Executive Employment Agreement – PurchasePro.com Inc. and Richard L. Clemmer
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (this "Agreement") is made by and
between PurchasePro.com, Inc., a Nevada corporation (the "Company"), and Richard
L. Clemmer ("Executive").
WHEREAS, the Company wishes to enter into an agreement with Executive, and
Executive wishes to enter into an agreement with the Company, whereby Executive
shall be employed by the Company under the terms and conditions set forth below;
THEREFORE, the parties agree as follows:
I. EMPLOYMENT: THIS AGREEMENT.
Executive's employment with the Company shall be "at-will", meaning either
the Company or Executive may terminate Executive's employment with the Company
at any time and for any reason, with or without cause, in each case subject to
the terms and provisions of this Agreement.
Executive's employment with the Company shall be governed by the provisions
of this Agreement for the period commencing with the date of this Agreement (the
"Effective Date") and continuing until this Agreement is terminated pursuant to
Section VII below (the "Employment Period").
II. DUTIES AND RESPONSIBILITIES.
A. Executive shall be employed by the Company in the position of Chief
Executive Officer of the Company, and shall be given responsibilities
commensurate with his position, which responsibilities may change as business
needs and market conditions change from time to time. Executive shall not be
required to serve in any positions, or take any title or duties, subordinate to
that or those of Chief Executive Officer of the Company or any equivalent.
B. Executive shall be given the title of Vice Chairman and Chief Executive
Officer of the Company, and shall be given a seat on the Company's Board of
Directors (the "Board"); provided however, that the foregoing is subject to the
approval of the shareholders of the Company from time to time.
C. As Chief Executive Officer, Executive will have such duties,
responsibilities and authority as are appropriate to such position. Throughout
the term of Executive's employment, Executive will devote such business time and
energies to the business and affairs of the Company as needed to carry out his
duties and responsibilities. In his capacity as Chief Executive Officer,
Executive shall be subject to annual performance reviews carried out by the
Compensation Committee of the Board.
III. CASH COMPENSATION.
A. Executive shall be paid a base salary at a rate of at least $500,000.00
per annum. Executive's base salary shall be paid at periodic intervals in
accordance with the Company's payroll practices for salaried employees.
B. To induce Executive to enter this Agreement and become employed by the
Company as set forth herein, the Company shall pay Executive an initial bonus of
$1,100,000 no later than thirty (30) days following the Effective Date.
C. Executive shall be paid a guaranteed bonus on an annual calendar year
basis during the Employment Period of not less than $200,000. In addition, each
calendar year, Executive shall be paid an additional bonus of between $0 and
$1,000,000, the amount of which shall be determined by the Compensation
Committee of the Company's Board of Directors based on annual performance
evaluations by the criteria established by the Board as agreed by Executive. The
bonus for any particular fiscal year shall be payable within thirty (30) days
following the last day of such fiscal year.
D. On June 1, 2001, the Company made a loan to Executive in the amount of
$1,316,055.28. In consideration of Executive's appointment as Chief Executive
Officer and in order to induce Executive to enter this Agreement, such loan is
hereby forgiven effective immediately.
E. With respect to any and all cash compensation payable to Executive
hereunder, the Company shall comply with all applicable tax withholding
requirements, and shall make such other deductions as may be authorized by
Executive.
F. The Company hereby covenants and agrees that it shall not issue grants
of stock options, or pay compensation in the form of salary, bonus or other
remuneration, to any other employee in excess of that granted or paid to
Executive, except as may be granted or paid as sales commission. The Company
further covenants and agrees that, with respect to any grants to Executive of
stock options or common stock, not less than one-third of each such grant shall
vest immediately upon grant and the remaining two-thirds of each such grant
shall vest over a period of not more than three years.
IV. EMPLOYEE BENEFITS & EXPENSE REIMBURSEMENT.
A. Executive shall be eligible to participate in all employee benefit plans
and compensation and perquisite programs generally made available to the
Company's executives and/or salaried employees from time to time, including,
without limitation, group life insurance, medical and dental insurance, welfare
benefit plans, paid holidays, and such other benefits that the Company generally
makes available to its executives. Executive shall be entitled to, and shall
accrue, paid vacation during the Employment Period at the rate of at least four
(4) weeks per year.
B. In addition to the foregoing, Executive shall be entitled to the
following additional benefits:
1. Reasonable relocation expenses will be reimbursed or paid directly
by the Company, with definition of benefits acceptable to Executive
including moving costs from Executive's out of state homes and associated
storage costs.
2. Executive shall be entitled to, and Company will pay for, all first
class travel of Executive in the performance of his duties or in connection
with travel to and from Executive's second home or homes, and of
Executive's immediate family members between Las Vegas, Nevada and such
second home or homes.
3. Executive's entertainment expenses incurred in the performance of
his duties shall be reimbursed by the Company.
4. Company shall cover the mortgage costs, broker and closing costs
and other reasonable expenses associated with Executive's home in Palo
Alto, California for up to one year or until such home is rented or sold by
Executive, whichever is sooner.
5. Complete comprehensive family medical, eye and dental coverage for
Executive, Grayson Clemmer, Danielle Alexandra, and any other dependents,
with physicians of Executive's choice.
6. Life insurance policy acceptable to Executive on Executive's life
with benefits of at least $3,000,000, with beneficiaries selected by
Executive, the cost of which shall be borne solely by the Company and paid
in full.
V. CONFIDENTIAL & PROPRIETARY INFORMATION.
Executive shall execute, not later than seven (7) business days after being
requested by the Company, the Company's form confidential/proprietary/trade
secret information, non-disclosure and/or inventions assignment agreement (the
"Employee Confidentiality and Intellectual Property Agreement") and shall comply
at all relevant times with such agreement.
VI. STOCK OPTIONS.
The Company will issue to Executive options (collectively, "Stock Options")
to acquire up to 1,050,000 shares of the Company's Common Stock ("Shares") in
accordance herewith and otherwise under the 1999 Stock Plan of PurchasePro.com,
Inc. (the "Plan"), with such terms and conditions as are set forth in a stock
option agreement or stock option agreements between Executive and the Company in
the form attached hereto as Exhibit A, including with respect to vesting and
exercise thereof and such other provisions as set forth therein. The Company
hereby acknowledges and agrees that the foregoing is expressly subject to the
covenants set forth in Section III.F.
VII. TERMINATION OF EMPLOYMENT.
Executive's employment shall be terminable pursuant to the following
procedures:
A. Death. Upon Executive's death, Executive's employment shall immediately
and automatically terminate.
B. Disability. Executive's employment may be terminated by the Company at
any time, upon written notice, due to Executive's Disability. Such termination
shall be effective immediately upon such notice, or on such prospective date
specified in such notice. For the purpose of this Agreement, "Disability" means
Executive's inability, either with or without reasonable accommodation, by
reason of any physical or mental injury, illness or impairment, to substantially
perform the essential functions required of him under this Agreement for a
period of ninety (90) or more consecutive days.
C. Cause. Executive's employment may be terminated by the Company at any
time, upon written notice, for Cause (as defined herein below). Such termination
shall be effective immediately upon such notice, or on such prospective date
specified in such notice. For the purpose of this Agreement, "Cause" means any
of the following reasons: (a) Executive's conviction of a felony offense; or (b)
the Company's good faith and indisputable determination that: (1) the Executive
has intentionally engaged in an act of theft, fraud, embezzlement or other
misconduct against the Company, its property or funds, or intentional dishonest
conduct with respect to the Company, or any vendor, partner, affiliate or
customer of the Company, which has a material adverse effect on the Company's
business or operations; or (2) the Executive has intentionally and materially
breached this Agreement or the Employee Confidentiality and Intellectual
Property Rights Agreement to which Executive and the Company are parties (but
only if such breach has not been cured by Executive within thirty (30) days
after receipt of written notice from the Company of such breach together with a
written description of the full particulars thereof).
D. Without Cause. Executive's employment under this Agreement may be
terminated without Cause:
1. By the Company at any time for any reason (excluding Executive's
death or Disability, or for Cause), by giving Executive written notice of
such termination; or
2. By Executive, at any time for any reason, by giving the Company,
through the Chairman of the Compensation Committee of the Board and a copy
to the Company's Vice President of Human Resources, written notice of such
termination.
E. Obligation of Company upon Any Termination. Except as specified in
Section VIII, below, upon termination of Executive's employment, the Company
shall only be required:
1. to pay Executive (or his estate) any unpaid base salary for
services rendered, for all accrued but unused vacation and any
bonus/incentive compensation, earned by Executive through the date of such
termination;
2. to allow Executive and/or his dependents to continue participation
only in those health benefits in which Executive and/or his dependents are
entitled to participate pursuant to the terms and conditions of the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA"): and
3. to allow Executive (or his estate) to enjoy the benefits of his
vested Stock Options, if any, subject to the terms and conditions then
applicable to those Stock Options as set forth in any agreement(s) pursuant
to which Executive is granted such Stock Options, or any addendum or stock
acceleration waiver with respect thereto, and in addition to any such terms
and conditions, Executive (or his estate) would be allowed to exercise
Executive's vested options during the time period set forth in, and in
accordance with, any such agreement(s) pursuant to which Executive is
granted Stock Options.
VIII. SEVERANCE.
A. Involuntary Termination. For purposes of this Agreement, the term
"Involuntary Termination" shall include any termination of Executive's
employment by reason of Executive's death or Disability, and the occurrence of
any of the following:
1. The Company terminates Executive's employment for reasons other
than Cause; or
2. Executive voluntarily resigns from the Company for any one of the
following reasons ("Good Reason"):
a. The Company's breach of any of its obligations to Executive
under this Agreement which breach is not cured within thirty (30)
days' written notice of such breach to the Company from Executive;
b. The Company changes Executive's title, working conditions or
duties such that Executive's powers, duties or working conditions are
diminished, reduced or otherwise changed to include powers, duties, or
working conditions which are not generally consistent with Executive's
title, continuing after written notice to the Company from Executive
and thirty (30) days to cure;
c. The Company relocates Executive's primary place of employment
outside of the Las Vegas metropolitan area; or
d. The deterioration of Executive's relationship with the
Company's Board of Directors, Chairman, President and/or Chief
Operating Officer (if Executive does not serve in such capacity at
such time), which determination shall be made by Executive in his sole
discretion, so as to make the performance of Executive's
responsibilities impossible or impracticable, which is not rectified
to Executive's reasonable satisfaction within thirty (30) days'
written notice thereof to the Company from Executive.
e. The Company issues grants of stock options, or pays
compensation in the form of salary, bonus or other remuneration, to
any other employee in excess of that granted or paid to Executive,
except as may be granted or paid as sales commission, continuing after
written notice to the Company from Executive and thirty (30) days to
cure.
B. Severance Benefits. In the event of his Involuntary Termination,
Executive shall be entitled to the following:
1. Severance Payment. A lump sum payment equal to two times
Executive's base salary in effect for Executive under Section III.A above,
just prior to the time of the act or omission resulting in his Involuntary
Termination, payable in full within thirty (30) days of such Involuntary
Termination. Such lump sum payment shall be subject to all applicable tax
withholding requirements.
2. Bonus/Incentive Compensation Continuation. To the extent not yet paid to
Executive, payment of (a) any guaranteed bonus payments as set forth in the
first sentence of Section III.C. for each of (i) the year within which such
Involuntary Termination occurs, (ii) the following year, and (iii) a prorated
amount for such portion of the year thereafter determined by multiplying
$200,000 by a fraction the numerator of which is the number of days elapsed
during such year as of the second anniversary of the date of such Involuntary
Termination and the denominator of which is 365, plus (b) the greater of (i) two
(2) times the most recent bonus paid under Section III.C. above (excluding the
first sentence thereof) on an annualized basis (such that if the most recent
bonus paid thereunder represents a bonus for less than a full year, such amount
shall be increased proportionally for purposes hereof as if such bonus were paid
at the same rate for the full year), or (ii) for the year within which such
Involuntary Termination occurs, the full annual bonus/incentive compensation
potential in effect for Executive for such year just prior to the time of the
act or omission resulting in his Involuntary Termination as set forth under
Section III.C above (excluding the first sentence thereof), currently
$1,000,000. Such bonus/incentive compensation payment shall be made in a single
lump sum payment not later than thirty (30) days after the effective date of
Executive's Involuntary Termination, and shall be subject to all applicable tax
withholding requirements.
3. Health Plan and Life Insurance Coverage. Continued coverage under
Executive's life insurance policy referred to in Section IV.B.6., and under
the Company's group health plans, without charge, for Executive and his
eligible dependents upon his election to receive such continued coverage
under COBRA, in such manner as existed prior to Executive's Involuntary
Termination. Such Company-paid coverage shall continue until the earlier
of: (i) the expiration of the two (2) year period measured from the
effective date of Executive's Involuntary Termination, or (ii) the first
date on which Executive is covered under another employer's health plan(s)
without exclusion for any pre-existing medical condition.
C. Limitations on Severance Benefits.
1. The benefits provided Executive under this Section VIII are the
only severance benefits to which Executive is entitled under this Agreement
upon the termination of his employment with the Company, and no other
severance benefits shall be provided to Executive by the Company pursuant
to any other severance plan or program of the Company (or of its parent or
subsidiary or related company).
2. In the event Executive of any confirmed breach of any of his
obligations under Sections V or IX of this Agreement, as determined by the
dispute resolution procedures set forth in this Agreement (and with respect
to any breach of Executive's obligations under Section IX, which breach is
not cured within thirty (30) days' written notice of such breach to
Executive from the Company):
a. Executive shall cease to be entitled to any severance benefits
otherwise to be provided under Section VIII.B; and
b. the Company shall be entitled to take any and all action
necessary to pursue legal and equitable remedies against Executive;
provided, however, this Agreement will remain in full force and effect
notwithstanding any such action by the Company.
IX. RESTRICTIVE COVENANTS.
During the Employment Period and for a period that is not less than one (1)
year after the termination of Executive's employment for any reason other than
death, Executive shall be subject to the following restrictive covenants:
A. Executive shall not directly or indirectly encourage or solicit any
employee, consultant or independent contractor to leave the employment or
service of the Company, or of its parent or subsidiary or related company, for
any reason or interfere in any other manner with such relationships at the time
existing between the Company (or its parent or subsidiary or related company)
and its employees, consultants and independent contractors.
B. Executive shall not directly or indirectly solicit any customer, vendor,
supplier, licensor, licensee or other business affiliate of the Company or of
its parent or subsidiary or related company; or directly or indirectly induce
any such person to terminate its existing business relationship with the Company
(or its parent or subsidiary or related company) or interfere in any other
manner with any existing business relationship between the Company (or its
parent or subsidiary or related company) and any such customer, vendor,
supplier, licensor, licensee or other business affiliate.
C. Executive shall not serve as an employee, agent, consultant, advisor,
independent contractor, general partner, officer, director, stockholder,
investor, lender or guarantor, or in any other capacity, directly or indirectly,
of or for any corporation, partnership or other entity, to the extent any
material portion of the business of such corporation, partnership or other
entity is related to the research or development with respect to, or the
marketing or sale of, any products or services for the carrying on of electronic
commerce transactions using technology or technologies similar in the design or
functionality to the proprietary technology of the Company (hereafter
collectively referred to as a "Business") in the United States or throughout the
world, nor shall Executive permit the use of Executive's name in connection with
any Business.
D. Notwithstanding the foregoing, Executive may own, directly or
indirectly, solely as an investment, up to five percent (5%) of any class of
"publicly traded securities" of any business that is competitive or
substantially similar to the Businesses or any person who owns a business that
is competitive or substantially similar to the Businesses. The term "publicly
traded securities" shall mean securities that are traded on a national
securities exchange or listed on the NASDAQ Stock Market or Bulletin Board.
E. The parties agree that if any of the foregoing restrictive covenants is
found by a court to be unreasonable, the court shall reduce and limit such
covenants to such area, scope or period as shall be deemed reasonable and the
parties shall comply with such reductions and limitations.
F. Executive hereby acknowledges that monetary damages may not be
sufficient to compensate the Company for any economic loss which may be incurred
by reason of Executive's breach of the foregoing restrictive covenants.
Accordingly, in the event of any such breach, the Company shall, in addition to
the termination of this Agreement and any remedies available to the Company at
law, be entitled to obtain equitable relief in the form of an injunction
precluding Executive from continuing such breach, or in the form of a decree
requiring specific performance of the covenants set forth herein.
X. MISCELLANEOUS.
A. Governing Law. This Agreement shall be construed and interpreted in
accordance with the laws of the State of Nevada without regard to its choice of
law rules.
B. Severability; Judicial Modification. Should any provision, or portion of
a provision, of this Agreement become or be deemed unenforceable by reason of
the scope, extent or duration of its coverage, then such provision shall be
deemed amended to the extent necessary to conform to applicable law so as to be
valid and enforceable. Should any provision, or portion of a provision, of this
Agreement be deemed unenforceable for any other reason, such unenforceability
will not affect any other provision, or portion of a provision, of this
Agreement and this Agreement shall be construed as if such unenforceable
provision, or portion of provision, had never been contained herein.
C. Remedies. Except as otherwise provided herein, all rights and remedies
provided pursuant to this Agreement or by law shall be cumulative, and no such
right or remedy shall be exclusive of any other. A party may pursue any one or
more rights or remedies hereunder or may seek damages or specific performance in
the event of another party's breach hereunder or may pursue any other available
remedy.
D. Arbitration. Any and all disputes between Executive and the Company
which arise out of Executive's employment under the terms of this Agreement or
the termination of such employment shall be resolved through final and binding
arbitration. Such disputes shall include, without limitation, disputes relating
to this Agreement, Executive's employment by the Company or the termination
thereof, claims for breach of contract or breach of the covenant of good faith
and fair dealing, and any claims of discrimination or other claims under Title
VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act,
the Americans With Disabilities Act, or any other federal, state or local law or
regulation now or later in concerning Executive's employment with the Company or
its termination. The only claims not covered by this Agreement are:
1. Executive's claims for benefits under the worker's compensation or
unemployment insurance laws, which will be resolved pursuant to those laws;
and
2. Any claims by the Company or by Executive arising from or relating
to Section V or Section IX of this Agreement.
Binding arbitration will be conducted in accordance with existing procedures for
resolution or employment disputes of the American Arbitration Association in the
largest metropolitan area within one hundred (100) miles of Executive's most
recent principal residence. Each party will share equally the cost of the
arbitration filing and hearing fees, and the cost of the arbitrator, and the
prevailing party shall be entitled to recover his/its reasonable attorneys fees
and costs incurred with respect to the arbitration. The parties understand and
agree that the arbitration shall be instead of any civil litigation and that
each is waiving the right to a jury trial as to such claims. The parties further
understand and agree that the arbitrator's decision shall be final and binding
to the fullest extent permitted by law and enforceable by any court having
jurisdiction thereof.
E. Assignment; Successors. This Agreement may not be assigned by Executive
without the Company's written consent. This Agreement shall be binding on the
heirs, executors, administrators, personal representatives, successors and
assigns of Executive and the Company.
F. Counterparts. This Agreement may be executed in more than one
counterpart, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
G. Changes to Agreement. This Agreement may only be changed by another
written agreement signed by Executive and an authorized officer of the Company
other than Executive.
H. Notices. Any and all notices under this Agreement, including notice of
change of address, shall be in writing and shall be deemed given when delivered
personally, when received by overnight delivery, or three (3) days after deposit
in the United States mail, certified or registered, postage prepaid, return
receipt requested, addressed to the party to whom such notice is being given.
1. To the Company: To the Chairman of the Compensation Committee of
the Board, with a copy to the Company's Vice President of Human Resources,
at each such person's principal place of employment with the Company.
2. To Executive: To the Executive at his residential address in the
Company's books and records, with a copy to counsel designated by Executive
in writing to the Company from time to time.
I. Complete Agreement: There are no promises, representations or
commitments made between Executive and the Company that do not appear in this
Agreement. This Agreement supersedes, cancels and replaces any and all prior
verbal and written agreements between Executive and the Company arising from or
relating to the subject matters covered (including but not limited to any and
all offer letters, employment, termination, change in control, severance and
compensation agreement) except the following which shall remain in full force
and effect in accordance with their respective terms:
1. The Company's Employee Proprietary Information and Inventions
Agreement or other confidential/proprietary/trade secret information and
inventions assignment agreements entered from time to time by Executive and
the Company; and
2. Any stock option grant notice or stock option agreement, stock
purchase/issuance agreements, addenda to stock option/purchase/issuance
agreement(s), and/or stock acceleration waiver entered from time to time by
Executive and the Company.
Dated: _______________________________ PurchasePro.com, Inc.
By ____________________________________
Title:_________________________________
Dated:________________________________ Executive
_______________________________________
Richard L. Clemmer
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