Employment Agreement - NetZero Inc. and Charles Hilliard
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and
entered into effective as of the 17th day of April, 1999, by and between
NetZero, Inc., a California corporation (the "Company"), with principal
corporate offices at 31416 Agoura Road #150, Westlake Village, CA 91362, and
Charles Hilliard, whose address is ___________________, California ________
("Employee").
1. EMPLOYMENT.
1.1 The Company hereby agrees to employ Employee, and Employee
hereby accepts such employment, on the terms and conditions
set forth herein, commencing April 17, 1999 (the "Effective
Date"), and continuing through April 17, 2003 (the "Term"),
unless such employment is terminated earlier as provided in
Section 4 below.
2. DUTIES OF EMPLOYEE.
2.1 Employee shall serve as the Senior Vice President, Finance and
Chief Financial Officer of the Company. In this capacity,
Employee shall perform such customary, appropriate and
reasonable executive duties as are usually performed by a
Chief Financial Officer, including such duties as are
delegated to him from time to time by the Board of Directors
of the Company (the "Board"). Employee shall report directly
to the Company's Chief Executive Officer.
2.2 Employee agrees to devote Employee's full time, attention,
skill and efforts to the performance of his duties for the
Company during the Term.
3. COMPENSATION AND OTHER BENEFITS.
3.1 BASE SALARY. During the Term, the Company shall pay to
Employee a base salary of One Hundred Forty Thousand Dollars
($140,000) per fiscal year (the "Base Salary"), payable at
the rate of Eleven Thousand Six Hundred Sixty-Six and 67/100
Dollars ($11,666.67) per month, with payments to be made in
accordance with the Company's standard payment policy and
subject to such withholding as may be required by law.
3.2 BONUS. During the Term, the Employee shall also be eligible to
receive an annual cash bonus of up to 50% of Employee's base
salary for each fiscal year (the "Annual Bonus"), less
withholding required by law, based on performance criteria
established by the Board. Employee shall not be eligible to
receive any unpaid Annual Bonus if his employment hereunder is
terminated pursuant to either Section 4.1, or if Employee
voluntarily resigns.
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3.3 VACATION. Employee shall be entitled to four (4) weeks paid
vacation in accordance with the Company's standard vacation
policies.
3.4 OTHER BENEFITS. Employee shall be eligible to participate, as
of the date of Employee's employment, in all group life,
health, medical, dental or disability insurance or other
employee, health and welfare benefits made available generally
to other executives of the Company. If Employee elects to
participate in any of such plans, Employee's portion of the
premium(s) will be deducted from Employee's paycheck.
3.5 BUSINESS EXPENSES. The Company shall promptly reimburse
Employee for all reasonable and necessary business expenses
incurred by Employee in connection with the business of the
Company and the performance of his duties under this
Agreement, subject to Employee providing the Company with
reasonable documentation thereof.
3.6 OPTION GRANT. Employee shall be granted an immediately
exercisable, non-qualified stock option (the "Option") under
the Company's 1999 Stock Option/Stock Incentive Plan (the
"Plan"), for 800,000 shares of the Company's Common Stock, at
an exercise price of $0.50 per share. Employee shall acquire a
vested interest in twenty-five percent of the Option shares
upon the first-year anniversary of the commencement of
Employee's employment with the Company and in the remaining
seventy-five percent of the Option shares in thirty-six (36)
equal monthly installments, beginning one month following such
first-year anniversary. The Option shall also be subject to
accelerated vesting as set forth below.
3.7 LOAN. The Company will lend Employee up to such amount as is
necessary to exercise the Option in full. The loan (a) will
bear interest at the minimum interest rate required to avoid
imputation of interest under applicable IRS guidelines, (b)
will become due and payable five (5) years from the date the
loan is made and Employee shall use the proceeds received by
him from the sale of the Option shares to repay the loan, (c)
will be secured by the underlying Option shares, and (d) will
be recourse with respect to the personal assets of Employee
with respect to at least 50% of the principal amount of the
loan.
3.8 PARTICIPATION IN FINANCING. The Company will allow Employee to
purchase up to 150,000 shares of the Company's Preferred Stock
in the Company's next round of financing, if and when such
stock is issued, at the same price per share paid by other
purchasers participating in such financing.
4. TERMINATION.
4.1 TERMINATION FOR CAUSE.
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(a) Termination "for cause" is defined as
follows: the Company terminates Employee's
employment with the Company (1) if Employee
is convicted of a felony or commits an act
of moral turpitude, in either case which
adversely impacts the Company, (2) if
Employee materially breaches the Company's
Confidentiality and Proprietary Agreement,
or (3) if Employee fails, after receipt of
detailed written notice and after receiving
a period of at least thirty (30) days
following such notice to cure such failure,
to use his reasonable good faith efforts to
follow the direction of the Company's Board
of Directors and to perform his obligations
hereunder.
(b) The Company may terminate this Agreement for any of
the reasons stated in Section 4.1(a) by giving
written notice to Employee without prejudice to any
other remedy to which the Company may be entitled.
The notice of termination shall specify the grounds
for termination. If Employee's employment hereunder
is terminated "for cause" pursuant to this Section
4.1, Employee shall be entitled to receive hereunder
his accrued but unpaid Base Salary and vacation pay
through the date of termination, and reimbursement
for any expenses as set forth in Section 3.5, through
the date of termination, but shall not be entitled to
receive any unpaid portion of the Annual Bonus or any
other amount.
4.2 TERMINATION WITHOUT CAUSE. If Employee's employment is
terminated without "cause" as defined in Section 4.1(a), or if
Employee is Involuntarily Terminated (as defined below), the
Company (or its successor, as the case may be) shall pay to
Employee (i) any accrued but unpaid Base Salary and vacation
through the date of termination, (ii) reimbursement for any
expenses as set forth in Section 3.5, through the date of
termination, (iii) Employee's Annual Bonus, prorated through
the date of termination, and (iv) a severance payment in an
amount equal to Two Hundred Eighty Thousand Dollars
($280,000.00), payable in one lump sum, subject to withholding
as may be required by law. In addition, if Employee's
employment is terminated without cause (other than if Employee
is Involuntarily Terminated) or if Employee's employment is
terminated due to death or permanent disability, Employee will
be credited with an additional twelve (12) months of service
toward vesting in the Option shares in addition to the service
he has accrued toward vesting through the date of termination.
If Employee is Involuntarily Terminated, vesting of the Option
shares will be accelerated in full; provided, however,
Employee will only vest in 75% of the Option shares if the
Corporate Transaction takes place in the first nine months
following the date of commencement of Employee's employment.
As used in this Section 4.2, Employee shall be deemed
"Involuntarily Terminated" if (i) the Company or any successor
to the Company terminates
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Employee's employment without cause in connection with or
following a Corporate Transaction (as defined in the
Company's stock option plan); or (ii) in connection with or
following a Corporate Transaction there is (a) a decrease
in Employee's title or responsibilities (it being deemed to
be a decrease in title and/or responsibilities if Employee
is not offered the position of Senior Vice President and
Chief Financial Officer of the Company or its successor as
well as the acquiring and ultimate parent entity, if any,
following the Corporate Transaction), (b) a decrease in pay
and/or benefits from those provided by the Company
immediately prior to the Corporate Transaction or (c) a
requirement that Employee re-locate out of the greater Los
Angeles metropolitan area.
5. ASSIGNMENT. Neither the Company nor Employee may assign this
Agreement or any rights or obligations hereunder. This
Agreement will be binding upon the Company and its successors
and assigns. In the event of a Corporate Transaction, the
Company shall cause this Agreement to be assumed by the
Company's successor as well as any acquiring or ultimate
parent entity, if any, following any Corporate Transaction.
6. MISCELLANEOUS.
6.1 This Agreement supersedes any and all other agreements, either
oral or in writing, between the parties hereto with respect to
the employment of Employee by the Company, other than the
Confidentiality and Proprietary Agreement, and constitutes the
entire agreement between the Company and the Employee with
respect to its subject matter.
6.2 This Agreement may not be amended, supplemented, modified or
extended, except by written agreement which expressly refers
to this Agreement, which is signed by each of the parties
hereto and which is authorized by the Company's Board of
Directors.
6.3 This Agreement is made in and shall be governed by the laws of
California, without giving effect to its conflicts-of-law
principles.
6.4 In the event that any provision of this Agreement is
determined to be illegal, invalid or void for any reason, the
remaining provisions hereof shall continue in full force and
effect.
6.5 Employee represents and warrants to the Company that there is
no restriction or limitation, by reason of any agreement or
otherwise, upon Employee's right or ability to enter into this
Agreement and fulfill his obligations under this Agreement.
6.6 All notices and other communications required or permitted
hereunder shall be in writing and shall be mailed by
first-class mail, postage prepaid, registered or certified, or
delivered either by hand, by messenger or by overnight courier
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service, and addressed to the receiving party at the
respective address set forth in the heading of this Agreement,
or at such other address as such party shall have furnished to
the other party in accordance with this Section 6.6 prior to
the giving of such notice or other communication.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the first date written above.
NETZERO, INC.
By: /s/ MARK GOLDSTON
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Mark Goldston, Chief Executive Officer
/s/ CHARLES HILLIARD
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Charles Hilliard
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