EB2B COMMERCE, INC.
1998 EXECUTIVE PERFORMANCE EQUITY AGREEMENT
This EXECUTIVE PERFORMANCE EQUITY AGREEMENT (the "Agreement") made
effective as of December 1, 1998 (the "Effective Date") by and between eB2B
Commerce Inc., a Delaware corporation (the "Company") and Xxxxxx Xxxxxxx
("Optionee").
WHEREAS, the Optionee is the Chief Financial Officer and Secretary of
the Company; and
WHEREAS, the Company desires to provide additional incentives to, and
rewards for, sustained performance by Optionee to promote the Company's long
term growth and financial success.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth and for good and valuable consideration, the parties hereto agree as
follows:
1. Grant of Award. Pursuant to the terms of this Agreement, the Company
shall award options to purchase one hundred thousand (100,000) shares of the
Company's Common Stock, par value $.001, ("Options") for achieving certain
performance goals ("Award"). For purposes of this Agreement, "Shares" shall mean
the Common Stock of the Company issuable upon exercise of the Options.
2. Performance Goals. The Optionee shall receive the Award provided that
during the calendar year ending December 31, 1999, the Company commences
business operations and begins processing transactions between manufacturers and
retailers on two (2) or more Network Trading Channels.
a. Network Trading Channel Defined. For purposes of this Agreement,
"Network Trading Channel" shall mean an extranet established and maintained by
the Company that enables manufacturers and retailers within a specific industry
or industry segment to conduct transactions over the Internet.
3. Administration. The Board of Directors of the Company shall have the
sole authority to determine whether the performance goals described above have
been met. On or prior to the sixtieth (60th) day following such approval by the
Board of Directors, the Company shall deliver to Optionee notice of the Award he
is entitled to receive.
4. Option Terms.
a. Exercise Price. The exercise price of the Shares covered by the
Options shall be fifty ($0.50) cents per share ("Purchase Price"). The Company
does not make any representation or warranty to Optionee regarding the Federal
or State income tax consequences or effects of the Options.
b. Vesting of Options. The Options awarded under this Agreement shall
be fully exercisable as of the date awarded.
c. Duration. The Options awarded herein will be exercisable, in full or
in part, for a period of five (5) years commencing on the date such Options are
awarded, or such shorter term as provided in this Agreement ("Exercise Period").
d. Payment. Payment for Shares purchased upon any exercise of Options
granted under this Agreement will be made in full in cash (including payment by
check) concurrently with such exercise.
5. Exercise of Options. The purchase rights represented by the Options may
be exercised by the Optionee, in whole or in part at any time, and from time to
time, during the Exercise
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Period, by the presentation of the purchase form attached, duly executed, at the
Company's office, and upon payment, in accordance with Section 4.4 above, by the
Optionee of the Purchase Price for the Shares. The Company agrees that the
Optionee hereof shall be deemed the record owner of the Shares as of the close
of business on the date on which the Options shall have been presented and
payment made for such Shares as aforesaid. Certificates for the Shares so
purchased shall be delivered to the Optionee hereof within a reasonable time,
not exceeding five (5) days, after the rights represented by this Option shall
have been so exercised. If this Option shall be exercised in part only, the
Company shall deliver an amended Agreement evidencing the rights of the Optionee
hereof to purchase the balance of the Shares which such Optionee is entitled to
purchase hereunder. Exercise in full of the rights represented by this Option
shall not extinguish the rights and obligations granted and imposed under
Section 11 hereof.
6. Adjustments. In the event the Common Stock is changed into or exchanged
for a different number or kind of shares of stock or other securities of the
Company or of another corporation (whether by reason of merger, consolidation,
reorganization or otherwise), or if the number of outstanding shares of Common
Stock are increased through a stock split or the payment of a stock dividend,
then there will be substituted for or added to each share of Common Stock which
is subject to an Option, the number and kind of Shares of securities into which
each outstanding share of Common Stock is changed. Outstanding Options will also
be amended as to price and other terms if necessary to reflect the foregoing
events. No right to purchase fractional Shares will result from any adjustment
in Options pursuant to this Section 6. In case of any such adjustment, the
Shares subject to the Option will be rounded down to the nearest whole share.
Notice of any adjustment will be given by the Company to Optionee, which will
have been so adjusted and such adjustment (whether or not notice is given) will
be effective and binding for all purposes of this Agreement. Any other provision
hereof to the contrary notwithstanding, in the event the Company is a party to a
merger or other reorganization, outstanding Options will be subject to the
agreement of merger or reorganization. Such agreement may provide, without
limitation, for the assumption of outstanding Options by the surviving company
or its parent, for the continuation by the Company (if the Company is a
surviving entity), for accelerated vesting and accelerated expiration, or for
settlement in cash.
7. Amendment and Termination. The Board may alter, amend, suspend or
terminate this Agreement, provided that no such action will deprive any of the
Optionee's rights under an Option without the Optionee's consent. Except as
herein provided, no such action of the Board, unless taken with the approval of
the stockholders of the Company, may:
(i) increase the maximum number of Shares for which Options awarded
under this Agreement may be exercised;
(ii) reduce the minimum permissible exercise price; or
(iv) amend this Agreement in any other manner which the Board, in its
discretion, determines should become effective only if approved by
the stockholders even though such stockholder approval is not
expressly required by this Agreement.
8. Investment Purpose. Each Option under this Agreement shall be awarded
on the condition that the purchase of stock thereunder shall be for investment
purposes, and not with a view to resale or distribution except that in the event
the stock subject to such Option is registered under the Securities Act of 1933,
as amended, or in the event a resale or distribution of such stock without such
registration would otherwise be permissible, such condition shall be inoperative
if in the opinion of counsel for the Company such condition is not required
under the Securities Act of 1933 or any other applicable law, regulation, or
rule of any governmental agency.
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9. Limitations of Rights of Optionee.
a. Rights as a Stockholder. Optionee or a permitted transferee of an
Option shall have no rights as a stockholder with respect to any Shares covered
by his Option until the date of the issuance of a stock certificate to him for
such Shares. No adjustment shall be made for dividend (ordinary or
extraordinary, whether in cash, securities or other property) or distributions
or other rights for which the record date is prior to the date such stock
certificate is issued, except as provided in Section 6 hereof.
b. No Violations. No Shares of stock issuable under this Agreement will
be issued and no certificate therefor delivered unless and until, in the opinion
of legal counsel for the Company, such securities may be issued and delivered
without causing the Company to be in violation of or to incur any liability
under any federal, state or other securities law, or any other requirement of
law or of any regulatory body having jurisdiction over the Company.
c. No Right to Employment. The receipt of an Option does not give the
Optionee any right to continued employment by the Company for any period, nor
will the awarding of the Option or the issuance of Shares on exercise thereof
give the Company any right to the continued services of the Optionee for any
period.
d. Express Award. Nothing contained in this Agreement will constitute
the awarding of an Option hereunder, which will occur only pursuant to such
performance goals contained in this Agreement.
10. Taxes. Optionee agrees, no later than the date as of which the value of
any Option awarded or Shares acquired pursuant to this Agreement first becomes
includible in the gross income of the Optionee for federal income tax purposes,
to pay to the Company, or make arrangements satisfactory to the Company
regarding payment of, any federal, state or local taxes of any kind required by
law to be withheld with respect to the Option or such Shares. The obligations of
the Company under this Agreement are conditioned on such payment or
arrangements, and the Company will, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind otherwise due to
Optionee.
11. Restrictions on Transfer; Company's Right of First Refusal.
a. Until such time as the Common Stock of the Company is Publicly
Traded, if Optionee receives from an unaffiliated person or entity a bona fide
offer (for the purpose of this Section 11, an "Offer") to purchase all or any
portion of the Shares which Offer Optionee desires to accept, Optionee shall
deliver written notice (for the purpose of this Section 11, the "Offer Notice")
to the Company setting forth all the terms and conditions of the Offer,
including the aggregate purchase price, proposed closing date, payment terms and
the name and address of the proposed purchaser. No Offer Notice will be
effective under this Section 11 if it is received by the Company on a date fewer
than thirty (30) days prior to the proposed closing date of the proposed sale.
For the purpose of verifying the contents of an Offer Notice, Optionee hereby
authorizes the Company's representatives to directly contact any person
identified in any Offer Notice.
b. Within twenty-five (25) days after receiving the Offer Notice, the
Company may, by written notice to Optionee, elect to purchase, at the price and
time and on terms and conditions not less favorable to Optionee than those
contained in the Offer, not less than all of the Shares proposed in the Offer to
be purchased.
c. If the Company fails to elect to exercise its rights under Section
11.2, Optionee may, at any time within (but not after) forty (40) days after the
expiration of the twenty-five (25) day exercise period referred to in Section
11.2, sell not less than all the Shares proposed in the Offer to be purchased to
the proposed purchaser at the price, and on the terms and conditions, contained
in the Offer.
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d. The Company shall not be obligated to recognize or give effect to
any sale of any of the Shares under this Section 11 unless and until a proposed
transferee has delivered to the Company a written instrument, in a form
reasonably acceptable to the Company, evidencing the proposed transferee's
consent and agreement to perform and be bound by all of the obligations
originally binding on Optionee under this Agreement.
12. Stock Certificates. The certificates for such Shares will be registered
in the name of the Optionee; if Optionee requests in the Notice, the certificate
will be registered in the name of the Optionee and another person jointly, as
joint tenants with right of survivorship. If the Option is exercised by the
legal representative of Optionee's estate, or by any person or persons who
acquires the Option directly from Optionee as a result of Optionee's death,
whether by bequest, inheritance, or otherwise or pursuant to a qualified
domestic relations order, the Notice will be accompanied by appropriate proof of
the right of such person or persons to exercise the Option.
13. Legends on Share Certificates.
a. For so long as the Common Stock is not Publicly Traded, in addition
to any other legends which may be prescribed by law, the following legend (or
substantially the following legend) will appear on each certificate representing
the Shares issued upon the exercise of each Option:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED
AND ARE BEING HELD PURSUANT TO THIS 1998 EXECUTIVE PERFORMANCE
EQUITY AGREEMENT OF EB2B COMMERCE, INC., AND MAY ONLY BE
TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF PURSUANT TO THE TERMS
THEREOF."
b. For so long as the Common Stock is not Publicly Traded, the
certificates representing the Shares may, at the absolute discretion of the
Company, be subject to a stop transfer order, and bear the following or
substantially similar legend and such other legends as may be required by the
Company:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SECURITIES
NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED
OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH
RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE
STATE SECURITIES LAWS OR (2) THE COMPANY RECEIVES AN OPINION OF
COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH COUNSEL AND
OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH
SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED
IN THE MANNER CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS."
14. Publicly Traded Defined. Corporate stock is "Publicly Traded" if stock
of that class is listed or admitted to unlisted trading privileges on a national
securities exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities Dealers,
Inc. ("NASD") or if sales or bid and offer quotations are reported for that
class of stock in the automated quotation system ("NASDAQ") operated by the
NASD.
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15. Nontransferability. Each Option granted under this Agreement is
nontransferable by the Optionee other than by will or the laws of descent and
distribution, and is exercisable only in accordance with the provisions of this
Agreement.
16. Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York.
17. Entire Agreement. This Agreement and the Employment Agreement
constitute the agreement of the Parties hereto respecting the subject matter
hereof. Any conflict between this Agreement and the Employment Agreement shall
be resolved in favor of the Employment Agreement.
18. Binding Effect. This Agreement is binding upon, and will inure to the
benefit of the parties hereto and their respective heirs, personal
representatives, successors and assigns.
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement
effective as of the date set forth below.
eB2B Commerce, Inc.
By: By:
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Xxxxxx Xxxxxxx
Date: Date:
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