Company Confidential
___________________________________________________________________________
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement") is made and entered
into this April 6, 1999 (the "Effective Date"), by and between WordCruncher
Internet Technologies, Inc., a Nevada corporation, with a principal office at
405 East 12450 South, Suite B, Draper, Utah 84020 ("Company"), and Peter T.
Stoop ("Employee").
RECITALS
1. Company is engaged in the process of developing, manufacturing and
marketing Internet technologies and other products and services.
2. Employee is or will be a vice president or executive of Company.
3. In consideration of the benefits of new or continued employment by
Company, as well as other good and valuable consideration set forth herein,
Employee agrees to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
herein contained and for good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto intending to be legally bound,
hereby agree as follows
1. DEFINITIONS. The following terms shall have the definitions stated
below:
a. Cause - shall mean Employee's termination only upon:
i. Employee's continued violations of Employee's obligations which
are demonstrably willful or deliberate on Employee's part after there has been
delivered to Employee a written demand for performance from Company which
describes the basis for Company's belief that Employee has not substantially
performed his or her duties;
ii. Employee's engaging in willful misconduct which is injurious to
Company or its affiliates;
iii. Employee's committing a felony, an act of fraud against or the
misappropriation of property belonging to Company or its affiliates;
iv. Employee's breaching, in any material respect, the terms of
this Agreement or any confidentiality or proprietary information agreement
between Employee and Company; or
v. A determination by Company, acting in good faith upon
information then available to Company, that Employee has committed a material
violation of the standards of employee conduct, which standards may be altered
from time to time by Company, as defined in the most current version of
Company's Employee Handbook.
Page 1
<Footer appears here <Address appears here
WordCruncher Internet Technologies, Inc. 405 E. 12450 S., Suite B,
Employment Agreement Peter Stoop> Draper Utah 84020 April 24, 1999>
b. Change of Control shall be deemed to have occurred if:
i. Company sells or otherwise disposes of all or substantially
all of its assets;
ii. There is a merger or consolidation of Company with any other
corporation or corporations, provided that the shareholders of Company, as a
group, do not hold, immediately after such event, at least 50% of the voting
power of the surviving or successor corporation;
iii. Any person or entity, including any "person" as such term is
used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), becomes the "beneficial owner" (as defined in the
Exchange Act) of Common Stock of Company representing 50% or more of the
combined voting power of the voting securities of Company (exclusive of
persons who are now officers or directors of Company).
c. Code - shall mean the Internal Revenue Code of 1986, as amended.
d. Constructive Termination - shall mean that the Employee has
terminated employment with Company or its affiliated entities because
Employee, without his or her consent, has incurred:
i. A comprehensive, material and substantial reduction in all or
most of Employee's duties, authority, and responsibilities as compared with
those duties, authority, and responsibilities existing immediately prior to
such termination; or
ii. A material and significant reduction in annual base salary.
For purposes of this Agreement, a reduction of twenty percent (20%) or more in
Employee's annual base salary in effect immediately prior to such reduction
will be deemed to be a significant reduction. A reduction in the Employee's
annual base salary that is part of an overall reduction in compensation also
applied to other executives of Company as a result of decreased profitability
or decreased business performance by Company or one of its business units
shall not constitute a Constructive Termination.
iii. A required and permanent relocation of Employee's office.
For purposes of this section, "permanent" shall mean a single period of time
of at least two (2) months, and "relocation" shall mean a distance of more
than 40 miles from Employee's then current office location.
e. Restricted Business - shall mean:
i. The design, development, manufacture, marketing or support
of Internet search technology, related services, or any other software
products of the type designed, developed, manufactured, sold or supported by
Company or as proposed to be designed, developed, manufactured, sold or
supported by Company pursuant to a development project which is actually being
pursued during the Term of this Agreement; and
ii. Any business which competes directly or indirectly with
the products or services of Company.
Page 2
<Footer appears here <Address appears here
WordCruncher Internet Technologies, Inc. 405 E. 12450 S., Suite B,
Employment Agreement Peter Stoop> Draper Utah 84020 April 24, 1999>
f. Restricted Territory shall mean the geographies within the United
States, European Community, and Canada.
g. Term - shall have the meaning set forth in Section 2.a.
2. EMPLOYMENT AND TERM.
a. This Agreement shall commence as of the Effective Date and shall
terminate two (2) years from the Effective Date, unless sooner terminated in
the event of termination of Employee's employment with Company or otherwise in
accordance with the provisions hereof (hereinafter referred to as the "Term"
or "Term of this Agreement").
b. Notwithstanding the foregoing, during the Term hereof, and subject to
other provisions set forth herein, Company may terminate Employee's employment
for Cause or without Cause.
c. If Employee's employment is terminated for Cause or if Employee
resigns his or her employment, no compensation or severance payments or other
payments will be paid or provided to Employee pursuant to this Agreement for
the period following the date when such a termination of employment is
effective.
d. If Company terminates Employee's employment other than for Cause or
if a Constructive Termination occurs: (i) Employee shall be entitled to
receive a severance payment from Company in an amount equal to 90 days of
Employee's base salary; and <the following has been struckout: (ii) Employee
shall be entitled to receive an amount equal to the cost of COBRA continuation
for a period of one year after termination;> (ii) Company agrees to accelerate
the vesting of that portion of Employee's stock options, if any, which would
have vested after the date of Employee's termination; The payments outlined in
Sections 2.d.i.. shall be payable in three (3) equal monthly installments and
are expressly subject to the conditions set forth in Section 3.
e. At the Effective Date of this Agreement, Employee's job title shall
be as specified in the attached Exhibit A.
f. From the Effective Date of this Agreement and continuing until such
amount shall be changed by Company, or until termination of this Agreement,
Company will pay Employee according to the annual base salary set forth in
Exhibit A. The parties agree that the annual base salary set forth in Exhibit
A shall be reviewed not less often than annually. Company shall pay Employee
in installments in accordance with Company's standard payroll practices.
g. In addition to Employee's base salary, Employee will participate in
Company's then current incentive bonus program under which Employee will be
entitled to earn incentive bonus compensation of up to the percentage of
Employee's base salary set forth in Exhibit A. Employee's eligibility to
participate in Company's incentive bonus program is determined by the terms
and conditions of the then current Company incentive bonus program. To the
Page 3
<Footer appears here <Address appears here
WordCruncher Internet Technologies, Inc. 405 E. 12450 S., Suite B,
Employment Agreement Peter Stoop> Draper Utah 84020 April 24, 1999>
extent that Employee's receipt of any incentive bonus is based, at least in
part, upon the satisfaction of certain performance objectives, such
performance objectives will be mutually determined and reviewed by Employee's
immediate supervisor in consultation with Employee. It is within the
discretion of Employee's immediate supervisor to increase or decrease
Employee's bonus percentage based upon performance.
h. Employee will be entitled to receive Company's employee benefits made
available to other employees and officers to the full extent of Employee's
eligibility therefor. During Employee's employment, Employee shall be
permitted, to the extent eligible, to participate in any group medical,
dental, life insurance and disability insurance plans, or similar benefit
plans of Company that are available to other comparable employees.
Participation in any such plan shall be consistent with Employee's rate of
compensation to the extent that compensation is a determinative factor with
respect to coverage under any such plan.
i. Employee is subject to the Company policies set forth in the most
current version of the Employee Handbook, which policies may be altered from
time to time by Company. In the event provisions of this Agreement are in
conflict with the Employee Handbook, the provisions of this Agreement shall
govern.
3. WAIVER. As a condition of receiving severance or other termination
benefits under this Agreement, Employee must sign a general waiver and release
in a form provided by the Company.
4. EMPLOYEE RESPONSIBILITIES. During the Term of this Agreement, Employee
agrees to devote his or her business time, skill and attention to his or her
duties and to performing them faithfully, diligently and competently, using
his or her best efforts to further the business of Company. Employee agrees
to perform such responsibilities and duties as may be required by Company from
time to time.
5. COVENANTS NOT TO COMPETE AND NOT TO SOLICIT.
a. Employee shall not during the Term of this Agreement and for a period
of one (1) year thereafter, directly or indirectly, engage in (whether as an
employee, consultant, proprietor, partner, director or otherwise), or have any
ownership interest in, or participate in the financing, operation, management
or control of, any person, firm, corporation or business that is a Restricted
Business in a Restricted Territory without the prior written consent of
Company. It is agreed that ownership of (i) no more than .5% of the
outstanding voting stock of a publicly traded corporation, or (ii) any stock
presently owned by Employee, shall not constitute a violation of this
provision.
b. Employee agrees that for a period of one (1) year after the
termination of this Agreement, Employee shall not:
i. Solicit, encourage, or take any other action which is intended
to induce any other employee of Company to terminate his or her employment
with Company; or
Page 4
<Footer appears here <Address appears here
WordCruncher Internet Technologies, Inc. 405 E. 12450 S., Suite B,
Employment Agreement Peter Stoop> Draper Utah 84020 April 24, 1999>
ii. Interfere in any manner with the contractual or employment
relationship between Company and any employee of Company.
The foregoing shall not prohibit Employee or any entity with
which Employee may be affiliated from hiring a former employee of Company;
provided that such hiring results exclusively from such former employee's
affirmative response to a general recruitment effort.
c. The parties intend that the covenants contained in the preceding
paragraphs shall be construed as a series of separate covenants, one for each
county, city and state or other political subdivision of the Restricted
Territory. Except for geographic coverage, each such separate covenant shall
be deemed identical in terms to the covenant contained in the preceding
paragraphs. If, in any judicial proceeding, a court shall refuse to enforce
any of the separate covenants (or any part thereof) deemed included in said
paragraphs, then such unenforceable covenant (or such part) shall be deemed
eliminated from this Agreement for the purpose of those proceedings to the
extent necessary to permit the remaining separate covenants (or portions
thereof) to be enforced.
d. In the event that the provisions of this Section 5 should ever be
deemed to exceed the time, scope or geographic limitations permitted by
applicable laws, then such provisions shall be reformed to the maximum time,
scope or geographic limitations, as the case may be, permitted by applicable
laws.
6. REASONABLENESS OF COVENANTS. Employee represents that he or she: (a) is
familiar with the covenants not to compete and not to solicit, and (b) is
fully aware of and acknowledges his or her obligations hereunder, including
without limitation the reasonableness of the length of time and scope of these
covenants. Employee acknowledges that breach of Employee's covenants not to
compete and not to solicit in Section 5 would cause irreparable injury to
Company, and agrees that in the event of such breach Company shall be entitled
to seek injunctive relief under applicable law without the necessity of
proving actual damages.
7. COMPANY AGREEMENTS. Employee has previously signed or will sign
Company's Intellectual Property Agreement as well as Company's Conflicts
Disclosure Form, and Employee agrees to execute and provide such other
reasonable documentation as Company may require. As a further condition of
employment, Employee must comply with Company's reasonable requests to execute
anew the aforementioned Company Agreements and provide Company with updated
documentation with those Company Agreements.
8. CHANGE OF CONTROL. In the event that Employee's employment with Company
is terminated without Cause following a Change of Control or Employee
experiences a Constructive Termination following a Change of Control:
a. Employee shall receive a severance payment in an amount equal to one
(1) times Employee's rate of annual base salary at the time of termination;
b. Company agrees to accelerate the vesting of that portion of
Employee's stock options, if
Page 5
<Footer appears here <Address appears here
WordCruncher Internet Technologies, Inc. 405 E. 12450 S., Suite B,
Employment Agreement Peter Stoop> Draper Utah 84020 April 24, 1999>
any, which would have vested after the date of Employee's termination;
c. The payments set forth in Sections 8.a and 8.b shall be payable in
three (3) equal monthly installments.
Termination of employment without Cause, including Constructive
Termination, shall be presumed to be "following a Change of Control" if it
takes place at any time within two (2) months before or one (1) year after a
Change of Control.
9. AT-WILL EMPLOYMENT. Company and Employee acknowledge that Employee's
employment is and shall continue to be at-will, as defined under applicable
law. If Employee's employment terminates for any reason, Employee shall not
be entitled to any payments, benefits, damages, awards or compensation other
than as provided by this Agreement or other written Company benefit plans
10. BEST PAYMENT PROVISION. In the event that any payment or benefit
received or to be received by Employee upon a Change of Control would result
in all or a portion of such payment to be subject to excise tax under Section
4999 of the Internal Revenue Code, then the Employee's payment shall be either
(i) the full payment or (ii) such lesser amount which would result in no
portion of the payment being subject to excise tax under Section 4999 of the
Internal Revenue Code, whichever of the foregoing amounts, taking into account
the applicable Federal, state, and local employment taxes, income taxes, and
the excise tax imposed by Section 4999 of the Internal Revenue Code, results
in the receipt by Employee, on an after-tax basis, of the greatest amount of
the payment notwithstanding that all or some portion of the payment may be
taxable under Section 4999 of the Internal Revenue Code. All determinations
required to be made under this Section 10 shall be made by a [INSERT COMPANY'S
OUTSIDE AUDITOR'S NAME] or any other nationally recognized accounting firm
which is Company's outside auditor at the time of such determination, which
firm must be reasonably acceptable to Employee (the "Accounting Firm").
Company shall cause the Accounting Firm to provide detailed supporting
calculations of its determinations to Company and Employee. Notice must be
given to the Accounting Firm within fifteen (15) business days after an event
entitling Employee to a payment under this Agreement. All fees and expenses
of the Accounting Firm shall be borne solely by Company. The Accounting
Firm's determinations must be made with substantial authority (within the
meaning of Section 6662 of the Internal Revenue Code).
11. DISABILITY OR DEATH.
If Employee's employment terminates by reason of the Employee's death or total
and permanent disability (as defined in Section 22(e)(3) of the Code), then
such termination shall be treated as if it were a termination without Cause.
12. AMOUNTS PAYABLE SUBJECT TO WITHHOLDING. Any amounts payable hereunder,
including any amounts to be paid in the event of a termination without Cause
or a Constructive Termination, shall be subject to applicable tax withholding.
Page 6
<Footer appears here <Address appears here
WordCruncher Internet Technologies, Inc. 405 E. 12450 S., Suite B,
Employment Agreement Peter Stoop> Draper Utah 84020 April 24, 1999>
13. REMEDIES UPON DEFAULT.
a. If either party to this Agreement shall be prevented from curing a
default or breach hereunder within the time periods set forth, by cause or
causes beyond its control, such as labor disputes, civil commotion, war,
government regulations or controls, casualty, inability to obtain materials or
service, or acts of God, such defaulting party shall be excused from
performance for the period of the delay and for a reasonable time thereafter
in which to cure such default.
b. In the event that Company shall be adjudicated as bankrupt or
insolvent, then this Agreement shall be null and void and the rights of the
parties hereunder shall be terminated.
14. ARBITRATION. Any claim, dispute or controversy arising out of this
Agreement, the interpretation, validity or enforceability of this Agreement or
the alleged breach thereof shall be submitted by the parties to binding
arbitration by the American Arbitration Association in Salt Lake City, Utah;
provided, however, that this arbitration provision shall not preclude Company
from seeking injunctive relief from any court having jurisdiction with respect
to any disputes or claims relating to or arising out of the misuse or
misappropriation of Company's trade secrets or confidential and proprietary
information. Arbitrators shall award costs and fees, including reasonable
attorneys' fees, to the prevailing party, or they shall be free to apportion
costs and fees as they deem reasonable under the circumstances.
15. INTEGRATION. This Agreement, including the documents referenced in
Section 7 of this Agreement, sets forth the entire understanding of the
parties hereto with respect to the subject matter hereof and supersedes all
previous communications, negotiations and agreements among the parties,
whether written or oral. No waiver, alteration, or modification, if any, of
the provisions of this Agreement shall be binding unless in writing and signed
by duly authorized representatives of the parties hereto. Termination of this
Agreement shall not terminate the documents referenced in Section 7 of this
Agreement.
16. SUCCESSORS. Company shall require any successor or assignee, in
connection with any sale, transfer or other disposition of all or
substantially all of Company's assets or business, whether by purchase,
merger, consolidation or otherwise, expressly to assume and agree to perform
Company's obligations under this Agreement in the same manner and to the same
extent that Company would be required to perform if no such succession or
assignment had taken place.
17. SURVIVAL OF TERMS. The terms of this Agreement shall survive Employee's
termination of employment with Company.
18. SEVERABILITY. If any term or provision of this Agreement shall be held
to be invalid or unenforceable for any reason, such term or provision shall be
ineffective to the extent of such invalidity or unenforceability without
invalidating the remaining terms and provisions hereof, and this Agreement
shall be construed as if such invalid or unenforceable term or provision had
not been contained herein.
Page 7
<Footer appears here <Address appears here
WordCruncher Internet Technologies, Inc. 405 E. 12450 S., Suite B,
Employment Agreement Peter Stoop> Draper Utah 84020 April 24, 1999>
19. NOTICES. Any notice pursuant to the Agreement shall be deemed validly
given or served if given in writing and delivered personally or ten (10)
calendar days after being sent by U.S. registered or certified mail, return
receipt requested and postage prepaid. In the case of Employee, mailed
notices shall be addressed to him or her at the home address which he or she
most recently communicated to Company in writing. In the case of Company,
mailed notices shall be addressed to the attention of Company's President or
CEO, with a copy directed to the attention of Company's General Counsel.
20. TITLE AND CAPTIONS. Section titles or captions to this Agreement are for
convenience only and shall not be deemed part of this Agreement or in no way
define, limit, augment, extend, or describe the scope, content, or intent of
any part or part of parts of this Agreement.
21. PRONOUNS AND PLURALS. Whenever the context may require, any pronoun used
herein shall include the corresponding masculine, feminine, or neuter forms
and the singular form of nouns, pronouns, and verbs shall include the plural
and vice versa. Each of the foregoing genders and plurals is understood to
refer to a corporation, partnership, or other legal entity when the context so
requires.
22. FURTHER ACTION. The parties shall execute and deliver all documents or
instruments, provide all information, and take or forebear from all such
action as may be necessary or appropriate to achieve the purposes of this
Agreement.
23. APPLICABLE LAW. This Agreement shall be construed in accordance with and
governed by the laws of the State of Utah.
24. WAIVER. No failure by any party to insist upon the strict performance of
any covenant, duty, agreement, or condition of this Agreement or to exercise
any right or remedy consequent upon a breach thereof shall constitute a waiver
of any such breach or of such or any other covenant, agreement, term, or
condition. Any party may, by notice delivered in the manner provided in this
Agreement, but shall be under no obligation to, waive any of its rights or
any conditions to its obligations hereunder, or any duty, obligation or
covenant of the other party. No waiver shall affect or alter the remainder of
this Agreement but each and every other covenant, agreement, term, and
condition hereof shall continue in force and effect with respect to any other
then existing or subsequently occurring breach.
25. EXHIBITS. All Exhibits annexed to this Agreement and any documents to be
delivered herewith are expressly made a part of this Agreement as fully as
though completely set forth herein.
26. COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which shall be an original, but all of which together shall constitute
one and the same Agreement.
27. EMPLOYEE ACKNOWLEDGMENT. Employee acknowledges that before signing this
Agreement, Employee was given an opportunity to read it, evaluate it, and
consult with an attorney and other personal advisors.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
Page 8
<Footer appears here <Address appears here
WordCruncher Internet Technologies, Inc. 405 E. 12450 S., Suite B,
Employment Agreement Peter Stoop> Draper Utah 84020 April 24, 1999>
WordCruncher Internet Technologies, Inc.
Name: M Daniel Lunt Employee: Peter T. Stoop
Signature: /s/ M. Daniel Lunt Signature: /s/ Peter T. Stoop
Title: President Title: Vice President, Product Marketing
And Management
Date: 4/27/99 Date: 4/27/99
Page 9
<Footer appears here <Address appears here
WordCruncher Internet Technologies, Inc. 405 E. 12450 S., Suite B,
Employment Agreement Peter Stoop> Draper Utah 84020 April 24, 1999>
EXHIBIT A
EMPLOYEE INFORMATION
Employee Name: Peter T. Stoop
Employee Title: Vice President, Product Marketing and Management
Initial Annual Base Salary: $84,000
Stock:
Employee will receive an initial stock option program of 300,000 options of
Company's common stock over the first three (3) years of employment. The
shares will vest equally on an annual basis over a period of three (3) years
on the anniversary of Employee's employment date pursuant to the Company's
Stock Plan.
Additional Terms:
- - Company acknowledges that Employee's current cellular phone is Employee's
personal and exclusive property. Employee will be treated no less favorably
than other comparable employees with respect to payment of cellular phone
expenses. Company and Employee acknowledge that Company's current policy for
directors and vice presidents is to reimburse Employee $50 per month toward
cellular phone expense.
- - Employee will be entitled to fifteen (15) days of vacation annually, which
will be accrued in accordance with Company's policies.
Page 10
<Footer appears here <Address appears here
WordCruncher Internet Technologies, Inc. 405 E. 12450 S., Suite B,
Employment Agreement Peter Stoop> Draper Utah 84020 April 24, 1999>