EMPLOYMENT AGREEMENT
AGREEMENT made as of August 16, 1999, by and between
XxxxxxxXxxxxxxxxxx.xxx Inc., a corporation incorporated under the laws of the
state of Delaware, with its principal place of business at 0000 Xxxxxxx Xxxxxx,
Xxxxxxx, Xxxxx 00000 (the "Company"), and XXXXXXX XXXXX, residing at the
address set forth at the end of this Agreement (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company and the Executive desire to set forth the terms
and conditions of the Executive's employment by the Company;
NOW, THEREFORE, the parties hereto agree as follows:
1. TERM OF EMPLOYMENT. The Executive's employment under this Agreement
shall be for a term commencing on October 4, 1999 and terminating on October 3,
2002, subject to earlier termination as provided in section 5 hereof (the "Term
of Employment"). Each year of the Term of Employment is referred to herein as a
"Contract Year."
2. EMPLOYMENT
2.1 During the Term of Employment, the Company shall employ
the Executive as its President and Chief Operating Officer, and the Executive
shall serve in such position, perform such services and have such authority,
functions, duties, powers and responsibilities as ordinarily are associated
with such title. The Executive shall faithfully and diligently serve the
Company and shall, as of January 1, 2000, devote all of his business time,
attention, skill and efforts thereto; provided, that the Executive may manage
his passive investments and be involved in charitable interests so long as they
do not interfere or conflict with the performance of the Executive's duties
hereunder. Through December 31, 1999, Executive may continue to perform
services on a part-time basis at Executive's discretion for his current
employer. The Executive shall be based in New York City.
3. COMPENSATION AND OTHER REMUNERATION.
3.1 BASE SALARY. The Company shall pay to the Executive
during the Term of Employment base salary at the annual rate of Two Hundred
Fifty Thousand Dollars ($250,000); provided, that Executive's base salary shall
be increased to Four Hundred Thousand Dollars ($400,000) at such time as the
Company closes a financing or financings which raise(s) an aggregate of $40
million; provided further, that Executive's base salary shall be further
increased at such time as the Company completes an initial public offering, to
a level commensurate with presidents of comparable companies at comparable
stages of development. Base salary will be paid in accordance with the
customary payroll practices of the Company and shall be subject to required
payroll deductions and withholdings. The compensation due to Executive
hereunder shall be due and payable notwithstanding any compensation which
Executive may earn from any other entity or outside source.
3.2 BONUS. The Executive shall be eligible to receive a bonus
in respect of each Contract Year in such amount, if any, as may be determined
by the Company's board of directors.
3.3 VACATION. The Executive shall be entitled to a reasonable
number of days of vacation during each Contract Year, scheduled in advance with
the Company to avoid excessive disruption of the Company's operations.
3.4 STOCK OPTIONS.
3.4.1. Pursuant to one or more stock option
agreements (hereafter referred to as the "Stock Option Agreement") dated the
date hereof, the Company shall grant to Executive stock options, under and
pursuant to the Company's 1999 Stock Option Plan, to purchase four thousand
(4,000) shares of the Company's common stock, $.01 par value ("Common Stock"),
at the price of Two Thousand Eighty-Five Dollars ($2,085) per share. Twenty
five percent (25%) of these options will vest immediately upon grant, and the
balance
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will vest in thirds on the last day of the first, second and third Contract
Year, provided Executive is employed on such dates, except as otherwise
provided in the last sentence hereof. The Stock Option Agreement will provide
that the maximum number of options which may be issued in the form of incentive
stock options pursuant to Section 422 of the Internal Revenue Code will be so
issued, with the balance of the options granted pursuant hereto to be issued as
non-qualified options. The Stock Option Agreement will further provide that if
the Executive dies during the Term of Employment or if the Company terminates
this Agreement due to his disability (as described below) or without "Cause"
(as defined below), or the Executive terminates this Agreement for "Good
Reason" (as defined below), all unvested options shall immediately become
exercisable.
3.4.2. All vested options will be exercisable for a period of
ten (10) years from the date of grant, regardless of whether this Agreement has
terminated. Any options granted in the form of incentive stock options which
are not exercised within three (3) months of the termination of employment
(other than due to death or disability) or twelve (12) month in the event of
termination due to disability automatically shall be converted into
non-qualified options.
4. BENEFITS; REIMBURSEMENT OF BUSINESS EXPENSES.
4.1 BENEFITS. The Executive shall participate in all benefit
plans of the Company generally available to its employees and/or to any senior
executive of the Company, whether n ow existing or hereafter established
(collectively, the "Benefit Plans"). The extent of Executive's participation in
the Benefit Plans shall be at the same level as the most senior executives of
the Company.
4.2 REIMBURSEMENT OF BUSINESS EXPENSES. Business expenses
incurred by the Executive in accordance with the Company's policies will be
reimbursed upon the presentation of receipts. Business-related air travel shall
be such class as is determined by Executive in his reasonable discretion.
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4.3 INSURANCE. During any period that the Executive is
rendering any services hereunder, the Company agrees to cause Executive to be
named as an insured under a director and officer liability insurance policy
which the Company shall obtain.
5. TERMINATION.
5.1 TERMINATION FOR CAUSE.
5.1.1 The Company may terminate this Agreement and
all of the Company's obligations hereunder, other than its obligations set
forth below in this section 5.1, for "Cause." "Cause" shall mean that the
Executive (i) is convicted of a felony, or any misdemeanor involving fraud or
theft, (ii) engages in dishonest behavior which materially adversely affects
the Company, (iii) commits a willful and intentional act having the effect of
materially injuring the reputation or business of the Company, including,
without limitation, habitual use of illegal drugs or alcohol or (iv) materially
breaches this Agreement and, after having been given written notice thereof by
the Company, fails to correct such breach within ten (10) days after receipt of
such notice.
5.1.2 In the event of termination by the Company for Cause,
the Company shall have no further obligations to the Executive other than to
pay (i) base salary accrued through the effective date of termination; and (ii)
all other benefits and amounts which may be then due the Executive under the
general provisions then in effect of any Benefit Plan ((i) and (ii)
collectively, the "Termination Entitlements").
5.2 TERMINATION DUE TO DEATH. This Agreement shall terminate
upon the Executive's death, and in such event the Company shall have no further
obligations hereunder, other than to pay to the Executive's estate the
Termination Entitlements.
5.3 TERMINATION DUE TO DISABILITY. If, during the Term of
Employment, the Executive shall become physically or mentally disabled, whether
totally or partially, so that he is unable to perform the material functions of
his position for periods aggregating one hundred
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thirty five (135) days in any twelve (12) month period, the Company shall be
entitled to terminate this Agreement upon written notice to the Executive given
at any time thereafter during which the Executive is still so disabled. Upon
such termination, the Term of Employment shall end, and the Company shall have
no further obligations hereunder other than to pay to the Executive the
Termination Entitlements.
5.4 TERMINATION FOR GOOD REASON. "Good Reason" shall mean any
of the following: (i) a material breach by the Company of this Agreement, (ii)
a material diminution of Executive's authority, duties or responsibilities with
the Company or (iii) the assignment to Executive of duties materially
inconsistent with Executive's position with the Company, unless otherwise
approved by the Executive. If there exists an event or condition that
constitutes Good Reason, and such event or condition is not cured within ten
(10) days following Executive's giving the Company notice thereof, Executive at
any time thereafter shall have the right to terminate this Agreement by giving
the Company written notice of such termination, and upon his doing so, the
provisions of sections 3.4.1 and 5.5 and all other relevant provisions hereof
shall apply.
5.5 TERMINATION WITHOUT CAUSE OR FOR GOOD REASON. If the
Company terminates this Agreement without Cause (as defined in section 5.1
hereof), or if the Executive terminates this Agreement for Good Reason (as
defined in section 5.4 hereof), in addition to the Termination Entitlements,
the Executive shall be entitled to receive all base salary due for the balance
of the Term of Employment in a lump sum within thirty (30) days of the date of
termination.
5.6 STOCK OPTION VESTING. The impact of the termination of
this Agreement on the stock options referred to in section 3 hereof, shall be
as described in section 3 and in the Stock Option Agreements under which such
options shall be issued.
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6. PROTECTION OF CONFIDENTIAL INFORMATION. The Executive acknowledges
that employment by the Company will bring the Executive into close contact with
the confidential affairs of the Company and its affiliates. In recognition of
the foregoing, the Executive covenants and agrees that the Executive will keep
secret all confidential matters of the Company and its affiliates, including,
without limitation, the terms and provisions of this Agreement, and will not use
for his own benefit or intentionally disclose such matters to anyone outside of
the Company, either during or after the Term of Employment, except with the
Company's consent, provided that (i) the Executive shall have no such obligation
to the extent such matters are or become publicly known other than as a result
of the Executive's breach of his obligations hereunder; (ii) the Executive may
disclose such matters to the extent required by applicable laws or governmental
regulations or judicial or regulatory process; and (iii) the Executive may
disclose the terms of this Agreement to his attorney(s), accountant(s) and/or
financial advisor(s).
7. OWNERSHIP OF WORK PRODUCT. The Executive acknowledges that in the
course of employment hereunder, he may conceive of, discover, or create
inventions or new contributions relating to the subject matter of his employment
(all of the foregoing being collectively referred to herein as "Work Product").
The Executive acknowledges that, unless the Company otherwise agrees, all of
such Work Product shall be owned by and belong exclusively to the Company. The
Executive shall further, unless the Company otherwise agrees in writing, (i)
promptly disclose any such Work Product to the Company; (ii) assign to the
Company, upon request, the entire rights to such Work Product to the extent not
otherwise owned at law by the Company; and (iii) sign all papers reasonably
necessary to carry out the foregoing.
8. REPRESENTATIONS. Both Executive and Company represent and warrant
that each is not a party to any agreements or understandings which would prevent
the fulfillment by such party of the terms of this Agreement or which would be
violated by entering into this Agreement and performing such party's obligations
hereunder.
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9. NOTICES. All notices, requests, consents and other communications
required or permitted to be given hereunder shall be in writing and shall be
deemed to have been duly given if delivered personally or three days after being
mailed first-class, postage prepaid, by registered or certified mail, to the
address of the recipient given herein (or such other address of which notice is
given or, in the case of notice to the Executive, to the most recent address set
forth on the records of the Company).
10. INDEMNIFICATION. The Company shall indemnify Executive against any
and all judgments, fines, amounts paid in settlement and reasonable expenses,
including attorneys' fees, incurred in connection with any action or proceeding,
whether civil, criminal, judicial, legislative, administrative or investigative,
or in connection with an appeal therein, by reason of the fact that Executive is
or was a director, officer, employee, representative or agent of the Company;
provided, however, that no such indemnification shall be made to Executive if an
adverse judgment or other final adjudication establishes that the acts of
Executive were committed in bad faith or were the result of active and
deliberate dishonesty and, in either case, were material to the cause of action
so adjudicated. Without limiting the foregoing, Executive shall also be entitled
to indemnification by the Company against any liability or damage, including
attorney's fees and liabilities under federal and state securities laws, arising
from any act or omission by Executive provided such act or omission was
reasonably believed to be within the scope of Executive's authority or was taken
upon advice of the accountants or legal counsel for the Company. The
indemnification of Executive provided by this section 10 shall continue after
Executive has ceased to be a director, officer, employee, representative or
agent of the Company and shall inure to the benefit of Executive's heirs,
executors, administrators and legal representatives.
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11. GENERAL.
11.1 GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the state of the State of
New York applicable to agreements made and to be wholly performed therein.
11.2 CAPTIONS. The section headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
11.3 ENTIRE AGREEMENT; NO OTHER REPRESENTATIONS. The parties
expressly acknowledge, represent and agree that this Agreement is fully
integrated and contains and constitutes the complete and entire agreement and
understanding of the parties with respect to the subject matters hereof and
supersedes any and all agreements, understandings and discussions, whether
written or oral, between the parties with respect to the subject matters hereof,
other than the Proprietary Rights and Information Agreement being entered into
simultaneously herewith. The parties further acknowledge, represent, and agree
that neither has made any representations, promises or statements to induce the
other party to enter into this Agreement, and each party specifically disclaims
reliance, and represents that there has been no reliance, on any such
representations, promises or statements.
11.4 ASSIGNABILITY. This Agreement and the parties' rights and
obligations hereunder may not be assigned by Executive or the Company without
the other's prior written consent.
11.5 AMENDMENTS; WAIVERS. This Agreement may be amended,
modified, superseded, canceled, renewed or extended, and the terms and covenants
hereof may be waived, only by written instrument executed by both of the parties
hereto, or in the case of a waiver, by the party waiving compliance. The failure
of either party at any time or times to require performance of any provisions
hereof shall in no manner affect such party's right at a later time to enforce
the same. No waiver by either party of the breach of any term or covenant
contained
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in this Agreement, whether by conduct or otherwise, in any one or more
instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such breach, or a waiver of the breach of any other term or
covenant contained in this Agreement.
11.6 CONSTRUCTION. No presumption will be made or inference
drawn because the attorneys for one of the parties drafted this Agreement or
because of its drafting history.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
XxxxxxxXxxxxxxxxxx.xxx Inc.
By: /s/ J. Xxxxx Xxxxxxx
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Its: C.E.O.
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XXXXXXX XXXXX
Signature: /s/ Xxxxxxx Xxxxx
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Address: 00 Xxxxx Xxxx
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Bronxville, N.Y. 10708
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