EMPLOYMENT AGREEMENT
This Agreement is made as of the 13th day of October, 1998 between
go2net, Inc., a Delaware corporation (the "Company"), and Xxxxxxx X. Xxxxxx,
Xx., an individual residing at 000 Xxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx
00000 (the "Executive").
RECITALS
WHEREAS, the Company desires to employ the Executive as the Chief
Operating Officer of the Company, and the Executive desires to serve as the
Chief Operating Officer of the Company, on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, the parties hereto, each intending to be legally bound
hereby, agree as follows:
1. EMPLOYMENT. The Company hereby employs the Executive as an
employee of the Company, and the Executive accepts such employment for the
term of employment specified in Section 3 below (the "Employment Term").
Effective January 1, 1999, the Executive shall become Chief Operating Officer
of the Company. On and after January 1, 1999 and during the remainder of the
Employment Term, as the Chief Operating Officer of the Company, the Executive
shall, subject to the direction of the Chief Executive Officer of the
Company, perform such duties consistent with those duties ordinarily and
customarily performed by a person holding such position in similar
organizations, as may from time to time be reasonably assigned to him by the
Chief Executive Officer or the Board of Directors of the Company. During the
Employment Term, the Executive will also be entitled to continue to serve as
a member of the Company's Board of Directors.
2. PERFORMANCE; LOCATION OF EMPLOYMENT; OTHER ACTIVITIES.
(a) The Executive agrees to devote his reasonable best efforts
and substantially all of his business time to the performance of his duties
hereunder during the Employment Term, except that from the period commencing
on the date hereof and ending on January 31, 1999, the Executive may continue
to be based in the Boston, Massachusetts area. From January 31, 1999 through
January 31, 2001, the Executive will perform his duties hereunder at the
Company's executive offices located in Seattle, Washington. Thereafter, the
Executive may elect to perform his duties hereunder at an office located in
the Boston, Massachusetts area.
(b) During the Employment Term, the Executive agrees that, unless
he has the express prior written approval of the Chief Executive Officer of
the Company, he shall not accept
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a membership on a Board of Directors of, or act as an officer, employee or
consultant to, any entity which is in a similar or competing business of the
Company that would in any way conflict with the business of the Company or
the time needed by the Executive to perform his duties hereunder.
3. EMPLOYMENT TERM. The term of employment under this Agreement shall
begin on the date of this Agreement and continue until January 31, 2002 (the
"Initial Employment Term"). Employment shall thereafter continue on the
basis hereby established for successive one year terms unless, more than
ninety days prior to the expiration of the Initial Employment Term or any
successive one year term, either the Executive or the Company provides the
other with written notice that this Agreement will not be renewed (the
"Subsequent Employment Term" and with the Initial Employment Term, the
"Employment Term"). Employment during the Employment Term shall be subject
to earlier termination in accordance with the terms of this Agreement.
4. COMPENSATION.
(a) SALARY. During the Employment Term, the Company shall pay the
Executive a base salary, payable in equal installments in accordance with the
Company's then current compensation practices for all of its executives,
subject to withholding and other applicable taxes, at an annual rate of One
Hundred Fifty Thousand Dollars ($150,000.00), provided that the Executive
will not receive any salary from the date hereof through December 31, 1998.
The base salary may be reviewed annually by the Board of Directors, provided
that the base salary shall not be decreased during the Employment Term.
(b) BONUS. The Executive shall be eligible to participate in a
bonus plan of the Company pursuant to which he will be entitled to receive an
annual bonus equal to a specified percentage of the annual base salary then
in effect, subject to achieving specified performance objectives. The actual
amount of such bonus and the performance objectives for the payment thereof
shall be as mutually established by the Executive and the Chief Executive
Officer of the Company. In addition, in consideration of the Executive's
willingness to relocate to the Seattle, Washington area, upon the Executive's
relocation, the Executive will be paid a bonus of $25,000.
(c) STOCK OPTIONS. Upon the execution and delivery of this
Agreement, the Executive shall be granted non-qualified stock options (the
"Options") to purchase 300,000 shares of Common Stock of the Company (the
"Common Stock") at an exercise price equal to $16.125 per share, representing
the closing market price of the Common Stock as reported on the Nasdaq
National Market on the date of this Agreement. Of the Options, (i) Options
to purchase 35,000 shares of Common Stock shall be immediately vested and
exercisable on the date hereof, (ii) Options to purchase an additional
215,000 shares of Common Stock shall vest in nine equal
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quarterly installments of 23,889 shares commencing on December 31, 1998, and
(iii) Options to purchase the remaining 50,000 shares of Common Stock shall
vest in four equal quarterly installments of 12,500 shares commencing on
March 31, 2001. In the event the Executive's employment is terminated by the
Company without Cause (as defined herein) or by the Executive for Good Reason
(as defined herein), all Options shall immediately become vested and
exercisable. In the event that the Company accelerates the vesting of any
options held by any other employee of the Company in connection with a change
of control of the Company, then all Options held by the Executive shall be
accelerated and become vested and exercisable in the same manner as such
other options are accelerated.
(d) RELOCATION EXPENSES. The Executive shall be reimbursed for
all reasonable out-of-pocket expenses incurred by him and his immediate
family in relocating to the Seattle, Washington area upon receipt of
appropriate documentation.
(e) INSURANCE; OTHER BENEFITS. The Executive and his dependants
shall be entitled to receive full family medical, dental and disability
insurance, at the Company's expense. The Executive shall also be entitled to
participate in all executive benefit plans now existing or hereinafter
established by the Company, including, but not limited to, family medical and
dental plans, group life and disability insurance plans, life insurance plan;
pension, 401(k), profit sharing or bonus plans, and any other benefit plan or
arrangement made available to executive officers of the Company. In
addition, the Executive shall be entitled to the use of an automobile of like
quality used by other executives of the Company and a parking space in the
Company's building, which shall be paid for by the Company.
(f) VACATION. The Executive shall be entitled to the same paid
vacation benefits as the other executive officers of the Company, but in no
case shall it be less than three weeks of paid vacation during each year of
the Employment Term to be taken at such time or times as shall be mutually
convenient and consistent with his duties and obligations to the Company.
5. EXPENSES. The Executive shall be reimbursed by the Company for all
reasonable expenses incurred by him in connection with the performance of his
duties hereunder in accordance with policies established by the Board of
Directors from time to time and upon receipt of appropriate documentation.
6. TERMINATION.
(a) TERMINATION AT END OF TERM. The employment of the Executive
hereunder shall terminate at the end of the Initial Employment Term or any
Subsequent Employment Term if either party provides notice of termination at
least 90 days prior to expiration of the Initial Employment Term or
Subsequent Employment Term, or if earlier terminated by the Board of
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Directors of the Company pursuant to this Section 6.
(b) TERMINATION BY THE COMPANY WITH CAUSE. The Company shall have
the right at any time to terminate the Executive's employment hereunder upon
the occurrence of any of the following (any such termination being referred
to as a termination for "Cause"): (i) the Executive has misappropriated or
done material, intentional damage to the Company or its business or financial
situation, or (ii) the Executive has been convicted of a felony involving
moral turpitude.
(c) TERMINATION UPON DEATH OR DISABILITY. The Executive's
employment hereunder shall automatically terminate upon the Executive's death
or upon his inability to perform his duties hereunder by reason of any
mental, physical or other disability for a period of at least six consecutive
months, or six months within any 18 month period, as determined by a
qualified physician selected by the Company and reasonably acceptable to the
Executive or his guardian, in the case where the Executive is incapacitated.
(d) TERMINATION BY THE COMPANY WITHOUT CAUSE. The Company shall
have the right to terminate the Executive's employment at any time prior to
the expiration of the Initial Employment Term or any Subsequent Employment
Term for any reason without Cause with at least ninety days written notice.
(e) TERMINATION BY THE EXECUTIVE FOR GOOD REASON. The Executive
shall have the right to terminate his employment at any time for Good Reason
upon written notice to the Company. For purposes of this Agreement, "Good
Reason" shall mean (a) the failure to elect or appoint the Executive as Chief
Operating Officer and to the Board of Directors of the Company, (b) the
Executive's authority or duties are materially changed without the prior
consent of the Executive, which change is not remedied within ten (10)
business days after written notice thereof is delivered to the Company by the
Executive, (c) any material breach of this Agreement by the Company, which
breach is not remedied within ten (10) business days after written notice
thereof is delivered to the Company by the Executive, or (d) the relocation
of Executive's place of work more than 30 miles from the Seattle, Washington
or the Boston, Massachusetts area. For purposes of this Agreement, the
Executive's authority or duties shall be deemed to be "materially changed"
if, without the Executive's consent, there is any diminution or adverse
modification in the Executive's title, compensation, responsibilities or
reporting relationship.
(f) VOLUNTARY RESIGNATION. In addition to the right to terminate
his employment for Good Reason under Section 6(e) above, the Executive may
voluntarily terminate his employment at any time upon thirty days notice.
The provisions of Section 8 relating to non-disclosure shall immediately
become effective upon the Executive's resignation without Good Reason.
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7. EFFECT OF TERMINATION OF EMPLOYMENT.
(a) WITH CAUSE; RESIGNATION; DEATH OR DISABILITY. If the
Executive's employment is terminated with Cause pursuant to Section 6(b), if
the Executive's employment is terminated by the death or disability of the
Executive pursuant to Section 6(c) or if the Executive elects to terminate
his employment voluntarily under Section 6(f) (other than for Good Reason),
the Executive's salary and other benefits specified in Section 4 shall cease
at the time of such termination; provided, however, that (i) the Executive
shall be entitled to continue to participate in the Company's medical benefit
plans to the extent required by law and shall be entitled to the
reimbursement for expenses incurred by him through the date of termination
pursuant to Section 5, and (ii) in the case of termination due to death or
disability, the Executive or his estate shall continue to receive his then
current annual base salary payable under Section 4(a) for a period of three
months from the date of termination.
(b) WITHOUT CAUSE BY THE COMPANY. If the Executive's employment
is terminated either by the Company without Cause pursuant to Section 6(d) or
by the Executive for Good Reason pursuant to Section 6(e), in each case,
prior to the expiration of the Initial Employment Term or any Subsequent
Employment Term, the Executive's salary and other benefits specified in
Section 4 shall cease at the time of such termination, and the Executive
shall be entitled to receive his then current annual base salary payable
under Section 4(a) for a period equal to the longer of the remainder of the
Employment Term or six months from the date of termination. In addition, in
any of such events or if the Company does not renew this Agreement beyond the
Initial Employment Term or Subsequent Employment Term (i) the Executive shall
also be entitled to receive any guaranteed bonus and any bonus accrued or
earned by the Executive through the date of termination pursuant to Section
4(b) and the amount of any expenses incurred by the Executive through the
date of termination pursuant to Section 5, (ii) all stock options then held
by the Executive shall immediately vest and become exercisable, and (iii) the
Executive shall continue to receive the insurance benefits specified in
Section 4, at the Company's expense, until the expiration of the Employment
Term.
(c) TAX PAYMENTS. In the event that any compensation payable by
the Company under this Agreement or otherwise (including any deemed
compensation attributable to the acceleration of stock options) constitutes
an excess parachute payment which is subject to tax under Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Excise Tax"), the Company
shall pay to the Executive an additional amount (the "Gross-Up Amount")
which, after the payment of all Federal, state and local income taxes thereon
(assuming the Executive is at the highest marginal Federal and applicable
state and local tax rate in effect on the date of payment of the Gross-Up
Amount) and the payment of the Excise Tax on the Gross-Up Amount, is equal to
the Excise Tax payable by the Executive on such excess parachute payment.
The Gross-Up Amount payable with respect to each excess parachute payment
shall be paid by the Company coincident with the payment of such excess
parachute payment.
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8. NON-DISCLOSURE OF BUSINESS INFORMATION. The Executive acknowledges
and agrees that by virtue of his employment with the Company, the Executive
will obtain such knowledge, know-how, training and experience that is not
generally known by those engaged in the Internet or World Wide Web industry
("Trade Secrets"), and there is a possibility that such knowledge, know-how,
training and experience could be used by a competitor of the Company to the
Company's detriment. Therefore, the Executive covenants and agrees, as
follows: (a) the Executive agrees that he will not, at any time during or
after the Employment Term, disclose, reproduce, assign or transfer to any
person, firm, corporation or other business entity, except as required by
law, any Trade Secrets concerning the business, finances, patents, affairs,
business plans, strategies, methods, software, hardware, results from ongoing
investigations from others, and present and future plans of the Company, any
subsidiary or affiliate thereof or any company formed or founded by the
Company at any time for any reason or purpose whatsoever, without the
Company's express written consent; nor shall the Executive make use of any
such Trade Secrets for his own purpose or for the benefit of any person,
firm, corporation or other business entity, except the Company or any
subsidiary or affiliate thereof and upon the termination of the Executive's
employment for any reason, the Executive will immediately return all books,
files, papers, records and documents of any kind (including those contained
in computer disks) relating to the business of the Company; (b) during the
period which the Executive is employed by the Company and for a period of one
year thereafter, the Executive shall not, without the prior written consent
of the Company, engage in, for any purpose whatsoever, any activity that
competes directly with the Company, except that the Executive shall have no
obligations under this clause (b) in the event he is terminated by the
Company without Cause or he elects to terminate his employment for Good
Reason, and (c) the Executive shall not, without the prior written consent of
the Company, within the one year period following the termination of his
employment solicit any employee of the Company to join the Executive as a
partner, employee or consultant in any Internet or World Wide Web related
enterprise that competes directly with the Company.
9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE EXECUTIVE. The
Executive represents that he has the capacity and desire to enter into this
Agreement, and the voluntary execution, delivery and performance of the
Agreement and compliance with its provisions will not conflict with or result
in any breach of any of the terms, conditions, obligations, covenants or
provisions of, or constitute a default under, any note, mortgage, agreement,
contract or instrument to which the Executive is a party or by which he may
be bound or affected, including specifically any pre-existing or existing
consulting, employment, or independent contractor arrangements,
understandings, or agreements whether written or oral. Furthermore, the
Executive agrees to indemnify the Company against any claims brought by any
predecessor employer alleging breach of employment contract or fiduciary
responsibilities.
10. INSURANCE. The Company may purchase insurance on the life of the
Executive,
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and if it does so, the Executive shall cooperate fully by performing all the
requirements of the life insurer which are necessary conditions precedent to
the issuance of the life insurance policy issued by it. If the Company
elects to purchase such insurance, the Executive may elect to designate a
beneficiary for up to $1 million of such insurance.
11. NOTICE. Any notices required or permitted hereunder shall be in
writing and shall be deemed to have been given when personally delivered or
when mailed, certified or registered mail, postage prepaid, to the following
addresses or such other address as to which notice is given in the manner
provided herein:
If to the Executive:
Xxxxxxx X. Xxxxxx, Xx.
000 Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
If to the Company:
go2net, Inc.
000 Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attn.: Xxxxxxx X. Xxxxxxxx
12. GENERAL.
(a) GOVERNING LAW; SUBMISSION TO JURISDICTION. The terms of this
Agreement shall be governed by and construed under the laws of the State of
Washington without regard to its principles of conflicts of laws.
Accordingly, to the extent a restriction contained in this Agreement is more
restrictive than permitted by the laws of any jurisdiction where this
Agreement may be subject to review and interpretation, the terms of such
restriction, for the purpose only of the operation of such restriction in
such jurisdiction, shall be the maximum restriction allowed by the laws of
such jurisdiction and such restriction shall be deemed to have been revised
accordingly herein. The parties hereto irrevocably agree that all claims
relating to this Agreement shall be submitted exclusively to federal and
state courts located in the County of King and the State of Washington and
irrevocably consent to the jurisdiction and venue of such courts and service
of process by certified or registered mail, return receipt requested,
directed to the parties at the addresses set forth herein or as otherwise
provided by law.
(b) REMEDY FOR BREACH OF SECTION 8. It is acknowledged by the
Executive that he will be devoting his work efforts towards establishing
relationships for the Company; that the Executive will be knowledgeable in
all aspects of the business, including the type of transactions
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the Company is involved with, thus, the Executive would be able to enter the
same business as the Company and unfairly compete against the Company to its
detriment. Thus, the restrictions contained in Section 8 and the provisions
contained in this Section regarding injunctive relief are reasonable and
justified. The Executive agrees that irreparable injury to the Company will
inevitably occur in the event of any breach of the terms and conditions of
this Agreement and, specifically, if Section 8 is breached by the Executive.
The Executive agrees in such event that the Company shall be entitled, in
addition to any other remedies available to it, without proof of monetary or
immediate damage, to seek an action for any injunction to retrain any
violation of this Agreement by the Executive and all persons acting for or
with the Executive.
(c) ASSIGNABILITY. The Executive may not assign his interest in
or delegate his duties under this Agreement. The Company may not assign the
Agreement or the rights and obligations hereunder without written consent of
Executive.
(d) BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the Company, its permitted successors and assigns,
and the Executive, his representatives and heirs.
(e) ENTIRE AGREEMENT; MODIFICATION. This Agreement and the Option
Grant Agreement constitute the entire agreement of the parties hereto with
respect to the subject matter hereof and they and may not be modified or
amended in any way except in writing by the parties hereto.
(f) DURATION. Notwithstanding the term of employment hereunder,
this Agreement shall continue for so long as any obligations remain under
this Agreement.
* * *
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have hereunto executed this Agreement the day and year first written above.
GO2NET, INC.
By:
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Name: Xxxxxxx X. Xxxxxxxx
Title: President and Chief Executive Officer
EXECUTIVE
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Xxxxxxx X. Xxxxxx, Xx.
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