Exhibit 10.4
STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT (the "Agreement") is entered into as of
August 16, 1999, by and between INDIVIDUAL INVESTOR GROUP, INC., a Delaware
corporation with its principal place of business at 125 Broad Street, 14th
Floor, New York, New York 10004 (the "Company"), and David H. Allen, an
individual residing at 490 Harding Drive, South Orange, New Jersey 07079 (the
"Employee").
WHEREAS, on August 16, 1999 (the "Grant Date"), the Stock Option
Committee (the "Committee") of the Board of Directors of the Company (the
"Board") authorized the grant to the Employee of an option (the "Option") to
purchase an aggregate of 175,000 shares of the authorized but unissued Common
Stock of the Company, $.01 par value (the "Common Stock"), conditioned upon the
Employee's acceptance of the grant of the Option upon the terms and conditions
set forth in this Agreement; and
WHEREAS, the Employee desires to acquire the Option upon the terms and
conditions set forth in this Agreement;
IT IS AGREED:
1. Grant of Stock Option. The Company hereby grants the Employee the
Option to purchase all or any part of an aggregate of 175,000 shares of Common
Stock (the "Option Shares") on the terms and conditions set forth herein.
2. Non-Qualified Stock Option. The Option represented hereby shall be
a "non-qualified stock option," and is not intended to be an Option which
qualifies as an "Incentive Stock Option" under Section 422 of the Internal
Revenue Code of 1986, as amended.
3. Exercise Price. The exercise price of the Option is $2.625 per
share, subject to adjustment as hereinafter provided.
4. Exercisability. This Option shall be exercisable, subject to the
terms and conditions of this Agreement, as follows: (i) the right to purchase
43,750 of the Option Shares shall be exercisable on or after August 16, 2000 and
(ii) the right to purchase one thirty-sixth of the 131,250 share balance of the
Option Shares shall be exercisable on or after on the 16th calendar day of each
month thereafter. After a portion of the Option becomes exercisable, such
portion shall remain exercisable, except as otherwise provided herein, until the
close of business on August 15, 2009 ("Exercise Period").
5. Effect of Termination of Employment.
5.1. Termination Due to Death. If Employee's employment by the
Company terminates by reason of death, the portion of the Option, if any, that
was exercisable as of the date of death may thereafter be exercised by the legal
representative of the estate or by the legatee of the Employee under the will of
the Employee, for a period of one (1) year from the date of such death or until
the expiration of the Exercise Period, whichever period is shorter. The portion
of the Option, if any, that was not exercisable as of the date of death shall
immediately expire upon death.
5.2. Termination Due to Disability. If Employee's employment by the
Company terminates by reason of disability, the portion of the Option, if any,
that was exercisable as of the date of termination of employment may thereafter
be exercised by the Employee for a period of one (1) year from the date of the
termination of employment or until the expiration of the Exercise Period,
whichever period is shorter. The portion of the Option, if any, that was not
exercisable as of the date of such termination of employment shall immediately
expire on the date of such termination of employment.
5.3. Other Termination.
(a) Except as otherwise provided in Section 5.6, if Employee's
employment is terminated for any reason other than (i) death or (ii) Disability
or (iii) for cause by the Company, then the portion of the Option, if any, that
was exercisable as of the date of termination of employment may thereafter be
exercised by the Employee for a period of ninety (90) days from termination of
employment or until the expiration of the Exercise Period, whichever is shorter.
The portion of the Option, if any, that was not exercisable as of the date of
such termination of employment shall immediately expire on the date of such
termination of employment. If the Company terminates your employment Without
Good Cause (as defined below) or you resign for Good Reason (as defined below),
any shares of the Option that would have vested due to the passage of time had
you remained employed for an additional twelve (12) months shall immediately be
deemed exercisable as of the date of termination. As used herein, "Good Cause"
for termination shall mean a termination of employment by the Company due to
your (a) conviction of a felony, (b) fraud, or (c) any other act of willful
misconduct that is materially injurious to the Company. A termination of your
employment by the Company except (x) for Good Cause or (y) due to your death or
disability, shall be a termination "Without Good Cause." As used herein, "Good
Reason" for your resignation will exist of you resign within sixty days of any
of the following: (a) a reduction in your base salary or target bonus, (b) any
material reduction in your benefits, (c) any diminishing change in your job
title and/or material diminishment of your job duties or (d) any requirement
that you relocate to an office more than thirty-five (35) miles from your
then-current office.
(b) In the event the Employee's employment is terminated for
cause, the Company may require the Employee to return to the Company the
economic value of any Option Shares purchased hereunder by the Employee within
the six (6) month period prior to the date of such termination of employment. In
such event, the Employee hereby agrees to remit to the Company, in cash, an
amount equal to the difference between the Fair Market Value of the Option
Shares on the date of such termination of employment (or the sales price of such
Shares if the Option Shares were sold during such six (6) month period) and the
Exercise Price of such Shares. For purposes of this Agreement, the "Fair Market
Value" of the Option Shares on a given date (the "Date of Determination") shall
mean (i) if the Common Stock is listed on a national securities exchange or
quoted on the Nasdaq National Market or Nasdaq SmallCap Market, the last sale
price of the Common Stock in the principal trading market for the Common Stock
on the last trading day preceding the Date of Determination, as reported by the
exchange or Nasdaq, as the case may be; (ii) if the Common Stock is not listed
on a national securities exchange or quoted on the Nasdaq National Market or
Nasdaq SmallCap Market, but is traded in the over-the-counter market, the
closing bid price for the Common Stock on the last trading day preceding the
Date of Determination for which such quotations are reported by the OTC Bulletin
Board or the National Quotation Bureau, Incorporated or similar publisher of
such quotations; and (iii) if the fair market value of the Common Stock cannot
be determined pursuant to clause (i) or (ii) above, such price as the Committee
shall determine, in good faith.
5.4. "Employment". The Employee shall be considered to be employed
by the Company pursuant to this Section 5 if the Employee is an officer,
director or full-time employee of the Company (or of any parent, subsidiary or
affiliate of the Company) or if the Committee determines in its sole and
absolute discretion that the Employee is rendering substantial services to the
Company as a part-time employee, consultant or contractor of the Company (or of
any parent, subsidiary or affiliate of the Company). The Committee shall have
the sole and absolute discretion to determine whether the Employee has ceased to
be employed by the Company and the effective date on which such employment
terminated.
5.5. No Right to Employment. Nothing in this Agreement shall confer
on the Employee any right to continue in the employ of, or other relationship
with, the Company (or with any parent, subsidiary or affiliate of the Company)
or limit in any way the right of the Company (or of any parent, subsidiary or
affiliate of the Company) to terminate the Employee's employment or other
relationship with the Company (or with any parent, subsidiary or affiliate of
the Company) at any time, with or without cause.
5.6. If Employee terminates his employment with the Company other
than for Good Reason, this Option, whether or not exercisable, shall immediately
expire.
6. Withholding Tax. Not later than the date as of which an amount
first becomes includible in the gross income of the Employee for Federal income
tax purposes with respect to the Option, the Employee shall pay to the Company,
or make arrangements satisfactory to the Company regarding the payment of, any
Federal, state and local taxes of any kind required by law to be withheld or
paid with respect to such amount. Notwithstanding anything in this Agreement to
the contrary, the obligations of the Company pursuant to this Agreement shall be
conditional upon such payment or arrangements with the Company and the Company
shall, to the extent permitted by law, have the right to deduct any such taxes
from any payment of any kind otherwise due to the Employee from the Company.
7. Adjustments. In the event of any merger, reorganization,
consolidation, recapitalization, consolidation, dividend (other than cash
dividend), stock split, reverse stock split, or other change in corporate
structure affecting the number of issued shares of Common Stock, the Company
shall proportionally adjust the number and kind of Option Shares and the
exercise price of the Option in order to prevent the dilution or enlargement of
the Employee's proportionate interest in the Company and Employee's rights
hereunder, provided that the number of Option Shares shall always be a whole
number.
7A. Acceleration of Vesting on Change of Control. Notwithstanding the
provisions of Sections 4, in the event of a "change of control" (as defined
below) while the Employee is employed by the Company, the vesting of this Option
shall accelerate and all the Option Shares shall be purchasable by Employee
simultaneous with such change of control. For the purposes of this Agreement, a
change of control shall mean (x) a merger or consolidation in which securities
possessing more than fifty percent (50%) of the total combined voting power of
the Company's outstanding securities are transferred to a person or persons
different from the persons holding those securities immediately prior to such
transaction (but excluding any transfers between any persons who are under
common control), or (y) the sale, transfer or other disposition of all or
substantially all of the Company's assets in complete liquidation or dissolution
of the Company.
8. Method of Exercise.
8.1. Notice to the Company. The Option shall be exercised in whole
or in part by written notice in substantially the form attached hereto as
Exhibit A directed to the Company at its principal place of business accompanied
by full payment as hereinafter provided of the exercise price for the number of
Option Shares specified in the notice.
8.2. Delivery of Option Shares. The Company shall deliver a
certificate for the Option Shares to the Employee as soon as practicable after
payment therefor.
8.3. Payment of Purchase Price. The Employee shall make pay for the
Option Shares by any one or more of the following methods set forth in this
Section 8.3.
8.3.1. Cash Payment. The Employee shall make cash payments by
wire transfer, certified check or bank check, in each case payable to the order
of the Company; the Company shall not be required to deliver certificates for
Option Shares until the Company has confirmed the receipt of good and available
funds in payment of the purchase price thereof.
8.3.2. Payment through Bank or Broker. The Employee may make
arrangements satisfactory to the Company with a bank or a broker who is member
of the National Association of Securities Dealers, Inc. to either (a) sell on
the exercise date a sufficient number of the Option Shares being purchased so
that the net proceeds of the sale transaction will at least equal the Exercise
Price multiplied by the number of Option Shares being purchased pursuant to such
exercise, plus the amount of any applicable withholding taxes and pursuant to
which the bank or broker undertakes irrevocably to deliver the full Exercise
Price multiplied by the number of Option Shares being purchased pursuant to such
exercise, plus the amount of any applicable withholding taxes to the Company on
a date satisfactory to the Company, but no later than the date on which the sale
transaction would settle in the ordinary course of business or (b) obtain a
"margin commitment" from the bank or broker pursuant to which the bank or broker
undertakes irrevocably to deliver the full Exercise Price multiplied by the
number of Option Shares being purchased pursuant to such exercise, plus the
amount of any applicable withholding taxes to the Company, immediately upon
receipt of the Option Shares.
8.3.3. Cashless Payment. The Employee may, in his or her sole
discretion, use shares of Common Stock of the Company that were owned by the
Employee for more than six (6) months (and which have been paid for within the
meaning of SEC Rule 144 and, if such shares were purchased from the Company by
use of a promissory note, such note has been fully paid with respect to such
shares), or that were obtained by the Employee in the open public market, to pay
the purchase price for the Option Shares by delivery of one or more stock
certificates in negotiable form which are effective to transfer good and valid
title thereto to the Company, free of any liens or encumbrances. Shares of
Common Stock used for this purpose shall be valued at the Fair Market Value.
8.3.4. Payment of Withholding Tax. Any required withholding
tax may be paid in cash or with Common Stock in accordance with Sections 8.3.1.,
8.3.2 and 8.3.3.
8.3.5. Exchange Act Compliance. Notwithstanding the foregoing,
the Company shall have the right to reject payment in the form of Common Stock
if in the opinion of counsel for the Company, (i) it could result in an event of
"recapture" under Section 16(b) of the Securities Exchange Act of 1934; (ii)
such shares of Common Stock may not be sold or transferred to the Company; or
(iii) such transfer could create legal difficulties for the Company.
9. Security Interest in Option Shares Collateralizing Obligations Owed
to the Company. Notwithstanding anything in this Agreement to the contrary, the
Employee hereby grants the Company a security interest in the Option Shares as
follows: in the event that the Employee owes the Company any sum (including
without limitation amounts owed pursuant to a loan made by the Company to the
Employee), and such sum is past due (the "Past Due Amount"), the Company shall
have a security interest in the Option Shares. The Employee hereby agrees to
execute, promptly upon request by the Company, such instruments and to take such
action as may be useful for the Company to perfect and/or exercise such security
interest, and hereby irrevocably grants the Company the right to retain, in full
or partial payment of the Past Due Amount, up to the following number of Option
Shares upon any whole or partial exercise of the Option: a fraction, the
numerator of which is the Past Due Amount, and the denominator of which is the
Fair Market Value of the Company's Common Stock (as set forth in Section 5.3(b))
as of the date of such exercise; provided that the fraction set forth in the
preceding clause shall be rounded up to the nearest whole number. The security
interest set forth herein shall be cumulative to all, and not in lieu of any,
other remedies to available to the Company with respect to any Past Due Amount.
10. Market Standoff Agreement. The Employee agrees that, in
connection with any registration of the Company's securities, upon the request
of the Company or the underwriters managing any public offering of the Company's
securities, the Employee will not sell or otherwise dispose of any Option Shares
(including without limitation sale of Option Shares in connection with the
exercise method set forth in Section 8.3.2.) or any other securities of the
Company without the prior written consent of the Company or such underwriters,
as the case may be, for such period of time from the effective date of such
registration as the Company or the underwriters may specify for the Company's
employee shareholders generally. The Employee understands and agrees that, in
order to ensure compliance with the market standoff agreement, the Company may
issue appropriate "stop-transfer" instructions to its transfer agent.
11. Notice of Disqualifying Disposition of ISO Shares. If the Option
granted to the Employee herein is an ISO, and if the Employee sells or otherwise
disposes of any of the Option Shares acquired pursuant to a whole or partial
exercise the Option prior to the later of (a) the second (2nd) anniversary of
the Grant Date, or (b) the first (1st) anniversary of the date of exercise of
such Option Shares, the Employee shall immediately notify the Company in writing
of such sale or disposition. The Employee acknowledges and agrees that the
Employee may be subject to income and other tax withholding by the Company on
the compensation income recognized by the Employee from any such sale or
disposition, by payment in cash (or in shares of Common Stock, to the extent
permissible under Section 8.3.4.) or out of the current wages or other earnings
payable to Employee. The Employee hereby authorizes his/her broker(s) to provide
the Company, promptly at the Company's request, with any information concerning
the Option Shares, now or previously in Employee's account(s) with such
broker(s), as the Company may request. The Employee agrees that this
authorization may not be revoked or modified in any manner except pursuant to a
writing signed by both the Employee and the Company.
12. Nonassignability. The Option shall not be assignable or
transferable except by will or by the laws of descent and distribution in the
event of the death of the Employee. No transfer of the Option by the Employee by
will or by the laws of descent and distribution shall be effective to bind the
Company unless the Company shall have been furnished with written notice thereof
and a copy of the will and such other evidence as the Company may deem necessary
to establish the validity of the transfer and the acceptance by the transferee
or transferees of the terms and conditions of the Option.
13. Required Holding Period. This Option and any Common Stock acquired
upon its exercise may not be sold, assigned or otherwise transferred prior to
the six (6) month anniversary of the Grant Date.
14. Company Representations. The Company hereby represents and
warrants to the Employee that:
(a) the Company, by appropriate and all required action, is duly
authorized to enter into this Agreement and consummate all of the transactions
contemplated hereunder; and
(b) the Option Shares, when issued and delivered by the Company
to the Employee in accordance with the terms and conditions hereof, will be duly
and validly issued and fully paid and non-assessable.
15. Employee Representations. The Employee hereby represents and
warrants to the Company that:
(a) he or she is acquiring the Option and shall acquire the
Option Shares for his or her own account and not with a view towards the
distribution thereof;
(b) he or she has received a copy of all reports and documents
required to be filed by the Company with the Commission pursuant to the Exchange
Act within the last twenty-four (24) months and all reports issued by the
Company to its stockholders within the last twenty-four (24) months;
(c) he or she understands that he or she must bear the economic
risk of the investment in the Option Shares, which cannot be sold by him or her
unless they are registered under the Securities Act of 1933 (the "1933 Act") or
an exemption therefrom is available thereunder and that the Company is under no
obligation to register the Option Shares for sale under the 1933 Act except as
provided in Section 16A below;
(d) in his or her position with the Company, he or she has had
both the opportunity to ask questions and receive answers from the officers and
directors of the Company and all persons acting on its behalf concerning the
terms and conditions of the offer made hereunder and to obtain any additional
information to the extent the Company possesses or may possess such information
or can acquire it without unreasonable effort or expense necessary to verify the
accuracy of the information obtained pursuant to clause (b) above;
(e) he or she is aware that the Company shall place stop transfer
orders with its transfer agent against the transfer of the Option Shares in the
absence of registration under the 1933 Act or an exemption therefrom as provided
herein; and
(f) The certificates evidencing the Option Shares may bear the
following legends:
"The shares represented by this certificate have been
acquired for investment and have not been registered
under the Securities Act of 1933. The shares may not
be sold or transferred in the absence of such
registration or an exemption therefrom under said Act."
"The shares represented by this certificate have been
acquired pursuant to a Stock Option Agreement, dated
as of August 16, 1999, a copy of which is on file
with the Company, and may not be transferred, pledged
or disposed of except in accordance with the terms
and conditions thereof."
16. Restriction on Transfer of Stock Option Agreement and Option
Shares. Notwithstanding anything in this Agreement to the contrary, and in
addition to the provisions of Section 12 of this Agreement, the Employee hereby
agrees that he or she shall not sell, transfer by any means or otherwise dispose
of the Option Shares acquired by him or her without registration under the 1933
Act, or in the event that they are not so registered, unless (a) an exemption
from the 1933 Act registration requirements is available thereunder, and (b) the
Employee has furnished the Company with notice of such proposed transfer and the
Company's legal counsel, in its reasonable opinion, shall deem such proposed
transfer to be so exempt.
16A. Registration Right. The Company agrees to file a registration
statement ("Registration Statement") on Form S-8 (or successor form) to register
the Option Shares for issuance to Employee on or prior to the date the Option or
any portion thereof first becomes exercisable. The Company will bear all
expenses and pay all fees incurred in connection with the filing and
modification or amendment of the Registration Statement, exclusive of
underwriting discounts, and commissions payable in respect of the sale of the
Common Stock and any counsel for the Employee. Moreover, if the Company fails to
comply with the provisions of this Section 16A, the Company shall, in addition
to any other equitable or other relief available to the Employee, be liable for
any and all incidental, special and consequential damages and damages due to
loss of profits sustained by the Employee.
17. Interpretation. Any dispute regarding the interpretation of this
Agreement shall be submitted by the Employee or the Company to the Committee for
review. The resolution of such a dispute by the Board or Committee shall be
final and binding on the Company and on the Employee.
18. Miscellaneous.
18.1. Notices. All notices, requests, deliveries, payments, demands
and other communications which are required or permitted to be given under this
Agreement shall be in writing and shall be either delivered personally or by
private courier (e.g., Federal Express), or sent by registered or certified
mail, return receipt requested, postage prepaid, to the parties at their
respective addresses set forth herein, or to such other address as either shall
have specified by notice in writing to the other. Notice shall be deemed duly
given hereunder when delivered in person or by private courier, or on the third
(3rd) business day following deposit in the United States mail as set forth
above.
18.2. [Intentionally omitted.]
18.3. Successors and Assigns. The Company may assign any of its
rights under this Agreement. This Agreement shall be binding upon and inure to
the benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer set forth herein, this Option Agreement shall be
binding upon the Employee and the Employee's heirs, executors, administrators,
legal representatives, successors and assigns.
18.4. Entire Agreement. This Agreement constitutes the entire
agreement of the parties hereto and supersede all prior undertakings and
agreements, oral or written, with respect to the subject matter hereof. The
Agreement may not be contradicted by evidence of any prior or contemporaneous
agreement. To the extent that the policies and procedures of the Company apply
to the Employee and are inconsistent with the terms of the Agreement, the
provisions of the Agreement shall control.
18.5. Amendments; Waivers. The Agreement may not be modified,
amended, or terminated except by an instrument in writing, signed by each of the
parties (in the case of the Company, such instrument must be signed by the
President or Chief Executive Officer of the Company to be effective). No failure
to exercise and no delay in exercising any right, remedy, or power under the
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, or power under the Agreement preclude any other
or further exercise thereof, or the exercise of any other right, remedy, or
power provided herein or by law or in equity. All rights and remedies, whether
conferred by the Agreement, by any other instrument or by law, shall be
cumulative, and may be exercised singularly or concurrently.
18.6. Severability; Enforcement. If any provision of this Agreement
is held invalid, illegal or unenforceable in any respect (an "Impaired
Provision"), (a) such Impaired Provision shall be interpreted in such a manner
as to preserve, to the maximum extent possible, the intent of the parties, (b)
the validity, legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby, and (c) such decision shall not
affect the validity, legality or enforceability of such Impaired Provision under
other circumstances. The parties agree to negotiate in good faith and agree upon
a provision to substitute for the Impaired Provision in the circumstances in
which the Impaired Provision is invalid, illegal or unenforceable.
18.7. Attorneys' Fees. In the event of any arbitration or
litigation between the parties arising under or related to this Agreement (a
"Covered Dispute"), the substantially prevailing party in the Covered Dispute
(the "Prevailing Party") shall be entitled to receive from the other party the
Prevailing Party's reasonable attorneys' fees and costs, including, without
limitation, the cost at the hourly charges routinely charged therefor by the
persons providing the services, reasonable fees and/or allocated costs of staff
(in-house) counsel, and fees and expenses of experts retained by counsel in
connection with such arbitration or litigation and with any and all appeals or
petitions therefrom, in addition to any other relief to which the Prevailing
Party may be entitled. A party to a Covered Dispute shall be the Prevailing
Party in such Covered Dispute if the claims against such party are dismissed at
any stage in the arbitration or litigation.
18.8. Governing Law; Jurisdiction. The Agreement shall be governed
by and construed in accordance with the law of the State of New York, without
reference to that body of law concerning choice of law or conflicts of law,
except that the General Corporation Law of the State of Delaware ("GCL") shall
apply to all matters governed by the GCL, including without limitation matters
concerning the validity of grants of stock options and actions of the Company's
board of directors or any committee thereof. The parties agree that, subject to
the agreement to arbitrate disputes set forth in Section 18.12, the sole and
exclusive judicial venues for any dispute, difference, cause of action or legal
action of any kind that any party, or any officer, director, employee, agent or
permitted successor or assign of any party may bring against any other party, or
against any officer, director, employee, agent or permitted successor or assign
of any party, related to this Agreement (a "Proceeding"), shall be (a) the
United States District Court for the Southern District of New York, if such
court has statutory jurisdiction over the Proceeding and (b) the Supreme Court
of the State of New York in the County of New York (collectively, the "New York
Courts"). Each of the parties hereby expressly (i) consents to the personal
jurisdiction of each of the New York Courts with respect to any Proceeding; (ii)
agrees that service of process in any Proceeding may be effected upon such party
in the manner set forth in Section 18.1 (as well as in any other manner
prescribed by law); and (iii) waives any objection, whether on the grounds of
venue, residence or domicile or on the ground that the Proceeding has been
brought in an inconvenient forum, to any Proceeding brought in either of the New
York Courts. Notwithstanding the foregoing, nothing in this paragraph alters the
parties' agreement to arbitrate disputes as set forth in Section 18.12.
18.9. No Duty to Disclose. The Employee acknowledges and agrees
that, except for the information provided to the Employee by the Company
pursuant to Section 15(b) and 15(d) prior to execution of this Agreement,
neither the Company nor any of the Company's officers, directors, shareholders,
employees, agents or representatives has any duty or obligation to disclose to
the Employee any information whatsoever, including but not limited to
information concerning the Company that might if made public affect the value of
the Option Shares. Such information includes without limitation any information
concerning the Company's actual or potential financial performance, actual or
potential material contracts to which the Company is or may become a party, or
actual or potential material transactions that involve or may involve the
Company, including but not limited to plans to effect a merger or to acquire or
dispose of a material amount of assets. The Employee acknowledges and
understands that he or she (a) might exercise his or her Option (or a portion
thereof) prior to the public dissemination of such information, and that the
value of the Option Shares may decrease after the public dissemination of such
information, or (b) might exercise his or her Option (or a portion thereof) and
sell, pledge or encumber the Option Shares (or a portion thereof) prior to the
public dissemination of such information, and that the value of the Option
Shares may increase after the public dissemination of such information; and the
Employee acknowledges and agrees that he or she will not bring or participate in
any claim whatsoever against the Company or against any of the Company's
officers, directors, shareholders, employees, agents or representatives related
to the failure to have disclosed such information prior to the Employee's
exercise of the Option and/or sale, pledge or encumbrance of the Option Shares.
18.10. Rights of Third Parties. Nothing in this Agreement, express
or implied, is intended to confer upon any party other than the parties hereto
or their respective permitted successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
18.11 Headings. The Section headings used herein are for
convenience only and do not define, limit or construe the content of such
sections. All references in this Agreement to Section numbers refer to Sections
of this Agreement, unless otherwise indicated.
18.12. Agreement to Arbitrate. The Employee and the Company
recognize that differences may arise between them during or following the
Employee's employment with the Company, and that those differences may or may
not be related to the grant of the Option herein or to the Employee's
employment. The Employee understands and agrees that by entering into this
Agreement, the Employee anticipates the benefits of a speedy, impartial
dispute-resolution procedure of any such differences. As used in this Section
18.12 and its subparts, the "Company" shall also refer to all benefit plans, the
benefit plans' sponsors, fiduciaries, administrators, affiliates, and all
successors and assigns of any of them.
(a) Arbitrable Claims. (i) ALL DISPUTES BETWEEN THE EMPLOYEE (AND HIS
OR HER PERMITTED SUCCESSORS AND ASSIGNS) AND THE COMPANY (AND ITS AFFILIATES,
SHAREHOLDERS, DIRECTORS, OFFICERS, AGENTS AND PERMITTED SUCCESSORS AND ASSIGNS)
RELATING IN ANY MANNER WHATSOEVER TO EMPLOYEE'S EMPLOYMENT OR TO THE TERMINATION
THEREOF, INCLUDING WITHOUT LIMITATION ALL DISPUTES ARISING UNDER THIS AGREEMENT
(COLLECTIVELY, "ARBITRABLE CLAIMS") SHALL BE RESOLVED EXCLUSIVELY BY BINDING
ARBITRATION. Arbitrable Claims shall include, but are not limited to, contract
(express or implied) and tort claims of all kinds, as well as all claims based
on any federal, state, or local law, statute, or regulation (including but not
limited to claims alleging unlawful harassment or discrimination in violation of
Title VII and/or Title IX of the U.S. Code, of the Age Discrimination in
Employment Act, of the Americans with Disabilities Act, of state statute, or
otherwise), excepting only claims under applicable workers' compensation law and
unemployment insurance claims. Arbitration shall be final and binding upon the
parties and shall be the exclusive remedy for all Arbitrable Claims. Except as
provided in Section 18.12(a)(ii), the Arbitrator (as defined below) shall decide
whether a claim is an Arbitrable Claim. THE PARTIES HEREBY WAIVE ANY RIGHTS THAT
THEY MAY HAVE TO TRIAL BY JURY IN REGARD TO ARBITRABLE CLAIMS.
(ii) Notwithstanding anything herein to the contrary, however,
the Company may enforce in court, without prior resort to arbitration, any claim
concerning actual or threatened unfair competition and/or the actual or
threatened use and/or unauthorized disclosure of confidential or proprietary
information of the Company. The court shall determine whether a claim concerns
actual or threatened unfair competition and/or the actual or threatened use
and/or unauthorized disclosure of confidential or proprietary information of the
Company.
(b) Arbitration Procedure.
(i) American Arbitration Association Rules; Initiation of
Arbitration; Location of Arbitration. Arbitration of Arbitrable Claims shall be
in accordance with the Employment Dispute Resolution Rules of the American
Arbitration Association ("AAA Rules"), except as provided otherwise in this
Agreement. Arbitration shall be initiated by providing written notice to the
other party with a statement of the claim(s) asserted, the facts upon which the
claim(s) are based, and the remedy sought. This notice shall be provided to the
other party within six (6) months of the acts or omissions complained of. Any
claim not initiated within this limitations period shall be null and void, and
the Company and the Employee waive all rights under statutes of limitation of
different duration. The arbitration shall take place in New York, New York.
(ii) Selection of Arbitrator. All disputes involving Arbitrable
Claims shall be decided by a single arbitrator (the "Arbitrator"), who shall be
selected as follows. The American Arbitration Association ("AAA") shall give
each party a list of eleven (11) arbitrators drawn from its panel of employment
arbitrators (the "Name List"). Each party may strike up to six (6) names on the
Name List it deems unacceptable, and shall notify the other party of the names
it has stricken, within fourteen (14) calendar days of the date the AAA gave
notice of the Name List. If only one common name on the Name List remains
unstricken by the parties, that individual shall be designated as the
Arbitrator. If more than one common name remains on the Name Lists unstricken by
parties, Employee shall strike one of the remaining names and notify the
Company, within seven (7) calendar days of notification of the list of
unstricken names. If, after Employee strikes a name as set forth in the
preceding sentence, there is still two or more unstricken names, the Company and
the Employee shall alternately strike names (with the Company having the next
strike) and notify the other party of the stricken name within seven (7)
calendar days, until only one remains. If no common name on the initial the Name
List remains unstricken by the parties, the AAA shall furnish an additional list
or lists, and the parties shall proceed as set forth above, until an Arbitrator
is selected.
(iii) Conduct of the Arbitration.
(A) Discovery. To help prepare for the arbitration, the
Employee and the Company shall be entitled, at their own expense, to learn about
the facts of a claim before the arbitration begins. Each party shall have the
right to take the deposition of one (1) individual and any expert witness
designated by another party. Each party also shall have the right to make
requests for production of documents to any party. Additional discovery may be
had only where the Arbitrator so orders, upon a showing of substantial need. At
least thirty (30) days before the arbitration, the parties must exchange lists
of witnesses, including any expert witnesses, and copies of all exhibits
intended to be used at the arbitration.
(B) Authority. The Arbitrator shall have jurisdiction to
hear and rule on pre-hearing disputes and is authorized to hold pre-hearing
conferences by telephone or in person as the Arbitrator deems necessary. The
Arbitrator shall have the authority to entertain a motion to dismiss and/or a
motion for summary judgment by any party and shall apply the standards governing
such motions under the Federal Rules of Civil Procedure. The Arbitrator shall
apply the substantive law (and the law of remedies, if applicable) of the state
in which the claim arose, or federal law, or both, as applicable to the claim(s)
asserted. The Arbitrator shall have the authority to award equitable relief,
damages, costs and fees as provided by the law for the particular claim(s)
asserted. The arbitrator shall not have the power to award remedies or relief
that a New York court could not have awarded. The Federal Rules of Evidence
shall apply. The burden of proof shall be allocated as provided by applicable
law. Except as provided in Section 18(a)(ii), the Arbitrator, and not any
federal, state, or local court or agency, shall have exclusive authority to
resolve any dispute relating to the interpretation, applicability,
enforceability or formation of the Agreement, including but not limited to any
claim that all or any part of any of the Agreement is void or voidable and any
assertion that a dispute between the Employee and the Company is not an
Arbitrable Claim. The arbitration shall be final and binding upon the parties.
(C) Costs. Either party, at its expense, may arrange for
and pay the cost of a court reporter to provide a stenographic record of the
proceedings. If the Arbitrator orders a stenographic record, the parties shall
split the cost. Except as otherwise provided in this Section 18.12 and in
Section 18.7, the Employee and the Company shall equally share the fees and
costs of the arbitration and the Arbitrator.
(c) Confidentiality. All proceedings and documents prepared in
connection with any Arbitrable Claim shall be confidential and, unless otherwise
required by law, the subject matter thereof shall not be disclosed to any person
other than the parties to the proceeding, their counsel, witnesses and experts,
the Arbitrator, and, if involved, the court and court staff. All documents filed
with the Arbitrator or with a court shall be filed under seal. The parties shall
stipulate to all arbitration and court orders necessary to effectuate fully the
provisions of this subparagraph concerning confidentiality.
(d) Enforceability. Either party may bring an action in any court of
competent jurisdiction to compel arbitration under this Agreement and to enforce
an arbitration award. Except as provided above, neither party shall initiate or
prosecute any lawsuit or administrative action in any way related to any
Arbitrable Claim. The Federal Arbitration Act shall govern the interpretation
and enforcement of this Section 18.12.
INDIVIDUAL INVESTOR GROUP, INC.
125 Broad Street, 14th Floor
New York, New York 10004
By:
Jonathan L. Steinberg
Chief Executive Officer
Acceptance
The Employee hereby acknowledges: I have received a copy of this
Agreement; I have had the opportunity to consult legal counsel in
regard to this Agreement, and have availed myself of that opportunity
to the extent I wish to do so (I understand the Company's attorneys
represent the Company and not myself, and I have not relied on any
advice from the Company's attorneys); I have read and understand this
Agreement; I am fully aware of legal effect of this agreement,
including without limitation the effect of Section 18.12 hereof
concerning arbitration; and I have entered into this Agreement freely
and voluntarily and based on my own judgment and not on any
representations or promises other than those contained in this
Agreement. The Employee accepts this Option subject to all the terms
and conditions of this Agreement.
The Employee acknowledges that there may be adverse tax consequences
upon exercise of this Option or disposition of the Option Shares and
that the Employee should consult a tax adviser prior to such exercise
or disposition.
Date The Employee
Print Name:
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