1
EXHIBIT 10.19
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of August 31, 1999, between BUILDNET INC., a
corporation organized and existing under the laws of the State of North Carolina
("BuildNet") and Xxxxxx X. Xxxxxxxx ("Employee").
WHEREAS, BuildNet desires to continue to employ Employee and Employee
desires to accept such continued employment on the terms and conditions
hereinafter set forth; and
WHEREAS, the parties hereby acknowledge that the goodwill, continued
patronage, names, addresses and specific business requirements of BuildNet's
clients and customers, and the designs, procedures, systems, strategies,
business methods and know-how of BuildNet, having been acquired through
BuildNet's efforts and/or the expenditure of considerable time and money, are
among the principal assets of BuildNet; and
WHEREAS, the parties hereby acknowledge that as a result of the
position in which Employee will be employed by BuildNet, Employee will develop
special skills and knowledge peculiar to BuildNet's business, whereby Employee
has become and will continue to become, through Employee's employment with
BuildNet, acquainted with the identities of the clients and customers of
BuildNet, and has acquired and will continue to acquire access to the techniques
of BuildNet in carrying on its business, as well as other confidential and
proprietary information; and
WHEREAS, the parties hereto acknowledge that the covenants set forth in
Sections 8 through 11 (the "Covenants") of this Agreement are necessary for the
reasonable and proper protection of BuildNet's confidential and proprietary
information (as defined herein), customer relationships, and the goodwill of
BuildNet's business, and that such Covenants constitute a material portion of
the consideration for Employee's employment hereunder;
NOW, THEREFORE, in consideration of the premises and mutual promises
and covenants contained herein, and for other good and valuable consideration,
the receipt and legal sufficiency of which are hereby acknowledged, the parties
agree as follows.
1. Position; Employment. BuildNet agrees to employ Employee, and
Employee agrees to be employed, as Vice President of Finance and Operations of
BuildNet, or in such other position of comparable status and seniority suitable
to Employee's knowledge and experience as the Board of Directors may from time
to time assign. The employment of Employee shall be effective as of July 16,
1999 and continue for the period as provided in Section 7 hereof.
2. Performance of Duties. Employee agrees to use his best efforts to
devote his entire time and best efforts, skill, ability and attention to the
business and affairs of BuildNet and to the performance of the services and
duties consistent with his position with BuildNet as he may be assigned from
time to time by the Board of Directors of BuildNet.
2
In the performance of his responsibilities as Vice President of Finance
and Operations, Employee shall be subject to all of BuildNet's policies, rules
and regulations applicable to its employees of comparable status. Employee shall
report directly to and be subject to the direction of the Chief Executive
Officer, President, Chief Operating Officer, Chief Financial Officer and Board
of Directors of BuildNet. Employee shall perform the duties consistent with
Employee's knowledge, experience, and position and the duties of BuildNet
employees of comparable status. Employee shall have such other duties and
responsibilities consistent with his position as the Board of Directors of
BuildNet shall from time to time reasonably assign to him. In performing such
duties, Employee shall be subject to and shall substantially abide by all
policies and procedures developed by BuildNet.
3. Compensation.
(a) Base Salary. In consideration of Employee's services
hereunder, BuildNet shall pay Employee a minimum annual base salary of One
Hundred Fifty Thousand Dollars ($150,000) per annum, less applicable statutory
deductions, payable in accordance with BuildNet's normal payroll practices (the
"Base Salary"). Employee's Base Salary shall be reviewed by the Board of
Directors of BuildNet on an annual basis and may be increased as the Board of
Directors of BuildNet deems appropriate in its sole discretion.
(b) Bonus. Employee may receive a bonus each calendar year
during his continued employment comparable to bonuses paid to other similarly
situated officers of BuildNet and as determined by the Board of Directors in its
sole discretion.
4. Stock Options. Upon the commencement of Employee's employment by
BuildNet, the shares of BuildNet Common Stock exercisable pursuant to stock
options currently held by Employee shall accelerate and become fully vested and
immediately exercisable, and BuildNet shall grant to Employee new incentive
stock options to purchase up to an aggregate of thirty thousand (30,000) shares
of the Common Stock of BuildNet, with an exercise price equal to the fair market
value of the Common Stock of BuildNet at the time of such grant. Options to
purchase six thousand (6,000) shares shall be immediately exercisable and the
remaining twenty-four thousand (24,000) shares shall begin to vest upon the
effective date Employee's employment in monthly installments over a two (2) year
period. Such options shall become fully exercisable in the event of (a) a sale
of all or substantially all the assets of BuildNet or a merger or consolidation
involving BuildNet in which the shareholders of BuildNet prior to such
transaction own less than a majority of the voting securities of the entity
surviving such transaction, or (b) any transaction or series of related
transactions pursuant to which a person, entity or persons or entities under
common control or acting as a group within the meaning of Section 13(d) of the
Securities Exchange Act of 1934, as amended, acquires securities constituting at
least a majority of the voting power of BuildNet. Notwithstanding the foregoing,
if the Company terminates employment of Employee without Cause (as defined
herein), one-half of the shares remaining unvested on the date of termination
shall be accelerated and vest immediately.
2
3
5. Employee Benefits. During the Term of this Agreement, Employee shall
be eligible to receive and/or participate in all employee benefits that are
offered by BuildNet to its employees generally.
6. INTENTIONALLY OMITTED.
7. Term and Termination. The term of the Employee's employment under
this Agreement (the "Term of Employment") shall commence effective as of July
16, 1999 and continue through the date one (1) year from the such date, unless
earlier terminated in accordance with the provisions of this Agreement. The Term
of Employment shall automatically extend beyond the initial one-year term until
such time as either party shall give notice of termination to the other. This
Agreement shall terminate prior to the expiration of the Term of Employment upon
the occurrence of any one of the following events.
(a) Cause. BuildNet may terminate this Agreement, at any time,
for Cause, with or without prior notice to Employee, in which event all payments
under this Agreement shall cease, except as provided in Section 7(d) below. The
term "Cause" as used herein shall mean (i) Employee, in carrying out his duties
hereunder, has been guilty of gross negligence or wilful and wanton misconduct
which in either case results in material harm to the financial condition,
business, assets, or prospects of BuildNet; (ii) the conviction of, or the
entering of a plea of no contest by, Employee for a felony or crime involving
moral turpitude, (iii) any act involving dishonesty in the performance of
Employee's duties hereunder, including, without limitation, fraud,
misappropriation or embezzlement, (iv) any material breach of this Agreement by
Employee, which failure cannot be cured or shall not have been cured within
thirty (30) days after receipt by Employee of written notice from BuildNet
specifying in reasonable detail the nature of such breach; or (v) Employee fails
to carry out directions (consistent with his position as set forth in Section 1
above) of the Board of Directors of BuildNet, which failure cannot be cured or
shall not have been cured within thirty (30) days after receipt by Employee of
written notice from BuildNet specifying in reasonable detail the failure to so
carry out such directions.
(b) Death. This Agreement shall terminate if Employee dies
during the Term of Employment. In such event, BuildNet shall pay to the
Employee's executors, legal representatives or administrators an amount as set
forth in Section 7(d) below.
(c) Disability. BuildNet may terminate this Agreement if
Employee shall suffer a Disability, in which event all payments under this
Agreement shall cease, except as provided in Section 7(d) below. For purposes of
this Agreement, "Disability" shall mean that Employee has not performed his
full-time duties with BuildNet for six (6) consecutive months or an aggregate of
six (6) months within a twelve (12) month period as a result of his incapacity
due to physical or mental illness.
(d) Certain Payments Upon Termination. If, during the Term of
Employment, BuildNet terminates the employment of Employee for Cause, Employee
voluntarily terminates his employment with BuildNet, or upon the death or
Disability of Employee during the Term of Employment, the Term of Employment
shall terminate immediately thereafter, and BuildNet shall pay Employee or his
beneficiary such Base Salary as he may be entitled to receive for
3
4
services rendered prior to the date of such termination. In the event of any
such termination, BuildNet shall not be liable for any other payments to
Employee. If, during the Term of Employment, BuildNet terminates the employment
of Employee without Cause, the obligations of BuildNet pursuant to this
Agreement, including but not limited to Sections 3, 4 and 5, shall continue in
full force and effect for the greater of (a) the remainder of the Term of
Employment or (b) six (6) months from the date of such termination.
8. Restrictive Covenants.
(a) Noncompetition. During the term of his employment, and for
a period of one (1) year after the termination or cessation of Employee's
employment with BuildNet, regardless of manner or cause of termination, Employee
agrees that, within the geographic area described in Section 8(e) hereof, he
will not: (i) engage in, manage, operate, control or supervise, or participate
in the management, operation, control or supervision of, any business or entity
which provides products or services competitive with those then currently
provided by BuildNet; or (ii) have any ownership or financial interest, directly
or indirectly, in any entity which provides products or services competitive
with those then currently provided by BuildNet, including, without limitation,
as an individual, partner, shareholder (other than as a shareholder of a
publicly-owned corporation in which Employee owns less than 1% of the
outstanding shares of such corporation), officer, director, employee, member,
associate, principal, agent, representative or consultant, and shall not in any
other manner, directly or indirectly, compete to any extent with such business
of BuildNet.
(b) Restriction on Solicitation of Customers. Employee agrees
that he will not (in addition to any other restriction on his activities), for a
period of one (1) year immediately following Employee's termination, on his own
behalf or on behalf of any other person or entity, directly or indirectly call
on or otherwise contact customers of BuildNet on or prior to the date of
termination or cessation of Employee's employment with BuildNet (the "Restricted
Customers") within the geographic area described in Section 8(e) hereof, for the
purpose of selling products or services to the Restricted Customers that are
competitive with those provided by BuildNet.
(c) Restriction on Solicitation of Employees. Employee agrees
that he will not, for a period of one (1) year immediately following Employee's
termination, directly or indirectly contact, solicit, interfere with or attempt
to entice in any form, fashion or manner any employee of BuildNet: (i) for the
purpose of inducing that employee to work with or for Employee (or with a person
or business entity with which employee is affiliated); or (ii) to terminate his
employment with BuildNet.
(d) Confidentiality. Employee will not at any time, whether
during or after the termination of his employment, reveal to any person or
entity any of the trade secrets or confidential information concerning the
organization, business or finances of BuildNet or of any third party that
BuildNet is under an obligation to keep confidential (including but not limited
to trade secrets or confidential information respecting inventions, research,
products, designs, methods, know-how, formulae, techniques, systems, processes,
software programs, works of authorship, customer lists, projects, plans and
proposals), except as may be required in the ordinary course of performing his
duties as an employee of BuildNet, and Employee shall keep
4
5
secret all matters entrusted to him and shall not use or attempt to use any such
information in any manner that may injure or cause loss to BuildNet.
(e) Geographic Scope of Restrictive Covenants. The geographic
area in which Employee shall not engage in any of the prohibited activities
listed in subsections 8(a) and 8(b) hereof shall be limited to the United
States.
9. Employee Developments. If at any time or times during Employee's
employment, Employee shall (either alone or with others) make, conceive,
discover or reduce to practice any invention, modification, discovery, design,
development, improvement, process, software program, work of authorship,
documentation, formula, data, technique, know-how, secret or intellectual
property right whatsoever or any interest therein (whether or not patentable or
registrable under copyright or similar statutes or subject to analogous
protection) (herein called "Developments") that relates to the business of
BuildNet or any of the products or services being developed, manufactured or
sold by BuildNet or that may be used in relation therewith, such Developments
and the benefits thereof shall immediately become the sole and absolute property
of BuildNet and its assigns, and Employee shall promptly disclose to BuildNet
each such Development and hereby assigns any rights Employee may have or acquire
in the Developments and benefits and/or rights resulting therefrom to BuildNet
and its assigns without further compensation and shall communicate, without cost
or delay, and without publishing the same, all available information relating
thereto to BuildNet. Upon the request of BuildNet, the Employee will execute and
deliver all documents and do other acts which are or may be necessary to
document such transfer or to enable BuildNet to file and prosecute applications
for and to acquire, maintain, extend and enforce any and all patents, trademark
registrations or copyrights under United States or foreign law with respect to
any such developments.
Notwithstanding the foregoing, this Agreement shall not be construed to
apply to, and shall not create any assignment of, any Developments of the
Employee that are covered by Section 66-57.1 of the North Carolina General
Statutes, a copy of which is attached hereto as Exhibit A.
10. Existing Developments. Employee represents that the Developments,
if any, identified on Exhibit B attached hereto comprise all the unpatented and
uncopyrighted Developments that Employee has made or conceived prior to or
otherwise not in connection with Employee's employment by BuildNet, which
Developments are excluded from this Agreement. Employee understands that it is
necessary only to list the title and purpose of such Developments but not
details thereof.
Employee further represents that Employee's performance of all the
terms of this Agreement and as an employee of BuildNet does not and will not
breach any agreement to keep in confidence proprietary information acquired by
Employee in confidence or in trust prior to Employee's employment by BuildNet.
Employee has not entered into, and Employee agrees he will not enter into, any
agreement either written or oral in conflict herewith.
11. Return of BuildNet Property. Upon the termination of Employee's
employment with BuildNet for any reason, Employee shall leave with or return to
BuildNet all personal
5
6
property belonging to BuildNet ("BuildNet Property") that is in Employee's
possession or control as of the date of such termination of employment,
including, without limitation, all records, papers, drawings, notebooks,
specifications, marketing materials, software, reports, proposals, equipment, or
any other device, document or possession, however obtained, whether or not such
BuildNet Property contains confidential or proprietary information of BuildNet
as described in Section 8(d) hereof.
12. Enforcement of the Covenants. Employee acknowledges and agrees that
the Covenants contained in Sections 8 through 11 of this Agreement are
reasonably necessary to the protection of BuildNet's business, that a violation
of any of the Covenants contained in Sections 8 through 11 of this Agreement
would result in immediate and irreparable harm to BuildNet and that BuildNet's
remedies at law and/or the award of monetary damages would be inadequate relief
for such a violation. Therefore, Employee's violation or threatened violation of
any of the Covenants contained in Sections 8 through 11 of this Agreement will
give BuildNet the right to enforce such Covenants through specific performance,
temporary restraining order, preliminary or permanent injunction, and other
equitable relief. These remedies will be cumulative and in addition to any other
remedies that BuildNet may have. In addition, Employee agrees that the Covenants
contained in Sections 8 through 11 will be extended by a length of time equal to
the period of time running from the filing of any action to enforce or challenge
the validity of the Covenants to the date of a final judgment (after appeals, if
any) or settlement of said litigation, or the expiration of all applicable
appeal periods after the entry of judgment in said litigation, whichever event
last occurs.
13. Waiver of Breach. Any waiver by BuildNet of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach of such provision or any other provision hereof.
14. Validity and Survival of the Covenants. Employee acknowledges and
agrees that the Covenants contained in this Agreement are exchanged for valid
and reasonable consideration, are reasonably necessary to protect BuildNet's
legitimate interests, are reasonable with respect to time duration and
geographic scope, do not interfere with the interests of the public, and that
the descriptions of prohibited activities contained in the covenants are
sufficiently precise and definite to inform me of the scope of the Covenants.
The Covenants contained Sections 8 through 11 of this Agreement will survive
termination of Employee's employment. Employee agrees that the existence of any
claim or cause of action that he may have against BuildNet, whether based on
this Agreement or otherwise, will not constitute a defense to BuildNet's
enforcement of the Covenants.
15. Severability. Employee hereby agrees that each provision herein
shall be treated as a separate and independent clause, and the unenforceability
of any one clause shall in no way impair the enforceability of any of the other
clauses herein. Moreover, if one or more of the provisions contained in this
Agreement shall for any reason be held to be excessively broad as to scope,
duration, territory, activity or subject so as to be unenforceable at law, such
provision or provisions shall be construed by the appropriate judicial body by
limiting and reducing it or them, so as to be enforceable to the extent
compatible with the applicable law as it shall then appear. In particular, in
the event that the provisions of Sections 8(a) and 8(b) are found to be
unenforceable or void (either in whole or in part) then the offending portion
shall be construed as valid and enforceable only to the extent permitted by law,
and the balance of this Agreement will remain in full force and effect. It
6
7
is the intention of the parties to restrict the activities of Employee only to
the extent necessary to protect the legitimate business interests of BuildNet
and not to deprive Employee of the right to earn a livelihood. Employee agrees
that this Agreement is reasonably necessary to protect BuildNet's legitimate
business interests.
16. Binding Effect. Employee's obligations under this Agreement shall
survive the termination of Employee's employment regardless of the manner of
such termination and shall be binding upon Employee's heirs, executors,
administrators and legal representatives.
17. Assignment. BuildNet shall have the right to assign this Agreement
to its successors and assigns, and all covenants and agreements hereunder shall
inure to the benefit of and be enforceable by said successors or assigns. This
Agreement may be amended only in a writing signed by each of the parties hereto.
18. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of North Carolina. This Agreement may be
executed in counterparts.
19. Entirety. This Agreement, including any exhibits hereto, as it may
be amended pursuant to the terms hereof, represents the complete and final
agreement of the parties and shall control over any other statement,
representation or agreement by BuildNet (e.g., as may appear in employment or
policy manuals). This Agreement supersedes any prior negotiations or discussions
between the parties with regard to the subject matter hereof.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
7
8
IN WITNESS WHEREOF, the parties hereto have caused this
Employment Agreement to be duly executed and their seals affixed hereto as of
the day and year first above written.
BUILDNET INC.
By: /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: CEO
EMPLOYEE
/s/ Xxxxxx X. Xxxxxxxx (SEAL)
Xxxxxx X. Xxxxxxxx
8
9
EXHIBIT A
SECTION 66-57.1 OF THE NORTH CAROLINA GENERAL STATUTES
Any provision in an employment agreement which provides that the
[employee] shall assign or offer to assign any of his rights in an invention to
his employer shall not apply to an invention that the employee developed
entirely on his own time without using the employer's equipment, supplies,
facility or trade secret information except for those inventions that:
(i) relate to the employer's business or actual or demonstrably
anticipated research or development, or
(ii) result from any work performed by the employee for the employer.
To the extent a provision in an employment agreement purports to apply
to the type of invention described, it is against the public policy of this
State and [is] unenforceable. The employee shall bear the burden of proof in
establishing that his invention qualifies under this section.
10
EXHIBIT B
PRIOR DEVELOPMENTS BY EMPLOYEE
The following is a complete list of all unpatented and uncopyrighted
Developments relevant to the subject matter of my employment by BuildNet that
have been made or conceived by me prior to or otherwise not in connection with
my employment by BuildNet.
No inventions or improvements.
------
All such inventions as are described below:
------
Additional sheets attached.
------
/s/ Xxxxxx X. Xxxxxxxx
----------------------
Xxxxxx X. Xxxxxxxx
