EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement"), effective as of January 2, 2002
(the "Effective Date"), between eB2B Commerce, Inc., a New Jersey corporation
with principal offices at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the
"Company"), and ▇▇▇▇▇▇ ▇▇▇▇▇▇ residing at ▇▇-▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ ("Employee"). The Company and Employee may be referred to herein
collectively as the "Parties" or individually as a "Party."
WHEREAS, the Company develops, owns and operates business to business
e-commerce solutions for transaction processing between buyers an suppliers; and
WHEREAS, the Company desires Employee to serve as Chief Operating
Officer of the Company, and Employee desires to accept such position and serve
the Company as set forth herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein set forth, the Parties do hereby agree as follows:
1. EMPLOYMENT. The Company hereby employs Employee and Employee
accepts this employment and agrees to render services to the Company on the
terms and conditions set forth in this Agreement. This Agreement, describing the
terms and conditions of Employee's employment with the Company, supersedes and
replaces any terms and conditions in any Company forms or other documents,
including the Company's standard employment application, whether signed by
Employee or not, where such terms and conditions are different or inconsistent
from the corresponding terms and conditions of this Agreement. During the term
of this Agreement, Employee shall serve as, and have all the power and authority
inherent in the office of, Chief Operating Officer of the Company, and upon
execution of this Agreement shall serve also as a member of the Executive
Committee of the Company (until such time as removed or not reelected thereto),
and shall perform services for the Company normally associated with such
positions and such other duties as the Executive Committee of the Company (or,
in the absence of such a Committee, the Board of Directors of the Company) shall
reasonably request (and not inconsistent with the position of a Chief Operating
Officer). As Chief Operating Officer, Employee shall be the chief technology
officer of the Company and, subject to the authority of the Chief Executive
Officer, in charge of the operations of the Company. Employee shall use his best
efforts to meet the business requirements and goals set by the Executive
Committee (or Board of Directors). On a day to day basis, Employee shall report
to the Chief Executive Officer of the Company. In furtherance thereof, Employee
will devote his best efforts, including his full-time attention during business
hours, to the affairs and business of the Company. Employee agrees not to serve
on any corporate, industry, civic or charitable boards or committees that would
interfere or create a conflict of interest with respect to his duties hereunder
without the prior consent of the Executive Committee (or Board of Directors).
Employee further agrees to observe and comply with the rules and regulations of
the Company as adopted by the Executive Committee or the Board of Directors with
respect to the performance of his duties.
2. TERM. The term of this Agreement shall be for a period of three
(3) years
commencing on the Effective Date (the "Initial Employment Term"). The
Agreement shall thereafter automatically renew for successive one (1) year
terms, until terminated by either Party in accordance with this Agreement (the
"Succeeding Employment Term"), unless either Party provides a written Notice of
Termination (as defined in Section 6 hereof) to the other party at least thirty
(30) days prior to the expiration of the Initial Employment Term or any
Succeeding Employment Term.
3. COMPENSATION.
3.1 BASE SALARY. The Company will compensate and pay Employee
for his services during the Initial Employment Term at a base salary of $165,000
per year (the "Base Salary"). The Base Salary shall be payable to Employee in
accordance with the Company's standard payroll policy for similarly situated
employees of the Company. The Base Salary shall be increased for each Succeeding
Employment Term in accordance with the percentage increase in the Consumer Price
Index for the trailing 12 month period.
3.2 STOCK OPTIONS. Employee shall, on the Effective Date, be
granted options to purchase 500,000 1 shares of Common Stock of the Company
("Options") pursuant to the terms of the Company's Amended 2000 Stock Option
Plan (the "Option Plan") and a separate Stock Option Agreement (or Agreements)
between Employee and the Company. The Options shall be "incentive stock options"
to the maximum extent permitted by applicable regulation. A description of the
principal terms of the Options are as follows: (a) the vesting schedule of the
Options is, subject to continued employment, one-third of the Options shall vest
on the date one year (an "Anniversary Date") following the Effective Date, an
additional one-third of the Options shall vest on the date two years (an
"Anniversary Date") following the Effective Date and an additional one-third of
the Options shall vest on the date three years (an "Anniversary Date") following
the Effective Date; provided however, that if Employee is terminated at any time
pursuant to Section 6.1 hereof, the amount of Options which shall be deemed to
have vested shall be calculated as if Employee was terminated on the next
Anniversary Date following such date of termination, and (b) the exercise price
of the Options shall be $____ per share (the fair market value per share of
Common Stock on the Effective Date).
4. BENEFITS.
4.1 INSURANCE; VACATION. The Company shall provide Employee
with health, disability, life (to the extent standard) and, if applicable, D&O
liability insurance coverage and other benefits during the term of this
Agreement as agreed upon by the Executive Committee, but in no event shall any
of such benefits be less than that offered to any of the Company's other senior
executives. Employee shall be entitled to such number of days of "paid time off"
(as such term is defined in the Company's Employee Handbook) as is commensurate
with his position, in accordance with the normal vacation policies of the
Company. Employee shall be entitled to participate in all other retirement,
welfare and benefit plans provided by the Company to its most
----------------------------
1 Subject to adjustment for stock splits, etc.
2
senior executives from time to time, to the extent Employee meets the
eligibility requirements for any such plan or benefit.
4.2 LIFE INSURANCE. The Company shall have the right, at its
own expense and for its own benefit, to purchase insurance on Employee's life,
and Employee shall cooperate by providing necessary information, submitting to
required medical examinations, and otherwise complying with the insurance
carrier's requirements.
5. EXPENSES. The Company shall reimburse Employee or otherwise provide
for or pay for all reasonable expenses incurred by Employee in furtherance of or
in connection with the business of the Company, including, but not by way of
limitation, (i) all reasonable expenses incurred by Employee in accordance with
the Company's Travel and Entertainment Policy; and (ii) all reasonable expenses
in connection with Employee's attendance at trade, professional and industry
related conferences which are in furtherance of the business of the Company.
Employee agrees that he will furnish the Company with adequate records and other
documents for the substantiation of each such business expense.
6. EMPLOYMENT TERMINATION.
6.1 TERMINATION BY THE COMPANY FOR CONVENIENCE. The Parties
agree that the Board has the right to terminate Employee's employment for
convenience during the term of this Agreement upon notice to Employee. The date
of termination will be the date specified in a notice from the Executive
Committee or the Board of Directors, but in no event less than thirty (30) days'
prior notice. Employee will cease to have any authority to act on the Company's
behalf as of the date of receipt of such notice by Employee.
6.2 TERMINATION BY THE COMPANY FOR CAUSE. The Parties agree
that the Board has the right to terminate Employee's employment during the term
of this Agreement for "Cause." For the purposes of this Agreement, the term
"Cause" will mean:
6.2.1 Conduct on Employee's part that is willfully
intended to and likely to materially injure the Company's business or
reputation;
6.2.2 Actions by Employee intentionally and knowingly
furnishing materially false, misleading or omissive information to the Board;
6.2.3 Employee is convicted of any felony or other
serious offense;
6.2.4 Abusive and illegal use of drugs or abusive use of
alcohol by Employee;
6.2.5 Any fraud, embezzlement or misappropriation by
Employee of the assets of the Company; or
6.2.6 The willful and significant failure by Employee to
perform reasonably
3
assigned duties and obligations as set forth in this Agreement, resulting
in material damage to the Company, but not encompassing illness, physical or
mental incapacity and of which the Company notifies Employee and such failure is
not remedied or persists for a period of at least thirty (30) days.
In the event that Employee's employment is terminated by the Company for Cause,
the date of employment termination will be as specified in the notice of
termination to Employee from the Company, and Employee will cease to have any
authority to act on behalf of the Company as of such date. The Company will pay
Employee the Base Salary due him as of such date, together with reimbursement
for all unpaid expenses incurred by the Employee pursuant to Section 5 hereof
and any other amounts owed to the Employee by the Company, and all other
compensation and benefits provided by the Company to Employee will cease as of
such date except as otherwise required by law.
6.3 TERMINATION BY THE COMPANY FOR DEATH OR DISABILITY. The
Parties agree that Employee's employment will terminate upon Employee's death or
Disability. The term "Disability" shall be defined as Employee's inability,
through physical or mental illness, to perform the majority of his usual duties
for a period of at least three continuous months or for an aggregate period of
at least six months during any 12 month period.
6.4 NOTICE OF TERMINATION. Any termination by the Company for
Cause shall be communicated by a Notice of Termination to Employee given in
accordance with Section 11 hereof. For purposes of this Agreement, a "Notice of
Termination" means a written notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of
Employee's employment under the provision so indicated and (iii) if the
termination date is other than the date of receipt of such notice, specifies the
effective termination date of this Agreement which date shall be in accordance
with the specific termination provision of this Agreement relied upon.
6.5 OBLIGATIONS OF THE COMPANY UPON CERTAIN TERMINATIONS.
6.5.1 If Employee's employment with the Company is
terminated pursuant to Section 6.3 of this Agreement, the Company will pay
Employee an amount equal to his Base Salary to which he is entitled for a period
of six months following the date of termination of employment in a manner
consistent with the Company's then applicable payroll practices, and,
notwithstanding anything in this Agreement to the contrary, the Company shall
have no further obligations to Employee.
6.5.2 If Employee's employment with the Company is
terminated pursuant to Section 6.1 of this Agreement or otherwise without Cause:
(a) during the first year of the Initial
Employment Term, the Company will continue to pay Employee his remaining Base
Salary for the first year of the Initial
4
Employment Term and for six (6) months thereafter in a manner consistent
with the Company's then applicable payroll practices, together with lump-sum
reimbursement for all unpaid expenses incurred by the Employee pursuant to
Section 5 hereof and any other amounts owned to the Employee by the Company.
Notwithstanding anything in this Agreement to the contrary, the Company shall
have no further obligations to the Employee.
(b) at any time following the first year of the
Initial Employment Term, the Company will continue to pay Employee his Base
Salary for a period of six months following the date of termination of
employment in a manner consistent with the Company's then applicable payroll
practices, together with a lump-sum reimbursement for all unpaid expenses
incurred by the Employee pursuant to Section 5 hereof and any other amounts
owned to the Employee by the Company. Notwithstanding anything in this Agreement
to the contrary, the Company shall have no further obligations to the Employee.
7. SURVIVAL OF AGREEMENT UPON TERMINATION. In the event that
Employee's employment is terminated, the rights and obligations of the
Parties which are set forth in Sections 7 through 11 of this Agreement shall
survive the employment termination for a period from the date of such employment
termination through the first anniversary of such date (unless otherwise stated
in the applicable provision).
8. RESTRICTIVE COVENANTS.
8.1 ACKNOWLEDGMENT. Employee acknowledges that (i) the
Company's business is business-to-business electronic commerce including, but
not limited to, building, owning and operating business to business e-commerce
solutions for transaction processing between buyers and suppliers, and providing
systems integration and consulting services relating thereto, and (ii)
fulfillment of the obligations hereunder will result in Employee becoming
familiar with the business affairs of the Company and any present or future
parent, subsidiary and/or affiliate.
8.2 COVENANT NOT TO COMPETE. In consideration for the
compensation provided for in this Agreement, and as a condition to the
performance by the Company of all obligations under this Agreement, Employee
agrees that during the Initial Employment Term or any Succeeding Employment
Terms of this Agreement and for the period from the date of termination of
Employee's employment through the first anniversary of such date (the
"Non-compete Term"), Employee shall not directly or indirectly through any other
person, firm or corporation compete or "participate in" any other business or
organization which during such period competes with the Company. The term
"participate in" shall mean: "directly or indirectly, for his own benefit or
for, with, or through any other person, firm, or corporation, own, manage,
operate, control, loan money to, or participate in the ownership, management,
operation, or control of, or be connected as a director, officer, employee,
partner, consultant, agent or independent contractor, or acquiesce in the use of
his name." Provided, however, the provisions of this Section 8.2 shall not apply
in the event Employee's employment is terminated by the Company pursuant to
Section 6.1 hereof or otherwise without Cause and Employee is no longer
receiving any payments from the Company pursuant to Section 6.5 hereof. Further
provided, however, the provisions of this Section 8.2 shall be void in
5
the event that (i) the Company fails in any material respect to pay the
Base Salary when due or within one month of the date due, (ii) the Company fails
to pay the principal on the Note issued by the Company to Employee on the date
hereof would which constitute an "Event of Default" under the Security
Agreement, dated the date hereof, among the Company, Employee and certain other
parties or (iii) the Company fails to pay when due, or within 30 days
thereafter, the Additional Payout described in Section 1.10 of that Agreement
and Plan of Merger, dated the date hereof, among the Company, Employee and
certain other parties. Notwithstanding the foregoing, it shall not be a breach
of the provisions of this Section 8.2 if, during or after the Non-compete Term
of this Agreement, Employee is a passive investor in any publicly held entity
and Employee owns three (3%) percent or less of the equity interests therein.
8.3 No SOLICITATION OF EMPLOYEES. In addition, during the
Non-compete Term Employee agrees not to recruit, solicit, or hire any employee
of the Company, or otherwise induce such employee to leave or terminate his or
her employment with the Company, to become an employee of or otherwise be
associated with him or any company or business with which he, directly or
indirectly, is or may become associated with, or competes with the business of
the Company.
8.4 RESTRICTIVE COVENANTS NECESSARY AND REASONABLE. Employee
agrees that the provisions of this Section 8 are necessary and reasonable to
protect the Company in the conduct of its business. If any restriction contained
in this Section 8 shall be deemed to be invalid, illegal, or unenforceable by
reason of the extent, duration or geographical scope thereof, or otherwise, then
the court making such determination shall have the right to reduce such extent,
duration, geographical scope, or other provisions hereof and in its reduced form
such restriction shall then be enforceable in the manner contemplated hereby.
9. INJUNCTIVE RELIEF. Employee, recognizing that irreparable injury
shall result to the Company in the event of Employee's breach of the terms and
conditions of this Agreement, agrees that in the event of his breach or
threatened breach, the Company shall be entitled to seek injunctive relief
restraining Employee, and any and all persons or entities acting for or with
him, from such breach or threatened breach. Nothing herein contained, however,
shall be construed as prohibiting the Company from pursuing any other remedies
available to it by reason of such breach or threatened breach.
10. INDEMNIFICATION.
10.1 To the fullest extent allowed by law, the Company shall
hold harmless and indemnify Employee, his executors, administrators or assigns,
against any and all judgments, penalties (including excise and similar taxes),
fines, settlements and reasonable expenses (including attorneys' fees) actually
incurred by Employee (net of any related insurance proceeds or other amounts
received by Employee or paid by or on behalf of the Company on Employee's behalf
in compensation of such judgments, penalties, fines, settlements or expenses) in
connection with any threatened, actual or completed action, suit or proceeding,
whether civil, criminal, arbitral, administrative or investigative, or any
appeal in such action, suit or proceeding, to which Employee
6
was, is or is threatened to be made a named defendant or respondent (a
"Proceeding"), because Employee is or was a director or officer or senior
executive of the Company, or was serving at the request of the Company as a
director, officer, partner, venturer, proprietor, trustee, employee, agent or
similar functionary (an "Affiliate Executive") of another corporation,
partnership, joint venture, sole proprietorship, trust, employee benefit plan or
other enterprise (each, a "Company Affiliate"). Upon authorization of
indemnification of Employee by the Board in accordance with the applicable
provisions of the corporation law of the Company's domicile, Employee shall be
presumed to be entitled to such indemnification under this Agreement upon
submission of a Claim (as hereinafter defined). Thereafter, the Company shall
have the burden of proof to overcome the presumption that Employee is so
entitled. Such presumption shall only be overcome by a judgment or other final
adjudication, after all appeals and all time for appeals have expired ("Final
Determination"), adverse to Employee establishing that such indemnification is
not permitted hereunder or by law. An actual determination by the Company
(including its Board, legal counsel, or its stockholders) that Employee has not
met the applicable standard of conduct for indemnification shall not be a
defense to the action or create a presumption that Employee has not met the
applicable standard of conduct. The purchase, establishment or maintenance of
any Indemnification Arrangement shall not in any way diminish, restrict, limit
or affect the rights and obligations of the Company or of Employee under this
Agreement except as expressly provided herein, and the execution and delivery of
this Agreement by the Company and Employee shall not in any way diminish,
restrict, limit or affect Employee's right to indemnification from the Company
or any other Party or Parties under any other indemnification arrangement, the
Certificate of Incorporation or Bylaws of the Company, or applicable state
corporate law.
10.2 Subject only to the provisions of this Section 10.2, as
long as Employee shall continue to serve as a director and/or officer of the
Company (or shall continue at the request of the Company to serve as an
Affiliate Executive) and, thereafter, as long as Employee shall be subject to
any possible Proceeding by reason of the fact that Employee was or is a director
and/or officer of the Company (or served in any of said other capacities), the
Company shall, unless no such policies are available in any market, purchase and
maintain in effect for the benefit of Employee one or more valid, binding and
enforceable policies (the "Insurance Policies") of directors' and officers'
liability insurance ("D&O Insurance") providing adequate liability coverage for
Employee's acts as a director and/or officer of the Company or as an Affiliate
Executive. The Company may promptly notify Employee of any lapse, amendment or
failure to renew said policy or policies or any provision thereof relating to
the extent or nature of coverage provided thereunder. In the event the Company
does not purchase and maintain in effect said policy or policies of D&O
Insurance pursuant to the provisions of this Section 10.2, the Company shall, to
the full extent permitted by law, in addition to and not in limitation of the
other rights granted Employee under this Agreement, hold harmless and indemnify
Employee to the full extent of coverage which would otherwise have been provided
for the benefit of Employee pursuant to the Insurance Policies.
10.3 Employee shall have the right to receive from the Company
on demand, or at his option to have the Company pay promptly on his behalf, in
advance of a Final Determination of a Proceeding all expenses payable by the
Company pursuant to the terms of this Agreement as corresponding amounts are
expended or incurred by Employee in connection with such Proceeding
7
or otherwise expended or incurred by Employee (such amounts so expended or
incurred being referred to as "Advanced Amounts"). In making any claim for
payment by the Company of any expenses, including any Advanced Amount, pursuant
to this Agreement, Employee shall submit to the Company a written request for
payment (a "Claim"), which includes a schedule setting forth in reasonable
detail the dollar amount expended (or incurred or expected to be expended or
incurred). Each item on such schedule shall be supported by the ▇▇▇▇, agreement
or other documentation relating thereto, a copy of which shall be appended to
the schedule as an exhibit. Where Employee is requesting Advanced Amounts,
Employee must also provide (i) written affirmation of such Employee's good faith
belief that he has met the standard of conduct required by law for
indemnification, and (ii) a written undertaking to repay such Advanced Amounts
if a Final Determination is made that Employee is not entitled to
indemnification hereunder.
10.4 The Company shall not be liable under this Agreement to
make any payment in connection with any claim made against Employee for an
accounting of profits made from the purchase or sale by Employee of securities
of the Company within the meaning of Section 16(b) of the Exchange Act or
similar provisions of any state statutory law or common law.
10.5 All agreements and obligations of the Company contained
herein shall continue during the period Employee is a director and/or officer of
the Company (or is serving at the request of the Company as an Affiliate
Executive) and shall continue thereafter so long as Employee shall be subject to
any possible Proceeding by reason of the fact that Employee was a director or
officer of the Company or was serving as such an Affiliate Executive.
10.6 Promptly after receipt by Employee of notice of the
commencement of any Proceeding, Employee shall, if a claim in respect thereof is
to be made against the Company under this Agreement, notify the Company of the
commencement thereof, but failure to so notify the Company will not relieve the
Company, to the extent the Company was not prejudiced thereby, from any
liability which it may have to Employee. With respect to any such Proceeding:
(i) the Company shall be entitled to participate therein at its own expense;
(ii) except with prior written consent of Employee, the Company shall not be
entitled to assume the defense of any Proceeding; and (iii) the Company shall
not settle any Proceeding in any manner which would impose any penalty or
limitation on Employee without Employee's prior written consent.
11. MISCELLANEOUS.
11.1 NOTICES. Any and all notices, demands, requests or other
communication required or permitted by this Agreement or by law to be served on,
given to, or delivered to any Party hereto by any other Party to this Agreement
shall be in writing and shall be deemed duly served, given, or delivered when
personally delivered to the Party to be notified, or in lieu of such personal
delivery, when deposited in the United States mail, registered or certified
mail, return receipt requested, or on the date of delivery if delivered by
overnight courier, addressed to the to the Party to be notified, at the address
of the Company at its principal office, as first set forth above, or to Employee
at the address as first set forth above. The Company or Employee may change the
address in the manner required by law for purposes of this paragraph by giving
notice of the change,
8
in the manner required by this paragraph, to the respective Parties.
11.2 AMENDMENT. This Agreement may not be modified, changed,
amended, or altered except in writing signed by Employee or his duly authorized
representative, and by a member of the Board of Directors of the Company (who
has been duly authorized by the Board).
11.3 GOVERNING LAW. This Agreement shall be interpreted in
accordance with the laws of the State of New York. It shall inure to the
benefit of and be binding upon the Company, and its successors and assigns.
11.4 ARBITRATION. Except for the provisions of Section 9
above, in the event of any dispute under this Agreement, each party agrees the
same shall be submitted to the American Arbitration Association ("AAA") in the
City of New York, for its determination and decision in accordance with its
rules and regulations then in effect. Each of the parties agrees that the
decision and/or award made by the AAA may be entered as a judgement of the
Courts of the State of New York and shall be enforceable as such.
11.5 SEVERABILITY. Should any provision or portion of this
Agreement be held unenforceable or invalid for any reason, the remaining
provisions and portions of this Agreement shall be unaffected by such holding.
11.6 ENTIRE AGREEMENT. This Agreement constitutes the sole and
only agreement of the Parties hereto respecting the subject matter hereof. Any
prior agreements, promises, negotiations, or representations concerning its
subject matter not expressly set forth in this Agreement, are of no force and
effect.
11.7 COUNTERPARTS. This Agreement and any certificates made
pursuant hereto may be executed in any number of counterparts and when so
executed all of such counterparts shall constitute a single instrument binding
upon all Parties hereto notwithstanding the fact that all Parties are not
signatory to the original or to the same counterpart.
11.8 SECTION HEADINGS. The Article and Section headings used in
this Agreement are for reference purposes only, and should not be used in
construing this Agreement.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
day and year set forth above.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
9
eB2B Commerce, Inc
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: CEO
10
