1. DEFINITIONS The following terms shall have the definitions stated
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below:
a. Cause - shall mean Employee's termination only upon:
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i. Employee's continued violations of Employee's obligations
which are demonstrably willful or deliberate on Employee's
part after there has been delivered to Employee a written
demand for performance from Company which describes the basis
for Company's belief that Employee has not substantially
performed his or her duties;
ii. Employee's engaging in willful misconduct which is
injurious to Company or its affiliates;
iii. Employee's committing a felony, an act of fraud against
or the misappropriation of property belonging to Company or
its affiliates;
iv. Employee's breaching, in any material respect, the terms
of this Agreement or any confidentiality or proprietary
information agreement between Employee and Company; or
v. A determination by Company, acting in good faith upon
information then available to Company, that Employee has
committed a material violation of the standards of employee
conduct, which standards may be altered from time to time by
Company, as defined in the most current version of Company's
Employee Handbook.
b. Change of Control shall be deemed to have occurred if:
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i. Company sells or otherwise disposes of all or substantially
all of its assets;
ii. There is a merger or consolidation of Company with any
other corporation or corporations, provided that the
shareholders of Company, as a group, do not hold immediately
after such event, at least 50% of the voting power of the
surviving or successor corporation;
iii. Any person or entity, including any "person" as such term
is used in Section 13(d)(3) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), becomes the "beneficial
owner" (as defined in the Exchange Act) of Common Stock of
Company representing 50% or more of the combined voting power
of the voting securities of Company (exclusive of persons who
are now officers or directors of Company.
c. Code - shall mean the Internal Revenue Code of 1986, as
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amended.
d. Restricted Business - shall mean:
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i. The design, development, manufacture, marketing or support
of Internet search technology, related services, or any other
software products of the type designed, developed,
manufactured, sold or supported by Company or as proposed to
be designed, developed, manufactured, sold or supported by
Company pursuant to a development project which is actually
being pursued during the Term of this Agreement; and
ii. Any business which competes directly or indirectly with
the products or services of Company.
e. Restricted Territory shall mean the geographies within the
United States, European Community, --------------------- and
Canada.
f. Term - shall have the meaning set forth in Section 2.a.
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2. EMPLOYMENT AND TERM.
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a. This Agreement shall commence as of the Effective Date and shall
terminate two (2) years from the Effective Date, unless sooner
terminated in the event of termination of Employee's employment with
Company or otherwise in accordance with the provisions hereof
(hereinafter referred to as the "Term" or "Term of this Agreement").
b. Notwithstanding the foregoing, during the Term hereof, and subject
to other provisions set forth herein, Company may terminate Employee's
employment for Cause of without Cause.
c. If Employee's employment is terminated for Cause or if Employee
resigns his or her employment, no compensation or severance payments or
other payments will be paid or provided to Employee pursuant to this
Agreement for the period following the date when such a termination of
employment is effective. Any commissions or other forms of incentive
pay that the employee had earned prior to the date of termination would
be due and payable upon termination.
d. If Company terminates Employee's employment other than for Cause:
(i) Employee shall be entitled to receive a severance payment from
Company in the an amount equal to 90 days of Employee's base salary
plus the maximum amount of incentive pay Employee could have earned
during that 90 day period according to the pay schedule in effect at
the time of termination, and (ii) Company agrees to accelerate the
vesting of Employee's stock options which would have vested at the n
ext anniversary following the date of Employee's termination. The
payments outlined in Section 2.d.i shall be payable in three (3) equal
monthly installments and are expressly subject to the conditions set
forth in Section 3. Any commissions or other forms of incentive pay
that the employee had earned prior to the date of termination would
also be due and payable upon termination.
e. At the Effective Date of this Agreement, Employee's job title shall
be as specified in the attached Exhibit A.
f. From the Effective Date of this Agreement and continuing until such
amount shall be changed by Company, or until termination of this
Agreement, Company will pay Employee according to the annual base
salary set forth in Exhibit A. The parties agree that the annual base
salary set forth in Exhibit A shall be reviewed not less than annually.
Company shall pay Employee in installments in accordance with Company's
standard payroll practices.
g. In addition to Employee's base salary, Employee will be entitled to
earn commission compensation of up to the percentage of Employee's base
salary set froth in Exhibit A. The Employee's receipt of any commission
is based upon the satisfaction of certain performance objectives, such
performance objectives will be mutually determined and reviewed by
Employee's immediate supervisor in consultation with Employee and is
subject to approval by Company's executive committee.
h. In addition to Employee's base salary, Employee will be entitled to
earn In-Package Bonus Incentive compensation of up to the percentage of
Employee's base salary set forth in Exhibit A. The Employee's receipt
of any In-Package Bonus Incentive is based upon the satisfaction of
certain performance objectives, such performance objectives will be
mutually determined and reviewed by Employee's immediate supervisor in
consultation with Employee and is subject to approval by Company's
executive committee.
i. Employee will be entitled to receive Company's employee benefits
made available to other employees and officers to the full extent of
Employee's eligibility therefor. During Employee's employment, Employee
shall be permitted, to the extent eligible, to participate in any group
medical, dental, life insurance and disability insurance plans, or
similar benefit plans of Company that are available to other comparable
employees. Participation in any such plan shall be consistent with
Employee's rate of compensation to the extent that compensation is a
determinative factor with respect to coverage under any such plan.
j. Employee is subject to the Company policies set forth in the most
current version of the Employee Handbook, which policies may be altered
from time to time by Company. In the event provisions of this Agreement
are in conflict with the Employee Handbook, the provisions of this
Agreement shall govern.
3. WAIVER. As a condition of receiving severance or other termination benefits
under this Agreement, Employee must sign a general waiver and release in a form
provided by the Company.
4. EMPLOYEE RESPONSIBILITIES. During the Term of this Agreement, Employee agrees
to devote his or her business time, skill and attention to his or her duties and
to performing them faithfully, diligently and competently, using his or her best
efforts to further the business of Company. Employee agrees to perform such
responsibilities and duties as may be required by Company from time to time.
5. COVENANTS NOT TO COMPETE AND NOT TO SOLICIT.
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a. Employee shall not during the Term of this Agreement and for a
period of one (1) year thereafter, directly or indirectly, engage in
(whether as an employee, consultant, proprietor, partner, director or
otherwise), or have any ownership interest in, or participate in the
financing, operation, management or control of, any person, firm,
corporation or business that is a Restricted Business in a Restricted
Territory without the prior written consent of Company. It is agreed
that ownership of (i) no more than .5% of the outstanding voting stock
of a publicly traded corporation, or (ii) any stock presently owned by
Employee, shall not constitute a violation of this provision.
b. Employee agrees that for a period of one (1) year after the
termination of this , Employee shall not:
i. Solicit, encourage, or take any other action which is
intended to induce any other employee of Company to terminate
his or her employment with Company; or
ii. Interfere in any manner with the contractual or employment
relationship between Company and any employee of Company.
The foregoing shall not prohibit Employee or any entity with which
Employee may be affiliated from hiring a former employee of Company;
provided that such hiring results exclusively from such former
employee's affirmative response to a general recruitment effort.
c. The parties intend that the covenants contained in the preceding
paragraphs shall be construed as a series of separate covenants, one
for each county, city and state or other political subdivision of the
Restricted Territory. Except for geographic coverage, each such
separate covenant shall be deemed identical in terms to the covenant
contained in the preceding paragraphs. If, in any judicial proceeding,
a court shall refuse to enforce any of the separate covenants (or any
part thereof) deemed included in said paragraphs, then such
unenforceable covenant (or such part) shall be deemed eliminated from
this Agreement for the purpose of those proceedings to the extent
necessary to permit the remaining separate covenants (or portions
thereof) to be enforced.
d. In the event that the provisions of this Section 5 should ever be
deemed to exceed the time, scope or geographic limitations permitted by
applicable laws, then such provisions shall be reformed to the maximum
time, scope or geographic limitations, as the case may be, permitted by
applicable laws.
6. REASONABLENESS OF COVENANTS. Employee represents that he or she: (a) is
familiar with the covenants not to compete and not to solicit, and (b) is fully
aware of and acknowledges his or her obligations hereunder, including without
limitation the reasonableness of the length of time and scope of these
covenants. Employee acknowledges that breach of Employee's covenants not to
compete and not to solicit in Section 5 would cause irreparable injury to
Company, and agrees that in the event of such breach Company shall be entitled
to seek injunctive relief under applicable law without the necessity of proving
actual damages.
7. COMPANY AGREEMENTS. Employee has previously signed or will sign Company's
Intellectual Property Agreement as well as Company's Conflicts Disclosure Form,
and Employee agrees to execute and provide such other reasonable documentation
as Company may require. As a further condition of employment, Employee must
comply with Company's reasonable requests to execute anew the aforementioned
Company Agreements and provide Company with updated documentation with those
Company Agreements.
8. CHANGE OF CONTROL. In the event that Employee's employment with Company is
terminated without Cause following a Change of Control:
a. Employee shall receive a severance payment in an amount equal to one
(1) times Employee's rate of annual base salary at the time of
termination;
b. Company agrees to accelerate the vesting of that portion of
Employee's stock options, if any, which would have vested after the
date of Employee's termination.
c. The payments set forth in Sections 8.a shall be payable in three (3)
equal monthly installments.
Termination of employment without Cause shall be presumed to be a "following a
Change of Control" if it takes place at nay time within two (2) months before or
one (1) year after a Change of Control.
9. AT-WILL EMPLOYMENT. Company and Employee acknowledge that Employee's
employment is and shall continue to be at-will, as defined under applicable law.
If Employee's employment terminates for any reason, Employee shall not be
entitled to any payments, benefits, damages, awards or compensation other than
as provided by this Agreement or other written Company benefit plans.
10. BEST PAYMENT PROVISION. In the event that any payment or benefit received or
to be received by Employee upon a Change of Control would result in all or a
portion of such payment to be subject to excise tax under Section 4999 of the
Internal Revenue Code, then the Employee's payment shall be either (i) the full
payment or (ii) such lesser amount which would result in no portion of the
payment subject to excise tax under Section 4999 of the Internal Revenue Code,
whichever of the foregoing amounts, taking into account the applicable federal,
state and local employment taxes, income taxes, and the excise tax imposed by
Section 4999 of the Internal Revenue Code, results in the receipt by Employee,
on an after-tax basis, of the greatest amount of the payment notwithstanding
that all or some portion of the payment may be taxable under Section 4999 of the
Internal Revenue Code. All determinations required to be made under this Section
10 shall be made by a CPA at Price Waterhouse or any other nationally recognized
accounting firm which is Company's outside auditor at the time of such
determination, which firm must be reasonably acceptable to Employee (the
"Accounting Firm"). Company shall cause the Accounting Firm to provide detailed
supporting calculations of its determinations to Company and Employee. Notice
must be given to the Accounting Firm within fifteen (15) business days after an
event entitling Employee to a payment under this Agreement. All fees and
expenses of the Accounting Firm shall be borne solely by Company. The Accounting
Firm's determinations must be made with substantial authority (within the
meaning of Section 6662 of the Internal Revenue Code).
11. DISABILITY OR DEATH. If Employee's employment terminates by reason of the
Employee's death or total and permanent disability (as defined in Section
22(e)(3) of the Code), then such termination shall be treated as if it were a
termination without Cause.
12. AMOUNTS PAYABLE SUBJECT TO WITHHOLDING. Any amounts payable hereunder,
including any amounts to be paid in the event of a termination without Cause or
a Constructive Termination, shall be subject to applicable tax withholding.
13. REMEDIES UPON DEFAULT.
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a. If either party to this Agreement shall be prevented from curing a
default or breach hereunder within the time periods set forth, by cause
or causes beyond its control, such as labor disputes, civil commotion,
war, government regulations or controls, casualty, inability to obtain
materials or service, or acts of God, such defaulting party shall be
excused from performance for the period of the delay and for a
reasonable time thereafter in which to cure such default.
b. In the event that Company shall be adjudicated as bankrupt or
insolvent, this Agreement shall be null and void and the rights of the
parties hereunder shall be terminated.
14. ARBITRATION. Any claim, dispute or controversy arising out of this
Agreement, the interpretation, validity or enforceability of this Agreement or
the alleged breach thereof shall be submitted by parties to binding arbitration
by the American Arbitration Association in Salt Lake City, Utah; provided,
however, that this arbitration provision shall not preclude Company from seeking
injunctive relief from any court having jurisdiction with respect to any
disputes or claims relating to or arising out of the misuse or misappropriation
of Company's trade secrets or confidential and proprietary information.
Arbitrators shall award costs and fees, including reasonable attorneys' fees, to
the prevailing party, or they shall be free to apportion costs and fees as they
deem reasonable under the circumstances.
15. INTEGRATION. This Agreement, including the documents referenced in Section 7
of this Agreement, sets forth the entire understanding of the parties hereto
with respect to the subject matter hereof and supersedes all previous
communications, negotiations and agreements among the parties, whether written
or oral. No waiver, alteration, or modification, if any, of the provisions of
this Agreement shall be binding unless in writing and signed by duly authorized
representatives of the parties hereto. Termination of this Agreement shall not
terminate the documents referenced in Section 7 of this Agreement.
16. SUCCESSORS. Company shall require any successor or assignee, in connection
with any sale, transfer or other disposition of all or substantially all of
Company's assets or business, whether by purchase, merger, consolidation or
otherwise, expressly to assume and agree to perform Company's obligations under
this Agreement in the same manner and to the same extent that Company would be
required to perform if no such succession or assignment had taken place.
17. SURVIVAL OF TERMS. The terms of this Agreement shall survive Employee's
termination of employment with Company.
18. SEVERABILITY. If any term or provision of this Agreement shall be held to be
invalid or unenforceable for any reason, such term or provision shall be
ineffective to the extent of such invalidity or unenforceability without
invalidating the remaining terms and provisions hereof, and this Agreement shall
be construed as if such invalid or unenforceable term or provision had not been
contained herein.
19. NOTES. Any notice pursuant to the Agreement shall be deemed validly given or
served if given in writing and delivered personality or ten (10) calendar days
after being sent by U.S. registered or certified mail, return receipt requested
and postage prepaid. In the case of Employee, mailed notices shall be addressed
to him or her at the home address which he or she most recently communicated to
Company in writing. In the case of Company, mailed notices shall be addressed to
the attention of Company's President or CEO, with a copy directed to the
attention of Company's General Counsel.
20. TITLE AND CAPTIONS. Section titles or captions to this Agreement are for
convenience only and shall not be deemed part of this Agreement or in no way
define, limit, augment, extend, or describe the scope, content, or intent of any
part or part of parts of this Agreement.
21. PRONOUNS AND PLURALS. Whenever the context may require, any pronoun used
herein shall include the corresponding masculine, feminine, or neuter forms and
th singular form of nouns, pronouns, and verbs shall include the plural and vice
versa. Each of the foregoing genders and plurals is understood to refer to a
corporation, partnership, or other legal entity when the context so requires.
22. FURTHER ACTION. The parties shall execute and deliver all documents or
instruments, provide all information, and take or forebear from all such action
as may be necessary or appropriate to achieve the purposes of this Agreement.
23. APPLICABLE LAW. This Agreement shall be construed in accordance with and
governed by the laws of the State of Utah.
24. WAIVER. No failure by any party to insist upon the strict performance of any
covenant, duty, agreement, or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute a waiver of
any such breach or of such or any other covenant, agreement, term, or condition.
Any party may, by notice delivered in the manner provided in this Agreement, but
shall be under no obligation to, waive any of its rights or any conditions to
its obligations hereunder, or any duty, obligation or covenant of the other
party. No waiver shall affect or alter the remainder of this Agreement but each
and every other covenant, agreement, term, and condition hereof shall continue
in force and effect with respect to any other then existing or subsequently
occurring breach.
25. EXHIBITS. All Exhibits annexed to this Agreement and any documents to be
delivered herewith are expressly made a part of this Agreement as though
completely set forth herein.
26. COUNTERPARTS. This Agreement may be executed in several counterparts, each
of which shall be an original, but all of which together shall constitute one
and the same Agreement.
27. EMPLOYEE ACKNOWEDGMENT. Employee acknowledges that before signing this
Agreement, Employee was given an opportunity to read it, evaluate it, and
consult with an attorney and other personal advisors.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
WordCruncher Internet Technologies, Inc.
Name: Xxxxx Xxxxx ____________________ Employee: Xxxx Barnett_________________
Signature:____________________________ Signature:_____________________________
Title: VP, Sales and Marketing________ Title: Director, Advertising Sales_____
Date:_________________________________ Date:__________________________________
EXHIBIT A
EMPLOYEE INFORMATION
Employee Name: Xxxx Xxxxxxx
Employee Title: Director, Advertising Sales
Annual Base Salary: $100,000
Commission Incentive:
Employee will have the opportunity to achieve a monthly commission, as
set forth in Section 2.g of 50% of Employee's monthly base salary.
In-Package Bonus Incentive:
Employee will have the opportunity to achieve In-Package Bonuses, as
set forth in Section 2.h, of 30% of Employee's annual base salary.
Stock:
Employee will receive an initial stock option program of 100,000
options of Company's common stock to vest equally on an annual basis
over the next three (3) years. The exercise price for the initial
100,000 options shall be an amount equal to 75% of the closing bid
price of WCTI stock on December 17, 1999 (3.69 x 0.75 = 2.77/share). In
addition, Employee will receive 50,000 options of Company's common
stock to vest on Employee's third anniversary date. The exercise price
of these options is set at double the price of the original 100,000
options or $5.54/share.
Additional Terms:
- Company will reimburse or pay Employee for reasonable pre-approved
office and travel expenses.
- Company will reimburse Employee's expense for health insurance
premiums under Employee's current health insurance plan. In the event
that costs for Employee's plan increase by more than 10%, Company has
the option, at its discretion, to propose an equivalent alternative
approach to health insurance for Employee. At such time that the
Company can offer health insurance in Employee's home area equivalent
to the coverage offered in the Salt Lake City coverage area, Company
may choose, with 60 days written notice, to include Employee under
Company's plan and terminate reimbursements for Employee's current
health insurance plan.
- Employee will be entitled to ten (10) days of vacation annually,
which will be accrued in accordance with Company's policies.
- Company will provide Employee a car allowance in the amount of
$350.00 per month.
- If for reasons other than for Cause, Company does not elect to extend
this contract after the first two years, Company agrees to accelerate
the vesting of Employee's stock options which would have vested on
Employee's third anniversary date.
