Exhibit 4.14
USWEB CORPORATION
EMPLOYMENT AGREEMENT
This Employment Agreement (the "AGREEMENT") is entered into by and
between USWEB Corporation, a Delaware corporation (the "COMPANY"), and
Xxxxxx Xxxx (the "EMPLOYEE") effective as of November 1, 1998.
WHEREAS, the Company desires to employ the Employee on a full-time basis
in the capacity of Chief Executive Officer of the Company, and the Employee
desires to accept such employment; and
WHEREAS the parties desires and agree to enter into an employment
relationship by means of this Agreement;
NOW THEREFORE in consideration of the promises and mutual covenants
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, it is mutually covenanted and
agreed by the parties as follows:
1. POSITION AND DUTIES. The Employee shall be employed as Chief
Executive Officer of the Company, reporting solely to the Company's Board of
Directors (the "BOARD") and assuming and discharging such duties and
responsibilities as are commensurate with the Employee's position. In
performing his basic duties, the Employee shall work at the Company's
business offices located in San Francisco or Santa Clara, California,
although the Employee acknowledges that frequent travel may be necessary in
carrying out his duties hereunder. The Employee shall perform his duties
faithfully and to the best of his ability and shall devote his full business
time and effort (except for permitted vacation periods and periods of illness
and other incapacity) to the performance of his duties hereunder, provided
that subject to Section 10, the Employee may serve on the boards of other
corporations. The Employee shall commence employment with the Company
effective November 1, 1998 (the "EFFECTIVE DATE"). For so long as the
Employee remains Chief Executive Officer of the Company, the Company will use
its commercially reasonable best efforts to cause the Employee to be elected
as a member of the Board (and at the option of the Employee, as Chairman of
the Board). If elected in any such capacity, the Employee shall serve as
such without additional consideration.
2. TERM OF EMPLOYMENT. This Agreement shall become effective upon
the Effective Date. The Employee's employment with the Company shall
continue until terminated by either party at any time, with or without
notice, and for any or no reason. The parties agree and acknowledge that
this Agreement is an "at will" agreement and that no implied covenant or
standard of practice will cause this Agreement to have any minimum period of
employment.
3. TERM OF AGREEMENT. The terms of this Agreement shall terminate
on the first date on which all obligations of the parties hereunder have been
satisfied. A termination of the terms of this
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Agreement pursuant to this Section 3 shall be effective for all purposes,
except that such termination shall not affect any ongoing obligations of the
parties hereunder.
4. COMPENSATION.
(a) BASE SALARY. For all services to be rendered by the
Employee to the Company while this Agreement is in effect, the Employee shall
receive a minimum annual base salary equal to $700,000 (the "BASE SALARY"),
payable in accordance with the Company's normal payroll practices. The Base
Salary shall be reevaluated yearly and may be increased by the Board, in
light of the Employee's performance of his duties.
(b) JOINING BONUS. Within fifteen (15) calendar days after
the Effective Date, the Company shall pay the Employee a lump sum cash bonus
equal to $200,000.
(c) PERFORMANCE BONUS. In the event the Company achieves
certain performance milestones to be determined by the Board in its sole
discretion, the Employee shall be entitled to an annual performance bonus in
the amount of $500,000 for on-target performance, with such pro-ration or
multipliers as are established by the Board in its sole discretion.
Notwithstanding the preceding, the Employee's bonus for his first year of
employment shall be paid at 100% of target.
5. OPTION. As of the Effective Date, the Company shall grant a
non-statutory stock option to the Employee covering a total of 1,200,000
shares of the Company's Common Stock (the "OPTION"). The exercise price of
the Option shall be $10.00 per share, an amount which is less than the
current fair market value of a share as of the Effective Date. Subject to
the Employee's continued employment with the Company, the Option shall vest
and become exercisable as to 1/4th of the shares subject to the Option on the
first anniversary of the Effective Date, and an additional 1/48th of the
shares shall vest and become exercisable on each subsequent monthly
anniversary of the Effective Date. Notwithstanding the foregoing, a portion
of the then unvested portion of the Option shall become vested and
exercisable upon the occurrence of certain events as provided in Sections 7
or 8 below. At all times while the option is exercisable, the shares subject
to the Option shall be registered with the Securities and Exchange Commission
(and assuming that the Company's shares continue to be registered with the
Commission in general).
6. OTHER BENEFITS. The Employee shall be entitled to participate in
the employee benefit plans and programs that the Company makes available to
its senior executives, subject to the rules and regulations applicable
thereto. In addition, the Company shall use its commercially reasonable
efforts to adopt a nonqualified deferred compensation plan in which the
Employee shall be eligible to participate. The Company reserves the right to
cancel or change the benefit plans and programs it offers to its senior
executive employees at any time. The Employee will be eligible for vacation
and sick leave in accordance with the policies in effect for senior
executives during the term of this Agreement and will receive such other
benefits and perquisites as the Company generally provides to its senior
executives. The Employee also shall be reimbursed by the Company for (i) up
to $7,500 per year in fees incurred by the Employee for financial counseling
or estate planning, and (ii) out-of-town travel costs incurred
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by the Employee's spouse when she is required to travel with the Employee in
furtherance of the Company's business, which reimbursements shall be in
accordance with the Company's standard policies for executive business travel.
7. TERMINATION.
(a) TERMINATION WITHOUT CAUSE OR FOR GOOD REASON. If the
Company terminates the Employee's employment other than for "Cause" or if
Employee terminates his employment for "Good Reason" (as those terms are
defined in Section 9 below), then, subject to the Employee's obligations
pursuant to Section 10 below and the signing of the Company's standard form
of release agreement releasing the Company from any further claims from or
obligations to the Employee, and in addition to any other amounts to which
the Employee is entitled hereunder: (i) the Company shall continue to pay the
Employee his Base Salary for a period of two (2) years, (ii) the Company
shall continue, for the same period, to provide the Employee with the same
medical, life and disability benefits as provided to the Employee immediately
prior to such termination or the after-tax cash equivalent, provided that
such amount is sufficient for the Employee to purchase his own similar
policy, for so long as the Employee is entitled to continuation of Base
Salary as provided in clause (i) above, provided that such coverage shall
become secondary if the Employee receives coverage from a subsequent
employer; and (iii) to the extent not otherwise vested and exercisable,
1/48th of the shares subject to the Option shall vest and become immediately
exercisable with respect to each full month which has elapsed between the
Effective Date and the Employee's termination date.
(b) DEATH OR DISABILITY. In the event of Employee's death
during the term of this Agreement, (i) 50% of any Company stock options
granted to the Employee that remain unexpired and unvested on the date of
Employee's death automatically shall vest, and (ii) the Company shall pay to
the Employee's estate all salary, bonuses and unpaid vacation accrued as of
the date of Employee's death and any other benefits payable under the
Company's then existing benefit plans and policies in accordance with such
plans and policies in effect on the date of death and in accordance with
applicable law. In the event that, during the term of this Agreement,
Employee is unable to perform his job due to Disability (as defined in
Section 9 below), the Company may, at its option, terminate Employee's
employment with the Company and such termination shall entitle the Employee
to (i) immediate vesting of 50% of any Company stock options granted to the
Employee that remain unexpired and unvested on the date of the Employee's
termination, and (ii) all salary, bonuses and unpaid vacation accrued as of
the date of such termination and any other benefits payable under the
Company's then existing benefit plans and policies in accordance with such
plans and policies in effect on the date of such termination and in
accordance with applicable law.
(c) VOLUNTARY TERMINATION; TERMINATION FOR CAUSE. In the event
the Employee's employment with the company terminates either (i) voluntarily
by the Employee without "Good Reason" (as defined in Section 9 below), or
(ii) involuntarily by the Company for "Cause" (as defined in Section 9
below), then the Company shall have no further obligations hereunder except
to pay to the Employee all amounts of unpaid Base Salary, reimburse all
reasonable business-related expenses and
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pay and provide all other benefits required by law or by the terms of the
applicable plan or benefit program.
8. CHANGE OF CONTROL.
(a) OPTION VESTING; SEVERANCE. In the event of a "Change of
Control" (as defined in Section 9) which results in either (i) the Employee
terminating his employment with the Company for "Good Reason" (as defined
in Section 9 below), or (ii) the Company terminating the Employee's
employment for other than "Cause" (as defined in Section 9 below), then (I)
100% of the Option shall vest and become immediately exercisable, and (2) the
Employee shall be entitled to receive the severance benefits set forth in
Section 7(a)(i) and 7(a)(ii) above.
(b) LIMITATION ON PAYMENTS. In the event that any payment or
benefits received or to be received by the Employee in connection with a
"Change of Control" (as defined in Section 9) or the termination of the
Employee's employment (the "TOTAL PAYMENTS") would subject the Employee to
the excise tax (the "Excise Tax") imposed under Section 4999 of the Internal
Revenue Code of 1986, as amended (the "Code"), then the Employee shall
receive (i) a payment from the Company sufficient to pay such excise tax, and
(ii) an additional payment from the Company sufficient to pay the excise tax
and federal and state income taxes arising from the payments made by the
Company pursuant to this sentence; provided, however, that in no event shall
the Company be required to pay the Employee more than $5,000,000 pursuant to
this Section 8(b). The determination of Employee's excise tax liability and
the amount, if any, required to be paid under this Section 8(b) shall be made
in writing by the Company's independent auditors (the "Accountants"). For
purposes of making the calculations required by this Section 8(b), the
Accountants may make reasonable assumptions and approximations concerning
applicable taxes and may rely on reasonable, good faith interpretations
concerning the application of Sections 280G and 4999 of the Code. The Company
and the Employee shall furnish to the Accountants such information and
documents as the Accountants may reasonably request in order to make a
determination under this Section 8(b). The Company shall bear all costs the
Accountants may reasonably incur in connection with any calculations
contemplated by this Section 8(b).
(c) CERTAIN BUSINESS COMBINATIONS. In the event it is
determined by the Board, upon receipt of a written opinion of the Company's
independent public accountants, that the operation of Section 8(b) hereof
would preclude accounting for any proposed business combination of the
Company involving a Change of Control as a pooling of interest, and the Board
otherwise desires to approve such proposed business transaction on a pooling
of interest basis, said Section shall be null and void, but only to the
extent necessary to preserve the pooling treatment.
9. DEFINITIONS. For purposes of this Agreement, the following
terms shall have the following meanings:
(a) CAUSE. "Cause" shall mean (i) any act of personal
dishonesty taken by the Employee in connection with his responsibilities as
an employee and intended to result in personal enrichment of himself or his
associates at the expense of the Company or its stockholders, (ii) any
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conviction (or plea of no contest) of a felony or an act of fraud against the
Company, (iii) continued violations of the Employee's employment-related
obligations which are willful and deliberate after there has been delivered
to the Employee a written demand from the Board regarding such activities and
the Employee has had a reasonable opportunity to correct such violations, or
(iv) willful refusal to carry out legally permissible instructions from the
Board after the Employee has been given written notice of a failure to carry
out such instructions and a reasonable opportunity to correct the situation.
(b) CHANGE OF CONTROL. A "Change of Control" shall mean (i)
the sale, lease, conveyance or other disposition of all or substantially all
of the Company's assets to any "person" (as such term is used in Section
13(d) of the Securities Exchange Act of 1934, as amended), entity or group of
persons acting in concert; (ii) any "person" or group of persons becoming
the "beneficial owner" (as defined in Rule 13d-3 under said Act), directly
or indirectly, of securities of the Company representing 50% or more of the
total voting power represented by the Company's then outstanding voting
securities; (iii) a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation that would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity or its controlling
entity) at least 50% of the total voting power represented by the voting
securities of the Company or such surviving entity (or its controlling entity)
outstanding immediately after such merger or consolidation; or (iv) a contest
for the election or removal of members of the Board that results in the
removal from the Board of at least 50% of the incumbent members of the Board.
(c) DISABILITY. A "Disability" shall mean the Employee's
inability to substantially perform his essential job functions as the result
of a physical or mental disability or incapacity for a period of 180 days,
consecutive or otherwise, in any 360-day period.
(d) GOOD REASON. Resignation for "Good Reason" shall mean
any of the following without the Employee's written consent: (i) any material
diminution or material adverse change in the Employee's position with the
Company, duties, responsibilities or the positions that report directly to
him, (ii) a reduction by the Company in Employee's Base Salary (in which
event payments provided in Sections 7 and 8 shall be made based upon
Employee's Base Salary in effect prior to any such reduction), (iii) a
material reduction in the aggregate program of employee benefits and
perquisites to which Employee is entitled, (iv) relocation by more than 25
miles from Employee's workplace, (v) a material decline in Employee's bonus
opportunity, (vi) the failure by the Company to elect, or the forcible
removal of, the Employee as a Director, in any event without Cause, (vii) in
the event that the Company becomes a wholly-owned subsidiary of another
corporation, the Employee not reporting directly to the board of directors of
the ultimate parent corporation of the Company.
10. NON-COMPETITION AND NON-SOLICITATION.
(a) For a period beginning on the Effective Date and ending 12
months after the date on which the Employee ceases to be employed by the
Company for any reason whatsoever, the Employee, directly or indirectly,
whether as employee, owner, sole proprietor, partner, shareholder,
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director, member, consultant, agent, founder, co-venturer or otherwise, will;
(i) not engage, participate or invest in any business activity anywhere in
the world which develops, manufactures or markets products or performs
services which are competitive with the products or services of the Company
at the time of the Employee's termination, or products or services which the
Company has under development or which are the subject of active planning at
the time of the Employee's termination; PROVIDED, HOWEVER, that the Employee,
may own as a passive investor, publicly-traded securities of any corporation
which competes with the business of the Company so long as such securities do
not, in the aggregate, constitute more than 1% of any class of outstanding
securities of such corporations; (ii) not hire or attempt to employ, recruit
or otherwise solicit, induce or influence any person to leave employment with
the Company or its resellers or distributors and (iii) not directly or
indirectly solicit business from any of the Company's customers and users,
resellers or distributors on behalf of any business which competes with the
Company. Notwithstanding the preceding, the Employee's obligations under
clause (i) of the preceding sentence shall end on the date of his termination
of employment from the Company.
(b) The Employee understands that the restrictions set forth in
this Section 10 are intended to protect the Company's interest in its
"proprietary information" (as such term may be defined in the
Non-disclosure Agreement) and establish customer relations in good will, and
agrees that such restrictions are reasonable, necessary and appropriate for
this purpose.
(c) The Employee agrees that it would be difficult to measure
any damages caused by the Company which might result from any breach by the
Employee of the promises set forth in this Section 10, and that in any event
money damages would be an inadequate remedy for any such breach.
Accordingly, the Employee agrees that if the Employee breaches, or proposes
to breach, any portion of this Section 10, the Company shall be entitled, in
addition to all other remedies that it may have, to injunction or other
appropriate equitable relief to restrain any such breach without showing or
proving any actual damage to the Company.
11. RIGHT TO ADVICE OF COUNSEL. The Employee acknowledges that he has
consulted with counsel and is fully aware of his rights and obligations under
this Agreement and of the tax consequences thereof. The Company shall
reimburse the Employee for the direct costs of obtaining such counsel in an
amount not to exceed $10,000.
12. ADDITIONAL AGREEMENTS. As a condition of the Employee's
employment with the Company, the Employee shall execute the Company's
standard form of non-disclosure and assignment and inventions agreement.
13. SUCCESSORS
(a) COMPANY'S SUCCESSOR. Any successor (whether direct or
indirect and whether by purchase, lease, merger, consolidation, liquidation
or otherwise) to all or substantially all of the Company's business or assets
shall assume the obligations under this Agreement and agree expressly to
perform the obligations under this Agreement in the same manner and to the
same extent as the
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Company would be required to perform such obligations in the absence of a
succession. For all purposes under this Agreement, the term "Company"
shall include any successor to the Company's business or assets which
executes and delivers the assumption agreement described in this subsection
(a) or which becomes bound by the terms of this Agreement by operation of law.
(b) EMPLOYEE'S SUCCESSORS. Without the written consent of the
Company, the Employee shall not assign or transfer this Agreement or any
right or obligation under this Agreement to any other person or entity.
14. NOTICE CLAUSE.
(a) MANNER. Any notice hereby required or permitted to be given
shall be sufficiently given if in writing and upon mailing by registered or
certified mail, postage prepaid, to either party at the address of such party
listed under such party's signature or such other address as shall have been
designated by written notice by such party to the other party.
(b) EFFECTIVENESS. Any notice or other communication required
or permitted to be given under this Agreement will be deemed given on the day
when delivered in person, or the third business day after the day on which
such notice was mailed in accordance with Section 14(a).
15. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the internal substantive laws, but not the choice of law
rules, of the state of California.
16. SEVERABILITY. The invalidity or unenforceability of any provision
of this Agreement, or any terms hereof, shall not affect the validity or
enforceability of any other provision or term of this Agreement.
17. INTEGRATION. Except as otherwise expressly provided otherwise
herein, this Agreement represents the entire agreement and understanding
between the parties as to the subject matter herein and supersedes all prior
or contemporaneous agreements, whether written or oral. No waiver,
alteration, or modification of any of the provisions of this Agreement shall
be binding unless in writing and signed by duly authorized representatives of
the parties hereto.
18. TAXES. All payments made pursuant to this Agreement shall be
subject to withholding of applicable income and employment taxes.
19. ARBITRATION. Except for proceedings seeking injunctive relief,
including, without limitation, allegations of misappropriation of trade
secrets, copyright or patent infringements, or breach of any anti-competition
provisions of this Agreement, any controversy or claim arising out of or in
relation to this Agreement, or the breach thereof, shall be settled by
arbitration in accordance with the commercial arbitration rules of the
American Arbitration Association ("AAA"), and judgment upon the award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof. Arbitration of this Agreement shall include all claims, regardless
of whether the dispute arises during the term of the
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Agreement, at the time of termination or thereafter. Either party may
initiate the arbitration proceedings, for which the provision is herein made,
by notifying the opposing party, in writing, of its demand to arbitrate. In
any such arbitration there shall be appointed one arbitrator who shall be
selected in accordance with the AAA Commercial Arbitration Rules. The place
of arbitration shall be San Francisco, California. The parties agree that the
award of the arbitrator shall be the sole and exclusive remedy between them
regarding any claims, counterclaims, issues or accounting presented or plead
to the arbitrator, that the arbitrator shall be the final judge of both law
and fact in arbitration of disputes arising out of or relating to this
Agreement, including the interpretation of the terms of this Agreement. The
parties further agree it shall be the sole and exclusive duty of the
arbitrator to determine the arbitrability of issues in dispute and that
neither party shall have recourse to the court of such a determination. The
Company shall pay the fees of the arbitrator.
20. COUNTERPARTS. This Agreement may be executed by either of the
parties hereto in one or more counterparts, none of which need contain the
signature of more than one party hereto, and each of which shall be deemed to
be an original, and all of which together shall constitute a single agreement.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by a duly authorized officer, as of the day and year
first above written.
USWEB CORPORATION
By: /s/ Xxxxxx X. Xxxx
Name: Xxxxxx X. Xxxx
Title: Director
0000 Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxx Xxxxx, XX 00000
XXXXXX XXXX
/s/ Xxxxxx Xxxx
Address:
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