1
EXHIBIT 10.6
EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into on December 20, 1999 (the "Effective
Time"), by and between L. Xxxxxxxxxxx Xxxxxxxxx, an individual resident of the
State of California ("Executive"), and Stockpoint, Inc., a Delaware corporation
("Company").
WHEREAS, Executive has heretofore been employed as the Executive Vice
President of the Company; and
WHEREAS, the Company desires to continue to have the benefit of the
Executive's services as a corporate officer of the Company;
WHEREAS, certain guarantors of borrowings of the Company have required,
as a condition to their guarantees, that the Company execute an employment
agreement with Executive and
WHEREAS, the proceeds from such borrowings are necessary for the
Company's operations and will benefit the Company and the Executive.
NOW, THEREFORE, in consideration of the premises, the respective
undertakings of the Company and Executive set forth below, the Company and
Executive agree as follows:
1. Employment. The Company hereby agrees to employ Executive, and
Executive accepts such employment and agrees to perform services for the
Company, upon the other terms and conditions set forth in this Agreement.
2. Term. The term of this agreement is one year and renews annually,
unless either party provides written notification 90 days prior to the renewal.
See section 8 below for Termination definitions and remedies.
3. Positions, Duties and Reporting.
3.01 Service with Company. During the term of this Agreement,
Executive agrees to perform such reasonable employment duties consistent with
the role of Executive Vice President as the Company shall assign to him/her from
time to time.
3.02 Performance of Duties. Executive agrees to serve the Company
faithfully and to the best of his/her ability and to devote his/her full time,
attention, and efforts to the business and affairs of the Company during the
term of this Agreement. Executive represents to the Company that he/she is under
no contractual commitments inconsistent with his/her obligations set forth in
this Agreement, and that during the term of this Agreement, he/she will not
render or perform services for any other corporation, firm, entity or person
which are inconsistent with the provisions of this Agreement.
3.03 Reporting. This position will report to the Chief Executive
Officer of the Company.
4. Compensation.
4.01 Base Salary. As base compensation for all services to be
rendered by Executive under this Agreement during the first year of the term of
this Agreement, the Company shall pay to Executive a base salary at a rate of
$150,000 per year, which salary shall be paid on a twice-monthly basis in
accordance with the Company's normal payroll procedures and policies. The salary
payable to Executive during each subsequent year during the term of this
Agreement shall be established by the Company and Executive, but in no event
shall the salary for any subsequent year be less than the base salary in effect
for the prior year.
4.02 Participation in Benefit Plans. During the term of this
Agreement, Executive shall be entitled to receive such medical and
hospitalization insurance and other fringe benefits as are being provided to the
Company's other executive level employees from time to time to the extent that
Executive's age, position or other factors qualify him/her for such fringe
benefits.
2
4.03 Expenses. The Company will pay or reimburse Executive for all
reasonable and necessary out-of-pocket expenses incurred by him/her in the
performance of his/her duties under this Agreement, subject to the presentment
of appropriate vouchers in accordance with the Company's normal policies for
expense verification.
4.04 Incentive for completion of an initial public offering. Upon
the completion of an initial public offering of the Company's common stock, the
Company will also pay Executive an IPO cash bonus of $30,000, which is due and
payable, immediately upon the close.
4.05 Annual Incentive Compensation. The Company shall formulate
and deliver to Executive by January 31, 2000 with respect to the remainder of
fiscal 2000, and by January 1 with respect to each succeeding fiscal year during
the term of this Agreement, and the Company and Executive shall use their best
efforts to negotiate and agree to, an annual incentive compensation plan for
Executive.
4.06 Vesting of Stock Options.
On September 15, 1999, the Company issued to the Executive an
additional option ("September 1999 Option") grant to purchase up to 40,000
shares of Company Common Stock at a price of $7.20 per share pursuant to the
Company's 1995 Stock Incentive Plan (the "Plan"). Such option shall become
exercisable with respect to 20% of the shares immediately upon execution of this
Agreement and the balance shall vest monthly at a rate of 1/60 of the total
September 1999 Option grant over the balance of the term. Such option shall
expire 10 years from the date of the grant and shall contain such other
provisions as are contained in the form of stock option agreement used by
Company under the Plan.
In the event that this Agreement is terminated as a result of the "Constructive
Termination" (as defined in Section 8.01(2)) or without "Cause" (as defined in
Section 8.01(1)) of the Executive, the September 1999 Option will vest with
respect to 40% of the shares subject thereto immediately. In addition, the
Company will permit the Executive to exercise all of his/her vested options for
a period of 12 months, commencing from the date of termination.
Vesting of all options granted to Executive will be accelerated with respect to
100% of the shares subject thereto in the event of a "Change in Control" of the
Company. For such purposes, a "Change in Control" shall mean any of the
following:
(i) A sale of all or substantially all of the assets of the Company;
(ii) The acquisition of more than 50% of the then outstanding Company
Common Stock by any person or group of persons acting in concert;
(iii) Any change that results in the Continuing Directors constituting
less than a majority of the Board of Directors;
(iv) A reorganization or, a merger of Company with another company
after which the holders of common stock of the Company
immediately prior to the merger or reorganization hold less than
50% of the voting power of the resulting corporations, or any
other transaction in which the Company (other than as the parent
corporation) is consolidated for federal income tax purposes or
is eligible to be consolidated for federal income tax purposes
with another corporation; or
(v) In the event that the Company Common Stock is traded on an
established securities market: a public announcement that any
person has acquired beneficial ownership of more than 25% of the
then outstanding Company Common Stock and for this purpose the
terms "person" and "beneficial ownership" shall have the meanings
provided in Section 13(d) of the Securities and Exchange Act of
1934 or related rules promulgated by the Securities and Exchange
Commission or; the commencement of or public announcement of an
intention to make a tender offer for more than 50% of the then
outstanding Company Common Stock.
3
For purposes of this Section 4.06, "Continuing Directors" shall include only
those directors of the Company on the date hereof and those directors, as of a
date 30 days prior to an event that would otherwise be considered a "Change in
Control," who were nominated by Continuing Directors and duly elected by
shareholders at an annual meeting thereof or nominated and elected by directors
who were "Continuing Directors."
On March 6, 1997, as part of its acquisition of Ethos Corporation ("the
Acquisition"), the Company issued to the Executive an option to purchase 15,000
shares of Company Common Stock ("March 1997 Option") at a price of $1.50 per
share pursuant to the Company's 1995 Stock Incentive Plan. The Company reaffirms
that as per agreement at the time of the Acquisition, the March 1997 Option
shall become accelerated with respect to 100% of the shares subject thereto of
the effective date of a registration statement filed by the Company for the
underwritten public offering of its common stock.
5. Confidential Information. Except as permitted or directed by the
Company's Board of Directors, during the term of this Agreement or at any time
thereafter, Executive shall not divulge, furnish or make accessible to anyone or
use in any way (other than in the ordinary course of the business of the
Company) any confidential or secret knowledge or information of the Company
which Executive has acquired or become acquainted with or will acquire or become
acquainted with during the period of his/her employment by the Company, whether
developed by himself/herself or by others, concerning any trade secrets,
confidential or secret designs, processes, formulae, plans, devices or material
(whether or not patented or patentable) directly or indirectly useful in any
aspect of the business of the Company, any confidential or secret development or
research work of the Company, or any other confidential information or secret
aspects of the business of the Company. Executive expressly acknowledges that,
in addition to the Company's proprietary software and technical know-how, the
Company's customer lists and the form (including, without limitation, payment
terms) of the Company's relationships with its customers is not publicly known
and that the disclosure or use of such information for any purpose other than
for the benefit of the Company could cause substantial damage the Company and
would place the Company at a competitive disadvantage. Executive acknowledges
that the above-described knowledge or information constitutes a unique and
valuable asset of the Company and that any disclosure or other use of such
knowledge or information other than the sole benefit of the Company would be
wrongful and would cause irreparable harm to the Company. The foregoing
obligations of confidentiality shall not apply to any knowledge or information
which is now published, which subsequently becomes generally publicly known,
other than as a direct or indirect result of the breach of this Agreement by
Executive, or which was known to the Executive prior to the term of his/her
employment with the Company. Executive agrees to notify any person or entity
with which Executive is employed or for which Executive provides services of the
requirements of this Section 5 and to notify the Company of the identity of any
such person or entity with which Executive is employed during the One year after
termination of this Agreement.
6. Employee Solicitation. During employment, and for a period of nine
months thereafter, Executive shall not (i) directly or indirectly solicit any
employee of the Company or any of Company's affiliates to leave the employ of
any such entity or in any way interfere adversely with the relationship between
any such employee and any such entity, (ii) directly or indirectly solicit any
employee of the Company or any affiliates to work for, render services or
provide advice to or supply confidential business information or trade secrets
of any such entity to any third person, firm or corporation, or (iii) directly
or indirectly solicit any existing customers and potential customers that have
an unexpired written proposals under consideration. For purposes of the
foregoing, solicitation shall not include solicitation of employees, vendors or
customers (i) who first solicit employment or a relationship from Executive, or
(ii) who are solicited (A) by advertising in periodicals of general circulation
or by general circulation Internet advertising, or (B) by a search or consulting
firm on behalf of Executive or Executive's affiliates, so long as Executive or
such affiliates did not direct or encourage such firm to solicit such employee,
vendor or customer of the Company. If any restriction set forth in this
paragraph is held to be unreasonable, then Executive and the Company agree, and
hereby submit, to the reduction and limitation of such prohibition to such area
or period as shall be deemed reasonable.
7. Patent and Related Matter.
7.01 Disclosure and Assignment. Executive will promptly disclose in
writing to the Company complete information concerning each and every invention,
discovery, improvement, work of authorship, device, design, apparatus, practice,
process, method or product whether patentable or not, made, developed, authored,
perfected, devised, conceived or first reduced to practice by Executive, either
solely or in collaboration with others, during the term of this Agreement,
whether or not during regular working hours,
4
relating to the Business of the Company (hereinafter referred to as
"Developments"). Executive, to the extent that he/she has the legal right to do
so, hereby acknowledges that any and all of said Developments are the property
of the Company and hereby assigns and agrees to assign to the Company any and
all of Executive's right, title and interest in and to any and all of such
Developments.
7.02 Limitation on Section 7.01. The provisions of section 7.01 shall
not apply to any Development meeting the following conditions:
(a) such Development was developed entirely on Executive's
own time; and
(b) such Development was made without the use of any
Company equipment, supplies, facility or trade secret
information, excluding Executives laptop; and
(c) such Development does not relate (I) directly to the
Business of the Company, or (ii) to the Company's
actual or demonstrably anticipated research or
development; and
(d) such Development does not result from any work
performed by Executive for the Company.
7.03 Assistance of Executive. Upon request and without further
compensation therefor, but at no expense to Executive, and whether during the
term of this Agreement or thereafter, Executive will do all lawful acts,
including, but not limited to, the execution of papers and lawful oaths and the
giving of testimony, that in the opinion of the Company, its successors and
assigns, may be necessary or desirable in obtaining, sustaining, reissuing,
extending and enforcing United States and foreign patents and/or registrations
including, but not limited to, design patents, on any and all of such
Developments (other than those described in 7.02), and for perfecting affirming
and recording the Company's complete ownership and title thereto, and to
cooperate otherwise in all proceedings and matters relating thereto.
7.04 Obligations, Restrictions and Limitations. Executive understands
that the Company may enter into agreements or arrangements with agencies of the
United States Government, and that the Company may be subject to laws and
regulations which impose obligations, restrictions and limitations on it with
respect to inventions and patents which may be acquired by it or which may be
conceived, authored or developed by employees, consultants or other agents
rendering services to it. Executive agrees that he/she shall be bound by all
such obligations, restrictions and limitations applicable to any such invention
or work of authorship conceived, authored or developed by him/her during the
term of this Agreement and shall take any and all further action which may be
required to discharge such obligations and to comply with such obligations and
to comply with such restrictions and limitations.
8. Termination
8.01 Grounds for Termination. This Agreement may be terminated:
(a) by the Company, if Executive dies, or
(b) by the Executive, if Executive becomes disabled (as
defined below), or
(c) by the Company, if the Executive has engaged in conduct
constituting cause for his/her termination and the
Company notifies Executive in writing of such election,
or
(d) by the Company without cause upon notice to the
Executive in writing of such election, provided that
such termination may only occur by unanimous decision
of the Board of Directors if there are then three or
fewer Directors or by a majority decision of the Board
of Directors if there are then four or more Directors.
5
(e) by the Executive, if the Executive is constructively
terminated, as defined in paragraph 8.01(2) herein and
the Executive has notified the Company of his/her
election to terminate for Constructive Termination, or
(f) by the Executive upon notice to the Company in writing
of such election.
If this Agreement is terminated pursuant to subsection (a), (b), (c), (e) or (f)
of this section 8.01, such termination shall be effective immediately. If this
Agreement is terminated pursuant to subsection (d) of this section 8.01, such
termination shall be effective thirty (30) days after delivery of the notice of
termination.
(1) "Cause" Defined. "Cause" means:
(a) The Employee has breached the provisions of Section 5, 6
or 7 of this Agreement in any material respect,
(b) The Executive has engaged in willful and material
misconduct, including willful and material failure to perform the
Employee's duties as an officer or employee of the Company and has
failed to cure such default within 30 days after receipt of written
notice of default from the Company,
(c) The Executive has committed fraud, misappropriation or
embezzlement in connection with the Company's business, or
(d) Executive has been convicted or has pleaded nolo
contendere to criminal misconduct that is detrimental to the Company's
reputation or that calls into question, in the judgement of the Board,
Executive's integrity in fulfilling his/her duties under this
Agreement.
In the event the Company terminates Executive's employment for "cause"
pursuant to subsection 8.01 and Executive objects in writing to the Board's
determination that there was proper "cause" for such termination within (30)
days after Executive is notified of such termination, the matter shall be
resolved by arbitration in accordance with the provisions of section 10.01. If
Executive fails to object to any such determination of "cause" in writing within
such thirty (30) day period, he/she shall be deemed to have waived his/her right
to object to that determination. If such arbitration determines that there was
not proper "cause" for termination, such termination shall be deemed to be a
termination pursuant to subsection 8.01(d).
(2) "Constructive Termination" defined. Constructive Termination means
termination by Executive after written notice to the Company that Executive
deems such termination by Executive as a result of Constructive Termination, and
only after:
(a) A material breach by the Company of a material
obligation of the Company under this Agreement after
the Executive has given the Company written notice of
the breach and the Company has not remedied the breach
within 30 days;
(b) A failure of the Company to pay when due to the
Executive any annual base salary, annual bonus or other
earned bonus or awards referred to in this Agreement;
(c) The relocation of the Executive's principal place of
employment to a location not within a 30 mile radius of
such place of employment on the Effective Date;
(d) A material reduction by the Company of the Executive's
duties or responsibilities;
6
(e) The failure of the Company to obtain an agreement
reasonably satisfactory to the Executive from any
successor to assume and agree to perform this
Agreement, or, if the business for which the
Executive's services are principally performed is sold
or transferred, the failure of the Company to obtain
such an agreement from the purchaser or transferee of
such business; or
(f) The Company becomes insolvent or bankrupt where
executive can no longer perform his/her duties as
outlined above.
In the event the Executive terminates Executive's employment for
"Constructive Termination" pursuant to subsection 8.01 and the Company
objects in writing to the Executive's determination that there was
Constructive Termination within (30) days after Executive has notified
the Company of the same, the matter shall be resolved by arbitration in
accordance with the provisions of section 10.01. If the Company fails
to object to any such determination of "Constructive Termination" in
writing within such thirty (30) day period, it shall be deemed to have
waived its right to object to that determination. If such arbitration
determines that there was not proper "Constructive Termination", such
termination shall be deemed to be a termination pursuant to subsection
8.01(c).
8.02 "Disability" Defined. For purposes of this Agreement, the term
"disabled" means any mental or physical condition which renders Executive unable
to perform the essential functions of his/her positions, with or without
reasonable accommodation, for a period of more than ninety (90) days during any
consecutive one hundred twenty (120) day period.
8.03 Surrender of Records and Property. Upon termination of his/her
employment with the Company, Executive shall deliver promptly to the Company all
records, manual, book, blank forms, document, letters, memoranda, notes,
notebooks, reports, data, tables, calculations or copies thereof, which are the
property of the Company or which relate in any way to the business, products,
practices or techniques of the Company, and all other property, trade secrets
and confidential information of the Company, including, but not limited to, all
documents which in whole or case are in his/her possession or under his/her
control.
8.04 Wage and Benefit Continuation. If Executive's employment by the
Company is terminated pursuant to subsection 8.01 (d) or 8.01(e), the Company
shall continue to pay to Executive his/her base salary and shall continue to
provide health insurance benefits for Executive for a period 9 months after
termination. Change in Control" as defined in Section 4.07, if Executive's
employment is terminated by "Constructive Termination" as defined in Section
8.01(2) or without "Cause" as defined in as defined in Section 8.01(1) within 12
months after the effective date of a "Change in Control," the severance
compensation package defined in this Section will be doubled to 18 months.
Notwithstanding anything else in this Section 8.04, Executive shall not be
entitled under this Section 8.04 or any other provision of this Agreement to
receive any cash compensation pursuant to this Agreement which constitutes an
"excess parachute payment" within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended, or any successor provision or regulations
promulgated.
If this Agreement is terminated pursuant to subsection 8.01 (a), 8.01 (c), or
8.01 (f), Executive's right to base salary and benefits shall immediately
terminate except as may otherwise be required by applicable law.
If Executive's employment is terminated by the Company pursuant to
subsection 8.01(a), 8.01(b), 8.01(d) or 8.01(e), Executive shall also be
entitled to receive any bonus payment that as of the time of termination would
have been payable to him/her pursuant to any incentive plan then in effect.
9. Indemnification and Directors & Officers Insurance
9.01 Indemnification. The Company will provide Executive
indemnification, exculpation and expense advancement, to the fullest extent of
the law, including, without limitation, entering into an indemnification
agreement with Executive in at least as beneficial a form to Executive as the
Company has entered into with any other officer or director of the Company.
7
9.02 Directors and Officers Insurance. The Company will provide, at
its expense, Directors and Officers (D&O) insurance in an amount deemed
appropriate by its Board of Directors and Officers. If the Company shall show
any employee as a named insured under such policy, then the Executive shall be a
named insured under such policy.
10. Settlement of Disputes.
10.01 Arbitration. Except as provided in section 10.02 any claims or
disputes of any nature between the Company and Executive arising from or related
to the performance, breach, termination, expiration, application, or meaning of
this Agreement or any related matter relating to Executive's employment and the
termination of that employment by the Company shall be resolved exclusively by
arbitration in Denver, CO, in accordance with the then applicable rules of the
American Arbitration Association. Any such arbitration shall be conducted by an
arbitrator with said Rules, who has at least ten (10) years experience as an
attorney in executive compensation and employment law. The fees of the
arbitrator (s) and other cost, including attorney fees, incurred by Executive
and the Company in connection with such arbitration shall be paid by the party
who is unsuccessful in such arbitration, as determined by the arbitrator. The
decision if the arbitrator(s) shall be final and binding upon both parties.
Judgement of the award rendered by the arbitrator(s) may be entered in any court
having jurisdiction thereof. In the event of submission of any dispute to
arbitration, each party shall, not later than thirty (30) days prior to the date
set forth hearing, provide to the other party and to the arbitrator(s) a copy of
all exhibits upon which the party intends to rely at the hearing and a list of
all persons each party intends to call at the hearing.
10.02 Resolution of Certain Claims- Injunctive Relief. Section 10.01
shall have no application to claims by the Company asserting a violation of
section 5, 6, 7 or 8.03 or seeking to enforce, by injunction or otherwise, the
terms of section 5, 6, 7 or 8.03. Such claims may be maintained by the Company
in a lawsuit subject to the terms of section 10.03. Executive agrees that, in
addition to, but not to the exclusion of any other available remedy, the Company
shall have the right to enforce the provisions of sections 5, 6, 7 and 8.03 by
applying for and obtaining temporary and permanent restraining orders
injunctions from a court of competent jurisdiction without the necessity of
filing a bond therefor and without the necessity of proving actual damages, and
the Company shall be entitled to recover from the Employee its reasonable
attorneys' fees and costs in enforcing the provisions of Sections 5, 6, 7 and
8.03.
10.03 Venue. Any action at law, suit in equity, or judicial proceeding
arising directly or indirectly, or otherwise in connection with, out of, related
to or from this Agreement or any provisions hereof shall be litigated only in
the courts of the State of California. Executive waives any right the Executive
may have to transfer or change the venue of any litigation brought against
Executive by the Company.
10.04 Severability. To the extent any provisions of this Agreement
shall be invalid or unenforceable, it shall be considered deleted herefrom and
the remainder of such provisions and if this Agreement shall be unaffected and
shall continue in full force and effect. In furtherance and not in limitation of
the foregoing, should the duration or geographical extent of, or business
activities covered by, any provisions of this Agreement be in excess of that
which is valid and enforceable under applicable law, then such provisions shall
be construed to cover only that duration, extent or activities which may validly
and enforceably be covered. Executive acknowledges the uncertainty of the law in
respect and expressly stipulates that this Agreement be given the construction
which renders its provisions valid and enforceable to the maximum extent (not
exceeding its express terms) possible under applicable law.
11 Miscellaneous.
11.01 Governing Law. This Agreement is made under and shall be governed
by and construed in accordance with the laws of the State of California.
11.02 Prior Agreements. Except as set forth in Section 1, this
Agreement contains the entire agreement of the parties relating to the
employment of Executive by the Company and the ancillary matters discussed
herein and supersedes all prior agreements and undertakings with respect to such
matters, and the parties hereto made no arrangements, representations or
warranties relating to such employment or ancillary matters which are not set
forth herein.
8
11.03 Withholding Taxes. The Company may withhold from any benefits
payable under this Agreement all federal, state, city or other taxes shall be
required pursuant to any law governmental regulation, or ruling or any other
amount owed to the Company.
11.04 Amendments. No amendment or modification of this Agreement shall
be deemed effective unless made in writing and signed by the both Executive and
Company.
11.05 No Waiver. No term or condition of this Agreement shall be deemed
to have been waived, nor shall there be any estoppel to enforce any provisions
of this Agreement, except by a statement in writing signed by the party against
whom enforcement of the waiver or estoppel is sought. Any written waiver shall
not be deemed a continuing waiver unless specifically stated, shall operate only
as to specific term or condition waived and shall not constitute a waiver of
such term or condition for the future or as to any act other than that
specifically waived.
11.06 Assignment. This Agreement shall not be assignable, in whole or
in part, by either party without the written consent of the other party, except
that the Company may, without the consent of the Executive, assign its rights
and obligations under this Agreement to any corporation, firm or other business
entity with or into which the Company may merge or consolidate, or to which the
Company may sell or transfer all or substantially all of its assets, or of which
50% or more of the equity investment and of the voting control is owned,
directly or indirectly, by, or is under common ownership with, the Company;
provided, however, that no such assignment will relieve Company of any of its
obligations hereunder. After any such assignee shall thereafter be deemed to be
the Company for the purposes of all provisions of this Agreement including
section 9.
11.07 Counterparts. This Agreement may be simultaneously executed in
any number of counterparts, and such counterparts executed and delivered, each
as an original, shall constitute but the same instrument.
11.08 Notices. All notices, demands and other communications to be
given or delivered under or by reason of the provisions of this Agreement will
be in writing and will be deemed to have given when personally delivered or
three days after being mailed, if mailed, by first class mail, return receipt
requested, or when receipt is acknowledged, if sent by facsimile, telecopy or
other electronic transmission device. Notices, demands and communications to
Company and the Executive will, unless another address is specified in writing,
be sent to the address indicated below:
Notices to Company: Notice to Executive:
------------------- --------------------
Stockpoint, Inc.
0000 Xxxxxxxxx Xxxx --------------------
Xxxxxxxxxx, Xxxx 00000 --------------------
Attn: President --------------------
11.09 Captions and Headings. The captions and paragraph headings used
in this Agreement are for convenience of reference only, and shall not affect
the construction or interpretation of this Agreement or any of the provisions
hereof.
11.10 Effect of Termination. It is expressly understood that neither
the Company nor the Executive shall have any continuing obligation under this
agreement upon termination hereof, except in respect of the matters referenced
in Sections 5, 6, 7 and 8.03.
9
IN WITNESS WHEREOF, Executive and the Company have executed this
Agreement as of date set forth herein.
Stockpoint, Inc.
By: /s/ Xxxxxxx X. Xxxxx
----------------------------
Its CEO
----------------------------
EXECUTIVE
/s/ L. Xxxxxxxxxxx Xxxxxxxxx
-------------------------------
L. Xxxxxxxxxxx Xxxxxxxxx
