EXHIBIT 10.12
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made of this 22/nd/ day of June, 2000, by and
between Xxxx X. Xxxxxxxx (the "Employee"), and Mainspring, Inc., a Delaware
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corporation located at Xxx Xxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx (the
"Company").
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WHEREAS, the Board of Directors of the Company (the "Board") believes
it to be to its advantage to ensure that the Employee continues to render
services to the Company as hereinafter provided; and
WHEREAS, the Employee's managerial position requires that he be
trusted with extensive confidential information and trade secrets of the Company
and that he develop a thorough and comprehensive knowledge of all details of the
Company's business;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in consideration of the mutual
covenants and obligations herein contained, the parties hereto agree as follows:
1. Title; Position and Responsibilities. Employee shall initially
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serve as the Chairman, President and Chief Executive Officer of the Company, and
the Employee shall exercise such powers and comply with and perform such
directions and duties regarding the business and affairs of the Company as may
from time to time be vested in or given to him by the Board of the Company and
shall use diligent efforts to improve and extend the business of the Company.
The Employee shall at all times report to, and his activities shall at all times
be subject to the direction and control of, the Board. The Employee agrees to
devote substantially all of his available business time, attention and services
to the discharge of such duties for the best interest of the Company.
Notwithstanding the foregoing, the Employee may (i) serve as an officer,
director. trustee, or committee member of any religious, professional, civic,
charitable or educational organization, or as a director of any corporation
whose business is not competitive with that of the Company; and (ii) engage in,
and devote time and effort to, any and all personal investments or business
ventures unrelated to the business or affairs of the Company, in each case so
long as such activities do not materially interfere with his obligations set
forth in this Section 1.
2. Compensation: Salary, Bonuses and Other Benefits. During the term
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of this Agreement, the Company shall pay the Employee the following
compensation, including the following annual salary, bonuses and other fringe
benefits:
(A) Salary. In consideration of the services to be rendered by
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the Employee to the Company, the Company will pay to the Employee for the year
ending December 31, 2000, an annualized salary of $200,000.00. Such annual
salary shall be payable in conformity with the Company's customary practices for
executive compensation as such practices shall be established or modified from
time to time (but no less than monthly). Salary payments shall be subject to
all applicable federal and state withholding, payroll and other taxes, in
accordance with law. The salary for subsequent years during the term of this
Agreement shall be reviewed annually by the Board. In connection with any such
review, the Board may, in its discretion, increase the Employee's salary, but
may not reduce it.
(B) Fringe Benefits. The Employee will also be entitled to be
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promptly reimbursed for all of his business-related travel, lodging and
entertainment expenses in accordance with the Company's prevailing policy for
senior executive officers or, if no such separate policy exists, for Company
employees. The Employee will be entitled to participate on the same basis with
all other
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officers and employees of the Company in the Company's standard benefits package
made generally available to all other officers and employees of the Company, as
may be adopted or modified from time to time by the Company, which benefits
package shall include, in addition to any other benefits, medical and disability
insurance. In addition, the Employee shall be entitled to an annual payment of
up to $20,000.00, payable in conformity with the Company's customary payroll
practices and subject to withholding and other tax requirements, all as set
forth in paragraph 2(A) above, as an automobile allowance.
(C) Vacation. Employee shall be entitled to a paid vacation
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(taken consecutively or in segments) of four (4) weeks during each fiscal year,
adjusted pro rata for any partial fiscal year during the term hereof. Such
vacation may be taken at such times as is reasonably prudent and consistent with
the proper and diligent performance by the Employee of his duties and
responsibilities hereunder.
(D) Bonus. For the year ending December 31, 2000, the Employee
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shall be entitled to receive a bonus of $50,000.00 per calendar quarter, subject
to the Company attaining the revenue and bookings goals as adopted by the Board.
Such bonus shall be determined by the Board, based on goals, milestones,
objectives and metrics used to measure performance established by the Employee
and the Board from time to time. Any bonus shall be subject to all applicable
federal and state withholding, payroll and other taxes. The bonus potential for
subsequent years during the term of this Agreement shall be reviewed annually by
the Board. In connection with any such review, the Board may, in its discretion,
increase the Employee's bonus potential, but may not reduce it.
(E) Loan. At the Employee's request, the Company will loan the
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Employee $100,000.00, with full recourse to all of the Employee's assets,
bearing interest at the applicable federal rate for a two year term and
evidenced by a note to be executed by and between the Employee and the Company.
The principal amount of the loan and all accrued interest will be due in full on
the second anniversary of the date of the note. Notwithstanding the foregoing,
the Employee must request such a loan on or before December 31, 2000 and the
proceeds of such loan must be used as payment by the Employee of the exercise
price of options to purchase common stock of the Company.
3. Annual Performance Review. Commencing February 15, 2001, and once
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annually thereafter during the term of this Agreement, the Board and the
Employee shall in good faith review the performance by, and the compensation
payable to, the Employee for the then current year and the proposed performance
by, and compensation to, the Employee for the then forthcoming year.
4. Term. The term of this Agreement shall commence on the date first
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above written and shall terminate on the earlier to occur of (i) June 30, 2002,
(ii) the death, physical incapacity or mental incompetence of the Employee, or
(iii) the occurrence of any of the circumstances described in Section 5 hereof
(the "Expiration Date").
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5. Termination. The Employee's term of employment under this
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Agreement may be earlier terminated as follows:
(A) At the Employee's Option: The Employee may terminate his
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employment, without cause, at any time upon at least thirty (30) days' advance
written notice to the Company.
(B) At the election of the Company for Just Cause. The Board,
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acting on behalf of the Company, upon the affirmative vote of at least two-
thirds of the members of the Board then in office (excluding the Employee, if
the Employee is a director), may, immediately and unilaterally, terminate the
Employee's employment hereunder for "just cause" at any time during the term of
this Agreement Termination of the Employee's employment by the Board shall
constitute a termination for "just cause"
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under this Section 5(B) if such termination is for one or more of the following
causes: (i) the failure of Employee to render services to the Company in
accordance with his assigned duties consistent with this Agreement, and such
failure of performance continues for a period of more than 60 days after written
notice thereof has been provided to the Employee; (ii) willful misconduct or
gross negligence of the Employee in connection with the performance of his
assigned duties; (iii) the conviction of the Employee of a felony; (iv)
disloyalty, breach of fiduciary duty or breach of the material terms of this
Agreement; (v) the commission by Employee of an act of fraud, embezzlement or an
act of deliberate disregard of the rules or policies of the Company which
results in loss, damage or injury to the Company or adversely affects the
business activities, reputation, goodwill or image of the Company; (vi) the
unauthorized disclosure or misappropriation by Employee of any trade secret or
confidential information of the Company or any of its clients or customers,
which results in damage or injury to the Company or adversely affects the
business activities, reputation, goodwill or image of the Company or its clients
or customers; or (vii) the commission by Employee of an act which constitutes
unfair competition with the Company or which induces any employee or customer of
the Company to break a material contract with the Company.
In making any determination under this Section, the Board shall act
fairly and in utmost good faith and shall give the Employee an opportunity to
appear and be heard at a meeting of the Board or any committee thereof and
present evidence on his behalf.
In the event of any such termination for "just cause," the Employee
shall be entitled to accrued and unpaid salary and vacation through the
termination date and no other payments.
(C) At the Election of the Company for Reasons Other Than Just
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Cause. The Board, acting on behalf of the Company, upon the affirmative vote of
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at least two-thirds of the members of the Board then in office (excluding the
Employee, if the Employee is a director), may, immediately and unilaterally,
terminate the Employee's employment hereunder at any time during the term of
this Agreement for other than "just cause" by giving thirty (30) days' advance
written notice to the Employee of the Company's election to terminate. During
such thirty-day period, the Employee will be available on a full-time basis for
the benefit of the Company to assist the Company in matters relating to the
transition of a new, successor officer of the Company. In the event the Board
exercises its right to terminate the Employee under this Section 5(C), the
Company agrees to pay the Employee a severance or termination payment of twelve
months' salary and car allowance at the then current rates, payable in the same
manner as such salary and automobile allowance were payable during the term of
the Employee's employment. Additionally, following the completion of the quarter
in which the Employee is terminated, the Company shall promptly pay to the
employee the amount of the bonus, if any, payable to the Employee in respect of
such quarter pursuant to section 2(D) hereof which was otherwise earned but
unpaid. Such severance payment shall be payable on a monthly basis for the
twelve (12) months following the Employee's termination and shall be subject to
all applicable federal and state taxes. All payments under this Section 5(c) are
subject to compliance by the Employee at all times with any and all
noncompetition, nonsoliciation or nondisclosure covenants between the Company
and the Employee. The Company shall additionally maintain in effect during such
twelve-month period all fringe benefits, including, without limitation, medical
and disability insurance, as were in effect for the benefit of the Employee and
his family on the date of the termination of the Employee's employment.
Following termination of the Employee pursuant to this Section 5(C), the
Employee shall have the right to retain as his own property any computer system
and any personal database or communication devices which the Company had
previously provided to the Employee for his use, and the Company shall deliver
to the Employee an appropriate instrument of transfer conveying title to such
equipment to the Employee for no consideration; provided, however, that the
Company is given the opportunity to remove all data on such equipment which is
proprietary or confidential. In the event of a termination under this Section
5(C), the Company may, at its option, retain the Employee as a consultant on
terms mutually
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agreed between the Company and the Employee. All such payments made and benefits
provided pursuant to this Section 5(C) or Section 5(D), shall be conditioned
upon the receipt by the Company of a signed release in a form acceptable to the
Company's counsel releasing the Company from any and all actions or causes of
actions, suits, debts, claims, complaints, contracts, controversies, agreements,
promises, damages, judgments and demands whatsoever, in law or in equity,
whether existing or contingent, known or unknown, pertaining to the Employee's
employment by the Company or termination of such employment. In the event of a
termination without "just cause", all stock options held by the Employee shall
become immediately vested and exercisable, such options to be exercisable for a
period of twelve (12) months following any effective date of termination, and
all restricted stock shall be free of any repurchase rights of the Company.
It shall be deemed to be a constructive termination by the Company for
other than "just cause" if: (i) the Employee's responsibilities and executive
authority are reduced or diluted in any material way without the Employee's
written consent; or (ii) the Employee is relocated to another Company office or
facility to a location outside of a radius of 25 miles from the Company's then-
current headquarter facility and without the Employee's written consent. In the
event that the Employee shall terminate his employment as a result of such
constructive termination, the Employee shall be entitled to the same severance
payments, bonus and benefits, vesting of options and termination of repurchase
rights, and transfer of computer, database and communications equipment as are
provided for in the preceding paragraph to the same extent as if he had been
terminated other than for "just cause".
(D) Termination Because of Acquisition of the Company. The
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provisions of this Section shall apply if the Employee's employment is
terminated because of any decision by the Board of the Company (or following
completion of the Acquisition (as defined below) the surviving corporation) in
connection with a consolidation, merger, reorganization, or sale of all, or
substantially all, of the assets or capital stock of the Company, or other
business combination in which the Company is the target in any business
combination (an "Acquisition"). In the event of the completion of an
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Acquisition, if the Employee is not offered employment by the acquiring
corporation in a comparable position, at a comparable salary, or is terminated
for other than "just cause" ("just cause" as defined in Section 5(B) hereof), or
if, within twelve (12) months following the completion of such Acquisition, he
shall terminate his employment as a result of his constructive termination, in
each case as provided in Section 5(C) hereof, then the Company or the acquiring
corporation, as the case may be, shall be obligated to provide to the Employee
the same severance payments, bonus and benefits, vesting of options and
termination of repurchase rights, and transfer of computer, database and
communications equipment as are provided for in Section 5(C) hereof. If the
Employee is offered employment by the acquiring corporation in a comparable
position, and at a comparable salary, neither the Company nor the acquiring
corporation shall be obligated to provide the severance payments, bonus or
benefits, vesting of options and termination of repurchase rights, and transfer
of computer and communications equipment provided for in this Section 6(D).
Anything contained in this Section 6(D) to the contrary notwithstanding, the
Employee shall not be entitled to any severance or other termination benefit if
the Employee has either (i) terminated such employment voluntarily (other than
as a result of his constructive termination as provided in Section 5(C) hereof),
or (ii) has been terminated by the Company or any acquiring corporation for
"just cause" pursuant to Section 5(B).
6. Noncompetition, Nondisclosure and Inventions Agreement. In
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connection with his employment by the Company pursuant to the terms of this
Agreement and in consideration of the Company entering into this Agreement with
the Employee, the Employee shall execute the Noncompetition, Nondisclosure and
Inventions Agreement attached hereto as Exhibit A, the terms and conditions of
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which are incorporated herein by reference. The Noncompetition, Nondisclosure
and Inventions Agreement is sometimes referred to herein as the "Ancillary
Agreement." The parties to this Agreement acknowledge that the Ancillary
Agreement shall supercede, in all respects, the Non-
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Disclosure and Non-Competition Agreement dated June 14, 1996 by and between the
Company and the Employee.
7. Governing Law; Injunctive Relief. This Agreement shall be
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governed by and construed in accordance with the internal laws of the
Commonwealth of Massachusetts and shall be deemed to be performable in the
Commonwealth of Massachusetts. The Employee acknowledges that the breach or
threatened breach of any of the provisions of this Agreement would give rise to
irreparable injury to Company which injury would be inadequately compensable in
money damages. Accordingly, Company may seek and obtain a restraining order
and/or injunction prohibiting the breach or threatened breach of any provision,
requirement or covenant of this Agreement, in addition to and not in limitation
of any other legal remedies which may be available. The Employee further
acknowledges and agrees that the agreements set out above are necessary for the
protection of Company's legitimate goodwill and business interests and are
reasonable in scope, duration and content.
8. Severability. In case any one or more of the provisions contained
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in this Agreement or the Ancillary Agreement for any reason shall be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement or the
Ancillary Agreement, but this Agreement or the Ancillary Agreement, as the case
may be, shall be construed, revised, modified and reformed to the maximum extent
possible to effect the purposes set forth herein and in the Ancillary Agreement.
9. Waivers and Modifications. This Agreement may be modified, and
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the rights and remedies of any provision hereof may be waived, only in
accordance with this Section. No modification or waiver by the Company shall be
effective without the consent of the Employee and at least a majority of the
Board (excluding the Employee, if the Employee is a director) then in office at
the time of such modification or waiver. No waiver by either party of any
breach by the other party of any provision hereof shall be deemed to be a waiver
of any later or other breach thereof or as a waiver of any other provision of
this Agreement. This Agreement and the Ancillary Agreement set forth all of the
terms of the understandings between the parties with reference to the subject
matter set forth herein and may not be waived, changed, discharged or terminated
orally or by any course of dealing between the parties, but only by an
instrument in writing signed by the party against whom any waiver, change,
discharge or termination is sought.
10. Assignment. The Employee acknowledges that the services to be
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rendered by him are unique and personal in nature. Accordingly, the Employee
may not assign any of his rights or delegate any of his duties or obligations
under this Agreement. The rights and obligations of the Company under this
Agreement shall inure to the benefit of, and shall be binding upon, the
successors and assigns of the Company, including any successor to the Company's
capital stock or assets by reason of any sale of stock or assets, merger, sale
or other form of business combination.
11. Arbitration. Any controversy, dispute, claim or breach arising
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out of or relating to this Agreement shall be submitted for settlement to an
arbitrator agreed upon by the parties. The decision of such arbitrator shall be
final and binding on the parties. If the parties cannot agree upon an
arbitrator, the controversy, claim or breach shall be referred to the American
Arbitration Association with a request that the Association appoint an
arbitrator. Such arbitration shall be held in Boston, Massachusetts, in
accordance with the rules and practices of the American Arbitration Association
pertaining to single-party arbitration then in effect, and the judgment upon the
award rendered shall be entered by consent in any court having jurisdiction.
The prevailing party shall be entitled to recover all costs and expenses
associated with any arbitration (including attorneys' fees); and if no party
prevails, each party shall be responsible for its own expenses.
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12. Integration. This Agreement and the Ancillary Agreement set
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forth all of the terms of the understandings between the parties and supersede
any other understandings, discussions or agreements among the parties with
reference to the subject matter set forth herein.
13. Interpretation. The language of all parts of this Agreement
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shall in all cases be construed as a whole according to its fair meaning and not
strictly for or against either of the parties.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first above written.
Mainspring, Inc. EMPLOYEE:
By: /s/ Xxxx X. Xxxxx /s/ Xxxx X. Xxxxxxxx
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Xxxx X. Xxxxx Xxxx X. Xxxxxxxx
Senior Vice President, Finance
and Operations
Exhibit A
MAINSPRING, INC.
NONCOMPETITION, NONDISCLOSURE AND INVENTIONS AGREEMENT
The undersigned, Xxxx X. Xxxxxxxx, in consideration for and as a condition
of my continued employment as an employee (the "Employee") of Mainspring, Inc.
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(the "Company"), hereby agrees with the Company as follows:
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1. Noncompetition Covenant. During the period of employment as an
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officer and/or key employee of the Company, the Employee will devote his
available business time and best efforts to promoting and advancing the business
of the Company. During the period of employment and for a period of one (1)
year after termination of such employment (for any reason whatsoever), the
Employee agrees that he will not, whether alone or as a partner, officer,
director, consultant, agent, employee or stockholder of any company or other
commercial enterprise, engage in any business or other commercial activity which
is or may be competitive with the products and services being marketed,
distributed or developed by the Company at the time of termination of such
employment. The foregoing prohibition shall not prevent employment or
engagement by any company or business organization, or any division thereof, not
substantially engaged in the business of offering strategy consulting services
for the Internet (the "Business") as long as the activities of any such
employment or engagement, in any capacity, does not involve work on matters
directly related to the products or services being developed, reduced to
practice, distributed or marketed by the Company at the time of any termination
of employment. The foregoing restriction shall not prohibit Employee from
owning securities of any publicly traded company that is engaged in the Business
as long as Employee does not own at any time more than three percent (3%) of
such class of equity securities of such company.
2. Nonsolicitation. During the period of employment by the Company and
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for a period of one (1) year after termination of such employment (for any
reason), the Employee will not directly or indirectly either for himself or for
any other commercial enterprise, solicit, divert or take away or attempt to
solicit, divert or take away, any of the Company's customers, business or
prospective customers in existence at the time of termination of such
employment. For purposes of this Agreement, "prospective customers" shall
include those customers being solicited by the Company at the time of the
Employee's termination. During such employment with the Company and for a
period of one (1) year thereafter, the Employee will not solicit or discuss with
any employee of the Company the employment of such Company employee by any
commercial enterprise, other than for the benefit of the Company, nor recruit,
attempt to recruit, hire, or attempt to hire any such Company employee other
than on behalf of the Company.
3. Nondisclosure Obligation. The Employee will not at any time, whether
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during or after the termination of employment, for any reason whatsoever (other
than to promote and advance the business of the Company), reveal to any person
or entity (both commercial and non-commercial) any of the trade secrets or
confidential business information concerning the Company: including its
research and development activities; product designs, prototypes and technical
specifications; show-how and know-how; marketing plans and strategies; pricing
and costing policies; customer and supplier lists and accounts; or nonpublic
financial information of the Company so far as they have come or may come to the
Employee's knowledge, except as may be required in the ordinary course of
performing his duties as an employee of the Company. This restriction shall not
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apply to: (i) information that may be disclosed generally or is in the public
domain through no fault of the Employee; (ii) information received from a third
party outside the Company that was disclosed without a breach of any
confidentiality obligation; (iii) information approved for release by written
authorization of the Company; or (iv) information that may be required by law or
an order of any court, agency or proceeding to be disclosed. The Employee
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shall keep secret all matters of such nature entrusted to him and shall not use
or disclose any such information for the benefit of any third party in any
manner which may injure or cause loss to the Company, whether directly or
indirectly.
4. Assignment of Inventions. The Employee expressly understands and
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agrees that any and all right or interest he obtains in any designs, trade
secrets, technical specifications and technical date, know-how and show-how,
customer and vendor lists, marketing plans, pricing policies, inventions,
concepts, ideas, expressions, discoveries, improvements and patent or patent
rights which are authored, conceived, devised, developed, reduced to practice,
or otherwise obtained by him during the term of this Agreement which relate to
or arise out of his employment with the Company are expressly regarded as "works
for hire" (the "Inventions"). The Employee hereby assigns to the Company the
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sole and exclusive right to such Inventions. The Employee agrees that he will
promptly disclose to the Company any and all such Inventions, and that, upon
request of the Company, the Employee will execute and deliver any and all
documents or instruments and take any other action which the Company shall deem
necessary to assign to and vest completely in the Company, to perfect trademark,
copyright and patent protection with respect to, or to otherwise protect the
Company's trade secrets and proprietary interest in such Inventions. The
obligations of the Employee under this Section shall continue beyond the
termination of the Employee's employment with respect to such Inventions
conceived of, reduced to practice, or developed by the Employee during the term
of this Agreement. The Company agrees to pay any and all copyright, trademark
and patent fees and expenses or other costs incurred by the Employee for any
assistance rendered to the Company pursuant to this Section.
The Employee's obligation to assign Inventions shall not apply to any
invention about which the Employee can prove that: (i) it was developed
entirely on the Employee's own time and effort; (ii) no equipment, supplies,
facility, trade secrets or confidential information of the Company was used in
its development; (iii) it does not relate to the business of the Company or to
the Company's actual or anticipated research and development activities; and
(iv) it does not result from any work performed by the Employee for the Company.
5. Absence of Conflicting Agreements. The Employee understands the
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Company does not desire to acquire from him any trade secrets, know-how or
confidential business information that he may have acquired from others. The
Employee represents that he is not bound by any agreement or any other existing
or previous business relationship which conflicts with or prevents the full
performance of the Employee's duties and obligations to the Company during the
course of employment.
6. Remedies Upon Breach. The Employee agrees that any breach of this
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Agreement by the Employee could cause irreparable damage to the Company. The
Company shall have, in addition to any and all remedies of law, the right to an
injunction or other equitable relief to prevent any violation of the Employee's
obligations hereunder.
7. Miscellaneous. Any waiver by the Company of a breach of any provision
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of this Agreement shall not operate or be construed as a waiver of any
subsequent breach hereof. If one or more of the provisions contained in this
Agreement shall for any reason be held to be excessively broad as to scope,
activity or subject matter so as to be unenforceable at law, such provision(s)
shall be construed and reformed by the appropriate judicial body by limiting and
reducing it (or them), so as to be enforceable to the maximum extent compatible
with the applicable law as it shall then appear. The obligations of the
Employee under this Agreement shall survive the termination of the Employee's
relationship with the Company regardless of the manner of such termination. All
covenants and agreements hereunder shall inure to the benefit of and be
enforceable by the successors of the Company. This Agreement shall be governed
by, and construed in accordance with, the internal laws of the Commonwealth of
Massachusetts. The Employee understands that this Agreement does not create an
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obligation on the part of the Company to continue the Employee's employment with
the Company. The Employee is employed as an employee "at will."
The Employee recognizes and agrees that the enforcement of this Agreement
is necessary to ensure the preservation, protection and continuity of the
confidential business information, trade secrets and goodwill of the Company.
The Employee agrees that, due to the proprietary nature of the Company's
business, the restrictions set forth in Sections 1, 2, 3 and 4 of this Agreement
are reasonable as to duration and scope.
IN WITNESS WHEREOF, the undersigned Employee and the Company have executed
this Agreement as of this 22/nd/ day of June, 2000.
MAINSPRING, INC. EMPLOYEE:
By: /s/ Xxxx X. Xxxxx /s/ Xxxx X. Xxxxxxxx
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Xxxx X. Xxxxx Xxxx X. Xxxxxxxx
Senior Vice President, Finance
and Operations
