Exhibit 10.5
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is effective as of the ___ day
of ________ 20__, between Xceed Inc., a Delaware corporation (the "Company"),
and ___________________, an individual resident of ________ (the "Employee").
WITNESSETH:
WHEREAS, it is the desire of the Company to offer the Employee employment
with the Company upon the terms and subject to the conditions set forth herein;
and
WHEREAS, it is the desire of the Employee to accept the Company's offer of
employment with the Company upon the terms and subject to the conditions set
forth herein.
NOW THEREFORE, in consideration of the premises and mutual covenants,
conditions and agreements contained herein and for such other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, each intending to be legally bound hereby, agree as follows:
1. EMPLOYMENT. The Company hereby agrees to employ the Employee and the
Employee hereby agrees to be employed by the Company upon the terms and subject
to the conditions set forth herein for the period of employment as set forth in
Section 2 hereof (the "Period of Employment").
2. TERM; PERIOD OF EMPLOYMENT. Subject to extension or termination as
hereinafter PROVIDED, the Period of Employment hereunder shall be from the date
hereof (the "Effective Date") through the third (3rd) anniversary of the
Effective Date. Thereafter, the Period of Employment may be extended for
successive one (1) year periods at the option of the Company upon delivery of
written notice by the Company to the Employee, subject to acceptance by the
Employee, not less than thirty (30) days prior to the expiration of the Period
of Employment, as previously extended. The phrase "Period of Employment" as used
herein shall, unless otherwise indicated: (a) specifically include any
extensions permitted hereunder or provided herein, except as otherwise noted;
and (b) be deemed to have terminated as of the date of any notice provided to
the Employee or the Company, as applicable, pursuant to Section 9 hereof,
notwithstanding the Company's obligation to pay the Employee pursuant to
Subsections 9(b) and 9(c) hereof.
3. OFFICE AND DUTIES. During the Period of Employment:
(a) the Employee shall be employed by the Company as its
______________________ and shall have the authority, duties, and
responsibilities reasonably prescribed by, and shall report to, the Chief
Executive Officer of the Company;
(b) the office of the Employee shall be located in the ________
metropolitan area;
(c) the Employee shall devote substantially all of his working time
to the business and affairs of the Company except for vacations, illness or
incapacity, as hereinafter set forth; and
(d) the Employee shall be entitled to annual vacation in an amount
substantially the same as currently being provided by the Company to similarly
titled employees.
In consideration of his employment hereunder, the Employee agrees that he
shall not, directly or indirectly, individually or as a member of any
partnership or joint venture, or as an officer, director, employee or agent of
any other person, firm, corporation, business organization or other entity,
engage in any trade or business activity or pursuit for his own account or for,
or on behalf of, any other person, firm, corporation, business organization or
other entity, irrespective of whether the same materially competes, conflicts or
interferes with that of the Company or the performance of the Employee's
obligations hereunder. The Employee represents and warrants that the Employee is
not party to any agreement which provides for his employment with or the
rendering of his services to any other individual or entity whatsoever. Further,
the Employee represents and warrants that he is not party to any agreement which
conflicts with or contradicts any provision hereof or otherwise restricts in any
way: (i) his ability to perform his obligations hereunder; or (ii) his right to
compete with a previous employer or such employer's business.
4. COMPENSATION AND BENEFITS. In exchange for the services rendered by
the Employee pursuant hereto in any capacity during the Period of Employment,
including without limitation, services as an officer, director, or member of any
committee of the Company or any affiliate, subsidiary or division thereof, the
Employee shall be compensated as follows:
(a) COMPENSATION. The Company shall pay the Employee compensation
equal to at least _______________________ Dollars ($________.00) per annum (the
"Annual Salary") at a rate of _________________________ Dollars and Thirty Three
Cents ($________.33) per month (each monthly amount, as the same may be
increased from time to time by virtue of the adjustments set forth herein below,
shall be defined as the "Monthly Compensation"). Such salary shall be payable in
accordance with the customary payroll practices of the Company and will be
reviewed by the Chief Executive Officer annually.
(b) OPTIONS. The Employee shall herewith be granted, under and in
accordance with the Company's Millennium Stock Option Plan (the "Plan") and
pursuant to the Stock Option Agreement in the form of EXHIBIT A attached hereto
and made a part hereof (the "Stock Option Agreement"), a non-qualified stock
option (as described in the Plan) to purchase up to _________________ (_______)
shares of common stock of the Company (the "Common Stock") at an exercise price
per share equal to ________ Dollars ($_____) (the "Option"). The grant date of
the Option shall be the date of this Agreement (the "Grant Date"). Subject to
any acceleration provisions set forth elsewhere in this Agreement, the Option
shall vest and become exercisable to purchase (by cashless exercise in the
discretion of the Employee pursuant to the provisions of the Stock Option
Agreement): (i) ____________ (______) shares of Common Stock commencing on the
first (1st) anniversary of the Grant Date; (ii) another ____________
2
(______) shares of Common Stock commencing on the second (2nd) anniversary of
the Grant Date; and (iii) another ____________ (______) shares of Common Stock
commencing on the third (3rd) anniversary of the Grant Date; PROVIDED, HOWEVER,
that it shall be a condition precedent to the vesting (pursuant to this
paragraph or otherwise in this Agreement) of any portion of the foregoing Option
that the Employee be employed up to and through the respective date of vesting
as set forth herein. The Company represents and warrants that the shares of
Common Stock subject to the Option shall be registered with the Securities
Exchange Commission under the Securities Act of 1933, as amended, not later than
such time that the Option first becomes exercisable. The Option shall expire ten
(10) years from Grant Date. The Company may grant the Employee additional
options to purchase shares of Common Stock if, in the sole judgment of the Chief
Executive Officer, the earnings of the Company or the services of the Employee
merit such options. Upon the execution of this Agreement by the Employee, the
Company will execute and deliver to the Employee the Stock Option Agreement with
respect to the Option setting forth the terms and conditions of the Option
described in this paragraph and elsewhere in this Agreement. The number, price,
and kind of shares subject to the Option shall be subject to proportional
adjustment if the shares of Common Stock of the Company are increased,
decreased, or exchanged for different securities through any recapitalization,
reclassification, stock-split, stock dividend, or like capital adjustment.
(c) BONUS. The Company may pay the Employee a bonus if, in the sole
judgment of the Chief Executive Officer, the earnings of the Company and/or the
services of the Employee merit such a bonus.
(d) WITHHOLDING AND EMPLOYMENT TAX. Payment of all compensation
hereunder shall be subject to customary withholding tax and other employment
taxes as may be required with respect to compensation paid by an
employer/corporation to an employee.
5. BUSINESS EXPENSES. The Company shall reimburse the Employee for all
reasonable travel and other out-of-pocket expenses incurred by the Employee in
connection with the performance of his duties under this Agreement, PROVIDED
THAT the same are previously authorized by the Company, in accordance with such
procedures as the Company may from time to time establish and as required to
preserve any deductions for federal income taxation purposes to which the
Company may be entitled.
6. DISABILITY. The Company shall provide the Employee with substantially
the same disability insurance benefits as those, if any, currently being
provided by the Company to similar employees.
7. DEATH. In the event of the Employee's death, the obligation of the
Company to make payments pursuant to Section 4 hereof shall cease as of the date
of such Employee's death and the Company shall pay to the estate of the Employee
any amount due to the Employee under Sections 4 and 5 which has accrued up to
the date of death.
8. OTHER BENEFITS. The Employee shall be entitled to participate in
fringe benefit, deferred compensation and stock option plans or programs of the
Company, if any, to the extent
3
that his position, tenure, salary, age, health and other qualifications make him
eligible to participate, subject to the rules and regulations applicable
thereto. Such additional benefits shall include, but not be limited to, paid
sick leave and individual health insurance (all in accordance with the policies
of the Company), parking, professional dues and association memberships. Except
as specifically set forth herein, the terms of and participation by the Employee
in, any deferred compensation plan or program shall be determined by the Company
in its sole discretion. The Company shall provide the Employee with
substantially the same indemnification and coverage under "directors and
officers" insurance as those currently being provided by the Company to its
directors and similar employees.
9. TERMINATION OF EMPLOYMENT. Notwithstanding any other provision of this
Agreement, employment hereunder may be terminated:
(a) By the Company, in the event of the Employee's death or
Disability (as hereinafter defined) or for Just Cause (as hereinafter defined).
"Just Cause" shall mean: (i) the Employee's indictment for, conviction of or the
entering into of a plea of guilty to a crime involving a felonious act or acts,
including dishonesty, fraud or moral turpitude by the Employee; (ii) the
Employee's willful misconduct, gross negligence or dishonesty in the performance
by the Employee of his duties; and (iii) the Employee's breach of Sections 10 or
11 hereof. The Employee shall be deemed to have a "Disability" for purposes of
this Agreement if he is unable to perform, by reason of physical or mental
incapacity, a material portion of his duties or obligations under this Agreement
for a period of thirty (30) consecutive days in any 365-day period. The Chief
Executive Officer shall determine whether and when the Disability of the
Employee has occurred or when the Employee shall be subject to a Just Cause
determination and such determination shall not be arbitrary or unreasonable.
Based upon the determination of the Chief Executive Officer, the Company shall
by written notice to the Employee given within thirty (30) days after discovery
of the occurrence of an event or circumstance which constitutes "Just Cause,"
specify the event or circumstance giving rise to the Company's exercise of its
right hereunder and, with respect to Just Cause arising under Sections 9(a)(i)
or (iii), the Employee's employment hereunder shall be deemed terminated as of
the date of such notice; with respect to Just Cause arising under Section
9(a)(ii), the Company shall provide the Employee with thirty (30) days written
notice of such violation and the Employee shall be given reasonable opportunity
during such thirty (30) day period to cure the subject violation;
(b) By the Company other than pursuant to Section 9(a) above, in its
sole and absolute discretion, PROVIDED THAT in such event the Company shall, as
liquidated damages or severance pay, or both, pay the Employee an amount equal
to: (i) the unpaid balance of the Annual Salary up to the date which is twelve
(12) months from the Effective Date and the Option shall immediately vest and
become exercisable to purchase ____________ (______) shares of Common Stock, if
termination as contemplated by this Section 9(b) occurs on or prior to the first
(1st) anniversary of the Effective Date or (ii) the Employee's then Monthly
Compensation multiplied by twelve (12), if termination as contemplated by this
Section 9(b) occurs after the first (1st) anniversary of the Effective Date; and
4
(c) By the Employee upon any material violation of any material
provision of this Agreement by the Company (including, without limitation, the
Company's reduction of any salary or benefit hereunder or relocation of the
Employee's offices outside the area described in Section 3(b)), which violation
remains unremedied for a period of thirty (30) days after written notice (the
"Violation Notice") of the same is delivered to the Company by the Employee,
PROVIDED THAT in such event, the Company shall, as liquidated damages or
severance pay, or both, pay to the Employee an amount equal to: (i) the unpaid
balance of the Annual Salary up to the date which is twelve (12) months from the
Effective Date and the Option shall immediately vest and become exercisable to
purchase ____________ (______) shares of Common Stock, if the Violation Notice
is delivered to the Company on or prior to the first (1st) anniversary of the
Effective Date or (ii) the Employee's then Monthly Compensation multiplied by
twelve (12), if the Violation Notice is delivered to the Company after the first
(1st) anniversary of the Effective Date.
(d) By the Employee after the Employee gives written notice to the
Company of the Employee's election to voluntarily resign his employment from the
Company.
Nothing set forth in this section shall: (i) require the Employee in the
event of termination pursuant to Subsections 9(b) or 9(c) above to mitigate
damages during the period in which the Employee is receiving payment thereunder
(the "Severance Period"); or (ii) entitle the Company to offset the amounts owed
by the Company to the Employee pursuant to Subsections 9(b) or 9(c) by any
income or compensation received by the Employee from sources other than the
Company during such Severance Period. In addition, the Company shall not be
entitled to withhold or otherwise offset any amounts payable to the Employee
under Subsections 9(b) or 9(c) above in response to an alleged violation by the
Employee of any of the obligations which are imposed under this Agreement and
survive termination hereof until such time as a court of competent jurisdiction
or other appropriate governing body has rendered judgment or otherwise made a
determination with respect to whether such violation has occurred.
10. NON-COMPETITION. In consideration of the Company's agreement to pay
the Employee the salary set forth herein, the Employee agrees that, during the
Period of Employment and for twelve (12) months following the date of
termination:
(a) the Employee shall not, anywhere in North America, directly or
indirectly, individually or as a member of any partnership or joint venture, or
as an officer, director, stockholder, employee or agent of any other person,
firm, corporation, business organization or other entity, participate in, engage
in, solicit or have any financial or other interest in any activity or any
business or other enterprise in any fields which at the time of termination is
competitive with the business or is in substantially the same business as the
Company or any subsidiary or division thereof (unless the Chief Executive
Officer shall have authorized such activity and the Company shall have consented
thereto in writing), as an individual or as a member of any partnership or joint
venture, or as an officer, director, stockholder, investor, employee or agent of
any other person, firm, corporation, business organization or other entity; and
5
(b) the Employee shall not: (i) solicit or induce any employee of the
Company to terminate his employment or otherwise leave the Company's employ or
hire any such employee (unless the Chief Executive Officer shall have authorized
such employment and the Company shall have consented thereto in writing); or
(ii) contact or solicit any clients or customers of the Company, either as an
individual or as a member of any partnership or joint venture, or as an officer,
director, stockholder, investor, employee or agent of any other person, firm,
corporation, business organization or other entity.
11. CONFIDENTIAL INFORMATION. The parties hereto recognize that it is
fundamental to the business and operation of the Company, its affiliates,
subsidiaries and divisions thereof to preserve the specialized knowledge, trade
secrets, and confidential information of the foregoing concerning the field of
advertising, marketing and interactive Internet solutions. The strength and
good-will of the Company is derived from the specialized knowledge, trade
secrets, and confidential information generated from experience through the
activities undertaken by the Company, its affiliates, subsidiaries and divisions
thereof. The disclosure of any of such information and the knowledge thereof on
the part of competitors would be beneficial to such competitors and detrimental
to the Company, its affiliates, subsidiaries and divisions thereof, as would the
disclosure of information about the marketing practices, pricing practices,
costs, profit margins, design specifications, analytical techniques, concepts,
ideas, process developments (whether or not patentable), customer and client
agreements, vendor and supplier agreements and similar items or technologies. By
reason of his being an employee of the Company, in the course of his employment,
the Employee has or shall have access to, and has obtained or shall obtain,
specialized knowledge, trade secrets and confidential information such as that
described herein about the business and operation of the Company, its
affiliates, subsidiaries and divisions thereof. Therefore, the Employee hereby
agrees as follows, recognizing and acknowledging that the Company is relying on
the following in entering into this Agreement:
(a) The Employee hereby sells, transfers and assigns to the Company,
or to any person or entity designated by the Company, any and all right, title
and interest of the Employee in and to all creations, designs, inventions,
ideas, disclosures and improvements, whether patented or unpatented, and
copyrightable material, made or conceived by the Employee solely or jointly, in
whole or in part, during the term hereof (commencing with the date of the
Employee's employment with the Company) which: (i) relate to methods, apparatus,
designs, products, processes or devices created, promoted, marketed,
distributed, sold, leased, used, developed, relied upon or otherwise provided by
the Company or any affiliate, subsidiary or division thereof; or (ii) otherwise
relate to or pertain to the business, operations or affairs of the Company or
any affiliate, subsidiary or division thereof. Whether during the Period of
Employment or thereafter, the Employee shall execute and deliver to the Company
such formal transfers and assignments and such other papers and documents as may
be required of the Employee to permit the Company or any person or entity
designated by the Company to file, enforce and prosecute the patent applications
relating to any of the foregoing and, as to copyrightable material, to obtain
copyright thereon; and
(b) Notwithstanding any earlier termination, the Employee shall,
except as otherwise required or compelled by law, keep secret and retain in
strict confidence, and shall not
6
use, disclose to others, or publish any information, other than information
which is in the public domain or becomes publicly available through no wrongful
act on the part of the Employee, which information shall be deemed not to be
confidential information, relating to the business, operation or other affairs
of the Company, its affiliates, subsidiaries and divisions thereof including but
not limited to confidential information concerning the design and marketing
practices, pricing practices, costs, profit margins, products, methods,
guidelines, procedures, engineering designs and standards, design
specifications, analytical techniques, technical information, customer, client,
vendor or supplier information, employee information, and any and all other
confidential information acquired by him in the course of his past or future
services for the Company or any affiliate, subsidiary or division thereof. The
Employee shall hold as the Company's property all notes, memoranda, books,
records, papers, letters, formulas and other data and all copies thereof and
therefrom in any way relating to the business, operation or other affairs of the
Company, its affiliates, subsidiaries and divisions thereof whether made by him
or otherwise coming into his possession. Upon termination of his employment or
upon the demand of the Company, at any time, the Employee shall deliver the same
to the Company within five (5) business days of such termination or demand. The
provisions of this Section 11 shall be inoperative as to such portions of any
information that are or become generally available to the public through no
fault or action of the Employee.
12. REASONABLENESS OF RESTRICTIONS. The Employee hereby agrees that the
restrictions in this Agreement, including without limitation, those relating to
the duration of the provisions hereof and the territory to which such
restrictions apply, are necessary and fundamental to the protection of the
business and operation of the Company, its affiliates, subsidiaries and
divisions thereof and are reasonable and valid. In addition, the Employee
acknowledges that he has agreed to such restrictions voluntarily.
13. REFORMATION OF CERTAIN PROVISIONS. In the event that a court of
competent jurisdiction determines that the non-compete or the confidentiality
provisions hereof are unreasonably broad or otherwise unenforceable because of
the length of their respective terms or the breadth of their territorial scope,
or for any other reason, the parties hereto agree that such court may reform the
terms and/or scope of such covenants so that the same are reasonable and, as
reformed, shall be enforceable.
14. REMEDIES. Subject to Section 15 below, in the event of a breach of any
of the provisions of this Agreement, the non-breaching party shall provide
written notice of such breach to the breaching party. The breaching party shall
have thirty (30) days after receipt of such notice in which to cure its breach.
If, on the thirty-first (3lst) day after receipt of such notice, the breaching
party shall have failed to cure such breach, the non-breaching party thereafter
shall be entitled to seek damages. It is acknowledged that this Agreement is of
a unique nature and of extraordinary value and of such a character that a breach
hereof by the Employee shall result in irreparable damage and injury to the
Company for which the Company may not have any adequate remedy at law.
Therefore, if on the thirty-first (31st) day after receipt of such notice, the
breaching party shall have failed to cure such breach, the non-breaching party
shall also be entitled to seek a decree of specific performance against the
breaching party, or such other relief by way of restraining order, injunction or
otherwise as may be appropriate to ensure compliance
7
with this Agreement. The remedies provided by this section are non-exclusive and
the pursuit of such remedies shall not in any way limit any other remedy
available to the parties with respect to this Agreement, including, without
limitation, any remedy available at law or equity with respect to any
anticipatory or threatened breach of the provisions hereof.
15. CERTAIN PROVISIONS; SPECIFIC PERFORMANCE. In the event of a breach by
the Employee of the non-competition or confidentiality provisions hereof, such
breach shall not be subject to any cure provision hereof and the Company shall
be entitled to seek immediate injunctive relief and a decree of specific
performance against the Employee. Such remedy is non-exclusive and shall be in
addition to any other remedy to which the Company or any affiliate, subsidiary
or division thereof may be entitled.
16. CONSOLIDATION; MERGER; SALE OF ASSETS.
(a) Nothing in this Agreement shall preclude the Company from
combining, consolidating or merging with or into, or transferring all or
substantially all of its assets to, another corporation or other entity, or
electing any other kind of corporate combination (each, a "Transaction") or
entering into a partnership or joint venture (each, a "Venture") with another
corporation or entity, PROVIDED THAT, in the event that the Company is not the
surviving entity following such Transaction or Venture (such other surviving
entity being referred to hereinafter as a "Successor-in-Interest"), the
Successor-in-Interest is bound by the terms of this Agreement or otherwise
assumes all of the obligations and undertakings of the Company hereunder. Upon
such a Transaction or Venture, this Agreement shall inure to the benefit of, be
assumed by, and be binding upon such Successor-in-Interest. The term "Company,"
as used in this Agreement, shall be deemed to include such Successor-in-Interest
and this Agreement shall continue in full force and effect and, subject to
Section 16(b), shall entitle the Employee and his heirs, beneficiaries and
representatives to exactly the same compensation, benefits, perquisites,
payments and other rights as would have been their entitlement had such
combination, consolidation, merger, transfer of assets or formation of such
partnership or joint venture not occurred.
(b) Notwithstanding any other vesting schedule for the Option in this
Agreement, in the event of a Change in Control and the Successor-in-Interest:
(i) does not assume the obligations of the Company hereunder; or (ii) otherwise
breaches any provision of this Agreement, then the Company or the
Successor-in-Interest, as the case may be, shall be obligated: (x) if the Change
in Control and the circumstances contemplated in Subsections 16(b)(i) or (ii)
above occur on or prior to the first (1st) anniversary date of the Effective
Date, to pay the Employee an amount equal to the unpaid balance of the Annual
Salary up to the date which is twelve (12) months from the Effective Date and
the Option shall immediately vest and become exercisable to purchase
____________ (______) shares of Common Stock; or (y) if the Change in Control
and the circumstances contemplated in Subsections 16(b)(i) or (ii) above occur
after the first (1st) anniversary but on or prior to the third anniversary of
the Effective Date, to pay the Employee an amount equal to the Employee's then
Monthly Compensation multiplied by twelve (12) and the Option shall immediately
vest and become exercisable to purchase ____________ (______) shares of Common
Stock. A "Change in Control" means a
8
transaction or series of related transactions in which the Company (i) is
consolidated with or acquired by another entity in a merger or other
reorganization in which the holders of the outstanding voting stock of the
Company immediately preceding the consummation of such event, shall, immediately
following such event, hold, as a group, less than a majority of the voting
securities of the surviving or successor entity, (ii) sells or liquidates all or
substantially all of the Company's assets, or (iii) is not the surviving entity.
17. SURVIVAL. Sections 10 through 15 shall survive the termination for any
reason of this Agreement (whether such termination is by the Company, by the
Employee, upon the expiration of this Agreement by its terms or otherwise).
18. SEVERABILITY. The provisions of this Agreement shall be considered
severable in the event that any of such provisions are held by a court of
competent jurisdiction to be invalid, void or otherwise unenforceable. Such
invalid, void or otherwise unenforceable provisions shall be automatically
replaced by other provisions which are valid and enforceable and which are as
similar as possible in term and intent to those provisions deemed to be invalid,
void or otherwise unenforceable. Notwithstanding the foregoing, the remaining
provisions hereof shall remain enforceable to the fullest extent permitted by
law.
19. ENTIRE AGREEMENT; AMENDMENT. This Agreement and the Stock Option
Agreement contains the entire agreement between the Company and the Employee
with respect to the subject matter hereof. This Agreement may not be amended,
changed, modified or discharged, nor may any provision hereof be waived, except
by an instrument in writing, executed by or on behalf of the party against whom
enforcement of any amendment, waiver, change, modification or discharge is
sought. No course of conduct or dealing shall be construed to modify, amend or
otherwise affect any of the provisions hereof.
20. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
physically delivered, delivered by express mail or other expedited service or
upon receipt if mailed, postage prepaid, via first class mail as follows:
(a) To the Company: Xceed Inc.
233 Broadway
New York, New York 10279
Attention:
(b) To the Employee:
------------------------
------------------------
------------------------
and/or to such other persons and addresses as any party hereto shall have
specified in writing to the other.
9
21. ASSIGNABILITY. This Agreement shall not be assignable by the Employee,
but shall be binding upon and shall inure to the benefit of his heirs,
executors, administrators and legal representatives. This Agreement shall be
assignable by the Company to any affiliate, subsidiary or division thereof and
to any Successor-in-Interest, subject to the obligations of the Company or such
Successor-in-Interest under Section 16.
22. GOVERNING LAW. This Agreement shall be governed by and construed under
the laws of the State of Delaware, without regard to the principles of conflicts
of laws thereof.
23. WAIVER AND FURTHER AGREEMENT. Any waiver of any breach of any terms or
conditions of this Agreement shall not operate as a waiver of any other breach
of such terms or conditions or any other term or condition hereof nor shall any
failure to enforce any provision hereof operate as a waiver of such provision or
of any other provision hereof. Each of the parties hereto agrees to execute all
such further instruments and documents and to take all such further action as
the other party may reasonably require in order to effectuate the terms and
purposes of this Agreement.
24. HEADINGS OF NO EFFECT. The headings contained in this Agreement are
for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
[SIGNATURE PAGE IMMEDIATELY FOLLOWS]
10
[SIGNATURE PAGE TO EMPLOYMENT AGREEMENT BETWEEN XCEED INC. AND ____________]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
XCEED INC.
By:
-------------------------------------
Chief Executive Officer
EMPLOYEE
By:
-------------------------------------
-------------------------------------
EXHIBIT A
TO
EMPLOYMENT AGREEMENT
Stock Option Agreement
XCEED INC.
MILLENIUM STOCK OPTION PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Xceed Inc.
Millennium Stock Option Plan (the "PLAN") shall have the same defined meanings
in this Stock Option Agreement (this "AGREEMENT").
I. NOTICE OF STOCK OPTION GRANT
------------------------
------------------------
------------------------
The undersigned Optionee has entered into an Employment Agreement between
the Optionee and the Company of even date herewith (as amended, the "EMPLOYMENT
AGREEMENT").
The Optionee has been granted an Option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Agreement, as follows:
Date of Grant: __________, 20___
Vesting Commencement Date: __________, 20___
Exercise Price per Share: $ per Share
Total Number of Shares Granted:
Type of Option: [__] Incentive Option
[__] Non-Qualified Option
Term/Expiration Date: __________, 20___
Vesting Schedule: See Section 3 of Article II.
II. AGREEMENT
1. GRANT OF OPTION. Xceed Inc., a Delaware corporation (the "COMPANY"),
hereby grants to the Optionee named in the Notice of Stock Option Grant above
(the "OPTIONEE"), an option (the "OPTION") to purchase the number of shares of
Common Stock (the "SHARES") set forth in the Notice of Stock Option Grant above,
at the exercise price per Share set forth in the Notice of Stock Option Grant
(the "EXERCISE PRICE"), and subject to the terms and conditions of the Plan,
which is incorporated herein by reference; provided, however, that this
Agreement shall modify the provisions of the Plan where the Plan by its terms
permit a stock option agreement or employment agreement between the Company and
the Optionee to override or otherwise modify the terms of the Plan. In
accordance with Section 9.1 of the Plan, no termination or amendment of the Plan
shall, without the written consent of Optionee, affect or impair the rights of
Optionee hereunder.
If designated in the Notice of Stock Option Grant as an Incentive
Stock Option ("ISO"), this Option is intended to qualify as an Incentive Stock
Option as defined in Section 422 of the Code. Nevertheless, to the extent that
it exceeds $100,000 during any calendar year, this Option shall be treated as a
Nonqualified Stock Option ("NQO").
2. EXERCISE PRICE. The exercise price per Share for the Common Stock
subject to the Option shall be as set forth above in Section I.
3. VESTING SCHEDULE. The Option shall vest and become exercisable on the
following dates, if the Optionee is employed by, or providing service to, the
Company on the applicable date (the "VESTING SCHEDULE"):
Date Shares for Which the Option is Exercisable
---- ------------------------------------------
__________, 20___ _________ Shares
__________, 20___ another _________ Shares (_________ total Shares)
__________, 20___ another _________ Shares (_________ total Shares)
12
The vesting and exercisability of the Option is cumulative. If the
foregoing schedule would produce fractional Shares, the number of Shares for
which the Option is exercisable shall be rounded down to the nearest whole
Share. The Option shall be fully exercisable not later than the date that is
three (3) years after the Date of Grant if the Optionee is then employed by, or
providing services to, the Company. Any unvested Option granted hereunder is
issued in consideration of future services to be rendered by Optionee.
Notwithstanding the Vesting Schedule or any provision in the Plan or this
Agreement to the contrary, but subject to any earlier vesting under the Plan,
the Option shall earlier vest and accelerate as follows:
(a) the Option shall immediately vest and become exercisable to purchase
____________ (______) Shares of Common Stock, if termination as
contemplated by Section 9(b) of the Employment Agreement occurs on or prior
to _______ 20___;
(b) the Option shall immediately vest and become exercisable to purchase
____________ (______) Shares of Common Stock, if a "VIOLATION NOTICE" (as
defined in the Employment Agreement) is delivered to the Company on or
prior to _______ 20___; and
(c) in the event of a "CHANGE IN CONTROL" (as defined in the Employment
Agreement) and the "SUCCESSOR-IN-INTEREST" (as defined in the Employment
Agreement): (i) does not assume the obligations of the Company under the
Employment Agreement; or (ii) otherwise breaches any provision of the
Employment Agreement, THEN the Company or the Successor-in-Interest, as
the case may be, shall be obligated with respect to: (x) if the Change
in Control and the circumstances contemplated in the preceding clauses
(i) or (ii) occur on or prior to _______ 20___, the Option shall
immediately vest and become exercisable to purchase ____________
(______) Shares of Common Stock; or (y) if the Change in Control and the
circumstances contemplated in the preceding clauses (i) or (ii) occur
after _______ 20___ but on or prior to _______ 20___, then the Option
shall immediately vest and become exercisable to purchase One Hundred
and ____________ (______) Shares of Common Stock.
4. EXERCISE OF OPTION. The Option shall be exercisable during its term in
accordance with the Vesting Schedule (subject to earlier vesting or acceleration
otherwise provided in Section 3 or in the Plan) and the provisions of Article
VII of the Plan as follows:
(a) DELIVERY OF NOTICE. The Option must be exercised by delivering
notice to the Company, which notice must be in writing and
personally delivered or sent by facsimile or United States mail
to the Chief Executive Officer of the Company at the address of
the
13
principal office of the Corporation. The notice shall be deemed
to be made when the Company or its successor in interest receives
the notice or within three days after it is sent by United States
mail, whichever is earlier.
(b) CONTENTS OF NOTICE. Such notice shall state the election to
exercise the Option, the number of Shares in respect of which it
is being exercised, and the name or names of the person or
persons in whose name or names the stock certificates are to be
issued. The notice shall be signed by the person or persons
exercising the Option and shall include each such person's
address for receipt of a certificate representing such Shares.
This Option shall be deemed to be exercised upon receipt by the
Company of such notice accompanied by payment in the amount of
the applicable Exercise Price (or notice of the applicable
payment option in lieu of cash). The Option shall not be
exercised for a fraction of a Share. For income tax purposes the
Shares shall be considered transferred to the Optionee on the
date on which the Option is exercised with respect to such
Shares.
(c) PROOF OF RIGHT TO EXERCISE. If the Option shall be exercised by
anyone other than the Optionee, such notice shall be accompanied
by appropriate proof, as determined by the Administrator in its
sole discretion, of the right of such person to exercise the
Option.
(d) METHOD OF PAYMENT. Payment of the applicable Exercise Price shall be,
at the election of the Optionee, by any of the following means:
(1) cash, check or cash equivalent;
(2) authorization from the Optionee for the Company to retain
from the total number of Shares as to which the Option is exercised
that number of Shares having a "fair market value" on the date of
exercise equal to the exercise price for the total number of Shares as
to which the Option is exercised; or
(3) such other consideration and method of payment for the
issuance of Shares permitted by the Administrator.
5. REGISTRATION OF SHARES. The Company represents and warrants to the
Optionee that the Shares of Common Stock subject to the Option shall
be registered with the Securities Exchange Commission under the
Securities Act of 1933, as amended, not later than such time that the
Option first becomes exercisable.
14
6. TERMINATION OF RELATIONSHIP. Notwithstanding the provisions of Article
VI of the Plan, if the employment or service of the Optionee is
terminated, the option rights of the Optionee, shall be as follows:
(a) If the employment or service of the Optionee is terminated for
cause, then the option rights of the Optionee under the Option
shall be exercisable by the Optionee at any time prior to the
expiration of the Option or within three (3) months after the
date of such termination, whichever period of time is shorter,
but only as to Shares that are vested and exercisable at the date
of such termination.
(b) If the employment or service of the Optionee is terminated for
any reason other than cause or death, then the option rights of
the Optionee under the Option shall be exercisable by the
Optionee at any time prior to the expiration of the Option or
within one (1) year after the date of such termination, whichever
period of time is shorter, but only but only as to Shares that
are vested and exercisable at the date of such termination.
(c) If the employment or service of the Optionee is terminated by
reason of death of the Optionee, then the option rights of the
Optionee under the Option shall be exercisable by the person or
persons to whom the Option rights pass by will or by the laws of
descent and distribution, at any time prior to the expiration of
the Option or within three (3) years after the date of death,
whichever period of time is shorter, but only but only as to
Shares that are vested and exercisable at the date of death. If a
person or estate acquires the right to exercise the Option by
bequest or inheritance, the Administrator may require reasonable
evidence as to the ownership of the Option, and may require such
consents and releases of taxing authorities as the Administrator
may deem advisable.
(d) Other than the condition precedent set forth in the Employment
Agreement that the Employee be employed up to and through the
respective date of vesting of the Option, the Administrator shall
not impose any targets, restrictions, or other terms relating to
the employment of the Optionee which targets, restrictions, or
terms must be fulfilled or complied with, as the case may be,
prior to the exercise of any portion of the Option.
7. NON-TRANSFERABILITY OF OPTION. No right or interest in this Agreement,
nor any Option granted hereby, may be assigned, transferred or
disposed of in any manner otherwise than by will or by the laws of
descent or distribution and may be exercised during the lifetime of
Optionee only by such Optionee. The terms of
15
the Plan and this Agreement and the Option shall be binding upon the
executors, administrators, heirs, successors and assigns of the
Optionee.
8. TERM OF OPTION. The Option may be exercised only within ten (10) years
after the date of grant of such Option, and may be exercised during
such term only in accordance with the Plan, subject to the terms of
this Agreement. Notwithstanding the foregoing, the limitations set
forth in the Plan regarding Options designated as Incentive Options
and Options granted to greater than ten percent (10%) stockholders
shall apply to all Options granted hereunder.
9. TAX CONSEQUENCES. Optionee acknowledges that he or she has been given
the opportunity to consult with his or her own tax advisor with
respect to the tax consequences of the Options and the exercise
thereof and the disposition of Shares, and that Optionee is not
relying upon the Company for any tax advice.
10. TAX WITHHOLDING FOR NONQUALIFIED STOCK OPTIONS. The following shall
apply with respect to any Non-Qualified Options or if for any other
reason Optionee is required by applicable tax laws to satisfy a
withholding obligation arising upon exercise of an Option:
(a) METHODS. Optionee in his or her discretion shall satisfy his or
her tax withholding obligation, if any, arising upon the exercise of an
Option by one of the following methods: (i) by cash payment; (ii) out of
Optionee's current compensation; or (iii) by electing to have the Company
withhold from the Shares to be issued upon exercise of the Option that
number of Shares having a "fair market value" equal to the amount required
to be withheld.
(b) RULE 16b-3. If the Optionee is subject to Section 16 of the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), any
surrender of previously owned Shares to satisfy tax withholding obligations
arising upon exercise of an Option must comply with the applicable
provisions of Rule 16b-3 promulgated under the Exchange Act ("RULE 16b-3")
and shall be subject to such additional conditions or restrictions as may
be required thereunder to qualify for the maximum exemption from Section 16
of the Exchange Act with respect to Plan transactions.
(c) PROCEDURES. All elections by an Optionee to have Shares withheld
to satisfy tax withholding obligations shall be made in writing in a form
acceptable to the Administrator and shall be subject to the following
restrictions: (i) the election must be made on or prior to the applicable
tax withholding date; (ii) once made, the election shall be irrevocable as
to the particular Shares of the Option as to which the election is made;
(iii) all elections shall he subject to the consent or disapproval of the
Administrator; (iv) if the Optionee is a "reporting person" under the
Exchange Act, the election must comply with the applicable provisions of
Rule 16b-3 and shall be subject to such additional
16
conditions or restrictions as may be required thereunder to qualify for the
maximum exemption from Section 16 of the Exchange Act with respect to Plan
transactions.
11. ENTIRE AGREEMENT; GOVERNING LAW. The Plan (as in effect on the date
hereof), the Employment Agreement, and this Agreement constitute the
entire agreement of the parties with respect to the subject matter
hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Optionee with respect to the subject
matter hereof, and may not be modified adversely to the Optionee's
interest except by means of a writing signed by the Company and
Optionee. This Agreement is governed by the laws of the State of
Delaware, excluding any conflicts or choice of law rule or principle
that might otherwise refer construction or interpretation of this
Agreement to the substantive law of another jurisdiction.
12. CHOICE OF FORUM. The federal and state courts of Illinois, County of
Cook, shall be the exclusive jurisdiction and venue for any court
action in connection with the resolution of any dispute that may arise
out of or relate to this Agreement.
13. ACKNOWLEDGEMENT OF OPTIONEE. Optionee acknowledges receipt of a copy
of the Plan and represents that he or she is familiar with the terms
and provisions thereof. Optionee has reviewed the Plan and this
Agreement in their entirety, has had an opportunity to obtain the
advice of counsel before executing this Agreement and fully
understands all provisions of this Agreement.
[SIGNATURE PAGE IMMEDIATELY FOLLOWS]
17
[SIGNATURE PAGE TO STOCK OPTION AGREEMENT BETWEEN XCEED INC. AND ____________]
IN WITNESS WHEREOF, the Company and Optionee have executed this Stock
Option Agreement as of the day and year first above written.
XCEED INC.,
a Delaware corporation
By: ,
----------------------------------------
Chief Executive Officer
OPTIONEE:
Dated as of: 20
---------------- -- ----------------------------------------
18