Consulting Agreement - EarthWeb Inc. and Nova Spivack
AGREEMENT
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THIS AGREEMENT (this "Agreement"), dated as of August 1, 1998 (the
"Effective Date"), is made between EarthWeb Inc., a Delaware corporation
("EarthWeb"), and Nova Spivack ("Consultant").
WHEREAS, the Consultant is a party to an Employment Agreement dated
January 1, 1995 with Global Network Partners LLC ("GNP"), as successor to
EarthWeb Ltd., as amended by the Intercompany Services Agreement (the
"Intercompany Services Agreement") dated as of October 25, 1996 among the
Consultant, GNP and certain other parties named therein (such employment
agreement, as so amended, the "Employment Agreement"); and
WHEREAS, the Consultant hereby resigns as an employee of EarthWeb
pursuant to Section 10 of the Employment Agreement and Jack D. Hidary and Murray
Hidary hereby waive their rights under said Section 10 to purchase the
Membership Interests (as defined therein) held by the Consultant; and
WHEREAS, the parties hereto desire that Consultant enter into this
Agreement and perform certain consulting services to EarthWeb as provided
herein.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants contained herein and for other good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agrees as follows:
Section 1. Services. (a) Throughout the term of this Agreement,
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Consultant agrees to provide services and to consult with EarthWeb executives
regarding strategic and other matters relating to the company and its operations
on an as requested basis (the "Services") at times and places of reasonable
mutual convenience. EarthWeb acknowledges that Consultant may have other
business commitments in addition to those imposed hereunder and the parties
shall endeavor to enable Consultant to perform the Services hereunder without
conflicting with such other commitments; provided, however, the parties
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acknowledge and agree that in the event of such a conflict, the Services to be
provided hereunder shall take precedence over such other commitments. It is
expected that during the term of this Agreement Consultant shall, if requested
by EarthWeb, devote up to 20 hours of business time per month to the performance
of the Services hereunder. In no event shall any unused hours carryover to any
subsequent month. Consultant agrees to provide the Services in a professional
and timely manner and, in performing such services, Consultant shall report to
EarthWeb's Chief Executive Officer ("CEO") and work with such other EarthWeb
employees and consultants as may be designated by the CEO.
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(b) The Services may be performed off-site as practicable, but the
Consultant shall make himself available to company executives and perform
Services at specified company locations, including EarthWeb's corporate
headquarters, as shall be necessary to adequately perform the Services.
Section 2. Term. (a) Subject to Section 2(b), Consultant's obligation
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to provide services under this Agreement shall be for a term of eighteen (18)
months, commencing on the date set forth above, unless this Agreement is
terminated sooner pursuant to the terms and conditions set forth in Schedule A
hereto. Schedule A attached hereto is incorporated herein in its entirety as if
the terms and conditions therein were set forth directly herein.
Notwithstanding anything in this Agreement to the contrary, Consultant hereby
agrees that he will not terminate this Agreement without cause during the period
commencing on the date hereof and ending three (3) months from the date of this
Agreement, and in the event Consultant so terminates this Agreement without
cause during such three (3) month period, he shall not be entitled, and
Consultant hereby agrees that he shall not be entitled, to any additional
compensation (in any form, including noncompete payments) or to exercise any
rights (including the right to put his common stock of EarthWeb to EarthWeb as
provided in this Section 2) under this Agreement from and after the date of such
termination.
(b) If, during the term of this Agreement, EarthWeb either completes an
underwritten public offering of its capital stock ("IPO"), directly or
indirectly, i.e., an acquisition of EarthWeb by or other combination with a
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public company or an acquisition of EarthWeb by or other combination with a
company that goes public during the term of this Agreement (with the first
public date of availability of stock of the acquirer being the "IPO Date" for
purposes of this Agreement), EarthWeb shall grant to Consultant a put option
exercisable after the first thirty (30) days following the IPO Date and prior to
the first 181 days following the IPO Date to sell to EarthWeb for $200,000 in
cash shares of EarthWeb common stock equal to $200,000 divided by the average
closing price (over the ten business days immediately preceding Consultant's
notice of exercise of such option) for such shares on the public market or
quotation system on which such shares are traded or listed. The option shall be
exercisable in one or more installments with the exercise price determined
separately as provided above for each installment. Such option grant, if not
otherwise made as provided above, shall be granted in case of a private
investment during such nine (9) month period of at least ten million dollars
($10,000,000) in a single transaction or a series of related transactions, the
option to be granted ten (10) days after the single closing date of a single
transaction or after the first closing date of a series of related transactions.
(c) If there is no IPO Date or triggering private investment, as provided
above, within the first nine (9) months after the Effective Date, EarthWeb shall
grant to Consultant a put option exercisable for the next immediately subsequent
60 day period to sell to EarthWeb for $100,000 in cash shares of EarthWeb common
stock equal to $100,000 (as determined by the Board of Directors of EarthWeb
exercising their good
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faith discretion) or, if higher, the highest valuation established by EarthWeb
within three (3) months prior in a public or private offering of equity which
has been consummated.
(d) The compensation obligations of subsections (b) and (c) above are
independent of Consultant's status as a consultant or director of EarthWeb.
Section 3. Payment for Services. As full compensation for the Services
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to be provided by Consultant hereunder, EarthWeb agrees to pay Consultant in
accordance with the terms and conditions set forth in Schedule A hereto.
Section 4. Independent Contractor. It is understood and agreed that
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Consultant shall perform the Services as an independent contractor and
consultant. Consultant shall not be deemed to be an employee of EarthWeb.
Consultant shall not be entitled to any benefits provided by EarthWeb to its
employees, and EarthWeb will make no deductions from any of the payments due to
Consultant hereunder for state or federal tax purposes. Consultant agrees that
he shall be personally responsible for any and all taxes and other payments due
on payments received by him from EarthWeb hereunder.
Section 5. Consultant Inventions.
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(a) Consultant agrees that all Inventions (as herein defined) shall be and
remain the property of EarthWeb. "Inventions" shall mean all ideas, inventions,
research, plans for products or services, marketing plans, computer software
(including, without limitation, source code), computer programs, original works
of authorship, copyrightable expression, characters, know-how, trade secrets,
information, data, developments, discoveries, improvements, modifications,
technology, algorithms and designs, whether or not subject to patent or
copyright protection, made, conceived, expressed, developed, or actually or
constructively reduced to practice, either during the term of Consultant's
employment with EarthWeb or his service as a Consultant hereunder, by Consultant
solely or jointly with others in connection with such employment or any Services
under this Agreement. The parties acknowledge that any of the foregoing items
made, conceived, expressed, developed, or actually or constructively reduced to
practice by Consultant solely and exclusively outside of the scope or
performance of such employment or the Services under this Agreement shall not be
considered Inventions for purposes of this Agreement.
(b) Consultant acknowledges that all of said Inventions shall be
assignable, and hereby are assigned, by Consultant to EarthWeb and that and that
any works of authorship capable of protection under copyright law and within
categories so treatable under copyright law, shall be considered as "work made
for hire" belonging to EarthWeb. To the extent that any such Inventions, under
applicable law, may not be considered work made for hire by Consultant for
EarthWeb, Consultant agrees to assign and, upon its creation, automatically
assigns to EarthWeb the ownership of such material,
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including any copyright or other intellectual property rights in such materials,
without the necessity of any further consideration. EarthWeb shall have the
exclusive right to use the Inventions, whether original or derivative, for all
purposes. At EarthWeb's expense, including compensation for Consultant's
services at the rates established in this Agreement, as well as reimbursement of
approved out-of-pocket expenses, Consultant will assist EarthWeb (or its
designees) in every proper way to protect the Inventions throughout the world,
including, without limitation, executing in favor of EarthWeb or any designee of
EarthWeb patent, copyright, and other applications and assignments relating to
the Inventions. Consultant agrees not to challenge EarthWeb's ownership of the
Inventions.
Section 6. Proprietary Information.
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(a) Consultant will not disclose or use, at any time either during or after
the period of Services, except for the benefit of EarthWeb or an affiliate of
EarthWeb, any Confidential Information (as herein defined). "Confidential
Information" shall mean all EarthWeb proprietary information, technical data,
trade secrets, and know-how, including, without limitation, research
(proprietary or otherwise), product plans, customer lists, computer software,
computer programs, developments, inventions, discoveries, processes, formulas,
algorithms, technology, designs, drawings, marketing and other plans, business
strategies and financial data and information, including but not limited to
Inventions, whether or not marked as "Confidential." "Confidential Information"
shall also mean information received by EarthWeb from customers of EarthWeb or
other third parties subject to a duty to keep confidential, but shall not
include any information if and to the extent the information is or becomes
publicly known through lawful means or is received by or made available to
Consultant without confidential or proprietary restriction by a third party who
rightfully possesses the information (without confidential or proprietary
restriction) and did not learn of it, directly or indirectly, from EarthWeb.
(b) Consultant hereby acknowledges and agrees that all personal property,
including, without limitation, all books, manuals, records, reports, notes,
contracts, lists, blueprints, and other documents, or materials, or copies
thereof, Confidential Information, and equipment furnished to or prepared by
Consultant in the course of or incident to his Services, including, without
limitation, records and any other materials pertaining to Inventions, belong to
EarthWeb and shall be promptly returned to EarthWeb upon termination of
Services. Following termination, the Consultant will not retain any written or
other tangible or electronic material containing any Confidential Information or
information pertaining to any Invention.
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Section 7. Limited Agreement Not to Compete.
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(a) During the term of this Agreement and for a period of twelve (12)
months after the termination of Consultant's Services with EarthWeb, Consultant
shall not, directly or indirectly, solicit for employment or employ any employee
or consultant to EarthWeb or any person who was employed by or acted as a
consultant to EarthWeb while this Agreement was in effect, except that
Consultant may solicit for employment or employ (i) any consultant to or part-
time employee of EarthWeb so long as such relationship does not, in the sole
opinion of EarthWeb, materially infringe upon the services provided or to be
provided to EarthWeb by such persons, or (ii) any employee of EarthWeb who was
terminated by EarthWeb without cause or who ceased to serve in such capacity of
his or her own volition without any solicitation by or on behalf of Consultant
and provided that in the case of either of the foregoing a period of four (4)
months has expired since the termination of his or her relationship with
EarthWeb.
(b)(1) During the term of this Agreement and for a period of two (2)
years after the termination of this Agreement (subject to extension as provided
in clause (2) of this subsection (b)), Consultant shall not, directly or
indirectly:
(A) act on his own behalf (or for any entity which he, directly or
indirectly, controls) as a direct competitor of EarthWeb or work as an employee,
employer, consultant, agent, principal, partner, manager, officer, director, or
in any other individual or representative capacity, for any person or entity who
or which is a direct competitor of EarthWeb; except that, with the written
consent of EarthWeb, which can be withheld at EarthWeb's sole discretion in the
event the direct competitor is listed in the last sentence of this subparagraph
(A) and, otherwise, can be withheld at EarthWeb's reasonable discretion,
Consultant shall be permitted to work for a separate and distinct division or
subsidiary of a direct competitor (other than the direct competitors enumerated
below) provided such division or subsidiary does not develop, market, sell,
license, own or operate an on-line service for software developers, internet
site developers and/or information technology ("IT") professionals
(collectively, "IT professionals") or any software relating thereto and
Consultant has no involvement with any of the foregoing. A "direct competitor"
includes any person or entity who or which develops, markets, sells, licenses,
owns or operates a public and/or commercial internet or extranet site which can
be accessed by the public generally (as opposed to an intranet or an extranet
which can only be accessed by employees of a specific company) on-line service
for software developers, internet site developers and/or IT professionals or any
software relating thereto, in which one of the primary purposes of such on-line
service (or software) is to provide such IT professionals with technical
resources, software development resources and/or IT professional resources,
including, but not limited to, on-line reference books, training materials and
tutorials, technical articles, on-line bulletin boards, a question and answer
facility for IT experts and/or white papers and source code libraries. The
parties acknowledge and agree that for purpose of this Agreement the term
"direct competitors" shall include, but shall not be limited to, the following
entities and their affiliates: Ziff-
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Davis; CMP Media; Miller Freeman; C|Net; Fawcette Publications and IDG; or
(B) solicit or take away for Consultant or for any other person or entity
to the exclusion or detriment of EarthWeb any person or entity who or which is
or was during the prior six months a customer of EarthWeb.
(2) The two year noncompetition period specified in subsection (b)(1) of
this Section shall be extended, at the option of EarthWeb exercised not more
than fifteen (15) months from the date of this Agreement, for up to two
additional one year periods provided EarthWeb gives notice by the end of such
fifteenth month of its acting, irrevocably, on the option for the selected one
or two years and in such notice comments to pay, as a binding contract
obligation, and in fact pays to Consultant $130,000 for each additional year of
requested noncompetition, such payments to be made monthly throughout each such
twelve month period of noncompetition.
(c) (1) In addition to Section 7(b), during the noncompetition period set
forth in Section 7(b) Consultant shall not, other than for the benefit of
EarthWeb, create, develop or otherwise work in any capacity on any general not
directly competitive with EarthWeb on-line service, except that Consultant may
create, develop or otherwise work in any capacity on a general on-line service
after the earlier of the IPO Date and six months from the date of this
Agreement; provided, that (i) no more than 5% of either the topics or content of
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such service relate to IT professionals or IT professional topics and (ii) none
of the primary or principal offerings of such service is IT professional topics
(either individually or in the aggregate); and provided, further, that prior to
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launching any general on-line service containing any topics or content relating
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to IT professionals or IT professional topics during the noncompetition term,
Consultant shall notify EarthWeb, provide a working demonstration of such on-
line service (and the list of intended IT topics) and enter into and conduct
good faith negotiations with EarthWeb to partner on the IT topics portion of
such service. If, after a period of sixty (60) days after Consultant provides
such working demonstration and the parties conduct such negotiations (the
"Negotiation Period"), Consultant and EarthWeb cannot reach a good faith mutual
agreement relating to such partnering Consultant shall, upon notice to EarthWeb,
be permitted to launch such service (subject to the restrictions contained in
clauses (i) and (ii) of this subsection (c)) provided that Consultant shall pay
to EarthWeb quarterly during the first post-launch year 50% (and 35% for each
year thereafter within the noncompetition period) of the revenues (net of
advertising agency fees, if any) derived from such service (to the extent
attributable to IT professionals and IT professional topics or content) for the
duration of the noncompetition period set forth in Section 7(b) and provide
EarthWeb with exclusive co-branding on such portions of the on-line service
related to IT professionals or IT professional topics or content for such period
(provided that such service may have nonexclusive non-technical brands
throughout the site). In the event Consultant after the termination of this
Agreement and during the continuing noncompetition period creates, develops or
works on any general on-line service that does not contain any topics or content
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relating to IT professionals or IT professional
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topics and such service later develops or adds any such content or topics, the
provisions of this Section shall again become applicable.
(2) Notwithstanding the foregoing clause (1), following receipt by EarthWeb
of the notice of intent to launch such service (or any such additional content
or topics, if applicable) and after the expiration of the Negotiation Period,
Consultant shall nonetheless not launch (or thereafter for a period of one year
become involved in any manner with) any such on-line service if it contains any
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topics or content relating to IT professionals or IT professional topics if
EarthWeb pays to Consultant $75,000; provided, however, that restraint from
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launch or other involvement shall not extend beyond any otherwise applicable
obligation of noncompetition duly elected by EarthWeb under this Agreement and
if such remaining noncompetition period is less than a year, EarthWeb shall only
be obligated to pay a pro-rated portion of the $75,000.
(d) Nothing in Sections 7(b) or 7(c) shall restrict Consultant from, or
impose a royalty on Consultant for, (i) creating a software program and/or
online service that enables, locates and/or aggregates people and/or companies
and enables them to interact with one another online or licensing such software
and/or service to companies for intranet only applications or for extranet
applications which do not involve a developer or for extranet applications which
do not involve a computer hardware and/or software developer program, including,
without limitation, a developer relations program which provides such a
developer with technical resources; however, if the content generated by the use
of such software or service relates to information technology, such exception
shall apply only if such software or service and the related content will not be
used or made available on a commercial online service or on that company's (or
any related company's) public internet site, or (ii) pursue independent work on
collaboration tools, expert systems and knowledge bases, e-mail products and
related software or concepts created by Consultant relating to EarthWeb's so
called "Tesla project" (but not including any code from that project) so long
Consultant, as a result of such work, would not be deemed a direct competitor
(as defined in Section 7(b)(1) above) of EarthWeb.
(e) This Section supersedes in all respects Section 15 of the Employment
Agreement but does not supercede Section 14 of the Employment Agreement.
Section 8. Injunctive Relief. Consultant agrees that the remedy at law
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for any breach of the provisions of Sections 2, 5, 6 or 7 of this Agreement
shall be inadequate and EarthWeb shall be entitled to injunctive relief in
addition to any other remedy at law which EarthWeb may have.
Section 9. Severability. In the event any of the provisions of this
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Agreement shall be held by a court or other tribunal of competent jurisdiction
to be unenforceable, the other provisions of this Agreement shall remain in full
force and effect.
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Section 10. Survival. All terms and conditions of this Agreement which
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by their terms survive the termination of this Agreement (including Sections 5,
6, 7 and 8) shall so survive.
Section 11. Representations and Warranties. Consultant represents and
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warrants that: Consultant is not under any obligations to any third party which
could interfere with the Consultant's performance under this Agreement;
Consultant's performance of his/her obligations to EarthWeb during the term of
his/her service with EarthWeb will not breach any agreement by which Consultant
is bound not to disclose any proprietary information including, without
limitation, that of former employers; Consultant's Services will be of a
professional quality; and, in performing Services, Consultant will obey all
applicable laws and will not knowingly violate or infringe any proprietary or
other right of any third party.
Section 12. Successors and Assigns. This Agreement shall be binding
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upon and inure to the benefit of both Consultant and EarthWeb and their
respective successors, heirs, and legal representatives, but neither this
Agreement nor any rights hereunder may be assigned by Consultant without prior
written consent of EarthWeb.
Section 13. Governing Law. The validity, interpretation,
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enforceability, and performance of this Agreement shall be governed by and
construed in accordance with the law of the State of New York, exclusive of its
choice-of-law rules.
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Section 14. Dispute Resolution. Any dispute relating to or arising out
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of Consultant's relationship with EarthWeb, which cannot be resolved by
negotiation, shall be settled by binding arbitration in accordance with the
American Arbitration Association Commercial Arbitration Rules and Procedures, as
amended by this Agreement. The costs of arbitration, including the fees and
expenses of the arbitrator, shall be shared equally by the parties. Each party
shall bear the cost of preparing and presenting its case. The arbitration shall
take place in the Borough of Manhattan, in the City of New York, in the State of
New York. The arbitration shall be conducted in strict confidence. The
arbitrator's decision shall be based upon the substantive law of the State of
New York or applicable federal law. The arbitrator's decision shall follow the
plain meaning of the relevant documents, and shall be final and binding. The
award may be confirmed and enforced in any court of competent jurisdiction. The
parties hereby agree that any federal or state court sitting in New York City in
the State of New York is a court of competent jurisdiction. Consultant hereby
waives his right to a jury trial. This paragraph shall not limit in any way any
party's right to seek injunctive or other equitable relief in any state or
federal court sitting in the Borough of Manhattan in the City of New York City
in the State of New York (jurisdictional, venue and inconvenient forum
objections to which are hereby waived by both parties), including recovery of
fees and costs, in the event that a dispute relates to or arises under this
Agreement. Should any litigation be commenced in connection with the matters
described in this Section, the prevailing party shall be entitled, in addition
to such other relief as may be granted, to a reasonable sum for such party's
attorney's fees and expenses determined by the court in such litigation or in a
separate action brought for that purpose.
Section 15. Modification. Neither this Agreement nor any of the terms
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hereof shall be amended or modified without the prior written consent of the
parties hereto.
Section 16. General.
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(a) This Agreement is not an employment contract. Except as set forth
on Schedule A hereto under the heading "Termination", neither party hereto shall
terminate this Agreement.
(b) This Agreement supersedes and replaces any existing agreement
entered into by Consultant and EarthWeb relating generally to the same subject
matter, including the Employment Agreement, except that all of the provisions of
Sections 8, 9.2 and 11 of the Employment Agreement shall remain in full force
and effect, except that (A) the Agreed Value for purposes of Section 11 thereof
shall be based on the public market price of EarthWeb, without discount for
relative illiquidity of a particular one percent (1%), and in the absence of a
public market price, on the value ascribed to EarthWeb in the most recent public
or private sale of more than 10% of EarthWeb's equity and failing that the most
recent bona fide offer) until the later of the completion of the IPO or the
distribution by GNP to Consultant of his pro-rata interest in GNP's holdings of
EarthWeb common stock (the "Distribution"), and (B) the terms Consultant and
consulting shall be substituted in place of the terms Employee and employment
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therein mutatis mutandis; provided, however, that if the buy-out price is
determined in the absence of a public market price and EarthWeb does in fact
make and close a public offering within six (6) months after the buy-out, then
twenty (20) days thereafter, EarthWeb shall pay to Consultant an adjusted buy-
out differential (if and only if the initial public offering price is greater
than the buy-out price actually paid on a per share basis) equal to the
difference between the per share price in such public offering and the per share
buy out price.
(c) Notwithstanding the foregoing, the Intercompany Services Agreement
shall remain in full force and effect until terminated in accordance with its
terms. In addition, immediately upon the Distribution, Consultant shall
relinquish his ownership interest in GNP for no additional consideration and
resign as a member of GNP.
(d) Failure to enforce any provision of the Agreement shall not
constitute a waiver of any term herein.
(e) This Agreement (including Schedule A, which is incorporated by
reference) contains the entire agreement between the parties with respect to the
subject matter herein.
(f) Each party hereto agrees from time to time upon the reasonable
request of any other party hereto to execute all documents and take all such
action as shall be reasonably necessary to effectuate the terms hereof and to
carry out the purposes and intent of this Agreement.
(g) The parties hereby agree that upon the Distribution all voting
trust agreements and all other arrangements or agreements between or among
Consultant, EarthWeb, GNP, Jack Hidary and/or Murray Hidary, except for this
Agreement, shall terminate.
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AGREED TO BY:
EARTHWEB INC.
By: /s/Jack D. Hidary /s/Nova Spivack
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Name: Jack D. Hidary NOVA SPIVACK
Title: President and Chief
Executive Officer
Acknowledged and Agreed:
GLOBAL NETWORK PARTNERS LLC
By: /s/Jack D. Hidary
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Name:Jack D. Hidary
Title:Managing Member
/s/ Jack D. Hidary /s/ Murray Hidary
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JACK HIDARY MURRAY HIDARY
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SCHEDULE A
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1. Compensation.
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During the term of this Agreement, in consideration for Consultant's Services
hereunder, and subject to the terms and conditions of this Agreement, EarthWeb
shall pay Consultant a consulting fee at a monthly rate of Six Thousand Dollars
(US $6,000), payable in equal installments on a semi-monthly basis. The annual
consulting fee shall be adjusted annually to match any increase in the Consumer
Price Index published by the U.S. Department of Labor for the Greater New York
Metropolitan Area (or its equivalent).
In addition, Consultant shall receive a one-time cash bonus of (i) $100,000 upon
the execution of this Agreement by all the parties hereto and (ii) $100,000 upon
the earlier to occur of the IPO Date or the date which is six (6) months from
the date of this Agreement; provided, that if such $100,000 would be payable
prior to January 1, 1999, notwithstanding the foregoing, such $100,000 shall be
paid on January 2, 1999.
The parties acknowledge that Consultant shall be entitled to COBRA benefits
under applicable law and EarthWeb and Consultant shall, for up to eighteen (18)
months after the date hereof (or the earlier termination of this Agreement),
share the cost of Consultant's monthly COBRA premium in the same proportion as
EarthWeb and Consultant would have shared the cost of health care coverage had
Consultant been an employee of EarthWeb. Thereafter, during the remaining term
of this Agreement, EarthWeb shall, at its option, (i) provide the Consultant
with health care coverage comparable to that provided pursuant to the terms of
COBRA with Consultant and EarthWeb to split the premiums in respect thereof in
the same manner as provided above, or (ii) reimburse the Consultant monthly, in
the same manner as provided above, for premiums paid by the Consultant to obtain
coverage comparable to that provided pursuant to the terms of COBRA.
2. Termination.
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(a) Death or Disablement. If Consultant shall die or be "considered to be
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disabled" (as hereinafter defined) during the term of this Agreement, EarthWeb
shall have the right to terminate this Agreement upon written notice to
Consultant or Consultant's legal representative or estate. For purposes of this
Agreement, Consultant will be "considered to be disabled" when he has been
unable to carry out his Services because of physical or mental impairment for a
period of 120 consecutive days or 180 days within any 360-day period.
(b) For Cause. EarthWeb shall have "cause" to terminate this Agreement upon:
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(i) the commission by Consultant of an act of (x) criminal misconduct, or (y)
fraud against EarthWeb, or (ii) the commission by Consultant of an act of
malfeasance, recklessness or gross negligence against EarthWeb that is injurious
to EarthWeb or its customers; or (iii) a material breach by Consultant of the
terms of this Agreement; in which case EarthWeb
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may at any time thereafter by written notice to Consultant immediately terminate
this Agreement.
(c) Without Cause. Subject to Section 3 of this Schedule, EarthWeb may, by
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written notice to Consultant, immediately terminate this Agreement without
cause. A termination shall be "without cause" if it is for any reason other than
a termination for death or disablement pursuant to subsection (a) above or a
termination for cause pursuant to subsection (b)(i) above.
3. Severance.
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In the event that EarthWeb terminates this Agreement prior to the 15th
month anniversary of the effective date of this Agreement (an "EarthWeb
Termination"), then:
(a) if such termination is without cause, EarthWeb shall (i) pay
Consultant all compensation accrued through the date of such termination,
(ii) continue to pay Consultant his consulting fee hereunder until the 18
month anniversary of this Agreement, as and when due; (iii) make the
payments as, if and when due under Sections 2(b) and 2(c) of the Agreement
and (iv) make the noncompetition payments as, if and when due under the
terms of the Agreement;
(b) if such termination is for cause, EarthWeb shall (i) pay
Consultant all compensation accrued through the date of such termination,
(ii) if such termination is prior to the 12th month anniversary of this
Agreement, continue to pay Consultant his consulting fee hereunder until
such 12th month anniversary as if no such termination occurred and (iii)
make the payments as, if and when due, under Section 2(b) of the Agreement;
and
If such termination is by Consultant from and after the date which is three
(3) months after the date of this Agreement, EarthWeb shall (i) pay
Consultant all compensation accrued through the date of such termination,
(ii)(x) if such termination is prior to the 15th month anniversary of this
Agreement and is for "cause" (as defined in the next sentence), continue to
pay Consultant his consulting fee hereunder until such 15th month
anniversary as if no such termination occurred or (y) if such termination
is prior to the 12th month anniversary of this Agreement and is not for
"cause", continue to pay Consultant his consulting fee hereunder until such
12th month anniversary as if no such termination occurred and (iii) make
the payments as, if and when due under Sections 2(b) and 2(c) of the
Agreement including the cash bonus payments of paragraph 1 of this Schedule
A above. For purposes of the foregoing sentence, "cause" shall mean a
material breach by EarthWeb of the terms of this Agreement.
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4. Transfer of Shares.
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All of the transfer restrictions (including, without limitation,
rights-of-first refusal and tag-along rights) applicable to shares of capital
stock of EarthWeb now held or hereafter acquired by the Consultant pursuant to
the Intercompany Services Agreement or otherwise shall remain in full force of
effect. In addition, if prior to the 18 month anniversary hereof EarthWeb shall
not have completed an underwritten public offering of its capital stock, the
Consultant, after complying with any other transfer restrictions (including,
without limitation, rights-of-first refusal) applicable to shares of capital
stock of EarthWeb now held or hereafter acquired by him, shall not transfer or
otherwise dispose of any such shares without the prior written approval of GNP
and Warburg Pincus Ventures, L.P., such approval not to be unreasonably withheld
(it being acknowledged that such consent may be withheld if such proposed
transfer is to a competitor of EarthWeb). Furthermore, in the event that
EarthWeb registers shares of its capital stock under the Securities Act of 1933
for parties other than EarthWeb within twelve months from the date of this
Agreement (the "Secondary Offering") and either Jack D. or Murray Hidary
participate in the Secondary Offering (either or both, the "Participating
Founder"), Consultant shall have the right to also participate ratably (based on
his then current shareholding as compared to the then current shareholdings of
the Participating Founder) in the Secondary Offering.
5. Board Seat.
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The parties acknowledge that Consultant is a member of the Board of
Directors of EarthWeb and that GNP has the right to designate the members of
such board of directors. Upon the later to occur of (i) Consultant's ownership
interest in EarthWeb equaling less than 5% of EarthWeb's then outstanding
capital stock or (ii) the one (1) year anniversary of this Agreement,
Consultant, on the request of GNP, shall resign from the EarthWeb Board (or, if
such request is made after the termination of the Intercompany Services
Agreement, on the request of the Company); provided, however, that in the event
Consultant is not an active member of the Board of Directors, as evidenced by,
among other events, a continued failure to attend meetings of the Board of
Directors, then Consultant hereby agrees to resign as a member of the Board of
Directors upon the request of GNP at any time.
6. Miscellaneous.
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(a) During each year of the term of this Agreement, the Consultant
shall, upon reasonable prior notice to EarthWeb, not be required to render
Services hereunder during any four weeks designated by the Consultant. Such
four weeks need not be consecutive but shall be taken in not less than one week
intervals and Consultant shall continue to be paid hereunder during such weeks
in the same manner as if he were providing Services during such time.
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(b) The Company agrees to use all reasonable efforts to ensure that
any written public document or press release produced by the Company listing
either or both of Jack Hidary and Murray Hidary as the (co-)founder(s) of the
Company shall also list (within reasonable proximity thereto) the Consultant as
a co-founder until such time as the Board of Directors of EarthWeb (or its
successor) reasonably determines, based upon events subsequent hereto,
including, but not limited to, any mergers or acquisitions or dispositions of
assets, that it would no longer be accurate to list Messrs. Jack Hidary, Murray
Hidary and Consultant as the co-founders of EarthWeb. In any event, Consultant
shall be and hereby is acknowledged as the original principal architect of
Gamelan, Developer. Com and DeveloperDirect in public communications where such
subjects are disclosed. Consultant hereby agrees that, from and after the date
of this Agreement, he shall not issue any statements in any form by or on behalf
of EarthWeb, and shall not represent that he is authorized to issue such
statements by or on behalf of EarthWeb, without the prior written approval of
EarthWeb, which may be withheld in its sole discretion. Any statement which
Consultant is so authorized by EarthWeb to issue shall, in each and every case,
conform with EarthWeb's standard processes for any issuance of a public
statement on behalf of EarthWeb.
(c) Upon execution and delivery of this Agreement by the parties
hereto, EarthWeb shall transfer to Consultant all of its rights in and to the
domain name whoknows.com and shall take all steps necessary to transfer such
name to Consultant.
(d) The parties acknowledge that EarthWeb shall transfer ownership to
Consultant of the approximately 75 commercial books purchased by Consultant (and
previously reimbursed by EarthWeb) during the term of his employment with
EarthWeb. Such transfer shall not be deemed to imply the transfer to Consultant
of any intellectual property rights arising out of the use of such books or
otherwise.
(e) So long as Consultant shall be providing either Services hereunder
or be a member of EarthWeb's Board of Directors, he shall be entitled to a free
single-user subscription to all of EarthWeb's on-line services.
(f) Unless this Agreement shall have been earlier terminated, it is
the intent of EarthWeb, to the extent practicable, to notify Consultant in
advance of the effective date of EarthWeb's initial public offering of its
capital stock.
(g) Upon the mutual written agreement of the parties, based on
Consultant's written request and EarthWeb's consent, which may not be
unreasonably withheld or delayed but which may include such terms and conditions
as are consistent with Consultant's duties under this Agreement, Consultant may
take one or more unpaid leaves of absence hereunder for a period not to exceed
60 days in the aggregate on such terms as they shall agree.
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(h) EarthWeb shall provide the Consultant with reasonable work space
and a computer at EarthWeb's corporate headquarters on an "as requested" basis
when the Consultant performs Services at such facility. In addition, upon
request in connection with the Services to be provided hereunder, EarthWeb shall
provide Consultant with reasonable access to a laptop computer to be used on or
off-site and Consultant shall be responsible for and shall reimburse EarthWeb
for the loss, theft or any damage to such computer while such computer is on
loan to Consultant. EarthWeb shall reimburse the Consultant in accordance with
its company policies for reasonable travel expenses incurred by the Consultant
in performing the Services, except that no reimbursement shall be made for local
travel expenses within New York City and, if the Consultant relocates
temporarily or permanently outside of the continental United States, such
reimbursement shall be limited to an amount not to exceed that which would have
been incurred had the Consultant remained in the continental United States (such
limitation to be calculated from the nearest major airport of entry or the
actual airport of entry into the continental United States closest to EarthWeb's
corporate headquarters, whichever is closer).
(i) Until the earlier of (x) the IPO Date and (y) six (6) months from
the date of this Agreement, Consultant shall be entitled, pro rata based on
Consultant's interest in GNP, to the same stock options and stock bonuses or
related stock grants as EarthWeb awards, grants or pays to any present or former
GNP member(s).
(j) Until twelve months from the date of this Agreement, following an
IPO, Consultant shall be entitled pro rata based on the Consultant's interest in
GNP to the same benefits of any private sales made by any present or former GNP
member to any of the managing underwriters for the IPO or to Warburg, Pincus
Ventures, L.P.
(k) Until seven (7) months from the date of this Agreement, Consultant
shall be entitled, in the event any present or former member of GNP receives a
cash bonus during such period in excess of $80,000, to receive a ratable amount
(based on the Consultant's interest in GNP) of the amount by which such bonus
exceeded $80,000.
(l) From and after the date of termination of that certain Amended and
Restated Operating Agreement of Global Network Partners LLC (the "GNP
Agreement"), until the earlier to occur of the consummation of the IPO or 18
months from the date of this Agreement, Consultant shall be entitled pro rata
based on the Consultant's interest in GNP, to the continuing benefit of the drag
along, tag along and anti-dilution rights provided by the following Sections of
the GNP Agreement, to the extent not amended by the terms of this Agreement:
Section 9.1 and Rider X. In the event there is no IPO by the date which is 18
months from the date of this Agreement, the provisions of Section 4 of this
Schedule A shall control. Furthermore, until such time as the date of the
consummation of the IPO, in the event any member of GNP sells any interest in
GNP or EarthWeb stock to any third party, Consultant shall have the right to
sell the same ratable portion of such security then owned by Consultant to such
other third party as the Consultant chooses; provided, that Consultant has no
right in connection therewith to require his securities be sold to the third
party buying such other member's securities (i.e.,
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no tag along right); and provided further that EarthWeb shall have the right to
veto any sale to a direct competitor (as such term is defined in Section 7
Agreement).
(m) Within thirty (30) days after the Effective Date and subject to
prior receipt of adequate supporting documentation, EarthWeb shall pay to
Consultant 50% of Consultant's reasonable legal and accounting expenses of
examining proposals for this Agreement and other agreements between Consultant
and EarthWeb and its affiliates and predecessors, and of negotiating and
executing this Agreement, up to a maximum reimbursement of $10,000.
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