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EXHIBIT 10.7
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into as of February 14, 2000, by and
between INTERLAND, INC., a Georgia corporation (the "Company"), headquartered in
Atlanta, Georgia, and H. XXXXXXXXXXX XXXXXXXXX ("Executive"), an individual
residing in Atlanta, Georgia.
WHEREAS, the Company desires to employ Executive and to establish
certain terms and conditions of his employment by entering into an employment
agreement with Executive as hereinafter provided;
WHEREAS, Executive desires to accept such employment with the Company
on the terms and conditions provided herein; and
WHEREAS, in the course of his employment, Executive will gain knowledge
of the business, affairs, finances, management, marketing programs and
philosophy, suppliers, distributors, customers, clients and methods of operation
of the Company and the Company would suffer irreparable harm if Executive were
to use such knowledge, information and business acumen in competition with the
Company or other than in the proper performance of his duties hereunder.
THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein, the parties hereby agree as follows:
1. Employment and Term. (a) Subject to the terms and conditions of this
Agreement, the Company hereby employs Executive, and Executive hereby accepts
employment, as Senior Vice President, General Counsel and Secretary of the
Company and shall have such responsibilities, duties and authority as may from
time to time be assigned to Executive by the Chief Executive Officer and the
Board of Directors. Executive hereby agrees that during the Term of this
Agreement he will devote substantially all his working time, attention and
energies to the diligent performance of his duties as Senior Vice President,
General Counsel and Secretary of the Company, provided that the Executive may
also serve on boards of directors or trustees of
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other companies and organizations, as long as such service does not materially
interfere with the performance of his duties hereunder. Nothing herein shall
preclude the Board, in its sole discretion, from changing Executive's title and
duties if the Board has concluded in its reasonable judgment that such change is
in the Company's best interests, subject to the terms of Section 12(g) of this
Agreement.
(b) Unless earlier terminated as provided in Section 3, Executive's
employment under this Agreement shall be for a term of 3 year(s), commencing on
February 14, 2000 and ending on February 14, 2003. Executive's employment with
the Company shall end with the termination of this Agreement unless the Company
gives Executive written notice not less than thirty (30) days before the
expiration of this Agreement that the Company desires to continue Executive's
employment. If such notice is given, upon the expiration of this Agreement,
Executive shall continue to be employed by the Company as an "at will" employee
on the same basis as other Company employees who are "at will" and do not have
employment agreements.
(c) Executive warrants that Executive is not under any obligation,
contractual or otherwise, limiting or affecting Executive's ability or right to
perform freely services for Company.
2. Compensation and Benefits. As compensation for his services during
the Term of this Agreement, Executive shall be paid and receive the amounts and
benefits set forth below:
(a) An initial base salary ("Initial Base Salary") of $200,000.00,
subject to withholding of all applicable taxes, expressed as an annual amount
but payable in equal installments shall be paid to Executive. Executive's
Initial Base Salary shall be reviewed for adjustments at such time as the Board
conducts salary reviews for its executive management generally, but not less
frequently than annually. Executive's salary shall be payable in accordance with
the Company's regular payroll practices in effect from time to time for
executive management of the Company.
(b) Executive shall participate in the Company's bonus incentive
compensation program, as long as it is available to executive officers of the
Company, and, based on Executive's performance, may be entitled to a bonus of up
to 15% of Executive's Base Salary.
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(c) In connection with commencement of employment, the Company will
grant to Executive options for 200,000 shares of Company Common Stock, as
granted by the Board and under the terms and conditions set forth in a separate
stock option agreement.
(d) Executive shall be entitled to participate in the Company's stock
option plan, at the discretion of the Board, and the amount and terms of any
stock option grant shall be set forth in a separate agreement.
(e) Executive shall participate in, or receive benefits under, any then
current "employee benefit plan" (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended) or employee benefit
arrangement made available by the Company to its executives generally, including
plans (to the extent offered) providing 401(k) benefits, health care, life
insurance, disability and similar benefits. Without limiting the foregoing,
Executive shall be entitled to two (2) weeks of vacation per year, in accordance
with the Company's vacation pay policy.
3. Benefits Upon Termination.
(a) If Executive's employment is terminated either by the Company
(other than for Cause) or by the Executive for Good Reason or if Executive
becomes Disabled, Executive shall be entitled to the payments and benefits in
(b) and (c) below. If Executive dies prior to his termination of employment, his
designated beneficiary or beneficiaries will be entitled to the payments in (d)
below. Payments and benefits under subsections (b) and (c) are subject to
Executive's execution of a separation agreement acceptable to the Company which
will include a complete release of any and all claims relating to his
employment. If Executive's employment is terminated by the Company for Cause or
by the Executive voluntarily (other than for Good Reason), this Agreement shall
end as of the Termination Date of Executive's employment and Executive will be
entitled to no further payments or benefits (except as otherwise required by
law). The Term of this Agreement automatically ends as of the Termination Date.
The provisions of Sections 4-11 survive any termination of this Agreement or
termination of employment, other than by reason of Executive's death.
(b) Subject to and in accordance with the provisions of Section 3(a),
Executive shall continue to receive Executive's Base Salary as then in effect
(subject to withholding of all
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applicable taxes) for the period commencing as of the Termination Date and
continuing until the later of (1) end of the Term of this Agreement set forth in
Paragraph 1(b) or (2) one year. Payment shall be made in the same manner as it
was being paid as of the Termination Date; provided that if Executive terminates
employment for Good Reason due to a reduction in Executive's Base Salary,
Executive's Base Salary shall be paid at the rate in effect immediately before
such reduction for purposes of this subsection. During any period that he is
paid hereunder, Executive shall be on call to consult with the Company with
respect to the Company's Business at reasonable times and places and upon
reasonable notice. Reasonable out of pocket business expenses incurred in
connection with such consulting shall be reimbursed. Any amounts Executive has
due and owing to the Company may offset any amounts paid under this Agreement.
(c) If Executive properly elects COBRA coverage for group health
benefits upon his Termination Date and timely pays the premiums charged, if any,
under the Company's group health plan to active employees for the coverage
elected, Company shall pay the balance of Executive's COBRA premium during the
period payments are made under Section 3(b) above but not beyond the COBRA
continuation period. Thereafter, Executive will be charged the normal COBRA
premium for any remaining period of COBRA coverage. Group term life insurance
benefits, if any, shall be continued at the same level and in the same manner as
for active employees during the period payments are made under Section 3(b)
above. Any additional coverages Executive had at termination, including
dependent coverage, will also be continued for the period during which payments
are made under Section 3(b) on the same terms as before termination and to the
extent permitted by the applicable policies or contracts. Any costs Executive
was paying for such coverages at the time of termination shall be paid by
Executive through deduction from the amounts payable under Section 3(b) or, if
such withholding cannot be done, by separate check payable to the Company each
month in advance. If Executive qualifies (or would qualify) for the Company's
long term disability plan, the effective date of long term disability plan
coverage shall be treated as a Date of Termination for purposes of this Section
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(d) If the Executive dies prior to termination of employment under
Section 3(a) above, his designated beneficiary or beneficiaries will be entitled
to receive amounts (subject to
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applicable taxes) equal to Executive's Base Salary as in effect at the date of
death for a period from the date of death to the later of (1) the end of the
Term of this Agreement set forth in Paragraph 1(b) or (2) one year. Amounts
shall be paid in installments in the same manner as the Executive was being paid
as of his date of death. Members of Executive's family shall be entitled to
continuation of benefits in accordance with Company policies.
4. Confidential Information. During the term of employment and
continuing subsequent to any termination or expiration of this Employment
Agreement, Executive shall maintain Confidential Information as secret and
confidential unless Executive is required to disclose Confidential Information
pursuant to the terms of a valid and effective order issued by a court of
competent jurisdiction or a governmental authority. Executive shall use
Confidential Information solely for the purpose of carrying out those duties
assigned him as an employee of Company and not for any other purpose. The
disclosure of Confidential Information to Executive shall not be construed as
granting to Executive any license under any copyright, trade secret or any right
of ownership or right to use the information whatsoever. All physical items,
including electronic media, containing Confidential Information, including,
without limitation, any business plan, Company know-how, collection methods and
procedures, advertising techniques, marketing plans and methods, sales
techniques, documentation, contracts, reports, letters, notes, any computer
media, client lists, and all other information and materials of Company's
business and operations, shall remain the exclusive and confidential property of
Company and shall be returned, along with any copies or notes of Executive made
thereof or therefrom, to Company when Executive ceases his employment with
Company.
5. Non-Disparagement. Executive shall not at any time make false,
misleading or disparaging statements about the Company, including its products,
services, management, employees, and customers.
6. Non-Solicitation of Customers. Executive hereby covenants and agrees
that at no time during Executive's employment with Company and for a period of
one year immediately following termination of Executive's employment with
Company, whether voluntary or
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involuntary, shall Executive act in any way, directly or indirectly, with the
purpose or effect of soliciting, diverting or taking away any strategic partner,
business, customer, client or supplier of Company that Executive contacted,
directly or indirectly, or that anyone directly or indirectly supervised by
Executive contacted, directly or indirectly, during Executive's employment with
Company.
7. Non-Solicitation of Employees. Executive hereby covenants and agrees
that at no time during Executive's employment with Company and for a period of
one year immediately following termination of Executive's employment with
Company, whether voluntary or involuntary, will Executive act in any way with
the purpose or effect of soliciting, recruiting, or encouraging, directly or
indirectly, any Person who is or was at any time during the one year period
prior to the Termination Date to leave the employ of Company, its divisions or
its subsidiaries.
8. Limitations on Post-Termination Competition. Executive hereby
covenants and agrees that at no time during Executive's employment with Company
and for a period of one year immediately following termination of Executive's
employment with Company, whether voluntary or involuntary, Executive shall not
perform Services within the Territory for any Person providing or offering goods
or services identical to or reasonably substitutable for Company's Business.
Executive acknowledges that (i) this covenant has unique, substantial, and
immeasurable value to Company, (ii) this covenant is reasonably limited in scope
and geography to protect Company's legitimate business interests, including its
property, confidential information and relationships, good will, economic
advantage, and customer relationships; (iii) the agreements, covenants and
undertakings of Executive set forth in this Agreement will not preclude
Executive from becoming gainfully employed following termination of employment
with Company; and (iv) the services Executive intends and is expected to provide
are special and unique.
9. Works. Executive acknowledges that Executive's work on and
contributions to documents, programs, methodologies, protocols, and other
expressions in any tangible medium (collectively, "Works") are within the scope
of Executive's employment and part of Executive's
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duties, responsibilities or assignment. Executive's work on and contributions to
the Works will be rendered and made by Executive for, at the instigation of, and
under the overall direction of, Company, and all such work and contributions,
together with the Works, are and at all times shall be regarded, as "work made
for hire" as that term is used in the United States Copyright Laws. Without
limiting this acknowledgment, Executive assigns, grants, and delivers
exclusively to Company all rights, titles, and interests in and to any such
Works, and all copies and versions, including all copyrights and renewals.
Executive will execute and deliver to Company, its successors and assigns, any
assignments and documents Company requests for the purpose of establishing,
evidencing, and enforcing or defending its complete, exclusive, perpetual, and
worldwide ownership of all rights, titles, and interests of every kind and
nature, including all copyrights, in and to the Works, and Executive constitutes
and appoints Company as its agent to execute and deliver any assignments or
documents Executive fails or refuses to execute and deliver, this power and
agency being coupled with an interest and being irrevocable.
10. Inventions and Ideas. Executive shall disclose promptly to Company,
and only to Company, any invention or idea of Executive (developed alone or with
others) conceived or made during Executive's employment by Company or within six
months of the Termination Date. Executive assigns to Company any such invention
or idea in any way connected with Executive's employment or related to Company's
business, research or development, or demonstrably anticipated research or
development, and will cooperate with Company and sign all papers deemed
necessary by Company to enable it to obtain, maintain, protect and defend
patents covering such inventions and ideas and to confirm Company's exclusive
ownership of all rights in such inventions, ideas and patents, and irrevocably
appoints Company as its agent to execute and deliver any assignments or
documents Executive fails or refuses to execute and deliver promptly, this power
and agency being coupled with an interest and being irrevocable. This
constitutes the Company's written notification that this assignment does not
apply to an invention for which no equipment, supplies, facility or trade secret
information of the Company was used and which was developed entirely on
Executive's own time, unless (a) the invention relates (i) directly to the
business of the Company, or (ii) to the Company's actual or demonstrably
anticipated research or development, or (b) the invention results from any work
performed by Executive for the Company.
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11. Relief for Breach. Because any breach or threatened breach of
Sections 4 through 10 of this Agreement by Executive would result in continuing
material and irreparable harm to Company, and because it would be difficult or
impossible to establish the full monetary value of such damage, Company shall be
entitled to injunctive relief in the event of Executive's breach or threatened
breach of this Agreement. Injunctive relief is in addition to any other
available remedy, including termination of this Agreement and damages. In the
event of any threatened breach by Executive, Company may suspend any payment due
to Executive under Paragraph 3 and if Executive has breached this Agreement, any
remaining amounts to be paid under Paragraph 3 shall be forfeited. In the event
of any breach or threatened breach by either Executive or the Company which
results in court-ordered relief, the breaching party shall reimburse the
non-breaching party for its reasonable attorneys' fees and other expenses
incurred to obtain such relief.
12. Definitions. For purposes of this Agreement, the following
definitions shall apply:
(a) "Board" or "Board of Directors" - means the Board of Directors of
the Company.
(b) "Business" - means Company's business of hosting, designing and
developing Web sites and supporting resellers of Web hosting services and hosts
of large Web sites through co-location and dedicated server programs.
(c) "Cause" - means the termination of Executive by the Company for one
or more of the following reasons:
(1) If, in its good faith judgment, the Board
determines that Executive has committed an act or acts which constitute
a felony (other than traffic-related offenses);
(2) If, in its good faith judgment, the Board
determines that the Executive has violated laws or Company policies
which result in material injury to the Company;
(3) If the Executive commits an act or acts of
dishonesty or fraud resulting or intended to result directly or
indirectly in significant gain or personal
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enrichment to the Executive at the expense of the Company or to the
significant detriment of the Company;
(4) Upon the willful and continued failure by the
Executive substantially to perform his duties with the Company (other
than any such failure resulting from incapacity due to mental or
physical illness constituting a Disability, as defined herein); or
(5) If, in its good faith judgment, the Board
determines that the Executive has violated or threatened to violate the
provisions of Paragraphs 4 to 10 above or any other material breach of
this Agreement.
Executive shall not be deemed to have been involuntarily terminated for Cause
unless and until there shall have been delivered to him a copy of a resolution
duly adopted by the Board, finding that, in the good faith opinion of the Board,
Executive engaged or threatened to engage in conduct set forth above and
specifying the particulars thereof in detail. For purposes of subsections (2),
(3), (4) and (5), the Board must also deliver to Executive a demand in writing
for performance or cure, which demand specifically identifies the manner in
which the Board believes that Executive's conduct falls within such subsection
and details the Board's requirements for Executive to "cure" such conduct, if
appropriate. Involuntary termination occurs when Executive fails to "cure"
within the time period given by the Board and in accordance with the terms
provided by the Board. For purposes of this Agreement, no act or failure to act
by Executive shall be deemed to be "willful" unless done or omitted to be done
by Executive not in good faith and without reasonable belief that Executive's
action or omission was in the best interests of the Company.
(d) "Confidential Information" - means information, without regard to
form, relating to Company's customers, operation, finances, and business that
derives economic value, actual or potential, from not being generally known to
other Persons, including, but not limited to, technical or nontechnical data,
formulas, patterns, compilations (including compilations of customer
information), programs, models, concepts, designs (including without limitation,
designs for Company's remote development and consulting center) devices,
methods, techniques, processes, financial data or lists of actual or potential
customers (including identifying information about customers), whether or not in
writing. Confidential Information includes
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information disclosed to Company by third parties that Company is obligated to
maintain as confidential. Confidential Information subject to this Agreement may
include information that is not a trade secret under applicable law, but
information not constituting a trade secret only shall be treated as
Confidential Information under this Agreement for a three year period after the
Termination Date.
(e) "Customers" - means strategic partners or customers of Company's
Business (1) that Executive contacted directly, or supervised directly or
indirectly through others contacting on behalf of Company, during the one year
period preceding the Termination Date; or (2) about whom Executive possessed
Confidential Information during the one year period preceding the Termination
Date.
(f) "Disability" - means the meaning ascribed to such term or its
variations, such as "Disabled", in the Company's long-term disability plan
covering the Executive, or in the absence of such plan, a meaning consistent
with Section 22(e)(3) of the Code.
(g) "Good Reason" means that one or more of the following has occurred
and, after giving the Company written notice of the occurrence and of
Executive's intention to resign from employment and the Company not curing the
event within 30 days of such written notice:
(i) a material diminution of position, duties,
responsibilities, authority or title or the
assignment of duties materially inconsistent with
Executive's position;
(ii) a reduction in Executive's Base Salary (annualized
rate);
(iii) relocation of Executive's work location outside the
Territory;
(iv) a material breach of this Agreement by the Company;
or
(v) the failure of a successor to the Company to assume
in writing this Agreement upon becoming a successor
or assignee of the Company.
Notwithstanding the foregoing, Executive's written consent to the
occurrence of any matter of Good Reason is a waiver of Executive's rights under
this Agreement to terminate his employment for that Good Reason.
(h) "Person" - means any individual, corporation, bank, partnership,
joint venture, association, joint stock company, trust, unincorporated
organization or other entity.
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(i) "Services" - means the services described on the Annex to this
Agreement which is made a part hereof.
(j) "Termination Date" - means the last day Executive is employed by or
providing services for Company, whether the separation is voluntary or
involuntary, with or without Cause, or with or without advance notice.
(k) "Territory" - means the area within a 50 mile radius of the city
limits of Atlanta, Georgia. Executive acknowledges that Executive will perform
services on behalf of Company in the Territory.
13. Contract Non-Assignable. The parties acknowledge that this
Agreement has been entered into due to, among other things, the special skills
of Executive, and agree that this Agreement may not be assigned or transferred
by Executive, in whole or in part, without the prior written consent of the
Company.
14. Successors; Binding Agreement.
(a) In addition to any obligations imposed by law upon any successor to
the Company, the Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company to expressly assume and agree to
perform this Agreement, in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
Failure of the Company to obtain such assumption and agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle the Executive to compensation from the Company in the same amount
and on the same terms as the Executive would be entitled to hereunder if the
Company terminated the Executive's employment without Cause, except that, for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Termination Date.
(b) This Agreement shall inure to the benefit of and be enforceable by
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Executive shall die
while any amount would still be payable to Executive hereunder (other than
amounts which, by their terms, terminate upon the death of
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Executive) if Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the executors, personal representatives or administrators of
Executive's estate.
15. Other Agents. Nothing in this Agreement is to be interpreted as
limiting the Company from employing other personnel on such terms and conditions
as may be satisfactory to the Company.
16. Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given if delivered or seven days after mailing if mailed, first class,
certified mail, postage prepaid:
To the Company: Interland, Inc.
000 Xxxxxxxx Xxxxxx, 0xx Xx.
Xxxxxxx, XX 00000
Attention: President
With a copy to: Xxxxxxxxxx Xxxxxxxx LLP
0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxxxx, Esq.
To the Executive: H. Xxxxxxxxxxx Xxxxxxxxx
Interland, Inc.
000 Xxxxxxxx Xxxxxx, 0xx Xx.
Xxxxxxx, XX 00000
Any party may change the address to which notices, requests, demands and other
communications shall be delivered or mailed by giving notice thereof to the
other party in the same manner provided herein.
17. Provisions Severable. Rights and restrictions in this Agreement may
be exercised and are applicable only to the extent they do not violate any
applicable laws, and are intended to be limited to the extent necessary so they
will not render this Agreement illegal, invalid, or unenforceable. If any term
shall be held illegal, invalid, or unenforceable by a court of
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competent jurisdiction, the remaining terms shall remain in full force and
effect. This Agreement does not in any way limit Company's rights under the laws
of unfair competition, trade secret, copyright, patent, trademark or any other
applicable law(s), which are in addition to rights under this Agreement. The
existence of a claim by Executive, whether predicated on this Agreement or
otherwise, shall not constitute a defense to Company's enforcement of this
Agreement.
18. Waiver. Failure of either party to insist, in one or more
instances, on performance by the other in strict accordance with the terms and
conditions of this Agreement shall not be deemed a waiver or relinquishment of
any right granted in this Agreement or the future performance of any such term
or condition or of any other term or condition of this Agreement, unless such
waiver is contained in a writing signed by the party making the waiver.
19. Amendments and Modifications. This Agreement may be amended or
modified only by a writing signed by both parties hereto.
20. Entire Agreement. This Agreement contains the entire agreement
between the parties hereto with respect to the subject matter hereof and
Executive's employment with the Company. This Agreement supersedes all prior
negotiations, discussions, agreements and undertakings, both written and oral,
among the parties hereto, with respect to Executive's terms and conditions of
employment with the Company. This Agreement may not be enlarged, modified or
altered except in a writing signed by the parties as provided in Section 20
hereof.
21. Governing Law. The validity and effect of this Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of Georgia. Each party irrevocably (a) consents to the exclusive jurisdiction
and venue of the courts of Xxxxxx County, State and federal courts in the
Northern District of Georgia, in any action arising under or relating to this
Agreement, and (b) waives any jurisdictional defenses (including personal
jurisdiction and venue) to any such action.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
EXECUTIVE:
/s/ H. Xxxxxxxxxxx Xxxxxxxxx
---------------------------------------
H. Xxxxxxxxxxx Xxxxxxxxx
COMPANY:
INTERLAND, INC.
By: /s/ Xxxxxxx Xxxxxxxxxx
------------------------------------
Xxxxxxx Xxxxxxxxxx
President & Chief Executive Officer
[ANNEX CONTINUES ON NEXT PAGE]
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ANNEX
TO
NONCOMPETITION PROVISIONS OF SECTION 8
OF EMPLOYMENT AGREEMENT
Name of Employee: H. Xxxxxxxxxxx Xxxxxxxxx
Title: Senior Vice President, General Counsel and Secretary
Description of Services:
Date of Agreement: February 14, 2000
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