Exhibit 10.7
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made this 24th day of June, 1999 (this
"Agreement"), between Shopping Sherlock, Inc. a Delaware corporation
("Employer"), and Xxxxxx Xxxxxxx ("Employee").
6 RECITALS
A. Employer desires to hire Employee and Employee wishes to be employed by
Employer. In such employment, Employee will be given access to information,
which is confidential and proprietary to Employer and its Affiliates and vital
to their business operations. For the purposes of the Agreement, the term
"Affiliate" means any entity currently existing or subsequently organized or
formed that directly or indirectly controls, is controlled by or is under common
control with Employer, whether through the ownership of voting securities, by
contract or otherwise.
B. Employee will receive adequate consideration for executing and delivering
this Agreement, including employment by Employer. Entry into this Agreement is a
condition of Employee's employment with Employer.
AGREEMENT
Based upon the consideration of the mutual covenants herein contained, and
other good and valuable consideration, the sufficiency and receipt of which are
hereby acknowledged, and in order to induce the Employer to employ Employee, the
parties hereto agree as follows:
1. Employment. Employer hereby agrees to employ Employee, and Employee agrees to
be employed by Employer in the capacity identified in Exhibit A. Employee will
report to the person identified at Exhibit A. Employee's basic responsibilities
are set forth in Exhibit A, although Employee may be required to perform other
responsibilities in addition to those identified at Exhibit A. Employee's base
of operations shall be the Employer's offices identified at Exhibit A. Changes
may be made from time to time by Employer, in its sole discretion, to the
duties, reporting relationship and title of Employee. Employee shall devote all
of Employee's work efforts to Employer. Employee shall comply with all rules,
policies and procedures of Employer as modified from time to time. Employee
shall perform all of Employee's responsibilities in a way that is in complete
compliance with all applicable laws.
2. Term of Employment. The employment is "at will," and the term of employment
shall be for no specific period of time and may be terminated by the Employer or
Employee at any time for any reason, with or without cause, in accordance with
the terms and conditions herein.
3. Compensation. For the duration of Employee's employment, the Employee shall
be paid an annual base salary ("Base Salary"), as identified in Exhibit A. Base
Salary shall be prorated for the actual period of employment and payable in
equal installments in accordance with Employer's normal payroll practices, and
shall be subject to appropriate deductions and withholding.
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4. Other Benefits. Employee shall be entitled to participate in employee benefit
programs established by Employer, such as medical, pension, disability and life
insurance plans, to the extent that Employee is eligible for such benefits in
accordance with Employer's policies, as they may be changed from time to time.
Nothing in this Agreement requires the adoption or maintenance of any such
arrangements or plans. For the duration of Employee's employment under this
Agreement, Employee shall accrue and utilize sick leave and vacation in
accordance with the policies and procedures of Employer, as they may be modified
from time to time. Employer shall reimburse Employee for reasonable expenses
necessarily incurred in the performance of Employee's duties in accordance with
Employer policies. All expenses in excess of the amount identified at Exhibit A
must be approved in advance by Employee's supervisor.
5. Termination or Discharge by Employer.
5.1.1 For Cause. Employer shall have the right to immediately terminate
Employee's services and this Agreement for cause. "Cause" means: any material
breach of this Agreement by Employee, including, without limitation, breach of
Employee's covenants in Sections 7, 8, 9 and 10; any failure to perform assigned
job responsibilities that continues without remedy for a period of thirty (30)
days after written notice to Employee by Employer; conviction of a felony (or
its legal equivalent in any jurisdiction) or failure to contest prosecution for
a felony (or its legal equivalent in any jurisdiction); violation of any
statute, rule or regulation, any of which in the judgment of Employer is harmful
to Employer's Business (as defined herein) or to Employer's reputation;
unethical practices; dishonesty; disloyalty; or any reason that would constitute
cause under the laws of the State of Washington or any other jurisdiction in
which the Employee performs services hereunder.
5.1.2 Upon termination of Employee's employment hereunder for cause or upon the
death or disability of Employee, Employee will have no rights to any unvested
benefits or any other compensation or payments after the termination date or the
last day of the month in which Employee's death or disability occurred. For
purposes of this Agreement, "disability" means the incapacity or inability of
Employee, whether due to accident, sickness or otherwise, as determined by a
medical doctor acceptable to the Board of Directors of Employer and confirmed in
writing by such doctor, to perform the essential functions of Employee's
position under this Agreement, with or without reasonable accommodation
(provided that no accommodation that imposes undue hardship on Employer will be
required) for an aggregate of ninety (90) days during any period of one hundred
eighty (180) consecutive days.
5.2 Without Cause. If Employer terminates Employee's employment without cause,
Employer shall provide Employee with the amount of advance notice set forth as
minimum notice in Exhibit A ("Minimum Notice"). Alternatively, and in the sole
discretion of Employer, Employer may terminate Employee's employment without
notice or with notice less than the Minimum Notice, but in such a situation,
Employer shall pay Employee the amount of Base Salary Employee would have earned
had Employee remained employed through the Minimum Notice period (based on the
Base Salary rate on the termination date), less the amount of Base Salary
actually earned during the Minimum Notice period. Such payments shall be sent to
Employee in amounts allocated per pay period by mail on Employer's usual and
customary paydays and shall be less required withholdings and deductions.
Employee shall have no rights to any unvested benefits at the time of
termination or any other payments except as stated in this paragraph.
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6. Termination by Employee. Employee may terminate Employee's employment under
this Agreement for any reason provided that Employee gives Employer the amount
of notice set forth as Minimum Notice in Exhibit A. In the event of such Notice,
Employee's compensation and benefits hereunder shall cease as of the date of
Employee's designated termination date, except that Employer may accelerate the
termination date to any date determined by Employer after which Employee's
services would not be required. In the event of termination by Employee, there
shall be no further compensation beyond the termination date.
7. Covenant Not To Compete. During the Restricted Period defined in Exhibit A,
Employee covenants and agrees that Employee shall not:
a. Directly, indirectly, or otherwise, own, manage, operate, control, serve
as a consultant to, be employed by, participate in, or be connected, in any
manner, with the ownership management, operation or control of any business
which is competitive with any type of business which Employer is engaged in
or planned to engage in at any time during Employee's employment with
Employer up to and including the time of the termination of employment
("Employer's Business");
b. Hire, offer to hire, entice away or in any other manner persuade or
attempt to persuade any officer, employee or agent of Employer to alter or
discontinue his or her relationship with Employer;
c. Directly or indirectly solicit, divert, or attempt to solicit or divert
any customers or business of Employer; or
d. Directly or indirectly solicit, divert, or in any other manner persuade
or attempt to persuade any supplier or Employee to alter or discontinue its
relationship with Employer.
7.1 For the purposes of this Section 7, Employer's Business includes, without
limitation, the development and operation of multiple commerce sites on the
Internet for the sale of products, services, and privileges over the Internet,
participating and building a reciprocal rebate program, providing e-commerce
services to direct and multi-level marketing companies as well as discount
warehouse companies, and inventing or adapting any e-commerce systems necessary
to the operation of such sites. Notwithstanding Employee's obligations under
this Section 7, Employee shall be entitled to own, as a passive investor, up to
five percent (5%) of any publicly-traded company without violating this
provision.
7.2 Employer and Employee agree that this provision does not impose an undue
hardship on Employee and is not injurious to the public; that this provision is
necessary to protect the valuable goodwill and the business of Employer; that
the nature of Employee's responsibilities with Employer under this Agreement
require Employee to have access to confidential information which is valuable
and confidential to Employer's Business; that the scope of this Section 7 is
reasonable in terms of length of time; and that adequate consideration supports
this Section 7.
7.3 Employee recognizes that Employer has entered into strategic alliance
agreements with partners, vendors and clients that include various
non-competition, nondisclosure, and non-circumvention requirements and employee
agrees to uphold and abide by these agreements.
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8. Confidential Information. Employee recognizes that Employer's Business and
continued success depend upon the use and protection of confidential and
proprietary business information, including, without limitation, the information
and technology developed by or available through licenses to Employer related to
Employer's Business, to which Employee has access (all such information being
"Confidential Information"). For purposes of this Agreement, the phrase
"Confidential Information" includes for Employer and its current or future
subsidiaries and affiliates, without limitation, and whether or not specifically
designated as confidential or proprietary: all business plans and marketing
strategies; information concerning existing and prospective markets and
customers; financial information; information concerning the development of new
products and services; and technical and non-technical data related to software
programs, designs, specifications, compilations, inventions, improvements,
methods, processes, procedures and techniques; provided, however, that the
phrase does not include information that;
(a) was lawfully in Employee's possession prior to disclosure of such
information by Employer;
(b) was, or at any time becomes, available in the public domain other than
through a violation of this Agreement;
(c) is documented by Employee as having been developed by Employee outside
the scope of Employee's employment and independently; or
(d) is furnished to Employee by a third party not under an obligation of
confidentiality to Employer. Employee agrees that during Employee's
employment and after termination of employment irrespective of cause,
Employee will use Confidential Information only for the benefit of Employer
and will not directly or indirectly use or divulge, or permit others to use
or divulge, any Confidential Information for any reason, except as
authorized by Employer.
(e) Employee's obligation under this Agreement is in addition to any
obligations Employee has under state, provincial or federal law.
8.1 Employee agrees to deliver to Employer immediately upon termination of
Employee's employment, or at any time Employer so requests, all tangible items
containing any Confidential Information (including, without limitation, all
memoranda, photographs, records, reports, manuals, drawings, blueprints,
prototypes, notes taken by or provided to Employee, and any other documents or
items of a confidential belonging to Employer), together with all copies of such
material in Employee's possession or control.
8.2 Employee agrees that in the course of Employee's employment with Employer,
Employee will not violate in any way the rights that any entity has with regard
to trade secrets or proprietary or confidential information. Employee's
obligations under this Section 8 are indefinite in term and shall survive the
termination of this Agreement.
9. Work Product and Copyrights. Employee agrees that all right, title and
interest in and to all products, materials and documents resulting from the
performance of Employee's duties at Employer and all copies thereof, including
works in progress, in whatever media, (the "Work"), will be and remain in
Employer upon their creation. Employee will xxxx all Work with Employer's
copyright or other proprietary notice as directed by Employer. Employee further
agrees:
9.1 To the extent that any portion of the Work constitutes a work able to be
protected under the copyright laws of the United States (the "Copyright Law"),
that all such Work will be considered a "work made for hire" as such term is
used and defined in the Copyright Law and that Employer will be
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considered the "author" of such portion of the Work and the sole and exclusive
owner throughout the world of copyright therein; and
9.2 If any portion of the Work does not qualify as a "work made for hire" as
such term is used and defined in the Copyright Law, that Employee hereby assigns
and agrees to assign to Employer, without further consideration, all right,
title and interest in and to such Work or in any such portion thereof including
without limitation any copyright, trade secret, trademark, trade dress, service
xxxx or other proprietary interest therein and further agrees to execute and
deliver to Employer, upon request, appropriate assignments of such Work and
copyright and other rights therein and such other documents and instruments as
Employer may request to fully and completely assign such Work and copyright and
other rights therein to Employer, its successors or nominees, and that Employee
hereby appoints Employer as attorney-in-fact to execute and deliver any such
documents on Employee's behalf in the event Employee should fail or refuse to do
so within a reasonable period following Employer's request.
10. Inventions and Patents. For purposes of this Agreement, "Inventions"
includes, without limitation, information, inventions, contributions,
improvements, ideas, or discoveries, whether they are able to be patented or
not, and whether or not conceived or made during work hours. Employee agrees
that all Inventions conceived or made by Employee during the period of
employment with Employer belong to Employer, provided they relate directly to
the business of the Employer, or relate to the employer's actual or demonstrably
anticipated research and development, or result from work performed by Employer.
Accordingly, Employee will:
10.1 Make adequate written records of such Inventions, which records will be
Employer's property; and
10.2 Assign to Employer, at its request, any rights Employee may have to such
Inventions for the U.S. and all foreign countries;
10.3 Waive and agree not to assert any moral rights Employee may have or acquire
in any Inventions and agree to provide written waivers from time to time as
requested by Employer; and assist Employer (at Employer's expense) in obtaining
and maintaining patents or copyright registrations with respect to such
Inventions.
10.4 Employee understands and agrees that Employer or its designee will
determine, in its sole and absolute discretion, whether an application for
patent will be filed on any Invention that is the exclusive property of
Employer, as set forth above, and whether such an application will be abandoned
prior to issuance of a patent. Employer will pay to Employee, either during or
after the term of this Agreement, the following amounts if Employee is sole
inventor, or Employee's proportionate share if Employee is joint inventor: $750
upon filing of the initial application for patent on such Invention; and $1,500
upon issuance of a patent resulting from such initial patent application,
provided Employee is named as an inventor in the patent.
10.5 Employee further agrees that Employee will promptly disclose in writing to
Employer during the term of Employee's employment and for one (1) year
thereafter, all Inventions whether developed during the time of such employment
or thereafter (whether or not Employer has rights in such Inventions) so that
Employee's rights and Employer's rights in such Inventions can be determined.
Except as set forth on the initialed Exhibit B to this Agreement, if any,
Employee represents and warrants that Employee has no Inventions, software,
writings or other works of authorship useful to Employer in the normal course
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of Employer's Business, which were conceived, made or written prior to the date
of this Agreement and which are excluded from the operation of this Agreement.
NOTICE: In accordance with Washington law, this Section 10 does not apply
to Inventions for which no equipment, supplies, facility, or trade secret
information of Employer was used and which was developed entirely on
Employee's own time, unless: (a) the Invention relates (i) directly to the
business of Employer or (ii) to Employer's actual or demonstrably
anticipated research or development, or (b) the Invention results from any
work performed by Employee for Employer.
11. Remedies. Notwithstanding other provisions of this Agreement regarding
dispute resolution, Employee agrees that Employee's violation of any of Sections
7, 8, 9 or 10 of this Agreement would cause Employer or its Affiliates
irreparable harm which would not be adequately compensated by monetary damages,
and that an injunction may be granted by any court or courts having
jurisdiction, restraining Employee from violation of the terms of this
Agreement, upon any breach or threatened breach of Employee of obligations set
forth in any of Sections 7, 8, 9 or 10. The preceding sentence shall not be
construed to limit Employer or its Affiliates from any other relief or damages
to which it may be entitled to as a result of Employee's violation of any
obligation owed Employer under law or provision of this Agreement, including any
of Sections 7, 8, 9 or 10.
12. Dispute Resolution. Except with regard to the right of Employer or Employee
to commence any judicial action or proceeding to obtain injunctive relief, and
to the greatest extent permitted by law, any controversy, claim or dispute of
whatever nature arising out of or relating to this Agreement, whether such
controversy, claim or dispute is based upon statute, contract, tort, common law
or otherwise, and whether such controversy, claim or dispute existed prior to or
arises after the date of this Agreement (any such controversy, claim or dispute
being a "Dispute"), shall be resolved in accordance with the procedures set
forth in this Section 12, which procedures will be the sole and exclusive
procedures for the resolution of any Disputes. Matters to be resolved under
these procedures also include claims and disputes arising out of statutes such
as Title VII of the Civil Rights Act, the Age Discrimination in Employment Act,
and the Washington Law against Discrimination or similar statues in
jurisdictions in which the Employee performs services under this agreement.
Nothing in this provision is intended to restrict Employee from submitting any
matter to an administrative agency with jurisdiction over such matter.
12.1 Compliance with Employer Policy. Employee and Employer will make a good
faith attempt to resolve all disputes in accordance with any dispute resolution
policy adopted by Employer before resorting to any other dispute resolution
procedure.
12.2 Mediation. Employer and Employee will make a good faith attempt to resolve
any and all claims and disputes not resolved in accordance with Section 12.1 by
submitting them to mediation in Seattle, Washington before resorting to
arbitration or any other dispute resolution procedure. The mediation of any
claim or dispute must be conducted in accordance with the then-current American
Arbitration Association ("AAA") national rules for the resolution of employment
disputes by mediation, by a mediator who has had both training and experience as
a mediator of general employment and commercial matters. If the parties to this
agreement cannot agree on a mediator, then the mediator will be selected by the
AAA in accordance with the criteria described in this provision. Within thirty
(30) days after the selection of the mediator, Employer and Employee and their
respective attorneys will meet with the mediator for one mediation session of at
least four hours. If the claim or dispute cannot be
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settled during such mediation session or mutually agreed continuation of the
session, either Employer or Employee may give the mediator and the other party
to the claim or dispute written notice declaring the end of the mediation
process. All discussions connected with this mediation provision will be
confidential and treated as compromise and settlement discussions. Nothing
disclosed in such discussions, which is not independently discoverable, may be
used for any purpose in any later proceeding.
12.3 Arbitration. If any claim or dispute has not been resolved in accordance
with Section 12.1 and Section 12.2, then the claim or dispute will be determined
by arbitration in Seattle, Washington, in accordance with the then-current AAA
national rules for the resolution of employment disputes by arbitration, except
as modified herein. The arbitration will be conducted by a sole neutral
arbitrator who has had both training and experience as an arbitrator of general
employment and commercial matters and who is and for at least ten (10) years has
been, a partner, a shareholder, or a member in a law firm. If Employer and
Employee cannot agree on an arbitrator, then the arbitrator will be selected by
the AAA applying the criteria in this provision. No person who has served as a
mediator under the mediation provision, however, may be selected as the
arbitrator for the same claim or dispute. Reasonable discovery will be permitted
and the arbitrator may decide any issue as to discovery. The arbitrator may
decide any issue as to whether or as to the extent to which, any dispute is
subject to the dispute resolution provisions in Section 12 and the arbitrator
may award any relief permitted by law. The arbitrator must base the arbitration
award on the provisions of Section 12 and applicable law and must render the
award in writing, including an explanation of the reasons for the award. Any
court having jurisdiction of the matter may enter judgment upon the award, and
the decision of the arbitrator will be final and binding. The statute of
limitations applicable to the commencement of a lawsuit will apply to the
commencement of arbitration under Section 12.3.
12.4 Reasonable attorneys' fees incurred in any Dispute relating to the
interpretation or enforcement of this Agreement shall be paid by the
non-prevailing party to such Dispute.
13. Xxxxxxx Xxxxxxx Compliance. Employee agrees to abide by the employer's
xxxxxxx xxxxxxx compliance program as set forth in Exhibit C.
14. Disclosure. Employee agrees to reveal the terms of this Agreement to any
future employer or potential employer of Employee and authorizes Employer, at
its election, to make such disclosure.
15. Representation of Employee. Employee represents and warrants to Employer
that Employee is free to enter into this Agreement and has no commitment,
arrangement or understanding to or with any party which restrains or is in
conflict with Employee's performance of the covenants, services and duties
provided for in this Agreement. Employee shall not violate any obligation owed
to any other party, including former employees, and shall not violate any rights
that any third party has with regard to proprietary information or trade
secrets. Employee agrees to indemnify Employer and to hold it harmless against
any and all liabilities or claims arising out of breach of this representation
and warranty.
16. Assignability. During Employee's employment hereunder, this Agreement may
not be assigned by either party without the written consent of the other;
provided, however, that Employer may assign its rights and obligations under
this Agreement to a successor by sale, merger or liquidation, if such successor
carries on Employer's business substantially in the form in which it is being
conducted at the time of the sale, merger or liquidation.
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17. Right of Set-off. By accepting this Agreement, Employee consents to a
deduction from any amounts Employer owes Employee from time to time (including
amounts owed to Employee as wages or other compensation, or vacation pay, as
well as any other amounts owed to Employee by Employer), to the extent of the
amounts Employee owes Employer. Whether or not Employer elects to make any
set-off in whole or in part, if Employer does not recover by means of set-off
the full amount Employee owes it, calculated as set forth above, Employee agrees
to pay immediately the unpaid balance to Employer.
18. Notices. Any notice required or permitted to be given hereunder shall be
sufficient if in writing, by registered or certified mail, to Employee at the
address set forth at Exhibit A, or to the President of Employer at Shopping
Sherlock, Inc., 11201 X.X. 0xx Xxxxxx, Xxxxx 000, Xxxxxxxx, XX, 00000. Notice
shall be deemed to have been given on the third day after deposit into the mail.
Notices to the Employee, may, at the discretion of Employer, alternatively be
hand delivered to Employee.
19. Severability. In the event that any provision of this Agreement or
compliance by any of the parties with any provision of this Agreement shall
constitute a violation of any law, unenforceable or void, then such provision,
to the extent only that it is in violation of law, void or unenforceable, shall
be deemed modified to the extent necessary so that it is no longer
unenforceable, void or in violation of law. If such modification is not
possible, said provision, to the extent that it is in violation of law, void or
unenforceable, shall be deemed severable from the remaining provisions of this
Agreement, which provisions shall remain binding on the parties.
20. Entire Agreement. This instrument contains the entire agreement of the
parties, and it may be changed only by an agreement in writing signed by the
party against whom enforcement of any waiver, change, modification, extension or
discharge is sought, and any such modification will be signed by the President
of Employer.
21. Governing Law. The validity, construction and performance of this Agreement
shall be governed by the laws of the State of Washington without regard to the
conflicts of law provisions of such laws.
22. Other. The waiver by Employer of a breach of any provision of this Agreement
by Employee shall not operate or be construed as a waiver of any subsequent
breach by Employee. Affiliates of Employer are and shall be third-party
beneficiaries of this Agreement.
EMPLOYER EMPLOYEE
---------------------------- ----------------------------------
By: Xxxxxxx XxXxxxx Xxxxxx Xxxxxxx
Its: CFO
Date: June 24, 1999 Date: -----------------
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Exhibit A to Employment Agreement
Name of Employee: Xxxxxx Xxxxxxx
Position: CEO
Title of position to whom employee reports: Board of Directors
Basic responsibilities.
Minimum Hours: 40 Hours per week.
Base salary: U.S. $10,000
Options: The company plans to grant 150,000 options to individual
Expense limit without
prior approval: U.S. $3,000
Minimum Notice: One month
Restricted Period: The Restricted Period shall be the period of one year
following the termination of Employee's employment with Employer for any reason.
Place of notice to Employee.
----------------------------
----------------------------
EMPLOYER EMPLOYEE
---------------------------- ----------------------------------
By: Xxxxxxx XxXxxxx Xxxxxx Xxxxxxx
Its: CFO
Date: June 24, 1999 Date: -----------------
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Exhibit B to Employment Agreement
Employee represents and warrants that Employee has no Inventions, software,
writings, artistic works, audiovisual works or other works of authorship useful
to Employer in the normal course of Employer's Business, which were conceived,
made or written prior to the date of this Agreement and which are excluded from
the operation of this Agreement.
List exemptions:
Initials of Employee: -----------
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Exhibit C to Employment Agreement
XXXXXXX XXXXXXX COMPLIANCE
SHOPPING SHERLOCK INC.
UPDATED XXXXXXX XXXXXXX COMPLIANCE - PROGRAM
As at June 22nd 1999
Adopted: June 22, 1999
Exhibits Updated: June 22, 1999
In order to continue its active role in the prevention of any question regarding
xxxxxxx xxxxxxx violations by its officers, directors, employees, shareholders
and other related individuals, to alter that role as necessary and appropriate
in light of the Company's increased size and publicly traded status, and to
ensure that its policies continue to be in accordance with the latest
developments in the law, the Company has adopted the policies and procedures
described in this Memorandum Effective as of the date set forth above. These
policies and procedures are regularly updated and posted to the Shopping
Sherlock Intranet under "Legal".
I. Adoption of Xxxxxxx Xxxxxxx Policy.
The Company has adopted the Shopping Sherlock Xxxxxxx Xxxxxxx Policy attached as
Exhibit A (the "Policy"), which prohibits trading while in possession of
Material Nonpublic Information regarding the Company. The Policy covers
officers, directors, shareholders and all other employees of, or consultants or
contractors to, the Company, as well as family members of such persons, and
other persons who have or may have access to Material Nonpublic Information. The
Policy (and/or a summary thereof is to be delivered to all new employees and
consultants upon the commencement of their relationships with the Company, and
is to be circulated to all personnel at least annually.
II. Designation of Certain Persons.
A. Section 16 Individuals. The Company has determined that those persons listed
on Exhibit B attached hereto are the persons currently subject to the reporting
and liability provisions of Section 16 of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and the rules and regulations promulgated
thereunder ("Section 16 Individuals"). Exhibit B will be amended and -updated
from time to time as appropriate to include an updated list of directors and
officers and shareholders who beneficially own more than 10% of the Company's
common stock.
B. Other Restricted Persons. The Company has determined that those persons
listed on Exhibit C attached hereto, together with the Section 16 Individuals
listed on Exhibit are currently subject to the pre clearance requirement
described in Section IV below. The Company believes that those persons have, or
are likely to have, regular access to Material Nonpublic Information. Exhibit C
may be amended from time to time. Under special circumstances, certain persons
not listed on Exhibit-C may have access to Material Nonpublic Information for a
period of time. During such period, such persons are also subject to the pre
clearance procedure described in Section IV.
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III. Appointment of Compliance Officer.
The Company designates its CFO as the Company's Xxxxxxx Xxxxxxx Compliance
Officer.
IV. Duties of Compliance Officer.
The duties of the Compliance Officer include, but are not limited to, the
following:
A. Pre clear all transactions involving the Company's securities by those
individuals listed on Exhibits B and C in order to define compliance with the
Policy, xxxxxxx xxxxxxx laws, Section 16 of the Exchange Act and Rule 144
promulgated under the Securities Act of 1933, as amended.
B. Coordinate preparation and filing of Section 16 reports (Forms 3, 4 and 5)
for all Section 16 Individuals.
C. Serve as the designated recipient at the Company of copies of reports filed
with the SEC by Section 16 Individuals under Section 16 of the Exchange Act.
D. Perform periodic cross-checks of available materials which may include Forms
3, 4 and 5, Form 144, officers' and directors' questionnaires, and reports
received from the Company's stock administrator and transfer agent, to determine
trading activity by officers, directors and others who access to Material
Nonpublic Information.
E. Circulate the Policy (and/or a summary thereof) to all employees, including
Section 16 Individuals, on an annual basis, and provide the Policy and other
appropriate materials to new officers, directors and others who have, or may
have, access to Material Nonpublic Information.
F. Assist the Company's Board of Directors with implementation of the Policy and
Sections I and II of this memorandum.
G. Coordinate with Company counsel regarding compliance with Rule 144 sales.
Attachments:
Exhibit "A" - Xxxxxxx Xxxxxxx Policy
Exhibit "B" - List of Section 16 insiders
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EXHIBIT "A"
SHOPPING SHERLOCK INC.
XXXXXXX XXXXXXX POLICY and Guidelines with Respect to Certain Transactions in
Company Securities
This Policy provides guidelines to employees, officers and directors of, and
consultants and contractors to, SHOPPING SHERLOCK INC. (the "Company") with
respect to transactions' in the Company's securities.
APPLICABILITY OF POLICY
This policy applies to all transactions in the Company's securities, including
Common Stock, options for Common Stock and any other securities the Company may
issue from time to time, such as preferred stock, warrants and convertible
debentures, as well as to derivative securities relating to the Company's stock,
whether or not issued by the Company, such as exchange-traded options. It
applies to all officers of the Company, all members of the Company's Board of
Directors, and all employees of, and consultants and contractors to, the Company
and its subsidiaries. This group of people when in receipt of or having access
to Material Nonpublic Information (as defined below) regarding the Company,
along with members of their immediate families and members of their households,
are sometimes referred to in this Policy as "Insiders". This Policy also applies
to any person who receives Material Nonpublic Information from any insider.
Any person who possesses Material Nonpublic Information regarding the Company is
an Insider for so long as the information is not publicly known. Any employee
can be an Insider from time to time, and would at those times be subject to this
Policy.
GENERAL POLICY
It is the policy of the Company to oppose the unauthorized disclosure of any
Material Nonpublic Information regarding the Company acquired in the workplace
or otherwise and the misuse of Material Nonpublic Information in securities
trading.
SPECIFIC POLICIES
1. Trading on Material Nonpublic Information. No director, officer or employee
of, or consultant or contractor to, the Company, and no member of the immediate
family or household of any such person, shall engage in any transaction
involving a purchase or sale of the Company's securities, including any offer to
purchase or offer to sell, during any period commencing with the date that he or
she possesses Material Nonpublic Information concerning the Company, and ending
at the close of business on the second Trading Day following the date of public
disclosure of that information, or at such time as such nonpublic information is
no longer material. As used herein, the term "Trading Day" shall mean a day on
which national stock exchanges and the NASDAQ Stock Market are open for trading.
2. Tipping. No Insider shall disclose ("tip") Material Nonpublic Information to
any other person (including family members) where such information may be used
by such person to his or her profit by
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trading in the securities of companies to which such information relates, nor
shall such Insider or related person make recommendations or express opinions on
the basis of Materials Nonpublic Information as to trading in the Company's
securities.
3. Confidential of Nonpublic Information. Nonpublic information relating to the
Company is the property of the Company and the unauthorized disclosure of such
information is forbidden.
POTENTIAL CRIMINAL AND CIVIL LIABILITY AND/OR DISCIPLINARY ACTION
1. Liability for Xxxxxxx Xxxxxxx. Insiders may be subject to disgorgement of
profits (or losses avoided) (trebled in some cases), penalties of up to
$1,000,000 and up to ten years in jail for engaging in transactions in the
Company's securities at a time when they have knowledge of Material Nonpublic
Information regarding the Company.
2. Liability for Tipping. Insiders may also be liable for improper transactions
by any person (commonly referred to as a "tippee") to whom they have disclosed
nonpublic information regarding the Company or to whom they have made
recommended or expressed opinions on the basis of such information as to trading
in the Company's securities. The Securities and Exchange Commission (the "SEC")
has imposed large penalties even when the disclosing person did not profit from
the trading. The SEC, the stock exchanges and the National Association of
Securities Dealers, Inc. use sophisticated electronic surveillance techniques to
uncover xxxxxxx xxxxxxx.
3. Possible Disciplinary Actions. Employees of the Company who violate this
policy shall also be subject to disciplinary action by the Company, which my
include ineligibility for future participation in the Company's equity incentive
plan or immediate termination of employment.
GUIDELINES
1. Recommended Trading Window- To ensure compliance with this Policy and
applicable federal and state securities laws, the Company requires that all
directors, officers, employees, consultants and contractors having access to the
Company's internal financial statements or other Material Nonpublic Information
refrain from conducting transactions involving the purchase or sale of the
Company's securities other than during the following period (the "Trading
Window"):
Trading Window: The period in any fiscal quarter commencing at the close of
business two full Trading Days following the date of public disclosure of the
financial results for the prior fine quarter or year and ending on the last day
of the second fiscal month of the fiscal quarter.
The safest period for trading in the Company's securities, assuming the absence
of Material Nonpublic Information, is generally the first ten days of the
Trading Window. Periods other than the Trading Window are more highly sensitive
for transactions in the Company's stock from the perspective of compliance with
applicable securities laws. This is due to the fact that officers, directors and
certain other employees will, as any quarter progresses, be increasingly likely
to possess Material Nonpublic Information about the expected financial results
for the quarter.
The purpose behind the recommended Trading Window is to help establish a
diligent effort to avoid any improper transaction. An Insider may choose not to
follow this suggestion, but he or she should be
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particularly careful with respect to trading outside the Trading Window, since
the Insider may, at such time, have access to (or later be deemed to have had
access to) Material Nonpublic Information regarding, among other things, the
Company's anticipated financial performance for the quarter.
It should be noted that even during the Trading Window any person possessing
Material Nonpublic Information concerning the Company should not engage in any
transactions in the Company's securities until such information has been known
publicly for at least two Trading Days. Although the Company may from time to
time recommend during a Trading Window that directors, officers, selected
employees and others suspend trading because of developments known to the
Company and not yet disclosed to the public,
each person is individually responsible at all times for compliance with the
prohibitions against xxxxxxx xxxxxxx. Trading in the Company's securities during
the Trading Window should not be considered a "safe harbor," and all directors,
officers and other persons should use good judgment at all times.
2. Pre clearance of Trades. The Company has determined that all officers and
directors of the Company should refrain from trading in the Company's
securities, even during the Trading Window, without first complying with the
Company's "Pre clearance" process. Each officer and director should contact the
Company's Xxxxxxx Xxxxxxx Compliance officer prior to commencing any trade in
the Company's securities.
The Company may also find it necessary, from time to time, to require compliance
with the pre clearance process from certain employees, consultants and
contractors other than and in addition to officers and directors.
3. No Short Sales or Options Trading. The Company requires that all officers,
directors, employees, consultants and contractors refrain from engaging in any
short sale of the Company's securities or any purchase or sale of put or call
options involving the Company's securities.
4. Trading in Stock of Customers and Suppliers. The Company requires that all
officers, directors, employees, consultants and contractors refrain from trading
in the securities of customers, suppliers or other third party entities with
whom the Company has a business relationship at a time that such person is in
possession of material non public information concerning the issuer of such
securities obtained through the Company's relationship with such other entity.
5. Individual Responsibility. Every officer, director and employee has the
individual responsibility to comply with this Policy against xxxxxxx xxxxxxx,
regardless of whether the Company has recommended a trading window to that
Insider or any other Insiders of the Company. The guidelines set forth in this
Policy are guidelines only, and appropriate judgment should be exercised in
connection with any trade in the Company's securities.
An Insider may, from time to time, have to forego, a proposed transaction in the
Company's securities even if he or she planned to make the transaction before
learning of the Material Nonpublic Information and even though the Insider
believes he or she may suffer an economic loss or forego anticipated profit by
waiting.
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APPLICABILITY OF POLICY TO INSIDE INFORMATION
REGARDING OTHER COMPANIES
This policy and the guidelines described herein also apply to Material Nonpublic
Information relating to other companies, including the Company's customers,
vendors, suppliers or acquisition candidates ("business partners"), when that
information is obtained in the course of employment with, or other services
performed on behalf of, the Company. Civil and penalties, and termination of
employment, may result from trading on inside information regarding the
Company's business partners.
All employees should treat Material Nonpublic information about the company's
business partners with the same care required with respect to information
related directly to the Company.
DEFINITION OF MATERIAL N0N PUBLIC INFORMATION
It is not possible to define all categories of material information. However,
information should be regarded as material if there is a reasonable likelihood
that it would be considered important to an investor in making an investment
decision regarding the purchase or sale of the Company's securities.
While it may be difficult under this standard to determine whether particular
information is material there are various categories of information that are
particularly sensitive and, as a general rule, should always be considered
material.
Examples of such information may include:
Financial results
Projections of future earnings or losses
News of a pending or proposed merger
News of a pending or proposed significant acquisition
News of the disposition of a subsidiary
Impending bankruptcy or financial liquidity problems
Gain or loss of a substantial customer or supplier
Changes in dividend policy
New product announcements of a significant nature
Significant product defects or modifications Significant pricing changes
Stock splits
New equity or debt offerings
Major acquisitions
Significant litigation exposure due to actual or threatened litigation
Major changes in senior management
Either positive or negative information may be material.
Non public information is information that has not been previously disclosed to
the general public and is otherwise not readily available to the general public.
CERTAIN EXPECTATIONS
For purposes of this Policy, the Company considers that the exercise of a stock
option for cash under the Company's stock option plans or the purchase of shares
under the Company's employee stock purchase
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plan (but not the sale of any such shares) is exempt from this Policy, since the
other party to the transaction is the Company itself and the price does not vary
with the market but is fixed by the terms of the option agreement or the plan.
Further, the Company does not believe that employees, officers or directors
should ordinarily be prohibited from making bonafide gifts and charitable
donations outside the Trading Window in situations where there is no unusual
activity or other reason to believe that a transaction would be particularly
risky.
ADDITIONAL INFORMATION - DIRECTORS AND OFFICERS
Directors and officers of the Company must also comply with the reporting
obligations and limitations on short-swing transactions set forth in Section 16
of the Securities Exchange Act of 1934, as amended. The practical effect of
these provisions is that officers and directors who purchase and sell the
Company's securities within a six-month period must disgorge all profits to the
Company whether or not they bad knowledge of any Material Nonpublic Information.
Under these provisions, and so long as certain other criteria are met, neither
the receipt of an option trader the Company's option plan, nor the exercise of
that option nor the receipt of stock under the Company's employee stock purchase
plan is deemed a purchase under Section 16; however, the sale of any such shares
is a sale under Section 16.
Moreover, no officer or director may ever make a short sale of the Company's
stock. The Company has provided, or will provide, separate memoranda and other
appropriate materials to its officers and directors regarding compliance with
Section 16 and its related rules.
INQUIRIES
Please direct your questions as to any of the matters discussed in this Policy
to the Company's Xxxxxxx Xxxxxxx Compliance officer.
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EXHIBIT "B"
DIRECTORS, OFFICERS AND SHAREHOLDERS SUBJECT TO SECTION 16
As of June 22, 1999
Directors:
Xxxxxxx Xxxxxxx
Xxxxxx Xxxxxxxx
Xxxxxx Xxxxxxx
Xxxxxxx Xxxxxx
Xxxxxxxx Xxxxxx
Officers:
TITLE NAME
----- ----
1. President and Chief Executive Officer Xxxxxx Xxxxxxx
2. Chief Financial Officer/Secretary Xxxxxxx XxXxxxx
3. Chief Technology Officer Xxx Xxxxxx
4. Chief Operating Officer Xxxxxxxx Xxxxxx
5. Executive Vice President of Sales and Marketing Xxxxxxx Xxxxxx
Shareholders:
Premier Lifestyles International Corporation (PLIC)
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