EXECUTION COPY
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made and entered into effective as of
August 21, 2000 by and between Arinco Computer Systems Inc., a New Mexico
corporation (the "Company"), and Xxxxxxx Xxxx (the "Executive").
WHEREAS, the Company desires to employ the Executive and to
enter into an agreement embodying the terms of such employment and considers it
essential to its best interests and the best interests of its stockholders to
xxxxxx the employment of the Executive by the Company during the term of the
Agreement;
WHEREAS, the Executive desires to accept such employment and
enter into such an agreement; and
WHEREAS, the Executive is willing to accept employment on the
terms hereinafter set forth in this agreement (the "Agreement").
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein and for other good and valuable consideration, the parties
hereto hereby agree as follows:
1. TERM OF EMPLOYMENT. Subject to the provisions of
Section 8, the Executive shall be employed by the Company for a period
commencing on the date hereof (the "Commencement Date") and ending on the third
anniversary of the Commencement Date; PROVIDED, HOWEVER, that such term shall be
automatically extended for additional one (1) year periods unless, no later than
120 days prior to the expiration of the initial period (or any extension thereof
pursuant to this Section 1), either party hereto shall provide written notice of
its or his desire not to extend the term hereof to the other party hereto (the
initial period together with each one-year extension shall be referred to
hereinafter as the "Employment Term").
2. POSITION.
(a) The Executive shall serve as the Chief
Executive Officer of the Company and of eHothouse, Inc. ("eHothouse"). In such
position, the Executive shall have such duties and authority as shall be
determined from time to time by the Board of Directors of the Company (the
"Board"), consistent with his position, including without limitation, the
performance of all services for eHothouse that a Chief Executive Officer of such
an enterprise would perform, until such time as the Board shall provide
otherwise. If elected, the Executive shall also serve on the Board without
additional compensation.
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(b) During the Employment Term, the Executive
shall devote substantially all of his business time and best efforts to the
performance of his duties hereunder and shall not engage in any other business,
profession or occupation for compensation or otherwise which would conflict with
rendering such services either directly or indirectly, without the prior written
consent of the Board.
(c) The parties acknowledge that the Executive's
principal place of business shall be within 50 miles of New York City ("NYC
metropolitan area"). However, the Executive acknowledges that in the performance
of his duties hereunder, he may be required to travel from time to time outside
of his principal place of business. Such travel shall be limited to
circumstances in which travel is reasonably necessary to promote the business of
the Company; and reasonable advance notice of such travel shall be given to the
Executive when possible. Executive shall be reimbursed for all of his expenses
in connection with such travel.
3. BASE SALARY. During the Employment Term, the Company
shall pay the Executive a base salary (the "Base Salary") at the annual rate of
$225,000 payable in regular installments in accordance with the Company's usual
payroll practices and any increase in the Executive's Base Salary shall be
determined by the Board or by the Compensation Committee of the Board.
Notwithstanding the foregoing, the Executive's Base Salary shall be reduced by
any salary or bonus received from a subsidiary or affiliate of the Company in
connection with the Executive's performance of services for such subsidiary or
affiliate of the Company.
4. BONUS. The Executive shall be afforded the
opportunity to earn a cash bonus in respect of each calendar year ending during
the Employment Term (each year's award granted pursuant to this Section 4 shall
hereinafter be referred to as the "Bonus"). The amount of the Bonus shall be
determined by the Board in its sole discretion and shall not exceed 100% of the
Executive's Base Salary with respect to such year.
5. EQUITY.
(a) Contingent upon (i) the Executive's
execution of a Stock Option Agreement (as defined below) and (ii) the approval
of the Plan by the stockholders of the Company at the annual meeting of the
stockholders of the Company on or about September 12, 2000, the Company shall
grant to the Executive pursuant to the Arinco Computer Systems Inc. 2000 Stock
Option Plan (the "Plan"), as of the Commencement Date, an option to purchase
3,000,000 shares of the Company's Common Stock (the "Option") at Fair Market
Value (as defined in the Plan). The Option shall be subject to the terms and
conditions set forth in an agreement (the "Stock Option Agreement") entered into
by and between the Company and the Executive evidencing such award which shall
be annexed hereto as Exhibit A. The Executive shall also be eligible to receive
from time to time, or at any time, additional option grants at the discretion of
the Board.
(b) The Executive shall be eligible to
participate in any other incentive plan or program that may be made available to
officers or employees of the Company established by the Board in accordance with
the terms of such plans.
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6. EMPLOYEE BENEFITS. During the Employment Term, the
Executive shall be provided with benefits on the same basis as benefits are
generally made available to other senior executives of the Company. The Company
will provide $2,000,000 term life insurance. Without limiting the foregoing, the
Company intends to adopt a medical plan and agrees that the Executive shall be
eligible to participate in such plan.
7. BUSINESS EXPENSES. During the Employment Term,
reasonable business expenses incurred by the Executive in the performance of his
duties hereunder shall be reimbursed by the Company in accordance with Company
policies.
8. TERMINATION. Notwithstanding any other provision of
the Agreement:
(a) FOR CAUSE BY THE COMPANY. The Employment
Term and the Executive's employment hereunder may be terminated by the Company
for "Cause." For purposes of the Agreement, "Cause" shall mean (i) conviction
of, or entry of a pleading of guilty or nolo contendre by the Executive with
respect to, a felony or any lesser crime a material element of which is fraud or
dishonesty under federal or state law; (ii) the Executive's willful dishonesty
towards the Company, (iii) the Executive's material, knowing or intentional
failure to comply with applicable laws with respect to the execution of the
Company's business operations, (iv) his material breach of the Agreement after
receiving written notice of such breach and after receiving a reasonable
opportunity to correct such breach; (v) the Executive's theft, fraud,
embezzlement, dishonesty or similar conduct which has resulted or is likely to
result in damage to the Company or any of its affiliates or subsidiaries or (vi)
the Executive's failure to follow the lawful instructions of the Board after
receiving written notice of such failure and after receiving a reasonable
opportunity to correct such failure. If the Executive is terminated for Cause,
he shall be entitled to receive his Base Salary through the date of termination.
(b) DISABILITY. The Employment Term and the
Executive's employment hereunder may be terminated by the Company if the
Executive becomes physically or mentally incapacitated and is therefore unable,
for a period in excess of ninety (90) consecutive days or for a period of one
hundred twenty (120) days during any consecutive twelve (12) month period, to
perform his duties hereunder (such incapacity is hereinafter referred to as
"Disability"). Upon the Executive's termination on account of Disability, the
Executive shall be entitled to receive his Base Salary through the six (6) month
anniversary of such termination.
(c) DEATH. Upon termination of the Executive's
employment hereunder for death, the Executive's estate shall be entitled to
receive his Base Salary through the date of his death.
(d) EHOTHOUSE MATTERS.
(i) If the Company does not consummate
its acquisition of eHothouse (the "eHothouse Closing") within 60 days of the
Commencement Date, then the Executive or the Company may terminate the
Employment Term upon a Notice of Termination (as defined below) given within
five business days after the 60th day of the Commencement Date. Such notice must
specify that such termination is pursuant to this Section
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8(d)(i). In the event of such a termination pursuant to this Section 8(d)(i),
the Executive shall continue to receive his Base Salary for six (6) months after
the date of such termination. Notwithstanding anything herein to the contrary,
the option grant to the Executive pursuant to Section 5(a) shall terminate as of
the date of such termination.
(ii) If the Board does not approve
eHothouse's acquisitions sufficient to generate $12 million in revenue by the
first anniversary of the eHothouse Closing, then the Executive may terminate the
Employment Term upon a Notice of Termination within 60 days of such first
anniversary. Such notice must specify that such termination is pursuant to this
Section 8(d)(ii). In the event of such a termination pursuant to this Section
8(d)(ii), the Executive shall continue to receive his Base Salary through six
(6) months from the date of such termination and such amount shall not be
reduced by any other earnings during such period. In addition to the first
one-third (1/3) of the Option granted pursuant to Section 5 hereof which shall
be vested as of the first anniversary of the Effective Date, an additional 8.31%
(E.G. 3 months additional vesting ) of the Option shall vest on the date of such
termination.
(e) WITHOUT CAUSE BY THE COMPANY. The Employment
Term and the Executive's employment hereunder may be terminated by the Company
without Cause upon Notice of Termination (as defined below) to the Executive. If
the Executive's employment is terminated by the Company without Cause (other
than by reason of Disability or death or pursuant to Section 8(d) hereof), the
Executive shall continue to receive his Base Salary through the later of (i) the
last day of the Employment Term and (ii) the one year anniversary of such
termination and such amount shall not be reduced by any other earnings during
such period.
(f) TERMINATION BY THE EXECUTIVE FOR GOOD
REASON. The Employment Term and the Executive's employment hereunder may be
terminated by the Executive for "Good Reason" upon Notice of Termination to the
Company and shall become effective if and only if the Company does not cure the
circumstances giving rise to Good Reason within 60 days of the Company's receipt
of such Notice of Termination. For purposes of the Agreement, "Good Reason"
shall mean (i) a material diminution in the Executive's duties and
responsibilities without the Executive's consent, or (ii) a material breach by
the Company of the provisions of this Agreement, including without limitation,
any reduction by the Company in the Executive's Base Salary; PROVIDED; HOWEVER,
that the Executive's relinquishment of the position or title of Chief Executive
Officer of the Company while maintaining the position and title of Chief
Executive Officer of eHotHouse shall not constitute Good Reason. A termination
by the Executive pursuant to this Section 8(f) shall be treated as a termination
by the Company without Cause pursuant to Section 8(e) and the provisions of
Section 8(e) shall apply.
(g) TERMINATION BY THE EXECUTIVE (OTHER THAN FOR
GOOD REASON). The Employment Term and the Executive's employment hereunder may
be terminated by the Executive for any reason other than Good Reason, upon
Notice of Termination (as defined below) to the Company. Upon a termination by
the Executive pursuant to this Section 8(g) the Executive shall be entitled to
his Base Salary through the date of such termination.
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(h) Upon the Executive's termination pursuant to
any of Section 8(a)- (g), the Executive (or his estate, as the case may be)
shall have no further rights to any compensation (including any Bonus), other
than those set forth in whichever is applicable of Section 8(a), (b), (c), (d),
(e), (f) or (g). All other benefits, if any, due the Executive following the
Executive's termination of employment pursuant to this Section 8 shall be
determined in accordance with the plans, policies and practices of the Company;
PROVIDED, HOWEVER, that the Executive shall not participate in any severance
plan, policy or program of the Company other than any applicable disability
benefit plan of the Company.
(i) NOTICE OF TERMINATION. Any purported
termination of employment by the Company pursuant to Section 8(d) or (e) or by
the Executive pursuant to Section 8(d), (f) or (g) shall be communicated by
written Notice of Termination to the other party hereto in accordance with
Section 12(h) hereof. For purposes of the Agreement, a "Notice of Termination"
shall mean a notice which shall indicate the specific termination provision in
the Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of employment under the
provision so indicated.
9. NON-COMPETITION/CONFIDENTIALITY.
(a) The Executive acknowledges and recognizes
the highly competitive nature of the businesses of the Company and its
subsidiaries and accordingly agrees as follows:
(i) During the Employment Term and for a
period of one (1) year following the date the Executive ceases to be employed by
the Company (the "Restricted Period"), the Executive will not directly or
indirectly, (A) engage in any business for the Executive's own account that
materially competes with the business of the Company as such business is in
effect as of the date of the termination, and as to which the Executive had
significant involvement, (B) enter the employ of, or render any services to, any
person engaged in any business that materially competes with the business of the
Company as such business is in effect as of the date of the termination, and as
to which the Executive had significant involvement, (C) acquire a financial
interest in, or otherwise become actively involved with, any person engaged in
any business that materially competes with the business of the Company as such
business is in effect as of the date of the termination, and as to which the
Executive had significant involvement, directly or indirectly, as an individual,
partner, shareholder, officer, director, principal, agent, trustee or
consultant, or (D) interfere with business relationships (whether formed before
or after the date of the Agreement) between the Company and customers or
suppliers of the Company.
(ii) Notwithstanding anything to the
contrary in the Agreement, the Executive may, directly or indirectly own, solely
as an investment, securities of any person engaged in the business of the
Company which are publicly traded on a national or regional stock exchange or on
the over-the-counter market if the Executive (A) is not a controlling person of,
or a member of a group which controls, such person and (B) does not, directly or
indirectly, own 1% or more of any class of securities of such person.
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(b) The Executive agrees that he will not, at
any time during or after the Employment Term, make use of or divulge to any
other person, firm or company, any trade or business secret, process, method or
means, or any other confidential information concerning the business or policies
of the Company, which he may have learned in connection with his employment. For
purposes of the Agreement, a "trade or business secret, process, method or
means, or any other confidential information" shall mean and include written
information treated as confidential or as a trade secret by the Company. The
Executive's obligation under this Section 9(b) shall not apply to any
information which (i) is known publicly; (ii) is in the public domain or
hereafter enters the public domain without the fault of the Executive; (iii) is
known to the Executive prior to his receipt of such information from the
Company, or (iv) is hereafter disclosed to the Executive by a third party not
under an obligation of confidence to the Company. The Executive agrees not to
remove from the premises of the Company, except as an employee of the Company in
pursuit of the business of the Company or except as specifically permitted in
writing by the Board, any document or other object containing or reflecting any
such confidential information. The Executive recognizes that all such documents
and objects, whether developed by him or by someone else, will be the sole
exclusive property of the Company. Except as specifically authorized by the
Board upon termination of his employment hereunder, the Executive shall
forthwith deliver to the Company all such confidential information, including
without limitation all lists of customers, correspondence, accounts, records and
any other documents or property made or held by him or under his control in
relation to the business or affairs of the Company, and no copy of any such
confidential information shall be retained by him.
(c) It is expressly understood and agreed that
although the Executive and the Company consider the restrictions contained in
this Section 9 to be reasonable, if a final judicial determination is made by a
court of competent jurisdiction that the time or territory or any other
restriction contained in the Agreement is an unenforceable restriction against
the Executive, the provisions of the Agreement shall not be rendered void but
shall be deemed amended to apply as to such maximum time and territory and to
such maximum extent as such court may judicially determine or indicate to be
enforceable. Alternatively, if any court of competent jurisdiction finds that
any restriction contained in the Agreement is unenforceable, and such
restriction cannot be amended so as to make it enforceable, such finding shall
not affect the enforceability of any of the other restrictions contained herein.
(d) For purposes of this Section 9 and of
Section 10 hereof, the Company shall be construed to include the Company and
each of its subsidiaries.
10. NON-SOLICITATION/INVENTIONS.
(a) The Executive acknowledges and recognizes
the highly competitive nature of the business of the Company and its affiliates
and accordingly agrees as follows:
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(i) During the Restricted Period, the
Executive will not, directly or indirectly, solicit or encourage any employee of
the Company to leave the employment of the Company.
(ii) During the Restricted Period, the
Executive will not, directly or indirectly, solicit or encourage to cease to
work with the Company any consultant under contract with the Company.
(iii) During the Restricted Period, the
Executive will not, directly or indirectly, solicit or otherwise proposition any
current, past or prospective client or customer of the Company. For purposes of
the Agreement, a prospective client is a person or entity with which the Company
is engaging in active recruitment or solicitation for the purpose of securing
such entity as a client of the Company.
(b) The Executive further acknowledges and
agrees that all discoveries, inventions, ideas, technology, formulas, designs,
software, programs, algorithms, products, systems, applications, processes,
procedures, methods and improvements and enhancements conceived, developed or
otherwise made or created or otherwise produced by the Executive at any time,
alone or with others, and in any way relating to the present or proposed
business, products or services of the Company or its affiliates, whether or not
subject to patent, copyright or other protection and whether or not reduced to
tangible form, during the Employment Term, ("Inventions"), shall be the sole and
exclusive property of the Company. The Executive agrees to, and hereby does,
assign to the Company, without any further consideration, all the Executive's
right, title and interest throughout the world in and to all Inventions. The
Executive agrees that all such Inventions that are copyrightable may constitute
"works made for hire" under the copyright laws of the United States and, as
such, acknowledges that the Company is the author of such Inventions and owns
all of the rights comprised in the copyright of such Inventions and the
Executive hereby assigns to the Company without any further consideration all of
the rights comprised in the copyright and other proprietary rights.
11. SPECIFIC PERFORMANCE. The Executive acknowledges and
agrees that the Company's remedies at law for a breach or threatened breach of
any of the provisions of Section 9 or Section 10 would be inadequate and, in
recognition of this fact, the Executive agrees that, in the event of such a
breach or threatened breach, in addition to any remedies at law, the Company,
without posting any bond, shall be entitled to obtain equitable relief in the
form of specific performance, temporary restraining order, temporary or
permanent injunction or any other equitable remedy which may then be available.
12. MISCELLANEOUS.
(a) ACCEPTANCE. The Executive hereby represents
that his performance and execution of the Agreement does not and will not
constitute a breach of any agreement or arrangement to which he is a party or is
otherwise bound, including, without limitation, any noncompetition or employment
agreement.
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(b) GOVERNING LAW. The Agreement shall be
governed by and construed in accordance with the laws of the State of New York
without regard to conflict of law provisions.
(c) ENTIRE AGREEMENT/AMENDMENTS. The Agreement
contains the entire understanding of the parties with respect to the employment
of the Executive by the Company. There are no restrictions, agreements,
promises, warranties, covenants or undertakings between the parties with respect
to the subject matter herein other than those expressly set forth herein. The
Agreement may not be altered, modified, or amended except by written instrument
signed by the parties hereto.
(d) NO WAIVER. The failure of a party to insist
upon strict adherence to any term of the Agreement on any occasion shall not be
considered a waiver of such party's rights or deprive such party of the right
thereafter to insist upon strict adherence to that term or any other term of the
Agreement.
(e) SEVERABILITY. In the event that any one or
more of the provisions of the Agreement shall be or become invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions of the Agreement shall not be affected thereby.
(f) ASSIGNMENT. The Agreement shall not be
assignable by the Executive. The Agreement may be assigned by the Company to a
company which is a successor in interest to substantially all of the business
operations of the Company. Such assignment shall become effective when the
Company notifies the Executive of such assignment or at such later date as may
be specified in such notice. Upon such assignment, the rights and obligations of
the Company hereunder shall become the rights and obligations of such successor
company, PROVIDED that any assignee expressly assumes the obligations, rights
and privileges of the Agreement.
(g) SUCCESSORS; BINDING AGREEMENT. The Agreement
shall inure to the benefit of and be binding upon the Company's and the
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributes, devises and legatees.
(h) NOTICE. All notices and other communications
hereunder shall be in writing and shall be given by hand delivery to the other
party or by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Executive:
Xx. Xxxxxxx Xxxx
000 Xxxx Xxxxxx
Xxxxxxxxxxxxx, Xxx Xxxx 00000
Copy to:
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Xxxxxxxxx, Xxxxxx, Xxxxxx, Xxxxx & Xxxx, PC
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx Xxxxxx, Esq.
If to the Company:
Arinco Computer Systems Inc.
00 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Chairman of the Board
Copy to: Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
1285 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxxx X. Xxxxx, Esq.
(i) or to such other address as either party
shall have furnished to the other in writing in accordance herewith. Notices and
communications shall be effective when actually received by the addressee.
(j) WITHHOLDING TAXES. The Company may withhold
from any amounts payable under the Agreement such Federal, state and local taxes
as may be required to be withheld pursuant to any applicable law or regulation.
(k) COUNTERPARTS. The Agreement may be signed in
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument. The parties hereto
confirm that any facsimile copy of another party's executed counterpart of this
Agreement (or its signature page thereof) will be deemed to be an executed
original thereof.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Employment Agreement as of the day and year first above written.
EXECUTIVE
_______________________________________
Xxxxxxx Xxxx
ARINCO COMPUTER SYSTEMS INC.
By:____________________________________
Name:
Title:
EXHIBIT A
ARINCO COMPUTER SYSTEMS, INC.
2000 STOCK OPTION PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "Agreement"), dated as of
August 21, 2000, is made by and between Arinco Computer Systems Inc., a New
Mexico corporation (the "Company"), and Xxxxxxx Xxxx (the "Optionee").
WHEREAS, the Company has adopted the Company's 2000 Stock
Option Plan (the "Plan"), pursuant to which options may be granted to purchase
shares of the Company's Common Stock (the "Common Stock"); and
WHEREAS, the Company desires to grant to the Optionee a
Nonqualified Stock Option to purchase the number of shares of Common Stock
provided for herein;
NOW, THEREFORE, in consideration of the recitals and the
mutual agreements herein contained, the parties hereto hereby agree as follows:
1. Grant of Option.
(a) Contingent upon the approval of the Plan by
the stockholders of the Company at the annual meeting of the stockholders of the
Company on or about September 12, 2000, the Company hereby grants to the
Optionee an Option to purchase 3,000,000 shares of Common Stock (such shares,
the "Option Shares") on the terms and conditions set forth in the Agreement and
as otherwise provided in the Plan. This Option is not intended to be treated as
an Incentive Stock Option, as such term is defined in Section 422 of the
Internal Revenue Code of 1986, as amended. The Optionee understands and
acknowledges that the Option Shares have not been registered under the
Securities Act of 1933, as amended,
(b) INCORPORATION BY REFERENCE, ETC. The
provisions of the Plan are hereby incorporated herein by reference. Except as
otherwise expressly set forth herein, the Agreement shall be construed in
accordance with the provisions of the Plan and any capitalized terms not
otherwise defined in the Agreement shall have the definitions set forth in the
Plan. The Committee shall have final authority to interpret and construe the
Plan and the Agreement and to make any and all determinations under them, and
its decision shall be binding and conclusive upon the Optionee and his legal
representative in respect of any questions arising under the Plan or the
Agreement.
2. Terms and Conditions.
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(a) PURCHASE PRICE. The price at which the
Optionee shall be entitled to purchase shares of Common Stock upon the exercise
of all or any portion of this Option shall be $1.59 per share.
(b) EXPIRATION DATE. The Option shall expire at
11:59 p.m. Eastern Standard Time on the tenth anniversary of the date of the
Agreement.
(c) EXERCISABILITY OF OPTION. Except as may
otherwise be provided herein, subject to the Optionee's continued employment
with the Company, or employment with eHothouse Inc., for so long as eHothouse
Inc. shall remain an affiliate of the Company. This Option shall become
exercisable as to one-third of the Option Shares on the first anniversary of the
date hereof and as to 2.77% of the Option Shares as of the first of each
calendar month commencing with the first month following the first anniversary
of the date hereof, such that this Option shall be 100% exercisable as of the
third anniversary of the date hereof.
(d) METHOD OF EXERCISE. This Option may be
exercised only by written notice in the form attached hereto (or a successor
form provided by the Committee) delivered in person or by mail in accordance
with Section 3(a) hereof and accompanied by payment therefor. The purchase price
of the shares of Common Stock shall be paid to the Company (i) by certified
check, by a "cashless exercise" procedure if and in the manner approved by the
Committee, or (iii) by any other method approved by the Committee in writing. If
requested by the Committee, the Optionee shall deliver the Agreement evidencing
the Option to the Secretary of the Company who shall endorse thereon a notation
of such exercise and return such Agreement to the Optionee.
(i) EXERCISE UPON DEATH OR TERMINATION
OF EMPLOYMENT. Notwithstanding anything contained in the Plan to the contrary,
in the event that the Optionee ceases to be employed by the Company, the Option
held by the Optionee (to the extent then outstanding) shall terminate as
follows:
(ii) In the event of the termination of
the Optionee's employment (a) due to his death or (b) due to "Disability" (as
defined below), the Option (to the extent exercisable at the time of the
Optionee's termination of employment or death, as applicable) shall be
exercisable for a period of 365 days following such termination of employment or
death, as applicable, and shall thereafter terminate;
(iii) In the event of the termination of
the Optionee's employment other than a termination described in subsection (vi)
of this Section 2(d), (a) by the Company other than for "Cause" (as defined
below), death or Disability, (b) by the Optionee with "Good Reason" (as defined
below), (c) as a result of eHothouse not being an affiliate or (d) as a result
of the failure of the Company to consummate its acquisition of eHothouse, Inc.
(the "eHothouse Closing") within 60 days of the date hereof, the first one-third
(1/3) of the Option Shares shall vest on the date of such termination (to the
extent not already vested) and the Option (to the extent exercisable at the time
of the Optionee's termination of employment) shall be exercisable for a period
of ninety (90) days following such termination of employment, and shall
thereafter terminate;
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(iv) In the event of the termination of
the Optionee's employment by the Company for Cause or as a result of the failure
of the Company to consummate the eHothouse Closing within 60 days of the date
hereof, the Option (whether or not exercisable at the time of such termination)
shall terminate on the date of the Optionee's termination of employment; and
(v) If the Optionee terminates his
employment without Good Reason other than a termination described in subsection
(vi) of this Section 2(d), the Option (to the extent exercisable at the time of
the Optionee's termination of employment) shall be exercisable for a period of
thirty (30) days following such termination of employment and shall thereafter
terminate; provided that a voluntary termination of employment within thirty
(30) days following a commission of any of the acts which would otherwise
constitute Cause shall be treated as a termination by the Company for Cause.
(vi) If the Optionee's employment with
the Company is terminated by either the Optionee (with the Board's consent) or
by the Company other than for Cause, and the Optionee remains the Chief
Executive Officer of eHothouse, then the Option shall continue to become
exercisable (vest) as if no such termination of employment had occurred such
that the Option shall be 100% exercisable as of the third anniversary of the
date hereof.
(vii) For purposes of the Agreement, the
terms "Cause", "Good Reason" and "Disability" shall have the meaning ascribed to
them in any existing employment, consulting between the Optionee and the
Company.
(e) NONTRANSFERABILITY. This Option shall not be
transferable by the Optionee other than by will or the laws of descent and
distribution.
(f) RIGHTS AS STOCKHOLDER. The Optionee shall
not be deemed for any purpose to be the owner of any shares of Common Stock
subject to this Option unless, until and to the extent that (i) this Option
shall have been exercised pursuant to its terms, (ii) the Company shall have
issued and delivered to the Optionee the Option Shares, and (iii) the Optionee's
name shall have been entered as a stockholder of record with respect to such
Option Shares on the books of the Company.
(g) WITHHOLDING TAXES. Prior to the delivery of
a certificate or certificates representing the Option Shares, the Optionee must
pay in the form of a certified check to the Company any such additional amount
as the Company determines that it is required to withhold under applicable
federal, state or local tax laws in respect of the exercise or the transfer of
Option Shares; PROVIDED that the Committee may, in its sole discretion, allow
such withholding obligation to be satisfied by any other method described in
Section 8(d) of the Plan.
3. Miscellaneous.
(a) NOTICES. Any and all notices, designations,
consents, offers, acceptances and any other communications provided for herein
shall be given in writing and shall be delivered either personally or by
registered or certified mail, postage prepaid, which
4
shall be addressed, in the case of the Company to the Secretary of the Company
at the principal office of the Company and, in the case of the Optionee, to
Optionee's address appearing on the books of the Company or to Optionee's
residence or to such other address as may be designated in writing by the
Optionee.
(b) NO RIGHT TO CONTINUED EMPLOYMENT. Nothing in
the Plan or in the Agreement shall confer upon the Optionee any right to
continue in the employ of the Company or shall interfere with or restrict in any
way the right of the Company, which are hereby expressly reserved, to remove,
terminate or discharge the Optionee at any time for any reason whatsoever, with
or without cause.
(c) BOUND BY PLAN. By signing the Agreement, the
Optionee acknowledges that he has received a copy of the Plan and has had an
opportunity to review the Plan and agrees to be bound by all the terms and
provisions of the Plan.
(d) SUCCESSORS. The terms of the Agreement shall
be binding upon and inure to the benefit of the Company, its successors and
assigns, and of the Optionee and the beneficiaries, executors, administrators,
heirs and successors of the Optionee.
(e) INVALID PROVISION. The invalidity or
unenforceability of any particular provision hereof shall not affect the other
provisions hereof, and the Agreement shall be construed in all respects as if
such invalid or unenforceable provision had been omitted.
(f) MODIFICATIONS. No change, modification or
waiver of any provision of the Agreement shall be valid unless the same be in
writing and signed by the parties hereto.
(g) ENTIRE AGREEMENT. The Agreement and the Plan
contain the entire agreement and understanding of the parties hereto with
respect to the subject matter contained herein and therein and supersede all
prior communications, representations and negotiations in respect thereto.
(h) GOVERNING LAW. The Agreement and the rights
of the Optionee hereunder shall be construed and determined in accordance with
the laws of the State of New York.
(i) HEADINGS. The headings of the Sections
hereof are provided for convenience only and are not to serve as a basis for
interpretation or construction, and shall not constitute a part, of the
Agreement.
(j) COUNTERPARTS. The Agreement may be executed
in counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. The parties hereto
confirm that any facsimile copy of another party's executed counterpart of this
Agreement (or its signature page thereof) will be deemed to be an executed
original thereof.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Stock Option Agreement as of the date and year first above written.
ARINCO COMPUTER SYSTEMS INC.
By: ___________________________________
TITLE _________________________________
OPTIONEE
SIGNATURE:_____________________________
Printed Name: XXXXXXX XXXX
--------------------------
Address: ______________________________
6
NOTICE OF OPTION EXERCISE
PURSUANT TO
ARINCO COMPUTER SYSTEMS INC.
2000 STOCK OPTION PLAN
To exercise your option to purchase shares of Arinco Computer Systems Inc.
("Shares"), please FILL OUT THIS FORM AND RETURN IT TOGETHER WITH A CERTIFIED
CHECK IN THE AMOUNT OF THE EXERCISE PRICE DUE, which is the product of the
number of Shares with respect to which you are exercising your purchase option
and the per share exercise price of $____. You are not required to exercise your
option with respect to all Shares thereunder. However, the minimum number of
Shares with respect to which you may exercise your option is 100 Shares, or the
total remaining number of Shares subject to your option, if less. You also must
include a certified check in the amount of required payroll taxes and income tax
withholding due in connection with your exercise, unless the Committee
administering the Stock Option Plan specifically provides for this obligation to
be satisfied in a different manner.
I hereby exercise my right to purchase ____ Shares under the stock option
granted to me pursuant to the Nonqualified Stock Option Agreement between myself
and Arinco Computer Systems Inc., dated as of August 21, 2000. I am vested in my
stock option as to the Shares being purchased hereunder. Enclosed is one or more
certified checks for the exercise price of $_______ and the required withholding
of $_______. (Please contact the Company to determine the amount of required
withholding.)
Signature: ____________________________
Printed Name: _________________________
Social Security Number: _______________
Date: _________________________________
