1
EXHIBIT 10.4
EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into on December 20, 1999 (the "Effective
Time"), by and between Xxxxxxx X. Xxxxxxxx, an individual resident of the State
of California ("Executive"), and Stockpoint, Inc., a Delaware corporation
("Company").
WHEREAS, Executive has heretofore been employed as the Chief Operating
Officer of the Company; and
WHEREAS, the Company desires to continue to have the benefit of the
Executives services as a corporate officer of the Company;
WHEREAS, certain guarantors of borrowings of the Company have required,
as a condition to their guarantees, that the Company execute an employment
agreement with Executive and
WHEREAS, the proceeds from such borrowings are necessary for the
Company's operations and will benefit the Company and the Executive.
NOW, THEREFORE, in consideration of the premises, the respective
undertakings of the Company and Executive set forth below, the Company and
Executive agree as follows:
1. Employment. The Company hereby agrees to employ Executive, and
Executive accepts such employment and agrees to perform services for the
Company, upon the other terms and conditions set forth in this Agreement.
2. Term. The term of this agreement is one year and renews annually,
unless either party provides written notification 90 days prior to the renewal.
See section 8 below for Termination definitions and remedies.
3. Positions, Duties and Reporting.
3.01 Service with Company. During the term of this Agreement,
Executive agrees to perform such reasonable employment duties consistent with
the role of Chief Operating Officer, as the Company shall assign to him from
time to time. These duties shall include but not limited to, management and
oversight of the following functions/departments: Sales, Marketing,
Infrastructure, Quality Assurance, Client Services, CFS Development and New
Product Development.
3.02 Performance of Duties. Executive agrees to serve the
Company faithfully and to the best of his ability and to devote his full time,
attention, and efforts to the business and affairs of the Company during the
term of this Agreement. Executive represents to the Company that he is under no
contractual commitments inconsistent with his obligations set forth in this
Agreement, and that during the term of this Agreement, he will not render or
perform services for any other corporation, firm, entity or person which are
inconsistent with the provisions of this Agreement.
3.03 Reporting. This position will report to the Chief Executive
Officer of the Company.
4. Compensation.
4.01 Base Salary. As base compensation for all services to be
rendered by Executive under this Agreement during the first year of the term of
this Agreement, the Company shall pay to Executive a base salary at a rate of
$150,000 per year, which salary shall be paid on a twice-monthly basis in
accordance with the Company's normal payroll procedures and policies. The salary
payable to Executive during each subsequent year during the term of this
Agreement shall be established by the Company and Executive, but in no event
shall the salary for any subsequent year be less than the base salary in effect
for the prior year.
4.02 Participation in Benefit Plans. During the term of this
Agreement, Executive shall be entitled to receive such medical and
hospitalization insurance and other fringe benefits as are being provided
2
to the Company's other executive level employees from time to time to the extent
that Executive's age, position or other factors qualify him/her for such fringe
benefits.
4.03 Expenses. The Company will pay or reimburse Executive for
all reasonable and necessary out-of-pocket expenses incurred by him in the
performance of his duties under this Agreement, subject to the presentment of
appropriate vouchers in accordance with the Company's normal policies for
expense verification.
4.04 Incentive for 1st Half of 1999. The Company agrees to pay
Executive, an incentive bonus for the first half of 1999 performance of $17,800
upon the signing of this document. In consideration for performance in the
second half of 1999, the Company has granted an additional stock options as
described in Section 4.07.
4.05 Incentive for completion of an initial public offering.
Upon the completion of an initial public offering of the Company's common stock,
the Company will also pay Executive an IPO cash bonus of $45,000, which is due
and payable, immediately upon the close.
4.06 Annual Incentive Compensation. The Company shall formulate
and deliver to Executive by January 31, 2000 with respect to the remainder of
fiscal 2000, and by January 1 with respect to each succeeding fiscal year during
the term of this Agreement, and the Company and Executive shall use their best
efforts to negotiate and agree to, an annual incentive compensation plan for
Executive.
4.07 Vesting of Stock Options.
On September 15, 1999, the Company issued to the Executive an
additional option ("September 1999 Option") grant to purchase up to 60,000
shares of Company Common Stock at a price of $7.20 per share pursuant to the
Company's 1995 Stock Incentive Plan (the "Plan"). Such option shall become
exercisable with respect to 20% of the shares immediately upon execution of this
Agreement and the balance shall vest monthly at a rate of 1/60 of the total
September 1999 Option grant over the balance of the term. Such option shall
expire 10 years from the date of the grant and shall contain such other
provisions as are contained in the form of stock option agreement used by
Company under the Plan.
In the event that this Agreement is terminated as a result of the "Constructive
Termination" (as defined in Section 8.01(2)) or without "Cause" (as defined in
Section 8.01(1)) of the Executive, the September 1999 Option will vest with
respect to 40% of the shares subject thereto immediately. In addition, the
Company will permit the Executive to exercise all of his/her vested options for
a period of 12 months, commencing from the date of termination.
Vesting of all options granted to Executive will be accelerated with respect to
100% of the shares subject thereto in the event of a "Change in Control" of the
Company. For such purposes, a "Change in Control" shall mean any of the
following:
(i) A sale of all or substantially all of the assets of the Company;
(ii) The acquisition of more than 50% of the then outstanding Company
Common Stock by any person or group of persons acting in concert;
(iii) Any change that results in the Continuing Directors constituting
less than a majority of the Board of Directors;
(iv) A reorganization or, a merger of Company with another company
after which the holders of common stock of the Company
immediately prior to the merger or reorganization hold less than
50% of the voting power of the resulting corporations, or any
other transaction in which the Company (other than as the parent
corporation) is consolidated for federal income tax purposes or
is eligible to be consolidated for federal income tax purposes
with another corporation; or
3
(v) In the event that the Company Common Stock is traded on an
established securities market: a public announcement that any
person has acquired beneficial ownership of more than 25% of the
then outstanding Company Common Stock and for this purpose the
terms "person" and "beneficial ownership" shall have the meanings
provided in Section 13(d) of the Securities and Exchange Act of
1934 or related rules promulgated by the Securities and Exchange
Commission or; the commencement of or public announcement of an
intention to make a tender offer for more than 50% of the then
outstanding Company Common Stock.
For purposes of this Section 4.07, "Continuing Directors" shall include only
those directors of the Company on the date hereof and those directors, as of a
date 30 days prior to an event that would otherwise be considered a "Change in
Control," who were nominated by Continuing Directors and duly elected by
shareholders at an annual meeting thereof or nominated and elected by directors
who were "Continuing Directors."
5. Confidential Information. Except as permitted or directed by the
Company's Board of Directors, during the term of this Agreement or at any time
thereafter, Executive shall not divulge, furnish or make accessible to anyone or
use in any way (other than in the ordinary course of the business of the
Company) any confidential or secret knowledge or information of the Company
which Executive has acquired or become acquainted with or will acquire or become
acquainted with during the period of his employment by the Company, whether
developed by himself or by others, concerning any trade secrets, confidential or
secret designs, processes, formulae, plans, devices or material (whether or not
patented or patentable) directly or indirectly useful in any aspect of the
business of the Company, any confidential or secret development or research work
of the Company, or any other confidential information or secret aspects of the
business of the Company. Executive expressly acknowledges that, in addition to
the Company's proprietary software and technical know-how, the Company's
customer lists and the form (including, without limitation, payment terms) of
the Company's relationships with its customers is not publicly known and that
the disclosure or use of such information for any purpose other than for the
benefit of the Company could cause substantial damage the Company and would
place the Company at a competitive disadvantage. Executive acknowledges that the
above-described knowledge or information constitutes a unique and valuable asset
of the Company and that any disclosure or other use of such knowledge or
information other than the sole benefit of the Company would be wrongful and
would cause irreparable harm to the Company. The foregoing obligations of
confidentiality shall not apply to any knowledge or information which is now
published, which subsequently becomes generally publicly known, other than as a
direct or indirect result of the breach of this Agreement by Executive, or which
was known to the Executive prior to the term of his employment with the Company.
Executive agrees to notify any person or entity with which Executive is employed
or for which Executive provides services of the requirements of this Section 5
and to notify the Company of the identity of any such person or entity with
which Executive is employed during the One year after termination of this
Agreement.
6. Employee Solicitation. During employment, and for a period of
nine months thereafter, Executive shall not (i) directly or indirectly solicit
any employee of the Company or any of Company's affiliates to leave the employ
of any such entity or in any way interfere adversely with the relationship
between any such employee and any such entity, (ii) directly or indirectly
solicit any employee of the Company or any affiliates to work for, render
services or provide advice to or supply confidential business information or
trade secrets of any such entity to any third person, firm or corporation, or
(iii) directly or indirectly solicit any existing customers and potential
customers that have an unexpired written proposals under consideration. For
purposes of the foregoing, solicitation shall not include solicitation of
employees, vendors or customers (i) who first solicit employment or a
relationship from Executive, or (ii) who are solicited (A) by advertising in
periodicals of general circulation or by general circulation Internet
advertising, or (B) by a search or consulting firm on behalf of Executive or
Executive's affiliates, so long as Executive or such affiliates did not direct
or encourage such firm to solicit such employee, vendor or customer of the
Company. If any restriction set forth in this paragraph is held to be
unreasonable, then Executive and the Company agree, and hereby submit, to the
reduction and limitation of such prohibition to such area or period as shall be
deemed reasonable.
7. Patent and Related Matter.
7.01 Disclosure and Assignment. Executive will promptly disclose
in writing to the Company complete information concerning each and every
invention, discovery, improvement, work of authorship, device, design,
apparatus, practice, process, method or product whether patentable or not, made,
4
developed, authored, perfected, devised, conceived or first reduced to practice
by Executive, either solely or in collaboration with others, during the term of
this Agreement, whether or not during regular working hours, relating to the
Business of the Company (hereinafter referred to as "Developments"). Executive,
to the extent that he has the legal right to do so, hereby acknowledges that any
and all of said Developments are the property of the Company and hereby assigns
and agrees to assign to the Company any and all of Executive's right, title and
interest in and to any and all of such Developments.
7.02 Limitation on Section 7.01. The provisions of section 7.01
shall not apply to any Development meeting the following conditions:
(a) such Development was developed entirely on
Executive's own time; and
(b) such Development was made without the use of any
Company equipment, supplies, facility or trade
secret information, excluding Executives laptop;
and
(c) such Development does not relate (I) directly to
the Business of the Company, or (ii) to the
Company's actual or demonstrably anticipated
research or development; and
(d) such Development does not result from any work
performed by Executive for the Company.
7.03 Assistance of Executive. Upon request and without further
compensation therefor, but at no expense to Executive, and whether during the
term of this Agreement or thereafter, Executive will do all lawful acts,
including, but not limited to, the execution of papers and lawful oaths and the
giving of testimony, that in the opinion of the Company, its successors and
assigns, may be necessary or desirable in obtaining, sustaining, reissuing,
extending and enforcing United States and foreign patents and/or registrations
including, but not limited to, design patents, on any and all of such
Developments (other than those described in 7.02), and for perfecting affirming
and recording the Company's complete ownership and title thereto, and to
cooperate otherwise in all proceedings and matters relating thereto.
7.04 Obligations, Restrictions and Limitations. Executive
understands that the Company may enter into agreements or arrangements with
agencies of the United States Government, and that the Company may be subject to
laws and regulations which impose obligations, restrictions and limitations on
it with respect to inventions and patents which may be acquired by it or which
may be conceived, authored or developed by employees, consultants or other
agents rendering services to it. Executive agrees that he shall be bound by all
such obligations, restrictions and limitations applicable to any such invention
or work of authorship conceived, authored or developed by him during the term of
this Agreement and shall take any and all further action which may be required
to discharge such obligations and to comply with such obligations and to comply
with such restrictions and limitations.
8. Termination
8.01 Grounds for Termination. This Agreement may be terminated:
(a) by the Company, if Executive dies, or
(b) by the Executive, if Executive becomes disabled
(as defined below), or
(c) by the Company, if the Executive has engaged in
conduct constituting cause for his termination and
the Company notifies Executive in writing of such
election, or
(d) by the Company without cause upon notice to the
Executive in writing of such election, provided
that such termination may only occur by unanimous
decision of the Board of Directors if there are
then three or fewer Directors or by a majority
decision of the Board of Directors if there are
then four or more Directors.
5
(e) by the Executive, if the Executive is
constructively terminated, as defined in paragraph
8.01(2) herein and the Executive has notified the
Company of his election to terminate for
Constructive Termination, or
(f) by the Executive upon notice to the Company in
writing of such election.
If this Agreement is terminated pursuant to subsection (a), (b), (c),
(e) or (f) of this section 8.01, such termination shall be effective
immediately. If this Agreement is terminated pursuant to subsection (d)
of this section 8.01, such termination shall be effective thirty (30)
days after delivery of the notice of termination.
(1) "Cause" Defined. "Cause" means:
(a) The Employee has breached the provisions of
Section 5, 6 or 7 of this Agreement in any material respect,
(b) The Executive has engaged in willful and material
misconduct, including willful and material failure to perform the
Employee's duties as an officer or employee of the Company and
has failed to cure such default within 30 days after receipt of
written notice of default from the Company,
(c) The Executive has committed fraud,
misappropriation or embezzlement in connection with the Company's
business, or
(d) Executive has been convicted or has pleaded nolo
contendere to criminal misconduct that is detrimental to the
Company's reputation or that calls into question, in the
judgement of the Board, Executive's integrity in fulfilling his
duties under this Agreement.
In the event the Company terminates Executive's employment for
"cause" pursuant to subsection 8.01 and Executive objects in writing to
the Board's determination that there was proper "cause" for such
termination within (30) days after Executive is notified of such
termination, the matter shall be resolved by arbitration in accordance
with the provisions of section 10.01. If Executive fails to object to
any such determination of "cause" in writing within such thirty (30)
day period, he shall be deemed to have waived his right to object to
that determination. If such arbitration determines that there was not
proper "cause" for termination, such termination shall be deemed to be
a termination pursuant to subsection 8.01(d).
(2) "Constructive Termination" defined. Constructive
Termination means termination by Executive after written notice to the
Company that Executive deems such termination by Executive as a result
of Constructive Termination, and only after:
(a) A material breach by the Company of a material
obligation of the Company under this Agreement
after the Executive has given the Company written
notice of the breach and the Company has not
remedied the breach within 30 days;
(b) A failure of the Company to pay when due to the
Executive any annual base salary, annual bonus or
other earned bonus or awards referred to in this
Agreement;
(c) The relocation of the Executive's principal place
of employment to a location not within a 30 mile
radius of such place of employment on the
Effective Date;
(d) A material reduction by the Company of the
Executive's duties or responsibilities;
6
(e) The failure of the Company to obtain an agreement
reasonably satisfactory to the Executive from any
successor to assume and agree to perform this
Agreement , or, if the business for which the
Executive's services are principally performed is
sold or transferred, the failure of the Company to
obtain such an agreement from the purchaser or
transferee of such business; or
(f) The Company becomes insolvent or bankrupt where
executive can no longer perform his duties as
outlined above.
In the event the Executive terminates Executive's employment for
"Constructive Termination" pursuant to subsection 8.01 and the Company objects
in writing to the Executive's determination that there was Constructive
Termination within (30) days after Executive has notified the Company of the
same, the matter shall be resolved by arbitration in accordance with the
provisions of section 10.01. If the Company fails to object to any such
determination of "Constructive Termination" in writing within such thirty (30)
day period, it shall be deemed to have waived its right to object to that
determination. If such arbitration determines that there was not proper
"Constructive Termination", such termination shall be deemed to be a termination
pursuant to subsection 8.01(c).
8.02 "Disability" Defined. For purposes of this Agreement, the
term "disabled" means any mental or physical condition which renders Executive
unable to perform the essential functions of his positions, with or without
reasonable accommodation, for a period of more than ninety (90) days during any
consecutive one hundred twenty (120) day period.
8.03 Surrender of Records and Property. Upon termination of his
employment with the Company, Executive shall deliver promptly to the Company all
records, manual, book, blank forms, document, letters, memoranda, notes,
notebooks, reports, data, tables, calculations or copies thereof, which are the
property of the Company or which relate in any way to the business, products,
practices or techniques of the Company, and all other property, trade secrets
and confidential information of the Company, including, but not limited to, all
documents which in whole or case are in his possession or under his control.
8.04 Wage and Benefit Continuation. If Executive's employment by
the Company is terminated pursuant to subsection 8.01 (d) or 8.01(e), the
Company shall continue to pay to Executive his base salary and shall continue to
provide health insurance benefits for Executive for a period 9 months after
termination. In the event of a "Change in Control" as defined in Section 4.07,
if Executive's employment is terminated by "Constructive Termination" as defined
in Section 8.01(2) or without "Cause" as defined in as defined in Section
8.01(1) within 12 months after the effective date of a "Change in Control," the
severance compensation package defined in this Section will be doubled to 18
months. Notwithstanding anything else in this Section 8.04, Executive shall not
be entitled under this Section 8.04 or any other provision of this Agreement to
receive any cash compensation pursuant to this Agreement which constitutes an
"excess parachute payment" within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended, or any successor provision or regulations
promulgated.
If this Agreement is terminated pursuant to subsection 8.01 (a), 8.01 (c), or
8.01 (f), Executive's right to base salary and benefits shall immediately
terminate except as may otherwise be required by applicable law.
If Executive's employment is terminated by the Company pursuant
to subsection 8.01(a), 8.01(b), 8.01(d) or 8.01(e), Executive shall also be
entitled to receive any pro rata bonus payment that as of the time of
termination would have been payable to him/her pursuant to any incentive plan
then in effect.
9. Indemnification and Directors & Officers Insurance
9.01 Indemnification. The Company will provide Executive
indemnification, exculpation and expense advancement, to the fullest extent of
the law, including, without limitation, entering into an indemnification
agreement with Executive in at least as beneficial a form to Executive as the
Company has entered into with any other officer or director of the Company.
7
9.02 Directors and Officers Insurance. The Company will provide,
at its expense, Directors and Officers (D&O) insurance in an amount deemed
appropriate by its Board of Directors and Officers. If the Company shall show
any employee as a named insured under such policy, then the Executive shall be a
named insured under such policy.
10. Settlement of Disputes.
10.01 Arbitration. Except as provided in section 10.02 any claims
or disputes of any nature between the Company and Executive arising from or
related to the performance, breach, termination, expiration, application, or
meaning of this Agreement or any related matter relating to Executive's
employment and the termination of that employment by the Company shall be
resolved exclusively by arbitration in Denver, CO, in accordance with the then
applicable rules of the American Arbitration Association. Any such arbitration
shall be conducted by an arbitrator with said Rules, who has at least ten (10)
years experience as an attorney in executive compensation and employment law.
The fees of the arbitrator (s) and other cost, including attorney fees, incurred
by Executive and the Company in connection with such arbitration shall be paid
by the party who is unsuccessful in such arbitration, as determined by the
arbitrator. The decision if the arbitrator(s) shall be final and binding upon
both parties. Judgement of the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof. In the event of submission of
any dispute to arbitration, each party shall, not later than thirty (30) days
prior to the date set forth hearing, provide to the other party and to the
arbitrator(s) a copy of all exhibits upon which the party intends to rely at the
hearing and a list of all persons each party intends to call at the hearing.
10.02 Resolution of Certain Claims- Injunctive Relief. Section
10.01 shall have no application to claims by the Company asserting a violation
of section 5, 6, 7 or 8.03 or seeking to enforce, by injunction or otherwise,
the terms of section 5, 6, 7 or 8.03. Such claims may be maintained by the
Company in a lawsuit subject to the terms of section 10.03. Executive agrees
that, in addition to, but not to the exclusion of any other available remedy,
the Company shall have the right to enforce the provisions of sections 5, 6, 7
and 8.03 by applying for and obtaining temporary and permanent restraining
orders injunctions from a court of competent jurisdiction without the necessity
of filing a bond therefor and without the necessity of proving actual damages,
and the Company shall be entitled to recover from the Employee its reasonable
attorneys' fees and costs in enforcing the provisions of Sections 5, 6, 7 and
8.03.
10.03 Venue. Any action at law, suit in equity, or judicial
proceeding arising directly or indirectly, or otherwise in connection with, out
of, related to or from this Agreement or any provisions hereof shall be
litigated only in the courts of the State of California. Executive waives any
right the Executive may have to transfer or change the venue of any litigation
brought against Executive by the Company.
10.04 Severability. To the extent any provisions of this
Agreement shall be invalid or unenforceable, it shall be considered deleted
herefrom and the remainder of such provisions and if this Agreement shall be
unaffected and shall continue in full force and effect. In furtherance and not
in limitation of the foregoing, should the duration or geographical extent of,
or business activities covered by, any provisions of this Agreement be in excess
of that which is valid and enforceable under applicable law, then such
provisions shall be construed to cover only that duration, extent or activities
which may validly and enforceably be covered. Executive acknowledges the
uncertainty of the law in respect and expressly stipulates that this Agreement
be given the construction which renders its provisions valid and enforceable to
the maximum extent (not exceeding its express terms) possible under applicable
law.
11 Miscellaneous.
11.01 Governing Law. This Agreement is made under and shall be
governed by and construed in accordance with the laws of the State of
California.
11.02 Prior Agreements. Except as set forth in Section 1, this
Agreement contains the entire agreement of the parties relating to the
employment of Executive by the Company and the ancillary matters discussed
herein and supersedes all prior agreements and undertakings with respect to such
matters, and the parties hereto made no arrangements, representations or
warranties relating to such employment or ancillary matters which are not set
forth herein.
8
11.03 Withholding Taxes. The Company may withhold from any
benefits payable under this Agreement all federal, state, city or other taxes
shall be required pursuant to any law governmental regulation, or ruling or any
other amount owed to the Company.
11.04 Amendments. No amendment or modification of this Agreement
shall be deemed effective unless made in writing and signed by the both
Executive and Company.
11.05 No Waiver. No term or condition of this Agreement shall be
deemed to have been waived, nor shall there be any estoppel to enforce any
provisions of this Agreement, except by a statement in writing signed by the
party against whom enforcement of the waiver or estoppel is sought. Any written
waiver shall not be deemed a continuing waiver unless specifically stated, shall
operate only as to specific term or condition waived and shall not constitute a
waiver of such term or condition for the future or as to any act other than that
specifically waived.
11.06 Assignment. This Agreement shall not be assignable, in
whole or in part, by either party without the written consent of the other
party, except that the Company may, without the consent of the Executive, assign
its rights and obligations under this Agreement to any corporation, firm or
other business entity with or into which the Company may merge or consolidate,
or to which the Company may sell or transfer all or substantially all of its
assets, or of which 50% or more of the equity investment and of the voting
control is owned, directly or indirectly, by, or is under common ownership with,
the Company; provided, however, that no such assignment will relieve Company of
any of its obligations hereunder. After any such assignee shall thereafter be
deemed to be the Company for the purposes of all provisions of this Agreement
including section 9.
11.07 Legal Fees. The company agrees to provide Executive a legal
fee allowance of $3,000 for the preparation of this employment agreement.
11.08 Counterparts. This Agreement may be simultaneously executed
in any number of counterparts, and such counterparts executed and delivered,
each as an original, shall constitute but the same instrument.
11.09 Notices. All notices, demands and other communications to
be given or delivered under or by reason of the provisions of this Agreement
will be in writing and will be deemed to have given when personally delivered or
three days after being mailed, if mailed, by first class mail, return receipt
requested, or when receipt is acknowledged, if sent by facsimile, telecopy or
other electronic transmission device. Notices, demands and communications to
Company and the Executive will, unless another address is specified in writing ,
be sent to the address indicated below:
Notices to Company: Notice to Executive:
------------------- --------------------
Stockpoint, Inc.
0000 Xxxxxxxxx Xxxx ----------------
Xxxxxxxxxx, Xxxx 00000 ----------------
Attn: President ----------------
11.10 Captions and Headings. The captions and paragraph headings
used in this Agreement are for convenience of reference only, and shall not
affect the construction or interpretation of this Agreement or any of the
provisions hereof.
11.11 Effect of Termination. It is expressly understood that
neither the Company nor the Executive shall have any continuing obligation under
this agreement upon termination hereof, except in respect of the matters
referenced in Sections 5, 6, 7 and 8.03.
9
IN WITNESS WHEREOF, Executive and the Company have executed this
Agreement as of date set forth herein.
Stockpoint, Inc.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------
Its CEO
-----------------------
EXECUTIVE
/s/ Xxxxxxx X. Xxxxxxxx
--------------------------
Xxxxxxx X. Xxxxxxxx
