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Exhibit [__]
ZAPME! CORPORATION
CONSULTING AGREEMENT
THIS AGREEMENT is made this 6th day of October, 2000 by and between
ZapMe! Corporation, a Delaware corporation (the "Company"), and Xxxx Xxxxxxx
(the "Consultant").
The Consultant is employed by the Company as its Chief Executive
Officer pursuant to the terms of a letter agreement dated September 15, 1999
(the "Employment Agreement'). Gilat Satellite Networks, an Israeli corporation
(the "Purchaser") has entered into an agreement, dated October 2, 2000, with the
Company pursuant to which the Purchaser will commence a tender offer for up to
51% of the outstanding common stock, .01 par value per share, of the Company
(the "Common Stock") and, upon consummation of such tender offer and the
acquisition by the Purchaser of not less than 51% of the Common Stock, the
Purchaser will have the right to designate a majority of the members of the
Company's Board of Directors (the date on which such designation by the
Purchaser occurs, the "Change of Control Date").
It is contemplated that, when the Purchaser designates a majority of
the Company's Board of Directors, Consultant will resign from the Company's
Board of Directors and his employment by the Company will be terminated by the
Company. Notwithstanding such termination of employment, however, the Purchaser
and the Company desire to obtain the services of Consultant to consult with and
perform services as an independent contractor for the Company with respect to
its business, and Consultant desires to provide services to the Company upon the
terms and conditions set forth in this Agreement.
In consideration of the mutual covenants and agreements set forth
herein, subject to Section 16 below, the parties agree as follows:
1. Consulting Services. On the Change of Control Date, the
Company hereby engages the Consultant as an independent contractor, and not as
an employee, to render consulting services to the Company as hereinafter
provided, and the Consultant hereby accepts such engagement, for a period (the
"Consulting Period") commencing on the Change of Control Date and terminating on
the earlier of (a) termination by the Consultant (including death or
disability); (b) termination by the Company for Cause (as defined herein); or
(c) the second anniversary of the Change of Control Date. During the Consulting
Period, the Consultant shall render such consulting services to the Company in
connection with the Company's business as the Consultant and the Chief Executive
Officer of the Company from time to time agree ("Services"). The Services shall
not require the Consultant's full time and attention nor require the Consultant
to relocate or spend a significant amount of time away from the Bay Area. The
Company acknowledges that the Consultant intends to pursue other business
interests that will affect the time he may spend providing the Services
hereunder.
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2. Confidentiality and Ownership:
(a) Consultant will not, during or subsequent to the term
of this Agreement, use the Company's Confidential Information for any
purpose whatsoever other than the performance of the Services on behalf
of the Company or disclose the Company's Confidential Information to
any third party, and agrees that all Confidential Information shall
remain the sole property of the Company. Confidential Information does
not include information which (i) is known to Consultant at the time of
disclosure as evidenced by written records of Consultant but not
through Consultant's employment with the Company, (ii) has become
publicly known and made generally available through no wrongful act of
Consultant, or (iii) has been rightfully received by Consultant from a
third party who is authorized to make such disclosure. Upon the
termination of this Agreement, or upon Company's earlier request,
Consultant will deliver to the Company all of the Company's property or
Confidential Information in tangible form that Consultant may have in
Consultant's possession or control. "Confidential Information" means
any information the Company reasonably deems to be confidential,
including but not limited to proprietary information, trade secrets,
technical data and know how.
(b) Consultant agrees that all copyrightable material,
notes, records, drawings, designs, inventions, improvements,
developments, discoveries and trade secrets (collectively,
"Inventions") conceived, made or discovered by Consultant, solely or in
collaboration with others, during the period of this Agreement which
relate in any manner to the business of the Company that Consultant may
be directed to undertake, investigate or experiment with, or which
Consultant may become associated with in work, investigation or
experimentation in the line of business of Company in performing the
Services hereunder, are the sole property of the Company. In addition,
any Inventions which constitute copyrightable subject matter shall be
considered "works made for hire" as that term is defined in the United
States Copyright Act. Consultant further agrees to assign (or cause to
be assigned) and does hereby assign fully to the Company all such
Inventions and any copyrights, patents, mask work rights or other
intellectual property rights relating thereto. Consultant agrees to
assist Company, or its designee, at the Company's expense, in every
proper way to secure the Company's rights in the Inventions.
3. Mutual Release. Effective upon commencement of the Consulting
Period, the Consultant and the Company each hereby irrevocably terminates the
Employment Agreement and releases and discharges forever the other with respect
to all of the obligations, rights and liabilities of the Company and the
Consultant thereunder other than (a) the Consultant's rights and the Company's
obligations with respect to the reimbursement by the Company of the Consultant's
relocation expenses, including all of the Consultant's rights for adjustments
and "gross ups" such that such reimbursement will be tax neutral to the
Consultant; (b) the Consultant's rights to indemnification under the Company's
charter and bylaws; (c) the Consultant's rights to be reimbursed for all
reasonable expenses paid by the Consultant in the ordinary course of conducting
Company business which are not reimbursed as of the commencement of the
Consulting Period; and (d) the Consultant's rights to receive compensation up to
and including the Change of Control Date and bonus compensation for the year
ended December 31, 2000.
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4. Compensation; Reimbursement; Office and Administrative
Support.
(a) In consideration of Consultant's consulting services
set forth in Section 1 above, during the Consulting Period the Company
shall pay the Consultant $275,000 per annum (the "Consulting Payments")
which will be payable in regular installments in accordance with the
Company's general payroll practices.
(b) During the Consulting Period, the Consultant will be
entitled to the continuation health and related benefits to which he
was entitled as Chief Executive Officer of the Company at the same
level as were provided by the Company to the Consultant as of the date
immediately preceding the commencement of the Consulting Period.
(c) During the Consulting Period, the Consultant shall be
entitled to occupy the office he is occupying on the date hereof, with
all furniture and equipment therein, and the Company will provide
full-time secretarial and, as the Consultant may reasonably request
from time to time, other administrative support to the Consultant at
the expense of the Company.
5. Termination. In the event that the Consulting Period is
terminated prior to the second anniversary of the Change of Control Date by the
Consultant (other than for Good Reason) or by the Company for Cause, Consultant
shall not be entitled to receive the Consulting Payments or any benefits for
periods after the termination of the Consulting Period, and upon any termination
of the Consulting Period as a result of a permanent disability, by the Company
without Cause, or by the Consultant for Good Reason, Consultant shall be
entitled to receive the Consulting Payments and benefits (including office,
secretarial, and other administrative support) until the second anniversary of
the Change of Control Date. For purposes hereof, "Cause" shall mean (a) the
Consultant's material breach of any provision of this Agreement; (b) the
Consultant's failure to adhere to any written Company policy if the Consultant
has been given written notice and a reasonable opportunity to comply with such
policy or cure his failure to comply; (c) the appropriation (or attempted
appropriation) of a material business opportunity of the Company; or (d) the
conviction of or the entering of a guilty plea or no contest with respect to, a
felony or the equivalent thereof. For purposes hereof, "Good Reason" shall mean
the Company's material breach of any provision of this Agreement.
6. Restricted Stock; Stock Options. Effective on the Change of
Control Date, the Company agrees that Consultant's Restricted Stock (as defined
in that certain Restricted Stock Purchase Agreement dated September 13, 1999,
amended as of June 21, 2000 (the "Restricted Stock Agreement")) shall
immediately vest and no longer be subject to any Repurchase Option (as defined
in the Restricted Stock Agreement), and that the Consultant's stock options
shall immediately terminate. Except as otherwise provided herein, the Restricted
Stock Agreement, the Note and the Security Agreement (as defined in the
Restricted Stock Agreement) shall remain in full force and effect; provided that
in the event that the Consulting Period is terminated prior to the second
anniversary of the Change of Control Date by the Company without Cause, the
Company agrees that the Note will not be due until the date which is thirty (30)
days after the
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second anniversary of the Change of Control Date, and that the Company will not
seek to enforce the Note until such date. After the occurrence of both (a) the
Change of Control Date, and (b) payment in full by Consultant for Consultant's
Restricted Stock, the Company shall notify the Escrow Holder (as defined in the
Restricted Stock Agreement), to deliver to the Consultant a certificate or
certificate evidencing all shares of paid-for Common Stock then held by the
Escrow Holder pursuant to the Joint Escrow Instructions, dated September 13,
1999, by and between the Company and the Consultant, at which time the Joint
Escrow Instructions shall terminate and be of no further force or effect. The
Consultant acknowledges that such certificate or certificates will continue to
be subject to the Security Agreement until the Note is paid or the obligations
thereunder of the Consultant are otherwise discharged.
7. Tax Returns. The Consultant shall file all tax returns and
reports required to be filed by him on the basis that the Consultant is an
independent contractor, rather than an employee, as defined in Treasury
Regulation Section 31.3121(d)-1(c)(2). The Company makes no representations or
warranties about the tax consequences to Consultant of the events described in
this or any other Agreement.
8. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the Company and its affiliates, successors, assigns
and any controlling entity and shall be binding upon and inure to the benefit of
the Consultant and his legal representatives and assigns; provided that in no
event shall Consultant's obligations to perform future services for the Company
be delegated or transferred by the Consultant without the prior written consent
of the Company (which consent may be withheld in its sole discretion). The
Company may assign or transfer its rights hereunder to any of its affiliates or
to a successor corporation in the event of merger, consolidation or transfer or
sale of all or substantially all of the assets of the Company.
9. Modification or Waiver. No amendment, modification or waiver
of this Agreement shall be binding or effective for any purpose unless it is
made in a writing signed by the party against whom enforcement of such
amendment, modification or waiver is sought. No course of dealing between the
parties to this Agreement shall be deemed to affect or to modify, amend or
discharge any provision or term of this Agreement. No delay on the part of the
Company or the Consultant in the exercise of any of their respective rights or
remedies shall operate as a waiver thereof, and no single or partial exercise by
the Company or the Consultant of any such right or remedy shall preclude other
or further exercises thereof. A waiver of a right or remedy on any one occasion
shall not be construed as a bar to or waiver of any such right or remedy on any
other occasion.
10. Governing Law and Venue. All issues and questions concerning
the construction, validity, enforcement and interpretation of this Agreement and
the exhibits and schedules hereto shall be governed by, and construed in
accordance with, the laws of the State of California, without giving effect to
any choice of law or conflict of law rules or provisions (whether of the State
of California or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of California. In furtherance of
the foregoing, the internal law of the State of California shall control the
interpretation and construction of this Agreement, even though under that
jurisdiction's choice of law or conflict of law analysis, the substantive law of
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some other jurisdiction would ordinarily apply. The Parties agree that the
federal and state courts of California are the sole and exclusive venue for
bringing any action under this Agreement and agree to submit themselves to the
jurisdiction of those courts.
11. Severability. Whenever possible each provision and term of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision or term of this Agreement shall be
held to be prohibited by or invalid under such applicable law, then such
provision or term shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating or affecting in any manner whatsoever the
remainder of such provision or term or the remaining provisions or terms of this
Agreement.
12. No Strict Construction. The language used in this Agreement
shall be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction shall be applied against any
party.
13. Certain Representations. This Agreement has been duly executed
and delivered by each of the Company and the Consultant. This Agreement
constitutes a valid and binding obligation of each of the Company and the
Consultant, enforceable in accordance with its terms. Each of the Company and
the Consultant represents and warrants to the other that (i) the execution,
delivery and performance of this Agreement does not and shall not conflict with,
or result in the breach of or violation of, any other agreement, instrument,
order, judgment or decree to which it or he is a party or by which he is bound,
and (ii) upon the execution and delivery of this Agreement by the other, this
Agreement shall be the valid and binding obligation of each of the Company and
the Consultant, enforceable in accordance with its terms.
14. Notice. Any notice required or permitted hereunder shall be
given in writing and shall be deemed effectively given upon personal delivery or
upon deposit in the United States Post Office mail, postage prepaid, addressed
to the other party hereto at his or its address shown below.
If to the Company;
ZapMe! Corporation
0000 Xxxxxxxxx Xxxxxxx
Xxx Xxxxx, XX 00000
Attention: Xxxxx Xxxxxxxxx
If to Consultant:
Xxxx Xxxxxxx
X/X Xxxx Xxxxxx
000 Xxxxxxxxxxx Xxxxxx
Detroit Michigan,
6
48243
or at such other address as such party may designate by written notice to the
other party.
15. Captions. The captions used in this Agreement are for
convenience of reference only and do not constitute a part of this Agreement and
shall not be deemed to limit, characterize or in any way affect any provision of
this Agreement, and all provisions of this Agreement shall be enforced and
construed as if no caption had been used in this Agreement.
16. Counterparts. This Agreement may be executed in counterparts,
any one of which need not contain the signatures of more than one party, but all
such counterparts taken together shall constitute one and the same instrument.
17. Effectiveness. Notwithstanding anything to the contrary
contained herein, this Agreement and the rights and obligations of the parties
hereto shall become effective only if the Change of Control Date occurs.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
ZAPME! CORPORATION
By:
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Its:
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Xxxx Xxxxxxx
