EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement"), made and entered into this
27th day of February, 2000, by and between Xxxxxxxx.xxx, Inc., a Delaware
corporation (the "Company"), and Xxxxxxx X. Xxxxxx (the "Executive").
W I T N E S S E T H
WHEREAS, the Company has a need for the Executive's personal services
in an executive capacity; and
WHEREAS, the Executive possesses the necessary strategic, financial,
planning, operational and managerial skills necessary to fulfill those needs;
and
WHEREAS, the Executive and the Company desire to enter into a formal
employment agreement to fully recognize the contributions of the Executive to
the Company and to assure continuous harmonious performance of the affairs of
the Company.
NOW, THEREFORE, in consideration of the mutual promises, terms,
provisions, and conditions contained herein, the parties agree as follows:
1. Position.
The Company hereby agrees to continue to employ the Executive
to serve in the role of Chief Executive Officer of the Company, subject to the
limitations set forth herein. As such, the Executive shall be responsible for,
and have the authority with regard to, all duties and responsibilities
commensurate with his position subject to the authority of the Board of
Directors of the Company (the "Board"). The Executive accepts such employment
upon the terms and conditions set forth herein, and further agrees to perform
the duties generally associated with his position, as well as such other duties
commensurate with his position as Chief Executive Officer as may be reasonably
assigned by the Board. The Executive shall, at all times during the Term, report
directly to the Board. The Executive shall perform his duties with reasonable
diligence and faithfulness and shall devote his full business time (excluding
periods of vacation and sick leave) and attention to such duties, provided the
foregoing will not prevent the Executive from (i) participating in charitable,
civic, educational, professional, community or industry affairs or serving on
the board of directors of other companies, (ii) managing his and his family's
personal passive investments (iii) continuing to perform services in any
capacity for Lease on Line, Inc. or managing real estate in the New York City
area, provided that these activities do not materially interfere with the
performance of the Executive's duties and responsibilities hereunder.
The Board shall, in good faith, consider the Executive's
advice and recommendations, if any, in connection with any appointments or
nominations to the Board. For so long as the Executive remains Chief Executive
Officer of the Company, the Board will nominate Executive for membership to the
Board and, if elected, Executive shall serve in such capacity without additional
consideration.
2. Term of Employment and Renewal.
The term of Executive's employment under this Agreement will
commence on the date of this Agreement (the "Effective Date"). Subject to the
provisions of Section 11 of this Agreement, the term of Executive's employment
hereunder shall be for an initial term of forty two (42) months from the
Effective Date (the "Initial Term"). The Initial Term of this Agreement shall be
automatically extended for successive one (1) year periods (each a "Renewal
Period") unless the Company or the Executive gives written notice to the other
at least ninety (90) days prior to the expiration of the Initial Term, or a
Renewal Period, of such party's election not to extend this Agreement.
References herein to the "Term" shall mean the Initial Term as it may be so
extended by one or more Renewal Periods. The last day of the Term is the
"Expiration Date."
3. Compensation and Benefits.
(a) Salary. Commencing on the Effective Date, the Company agrees to
pay the Executive a base salary at an annual rate of Two Hundred Thousand
Dollars ($200,000), payable in such installments as is the policy of the Company
(as increased from time to time, the "Salary"), but no less frequently than
monthly. Thereafter, the Board shall determine appropriate increases to
Executive's Salary but in no event shall diminish the amount of Executive's
Salary.
(b) Bonus. The Executive shall be eligible to receive annual
bonuses, at the discretion of the Board, provided that the structure and
potential amount of the bonus shall be no less favorable than that offered to
other senior executives at the Company.
(c) Benefits. The Executive shall be entitled to participate in all
employee benefit plans which the Company provides or may establish from time to
time for the benefit of its employees, including, without limitation, group
life, medical, surgical, dental and other health insurance, short and long-term
disability, deferred compensation, profit-sharing, vacation and similar plans,
under the terms and conditions of the applicable plans and/or policies; provided
that the Executive shall be entitled to life insurance and long term disability
benefits no less than the level of benefits in effect on the date immediately
preceding the Effective Date. The Company may purchase one or more "key man"
insurance policies on the Executive's life, each of which will be payable to and
owned by the Company. The Company, in its sole discretion, may select the amount
and type of key man life insurance purchased, and the Executive will have no
interest in any such policy. The Executive will cooperate with the Company in
securing this key man insurance, by submitting to all required medical
examinations, supplying all information and executing all documents required in
order for the Company to secure the insurance.
(d) Stock Options.
(i) At the time of the pricing of an initial public offering of
the Company's stock (the "IPO"), the Compensation Committee of the Board shall
grant the Executive, pursuant to the Company's 2000 Stock Option/Stock Issuance
Plan, and under the terms and conditions set forth in the Company's standard
Notice Of Grant of Stock Options, and the exhibits thereto, an option to
purchase a total of five hundred twenty-five thousand (525,000) shares of the
Company's common
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stock (the "Option Shares") at the following purchase prices: (a) as to one
hundred seventy-five thousand (175,000) of the Option Shares, a price equal to
ten percent above the IPO price (the "10% Shares"); (b) as to one hundred
seventy-five thousand (175,000) of the Option Shares, a price equal to forty
percent above the IPO price (the "40% Shares"); and (c) as to one hundred
seventy-five thousand (175,000) of the Option Shares, a price equal to sixty
percent above the IPO price (the "60% Shares"). This stock option (the "Stock
Option") shall vest and become exercisable over a forty-two (42) month period,
as long as the Executive is employed by the Company, in the following manner: as
to the 10% Shares, over a fourteen (14) month period beginning on the date of
the grant (the "Grant Date") at a rate of one fourteenth of the 10% Shares per
month; once the Stock Option is fully vested as to the 10% Shares, the Stock
Option shall vest and become exercisable as to the 40% Shares over a fourteen
(14) month period at a rate of one fourteenth of the 40% Shares per month; and
once the Stock Option is fully vested as to the 40% Shares, the Stock Option
shall vest and become exercisable as to the 60% Shares over a fourteen (14)
month period at a rate of one fourteenth of the 60% Shares per month. The Stock
Option shall immediately vest and become fully exercisable upon the termination
of the Executive's employment without Cause or for Good Reason. The Stock Option
shall, to the maximum extent permitted by applicable law, be designated as an
incentive stock option within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code") and to the extent not allowable, the Stock
Option shall be a non-qualified stock option. The Executive shall be permitted
to transfer any non-qualified stock option to his immediate family members,
trusts (the beneficiaries of which are exclusively such family members), family
partnerships or, subject to the approval of the Compensation Committee of the
Board, other persons.
(ii) In addition to the option grants described herein, at the
sole discretion of the Compensation Committee of the Board, the Executive shall
be eligible for additional annual grants of stock options.
(e) Expenses. The Company shall pay or reimburse the Executive for
all reasonable out-of-pocket expenses actually incurred by him during the Term
in performing services hereunder, provided that the Executive properly accounts
for such expenses in accordance with the Company's policies.
(f) Vacation. The Executive shall be entitled to an annual paid
vacation in accordance with the Company's policy applicable to senior
executives, but in no event less than four (4) weeks per calendar year (as
prorated for partial years) and which may be accrued from year-to-year, if not
used, up to a maximum of six (6) weeks, which vacation may be taken at such
times as the Executive elects with due regard to the needs of the Company.
(g) Perquisites. The Company shall provide to the Executive, at the
Company's cost, all perquisites which other senior executives of the Company are
entitled to receive and, at a minimum, all perquisites that the Executive is
receiving as of the Effective Date.
(h) Tax and Financial Planning. The Company shall reimburse the
Executive for reasonable expenses incurred by the Executive in connection with
obtaining professional tax and financial planning advice.
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4. Confidentiality, Disclosure of Information.
(a) The Executive recognizes and acknowledges that the Executive has
had and will have access to Confidential Information (as defined below) relating
to the business or interests of the Company or of persons with whom the Company
may have business relationships. Except as permitted herein, the Executive will
not during the Term, or at any time thereafter, use or disclose any Confidential
Information of the Company (except as required by applicable law or in
connection with the performance of the Executive's duties and responsibilities
hereunder). The term "Confidential Information" means information relating to
the Company's business affairs, proprietary technology, trade secrets, patented
processes, research and development data, know-how, market studies and
forecasts, competitive analyses, pricing policies, employee lists, employment
agreements (other than this Agreement), personnel policies, the substance of
agreements with customers, suppliers and others, marketing arrangements,
customer lists, commercial arrangements or any other information relating to the
Company's business that is not generally known to the public or to actual or
potential competitors of the Company (other than through a breach of this
Agreement). This obligation shall continue until such Confidential Information
becomes publicly available or known in the Company's industry, other than
pursuant to a breach of this Section 4 by the Executive, regardless of whether
the Executive continues to be employed by the Company.
(b) It is further agreed and understood by and between the parties
to this Agreement that all "Company Materials," which include, but are not
limited to, computers, computer software, computer disks, tapes, printouts,
source, HTML and other code, flowcharts, schematics, designs, graphics,
drawings, photographs, charts, graphs, notebooks, customer lists, sound
recordings, other tangible or intangible manifestation of content, and all other
documents whether printed, typewritten, handwritten, electronic, or stored on
computer disks, tapes, hard drives, or any other tangible medium, as well as
samples, prototypes, models, products and the like, shall be the exclusive
property of the Company and, upon termination of Executive's employment with the
Company (or, in the event that the Executive continues as director of the
Company, upon ceasing to be a director of the Company), and/or upon the request
of the Company, all Company Materials, including copies thereof, as well as all
other Company property then in the Executive's possession or control, shall be
returned to and left with the Company. Notwithstanding the foregoing, the
Executive may retain (i) a copy of his rolodex and similar phone or electronic
directories (collectively, the "Rolodex") to the extent such Rolodex does not
contain information other than name, address, telephone number and similar
information, (ii) copies of such other books and marketing materials used by the
Executive in the performance of his duties hereunder, and (iii) any computers
used by the Executive in the performance of his duties hereunder, provided that
the Company shall retain sole ownership of the original Rolodex, books and
marketing materials, and provided that the Executive provides the Company with
all business-related data stored on such computer(s).
5. Inventions Discovered by Executive.
The Executive shall promptly disclose to the Company any
invention, improvement, discovery, process, formula, or method or other
intellectual property, whether or not patentable or copyrightable (collectively,
"Inventions"), conceived or first reduced to practice by the Executive, either
alone or jointly with others, while performing services hereunder (or, if based
on any Confidential Information, at any time after the Term), (a) which pertain
to any line of business activity of the Company, whether then conducted or then
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being actively planned by the Company, with which the Executive was or is
involved, (b) which is developed using time, material or facilities of the
Company, whether or not during working hours or on the Company premises, or (c)
which directly relates to any of the Executive's work during the Term, whether
or not during normal working hours. The Executive hereby assigns to the Company
all of the Executive's right, title and interest in and to any such Inventions.
During and after the Term, the Executive shall execute any documents necessary
to perfect the assignment of such Inventions to the Company and to enable the
Company to apply for, obtain and enforce patents, trademarks and copyrights in
any and all countries on such Inventions, including, without limitation, the
execution of any instruments and the giving of evidence and testimony, without
further compensation beyond the Executive's agreed compensation during the
course of the Executive's employment. Without limiting the foregoing, the
Executive further acknowledges that all original works of authorship by the
Executive, whether created alone or jointly with others, related to the
Executive's employment with the Company and which are protectable by copyright,
are "works made for hire" within the meaning of the United States Copyright Act,
17 U.S.C. ss. 101, as amended, and the copyright of which shall be owned solely,
completely and exclusively by the Company. If any Invention is considered to be
work not included in the categories of work covered by the United States
Copyright Act, 17 U.S.C. ss. 101, as amended, such work is hereby assigned or
transferred completely and exclusively to the Company. The Executive hereby
irrevocably designates counsel to the Company as the Executive's agent and
attorney-in-fact to do all lawful acts necessary to apply for and obtain patents
and copyrights and to enforce the Company's rights under this Section. This
Section 5 shall survive the termination of this Agreement. Any assignment of
copyright hereunder includes all rights of paternity, integrity, disclosure and
withdrawal and any other rights that may be known as or referred to as "moral
rights" (collectively "Moral Rights"). To the extent such Moral Rights cannot be
assigned under applicable law and to the extent the following is allowed by the
laws in the various countries where Moral Rights exist, the Executive hereby
waives such Moral Rights and consents to any action of the Company that would
violate such Moral Rights in the absence of such consent. The Executive agrees
to confirm any such waivers and consents from time to time as requested by the
Company.
6. Non-Competition and Non-Solicitation.
The Executive acknowledges that the Company has invested
substantial time, money and resources in the development and retention of its
Inventions, Confidential Information (including trade secrets), customers,
accounts and business partners, and further acknowledges that during the course
of the Executive's employment with the Company the Executive has had and will
have access to the Company's Inventions and Confidential Information (including
trade secrets), and will be introduced to existing and prospective customers,
accounts and business partners of the Company. The Executive acknowledges and
agrees that any and all "goodwill" associated with any existing or prospective
customer, account or business partner belongs exclusively to the Company,
including, but not limited to, any goodwill created as a result of direct or
indirect contacts or relationships between the Executive and any existing or
prospective customers, accounts or business partners. Additionally, the parties
acknowledge and agree that Executive possesses skills that are special, unique
or extraordinary and that the value of the Company depends upon his use of such
skills on its behalf.
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In recognition of this, the Executive covenants and agrees that:
(a) During the Term, and for a period of one (1) year thereafter,
the Executive may not, without the prior written consent of the Board, (whether
as an employee, agent, servant, owner, partner, consultant, independent
contractor, representative, stockholder or in any other capacity whatsoever):
(i) conduct any business with any customer of the Company on behalf of any
entity or person other than the Company (including the Executive) if such
business is competitive with the products or services offered by the Company, or
(ii) perform any work competitive in any way with the products or services
offered or planned to be brought to market by the Company during the Term or
within one (1) year thereafter, on behalf of any entity or person other than the
Company (including the Executive), provided that nothing herein shall prohibit
the Executive from owning up to 5% of the securities of any company or venture
fund, mutual fund or other similar investment vehicle as to which the Executive
does not control or influence investment decisions, and provided that nothing
herein shall prohibit the Executive from making other personal investments that
otherwise might violate this sub-Section with the prior approval of the Board.
(b) During the Term, (except as requested in connection with the
performance of the Executive's duties and responsibilities hereunder), and for a
period of one (1) year thereafter, the Executive may not entice, solicit or
encourage any Company employee to leave the employ of the Company or any
independent contractor to sever its engagement with the Company, absent prior
written consent to do so from the Board.
(c) During the Term, and for a period of one (1) year thereafter,
except in the good faith performance of his duties hereunder, the Executive may
not, directly or indirectly, entice, solicit or encourage any customer or
prospective customer of the Company to cease doing business with the Company, or
reduce its relationship with the Company or refrain from establishing or
expanding a relationship with the Company.
7. Domain Name Registration Policy. The Executive must receive approval
of the Board promptly following his registration of any domain name (other than
if the Company is the registrant), such approval not to be unreasonably
withheld. Should the Board decline to approve such registration, the Executive
shall dispose of such domain registration rights as directed by the Board. At
the time such approval is sought, the Executive must submit a signed written
statement agreeing to the following:
(a) The domain name being registered was thought of independently
and not conceived of or recommended, directly or indirectly, by any customer,
employee, consultant, director or partner of the Company other than the
Executive.
(b) The domain name does not infringe on the legal rights of any
third party nor does it fall within the category of abusive registration
(cybersquatting) in that: (1) the domain name is identical or similar to a trade
or service xxxx; (2) the holder of the domain name has no rights or legitimate
interests in respect to the domain name; or (3) the domain name has been
registered and used in bad faith (bad faith is defined to include: an offer to
sell the name, an attempt to confuse the complainant's customers, or an attempt
to disrupt the complainant's business).
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(c) The Executive cannot sell, license, transfer or negotiate the
sale, license or transfer of this domain name for a period of ninety (90) days
following registration of the name.
8. Non Disparagement. The Executive agrees that, except in the good
faith performance of his duties, at all times during the Term, and any
additional periods during which he serves as an employee, consultant or director
of the Company, the Executive will not make any public statement that is
disparaging about the Company, or any of its officers or directors, including,
but not limited to, any statement that disparages the products, services,
finances, financial condition, capabilities or other aspect of the business of
the Company. The Company likewise agrees that, during the Term, and any
additional periods during which the Executive serves as an employee, consultant
or director of the Company, it will not issue any formal public statement, and
none of its executive officers or directors will make any public statement, that
is disparaging of the Executive.
9. Provisions Necessary and Reasonable.
The Executive agrees that (i) the provisions of Sections 4, 5,
6 and 7 of this Agreement are necessary and reasonable to protect the Company's
Confidential Information, Inventions, and goodwill; (ii) the specific temporal,
geographic and substantive provisions set forth in Section 6 of this Agreement
are reasonable and necessary to protect the Company's business interests; and
(iii) in the event of any breach of any of the covenants set forth herein, the
Company would suffer substantial irreparable harm and would not have an adequate
remedy at law for such breach. In recognition of the foregoing, the Executive
agrees that in the event of a breach or threatened breach of any of these
covenants, in addition to such other remedies as the Company may have at law,
without posting any bond or security, the Company shall be entitled to seek and
obtain equitable relief, in the form of specific performance, and/or temporary,
preliminary or permanent injunctive relief, or any other equitable remedy which
then may be available. The seeking of such injunction or order shall not affect
the Company's right to seek and obtain damages or other equitable relief on
account of any such actual or threatened breach.
(a) If any of the covenants contained in Sections 4, 5, 6 and 7
hereof, or any part thereof, are hereafter construed to be invalid or
unenforceable, the same shall not affect the remainder of the covenant or
covenants, which shall be given full effect without regard to the invalid
portions.
(b) If any of the covenants contained in Sections 4, 5, 6 and 7
hereof, or any part thereof, are held to be unenforceable by a court of
competent jurisdiction because of the temporal or geographic scope of such
provision or the area covered thereby, the parties agree that the court making
such determination shall have the power to reduce the duration and/or geographic
area of such provision and, in its reduced form, such provision shall be
enforceable.
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10. Representations Regarding Prior Work and Legal Obligations.
(a) The Executive represents that the Executive has no agreement or
other legal obligation with any prior employer, or any other person or entity,
that restricts the Executive's ability to accept employment with, or to perform
any function for, the Company.
(b) The Executive has been advised by the Company that at no time
should the Executive divulge to or use for the benefit of the Company any trade
secret or confidential or proprietary information of any previous employer nor
shall the Company require the Executive to divulge any such information. The
Executive expressly acknowledges that the Executive has not divulged or used any
such information for the benefit of the Company.
11. Termination and Severance.
Notwithstanding the provisions of Section 2 of this Agreement,
the Executive's employment hereunder may terminate under the following
circumstances:
(a) Termination by the Company for Cause. The Company may terminate
this Agreement for Cause at any time, within ninety (90) days of the Board's
discovery of the Cause event, upon written notice to the Executive setting forth
in reasonable detail the nature of such Cause. For purposes of this Agreement,
Cause is defined as (i) the Executive's willful and material breach of the terms
of this Agreement, unless any such breach is susceptible to cure and is
corrected within thirty (30) days following written notice by the Company
specifying the details thereof; (ii) the Executive's conviction of any felony;
or (iii) gross negligence or willful misconduct by the Executive having a
material adverse impact on the Company; (iv) the Executive's willful refusal to
attempt to perform his job duties (other than due to Disability, as defined
below, or an approved leave) after his receipt of written notice from the Board.
Upon the termination for Cause of the Executive's employment, the Company shall
have no further obligation or liability to the Executive other than for unpaid
Salary earned under this Agreement prior to the date of termination, and any
accrued but unused vacation.
(b) Termination by the Company Without Cause. The Executive's
employment hereunder may be terminated without Cause by the Company upon written
notice to the Executive, provided, however, that if the Company terminates the
Executive's employment without Cause, or the Executive terminates his employment
for Good Reason, as defined below, the Company shall pay or provide the
Executive with: (i) unpaid Salary earned under this Agreement prior to the date
of termination and any accrued but unused vacation; (ii) any unpaid bonus
accrued with respect to the fiscal year ending on or preceding the date of
termination; (iii) a pro-rata bonus equal to the amount the Executive would have
received if employment continued (without any discretionary cutback) multiplied
by a fraction where the numerator is the number of days in each respective bonus
period prior to the Executive's termination and the denominator is the number of
days in the bonus period; (iv) reimbursement for any unreimbursed business
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expenses incurred by the Executive through the date of termination; (v) any
payments or benefits due under Company policies or benefit plans (collectively,
(i) through (v), "Accrued Obligations"); (vi) all stock option or equity grants
to the Executive shall vest in full so as to become fully exercisable and shall
remain exercisable for five (5) years following the date of termination; (vii)
on or within five (5) business days following the date of termination, a lump
sum cash payment equal to the product of (A) one twelfth (1/12th) of the
Executive's Salary (or, if improperly reduced, required to be in effect) and (B)
the number of months remaining in the Term or twelve (12) months, whichever is
greater; and (viii) medical and dental benefits for the Executive (and eligible
dependents) under COBRA upon the same terms and conditions in effect on the date
of termination for the eighteen (18) month period following the date of
termination, provided that, to the extent the Executive incurs tax that he would
not have incurred as an active employee as a result of the aforementioned
coverage or the benefits provided hereunder, the Executive shall receive from
the Company an additional payment in the amount necessary so that the Executive
will have no additional cost for receiving such items or any additional payment.
As a condition of receiving severance benefits pursuant to this Agreement, the
Executive shall execute and deliver to the Company prior to his receipt of such
benefits a general release substantially in the form attached hereto as Exhibit
B.
(c) Termination by the Executive. The Executive may terminate his
employment hereunder upon one (1) month's written notice to the Company,
provided, however, that the Company may pay the Executive his Salary in lieu of
any part of such notice. The Executive may also terminate his employment
hereunder for "Good Reason," within ninety (90) days of the occurrence of any of
the following events (i) a material breach of this Agreement by the Company,
including, but not limited to, any reduction of any part of the Executive's
compensation (including Salary and bonus) or benefits or any failure to timely
pay any part of the Executive's compensation (including Salary and bonus) or to
provide the benefits contemplated herein; (ii) a change in the Executive's
reporting relationship so that he no longer reports directly to the Board; (iii)
a relocation of the Executive's worksite to a location 35 miles or more from its
then-current location; (iv) any reduction or diminution (except temporarily
during any period of physical or mental impairment) in the Executive's titles,
positions, authorities, duties or responsibilities with the Company including,
but not limited to, any assignment to the Executive of duties or
responsibilities not commensurate with his position; (v) the failure for any
reason of the Compensation Committee of the Board to grant the Stock Option on
the terms set forth in this Agreement; or (viii) the failure of the Company to
obtain and deliver to the Executive a satisfactory written agreement from any
successor to the Company to assume and agree to perform this Agreement. The
Executive shall give the Company thirty (30) days' written notice and
opportunity to cure prior to any termination for Good Reason based on the
grounds specified herein.
(d) Death. In the event of the Executive's death during the Term of
this Agreement, the Executive's employment hereunder shall immediately and
automatically terminate, and the Company shall have no further obligation or
duty to the Executive or his estate or beneficiaries other than the Accrued
Obligations.
(e) Disability. The Company may terminate the Executive's employment
hereunder, upon written notice to the Executive, in the event that the Executive
becomes disabled during the Term through any condition of either a physical or
psychological nature and, as a result, is, with reasonable accommodation, unable
to perform the essential functions of the services contemplated hereunder for
(a) a period of ninety (90) consecutive days, or (b) for shorter periods
aggregating one hundred twenty (120) days during any twelve (12) month period
during the Term. Any such termination shall become effective upon mailing or
hand delivery of notice while Executive continues to be unable to perform the
essential functions of the services contemplated hereunder that the Company has
elected its right to terminate under this subsection 11(e), and the Company
shall have no further obligation or duty to the Executive other than for the
Accrued Obligations. For purposes of determining the Executive's entitlement to
the benefits provided for in this sub-Section only, the existence or
nonexistence of a disability shall be determined by a physician to be selected
by the Executive and the Company in good faith.
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(f) Effect of Non-Renewal. In the event that the Company gives
notice of its election not to extend the Term of the Agreement for a Renewal
Period pursuant to Section 2 above, the Company shall continue to pay the
Executive full compensation as defined in Section 3 of this Agreement from the
date the Executive receives such notice through the Expiration Date, shall
provide the Executive the Accrued Obligations and shall have no other
obligations to the Executive.
(g) No Mitigation/No Offset. The Executive shall not be required to
seek other employment or otherwise mitigate the value of any severance benefits
contemplated by this Agreement, nor shall any such benefits be reduced by any
earnings or benefits that Executive may receive from any other source or by any
damages claimed by the Company (other than for agreed-upon debts or for damages
arising out of embezzlement or similar malfeasance by the Executive).
(h) Excise Tax. In the event that the Executive becomes entitled to
payments and/or benefits which would constitute "parachute payments" within the
meaning of Section 280G(b)(2) of the Code, the provisions of Exhibit A shall
apply.
12. Choice of Law.
The Executive acknowledges that a substantial portion of the
Company's business is based out of and directed from the State of New York. The
Executive also acknowledges that during the course of the Executive's employment
with the Company the Executive will have substantial contacts with New York.
The validity, interpretation and performance of this Agreement
shall be governed by, and construed in accordance with, the internal law of New
York, without giving effect to conflict of law principles. Both parties agree
that the exclusive venue for any action, demand, claim or counterclaim relating
to the terms and provisions of Sections 4, 5, 6 and 7 of this Agreement, or to
their breach, shall be in the state or federal courts located in the State and
City of New York and that such courts shall have personal jurisdiction over the
parties to this Agreement.
13. Miscellaneous.
(a) Assignment. The Executive acknowledges and agrees that the
rights and obligations of the Company under this Agreement may be assigned by
the Company to any successors in interest but not otherwise, provided such
successor in interest assumes all of the obligations hereunder of the Company in
a writing delivered to the Executive and otherwise complies with the provisions
hereof with regard to such assumption. The Executive further acknowledges and
agrees that this Agreement is personal to the Executive and that the Executive
may not assign any rights or obligations hereunder.
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(b) Withholding. All Salary and bonus payments required to be made
by the Company to the Executive under this Agreement shall be subject to
withholding taxes, social security and other payroll deductions in accordance
with the Company's policies applicable to employees of the Company at the
Executive's level.
(c) Entire Agreement. This Agreement and the Notice of Grant of
Stock Options set forth the entire agreement between the parties on the subject
matter contained herein and supersede any prior communications, agreements and
understandings, written or oral, with respect to the terms and conditions of the
Executive's employment including, but not limited to, the prior written
employment agreement between the parties, dated November 15, 1995, as amended.
(d) Amendments. Any attempted modification of this Agreement will
not be effective unless signed by an officer of the Company and the Executive.
(e) Waiver of Breach. The Executive understands that a breach of any
provision of this Agreement may only be waived by an officer of the Company. The
waiver by the Company of a breach of any provision of this Agreement shall not
operate or be construed as a waiver of any subsequent breach.
(f) Severability. If any provision of this Agreement should, for any
reason, be held invalid or unenforceable in any respect by a court of competent
jurisdiction, then the remainder of this Agreement, and the application of such
provision in circumstances other than those as to which it is so declared
invalid or unenforceable, shall not be affected thereby, and each such provision
of this Agreement shall be valid and enforceable to the fullest extent permitted
by law.
(g) Notices. Any notices, requests, demands and other communications
provided for by this Agreement shall be in writing and shall be effective when
delivered by private messenger, private overnight mail service, or facsimile as
follows (or to such other address as either party shall designate by notice in
writing to the other in accordance herewith):
If to the Company:
000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
With a copy to:
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
0000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxxx X. Xxxxx
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If to the Executive:
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
(h) Survival. The Executive and the Company agree that certain
provisions of this Agreement shall survive the expiration or termination of this
Agreement and the termination of the Executive's employment with the Company.
Such provisions shall be limited to those within this Agreement which, by their
express and implied terms, obligate either party to perform beyond the
termination of the Executive's employment or termination of this Agreement.
(i) Arbitration of Disputes. Any controversy or claim arising out of
this Agreement or any aspect of the Executive's relationship with the Company
including the cessation thereof (other than disputes with respect to alleged
violations of the covenants contained in Sections 4, 5, 6 or 7 hereof, which
shall be resolved as set forth in Section 12 hereof) shall be resolved
exclusively by arbitration in accordance with the then existing National Rules
for the Resolution of Employment Disputes of the American Arbitration
Association, in New York, New York, and judgment upon the award rendered may be
entered in any court having jurisdiction thereof. The Company shall pay all
costs of the American Arbitration Association and the arbitrator. The parties
agree that the award of the arbitrator shall be final and binding.
(j) Legal Fees.
(i) The judge or arbitrator in any proceeding or arbitration
arising out of this Agreement may award the prevailing party such party's
reasonable legal fees and costs.
(ii) The Company shall pay the legal fees and costs incurred by
the Executive in connection with the negotiation and preparation of this
Agreement upon the presentation of invoices in appropriate form.
(k) Rights of Other Individuals. This Agreement confers rights
solely on the Executive and the Company. This Agreement is not a benefit plan
and confers no rights on any individual or entity other than the undersigned.
(l) Headings. The parties acknowledge that the headings in this
Agreement are for convenience of reference only and shall not control or affect
the meaning or construction of this Agreement.
(m) Advice of Counsel. The Executive and the Company hereby
acknowledge that each party has had adequate opportunity to review this
Agreement, to obtain the advice of counsel with respect to this Agreement, and
to reflect upon and consider the terms and conditions of this Agreement. The
parties further acknowledge that each party fully understands the terms of this
Agreement and has voluntarily executed this Agreement.
(n) Insurance. The Company will cover the Executive under directors'
and officers' liability insurance in the same amount and to the same extent as
the Company covers its other officers and directors.
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IN WITNESS WHEREOF, the undersigned have duly executed this Agreement
as of the day and year set forth below.
EXECUTIVE XXXXXXXX.XXX, INC.
/s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxx Xxxx
------------------------ --------------------------------
XXXXXXX X. XXXXXX XXXX XXXX
Title: General Counsel and Secretary
-----------------------------
Dated: February 27, 2000 Dated: February 27, 2000
------------------ ----------------------------
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EXHIBIT A
GOLDEN PARACHUTE PROVISIONS
(a) In the event that the Executive shall become entitled to payments
and/or benefits provided by this Agreement or any other amounts in the "nature
of compensation" (whether pursuant to the terms of this Agreement or any other
plan, arrangement or agreement with the Company, any person whose actions result
in a change of ownership or effective control covered by Section 280G(b)(2) of
the Code or any person affiliated with the Company or such person) as a result
of such change in ownership or effective control (collectively the "Company
Payments"), and such Company Payments will be subject to the tax (the "Excise
Tax") imposed by Section 4999 of the Code (and any similar tax that may
hereafter be imposed by any taxing authority) the Company shall pay to the
Executive at the time specified in paragraph (d) below an additional amount (the
"Gross-up Payment") such that the net amount retained by the Executive, after
deduction of any Excise Tax on the Company Payments and any U.S. federal, state,
and for local income or payroll tax upon the Gross-up Payment provided for by
this paragraph (a), but before deduction for any U.S. federal, state, and local
income or payroll tax on the Company Payments, shall be equal to the Company
Payments.
(b) For purposes of determining whether any of the Company Payments and
Gross-up Payments (collectively the "Total Payments") will be subject to the
Excise Tax and the amount of such Excise Tax, the Total Payments shall be
treated as "parachute payments" within the meaning of Section 280G(b)(2) of the
Code, and all "parachute payments" in excess of the "base amount" (as defined
under Section 280G(b)(3) of the Code) shall be treated as subject to the Excise
Tax, unless and except to the extent that, in the opinion of the Company's
indepen-dent certified public accountants appointed prior to any change in
ownership (as defined under Section 280G(b)(2) of the Code) or tax counsel
selected by such accountants (the "Accountants") such Total Payments (in whole
or in part) either do not constitute "parachute payments," represent reasonable
compensation for services actually rendered within the meaning of Section
280G(b)(4) of the Code in excess of the "base amount" or are otherwise not
subject to the Excise Tax, and the value of any non-cash benefits or any
deferred payment or benefit shall be determined by the Accountants in accordance
with the principles of Section 280G of the Code.
(c) For purposes of determining the amount of the Gross-up Payment, the
Executive shall be deemed to pay U.S. federal income taxes at the highest
marginal rate of U.S. federal income taxation in the calendar year in which the
Gross-up Payment is to be made and state and local income taxes at the highest
marginal rate of taxation in the state and locality of the Executive's residence
for the calendar year in which the Company Payment is to be made, net of the
maximum reduction in U.S. federal income taxes which could be obtained from
deduction of such state and local taxes if paid in such year. In the event that
the Excise Tax is subsequently determined by the Accountants to be less than the
amount taken into account hereunder at the time the Gross-up Payment is made,
the Executive shall repay to the Company, at the time that the amount of such
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reduction in Excise Tax is finally determined, the portion of the prior Gross-up
Payment attributable to such reduction (plus the portion of the Gross-up Payment
attributable to the Excise Tax and U.S. federal, state and local income tax
imposed on the portion of the Gross-up Payment being repaid by the Executive if
such repayment results in a reduction in Excise Tax or a U.S. federal, state and
local income tax deduction), plus interest on the amount of such repayment at
the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the
foregoing, in the event any portion of the Gross-up Payment to be refunded to
the Company has been paid to any U.S. federal, state and local tax authority,
repayment thereof (and related amounts) shall not be required until actual
refund or credit of such portion has been made to the Executive, and interest
payable to the Company shall not exceed the interest received or credited to the
Executive by such tax authority for the period it held such portion. The
Executive and the Company shall mutually agree upon the course of action to be
pursued (and the method of allocating the expense thereof) if the Executive's
claim for refund or credit is denied.
(d) In the event that the Excise Tax is later determined by the
Accountant or the Internal Revenue Service to exceed the amount taken into
account hereunder at the time the Gross-up Payment is made (including by reason
of any payment the existence or amount of which cannot be determined at the time
of the Gross-up Payment), the Company shall make an additional Gross-up Payment
in respect of such excess (plus any interest or penalties payable with respect
to such excess) at the time that the amount of such excess is finally
determined.
(e) The Gross-up Payment or portion thereof provided for in paragraph
(c) above shall be paid not later than the thirtieth (30th) day following an
event occurring which subjects the Executive to the Excise Tax; provided,
however, that if the amount of such Gross-up Payment or portion thereof cannot
be finally determined on or before such day, the Company shall pay to the
Executive on such day an estimate, as determined in good faith by the
Accountant, of the minimum amount of such payments and shall pay the remainder
of such payments (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code), subject to further payments pursuant to paragraph
(c) hereof, as soon as the amount thereof can reasonably be determined, but in
no event later than the ninetieth (90th) day after the occurrence of the event
subjecting the Executive to the Excise Tax. In the event that the amount of the
estimated payments exceeds the amount subsequently determined to have been due,
such excess shall constitute a loan by the Company to the Executive, payable on
the fifth (5th) day after demand by the Company (together with interest at the
rate provided in Section 1274(b)(2)(B) of the Code).
(f) In the event of any controversy with the Internal Revenue Service
(or other taxing authority) with regard to the Excise Tax, the Executive shall
permit the Company to control issues related to the Excise Tax (at its expense),
provided that such issues do not potentially materially adversely affect the
Executive, but the Executive shall control any other issues. In the event the
issues are interrelated, the Executive and the Company shall in good faith
cooperate so as not to jeopardize resolution of either issue, but if the parties
cannot agree the Executive shall make the final determination with regard to the
issues. In the event of any conference with any taxing authority as to the
Excise Tax or associated income taxes, the Executive shall permit the
representative of the Company to accompany the Executive, and the Executive and
the Executive's representative shall cooperate with the Company and its
representative.
(g) The Company shall be responsible for all charges of the Accountant.
(h) The Company and the Executive shall promptly deliver to each other
copies of any written communications, and summaries of any verbal
communications, with any taxing authority regarding the Excise Tax covered by
this Appendix A.
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EXHIBIT B
SEPARATION AGREEMENT
AND GENERAL RELEASE
This Separation Agreement and General Release ("Agreement") is made and
entered into this ____ day of _____, _____, by and between [COMPANY NAME]
(hereinafter the "Company" or "Employer") and [EMPLOYEE NAME] ("Employee")
(hereinafter collectively referred to as the "Parties"), and is made and entered
into with reference to the following facts.
RECITALS
WHEREAS, Employee was hired by the Company on or about ________, as a
____________; and
WHEREAS, the Company and Employee have agreed to terminate their
employment relationship effective ______, ____; and
WHEREAS, the Parties each desire to resolve any potential disputes
which exist or may exist arising out of Employee's employment with the Company
and/or the termination thereof.
NOW THEREFORE, in consideration of the covenants and promises contained
herein, the Parties hereto agree as follows:
AGREEMENT
1. Agreement By the Company. In exchange for Employee's agreement to be
bound by the terms of this entire Agreement, including but not limited to the
Release of Claims in paragraph 3, the Company agrees to provide Employee with
[INSERT CONSIDERATION AS PROVIDED FOR IN PARAGRAPH 11 OF THE EMPLOYMENT
AGREEMENT].
Employee acknowledges that, absent this Agreement, s/he has no legal,
contractual or other entitlement to the consideration set forth in this
paragraph and that the amount set forth in this paragraph constitute valid and
sufficient consideration for Employee's release of claims and other obligations
set forth herein.
2. Release of Claims. Employee hereby expressly waives, releases,
acquits and forever discharges the Company and its divisions, subsidiaries,
affiliates, parents, related entities, partners, officers, directors,
shareholders, investors, executives, managers, employees, agents, attorneys,
representatives, successors and assigns (hereinafter collectively referred to as
"Releasees"), from any and all claims, demands, and causes of action which
Employee has or claims to have, whether known or unknown, of whatever nature,
which exist or may exist on Employee's behalf from the beginning of time up to
and including the date of this Agreement. As used in this paragraph, "claims,"
"demands," and "causes of action" include, but are not limited to, claims based
on contract, whether express or implied, fraud, stock fraud, defamation,
wrongful termination, estoppel, equity, tort, retaliation, intellectual
property, personal injury, spoliation of evidence, emotional distress, public
policy, wage and hour law, statute or common law, claims for severance pay,
claims related to stock options and/or fringe benefits, claims for attorneys'
fees, vacation pay, debts, accounts, compensatory damages, punitive or exemplary
16
damages, liquidated damages, and any and all claims arising under any federal,
state, or local statute, law, or ordinance prohibiting discrimination on account
of race, color, sex, age, religion, sexual orientation, disability or national
origin, including but not limited to, the New York State Human Rights Law, the
Age Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964
as amended, the Americans with Disabilities Act, the Family and Medical Leave
Act or the Employee Retirement Income Security Act. This release shall not be
effective as to any claims, demands or causes of action arising out of acts or
omissions occurring after the date of execution of this Agreement or based on
any indemnification rights of the Executive under the Company's certificate of
incorporation, by-laws or under applicable law.
3. Acceptance of Agreement/[Revocation]. This Agreement was received by
Employee on ______, ____. Employee may accept this Agreement by returning a
signed original to the Company. This Agreement shall be withdrawn if not
accepted in the above manner on or before _______.
4. New York Law Applies. This Agreement, in all respects, shall be
interpreted, enforced and governed by and under the laws of the State of New
York. Any and all actions relating to this Agreement shall be filed and
maintained in the federal and/or state courts located in the State and County of
New York, and the parties consent to the jurisdiction of such courts. In any
action arising out of this Agreement, or involving claims barred by this
Agreement, the prevailing party shall be entitled to recover all costs of suit,
including reasonable attorneys' fees.
5. Voluntary Agreement. EMPLOYEE UNDERSTANDS AND AGREES THAT S/HE MAY
BE WAIVING SIGNIFICANT LEGAL RIGHTS BY SIGNING THIS AGREEMENT, AND REPRESENTS
THAT S/HE HAS ENTERED INTO THIS AGREEMENT KNOWINGLY AND VOLUNTARILY, WITH A FULL
UNDERSTANDING OF AND IN AGREEMENT WITH ALL OF ITS TERMS.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
the dates provided below.
DATED: _____________________, ____ [COMPANY NAME]
By: __________________________
Its: __________________________
DATED: _____________________, ____ [EMPLOYEE NAME]
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