Employment Agreement - HotWired Ventures LLC and Jeffrey Simon
HOTWIRED VENTURES LLC
EMPLOYMENT AGREEMENT
HOTWIRED VENTURES LLC, a California limited liability company (the
"Company"), located at 520 Third Street, Fourth Floor, San Francisco, California
94107 and Jeffrey Simon ("Employee"), whose current address is 87 Hunting Ridge
Road, Stamford, CT 06903, hereby agree as follows:
1. EMPLOYMENT AND TITLE. The Company hereby agrees to employ Employee,
and Employee hereby accepts employment with the Company, such employment to
commence effective November 6, 1995 ("Start Date"). Employee shall initially
serve as Vice President and Chief Financial Officer of the Company.
2. DUTIES.
(a) Employee shall be responsible for the financial and
accounting operations and functions of the Company and shall perform the duties
customarily associated with such position, as well as such duties as may be
assigned to Employee by the Company from time to time.
(b) Employee shall at all times be subject to the direction of
the Managers of the Company, to the policies established by the Company and to
the terms and conditions of such employee guidelines or manuals as the Company
distributes to its employees. Employee agrees that Employee will, to the best of
Employee's abilities, conscientiously perform all of the duties and obligations
required of Employee during the time Employee is employed by the Company.
3. EMPLOYMENT AT WILL; SEVERANCE.
(a) The Company and Employee agree that Employee is an "at
will" employee and that either party may terminate the employment relationship
at any time.
(b) If the Company terminates Employee's employment without
cause within twelve (12) months following the Start Date, Employee will receive,
as severance, continued payment of his base salary through the end of such
initial 12-month period (i.e., November 5, 1996). In addition, all accrued
vacation, unreimbursed travel and business expenses will be paid to Employee
within sixty (60) days of the effectiveness of his termination.
(c) If Employee resigns or his employment is terminated for
cause, all compensation and benefits will cease immediately; all accrued salary,
vacation, unreimbursed travel and business expenses and bonuses will be paid,
but Employee will receive no severance benefits. For purposes of this Agreement,
"cause" shall mean misconduct, including: (i) conviction of any felony or any
crime involving moral turpitude or dishonesty; (ii) participation in a fraud or
act of dishonesty against the Company; (iii) willful breach of the Company's
policies; (iv) intentional damage to the Company's property; (v) material breach
of
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this Agreement or any subsequent agreement relating to the subject matter
hereof; or (vi) conduct by you which in the good faith and reasonable
determination of the Company's Managers demonstrates gross unfitness to serve.
Physical or mental disability shall not constitute "cause".
4. CASH COMPENSATION; BENEFITS. As compensation for the services to be
rendered by Employee hereunder, the Company shall initially pay Employee:
(a) A sign-on bonus in the gross amount of Fifteen Thousand
Dollars ($15,000), payable in one lump sum on the Start Date, which may be
applied toward Employee's expenses in moving his residence from Connecticut to
the San Francisco Bay Area or toward any other purpose, in Employee's
discretion. Except pursuant to this bonus, Employee shall not be compensated or
otherwise reimbursed for any relocation-related expenses.
(b) An annual salary of One Hundred Ten Thousand Dollars
($110,000), payable in arrears in equal installments twice per month, prorated
for any partial employment period, and as adjusted from time to time.
In addition, Employee will be eligible to participate in the Company's
standard employee benefits programs which include medical and dental insurance
and a 401(k) tax deferred savings plan. The Company reserves the right to modify
employee benefit programs from time to time, as deemed necessary.
5. EQUITY PARTICIPATION; VESTING.
(a) In connection with Employee's agreement hereunder, the
Company will sell to Employee six hundred ten (610) Class C membership interests
(the "Units"), representing a 0.50% subordinated profits interest in the
Company, within thirty (30) days following the Start Date (which the parties
understand and agree may be converted into an equivalent equity interest in the
event that the Company converts into a C-corporation for tax purposes, which
equity shall be subject to the terms of this Agreement and included in the
definition of "Units" hereunder), subject to Employee's execution of the
Company's standard Subscription Agreement and Employee's agreement to be bound
by the terms and conditions of the Company's Second Amended and Restated
Operating Agreement dated as of August 25, 1995 and thereby become a Member of
the Company.
(b) Beginning with November 1, 1995 (the "Vesting Commencement
Date"), Employee's rights of full ownership of the Units purchased by Employee
shall vest as follows:
<TABLE>
<CAPTION>
MONTHS OF SERVICE PERCENTAGE VESTED
<S> <C>
More than zero but less than 0%
24 months after the Vesting
Commencement Date
</TABLE>
2.
<PAGE> 3
<TABLE>
<CAPTION>
MONTHS OF SERVICE PERCENTAGE VESTED
<S> <C>
More than 24 but less than 36 25%
months after the Vesting
Commencement Date
More than 36 but less than 48 50%
months after the Vesting
Commencement Date
More than 48 but less than 60 75%
months after the Vesting
Commencement Date
More than 60 months after 100%
the Vesting Commencement
Date
</TABLE>
(c) In the event that:
(i) the Company terminates Employee's employment and a determining
factor in such termination is the purpose of avoiding the
vesting of Employee's Units;
(ii) in connection with an underwritten initial public offering,
the Company registers any of its securities with the
Securities and Exchange Commission pursuant to Section 6 of
the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder; or
(iii) any person or related group of persons (other than the
Company, Wired, or a person that directly or indirectly
controls, is controlled by, or is under common control with
the Company) directly or indirectly acquires beneficial
ownership (within the meaning of Rule 13d-3 of the Securities
Exchange Act of 1934, as amended) of fifty percent (50%) or
more of the total combined voting power of the Company's
outstanding securities
then, the vesting of the Units shall accelerate so that each Unit shall,
immediately prior to the effectiveness of any of the events listed in this
subparagraph 5(c), become fully vested.
6. RIGHT TO REPURCHASE UNITS. Employee may not sell, assign, transfer,
encumber, or otherwise dispose of any interest in the Units except as provided
in this Paragraph 6. The Units shall be subject to a purchase option in favor of
the Company as set forth below.
(a) OPTION TO REPURCHASE UNITS. If Employee ceases to be employed by
the Company, whether by reason of retirement, quitting or termination with or
without cause, then
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the Company shall have the exclusive right and option, exercisable at any time
during a period of sixty (60) days from the date of said termination, (i) to
purchase the then non-vested Units of Employee for a price per Unit equal to the
price per Unit that the Employee originally paid for such unvested Units, and
(ii) to purchase the then vested Units for a price equal to the fair market
value of such Units. If the Company decides to exercise this option to purchase,
it shall give written notice to that effect to Employee, and the sale and
purchase shall be consummated within thirty (30) days thereafter.
(b) DETERMINATION OF FAIR MARKET VALUE OF VESTED UNITS. The
value of Employee's vested Units shall be determined by agreement between
Employee and the Company. Should the parties be unable to agree on a value or
otherwise fail to make any such determination within thirty (30) days of the
notice of exercise of the Company's option to purchase, then the period for
purchasing the Units shall be extended to include a reasonable amount of time
for appraisal and closing, and the value shall be determined by an independent
appraiser selected by both Employee and the Company. The cost of the appraisal
shall be borne equally by Employee and the Company.
(c) LAPSE OF PURCHASE OPTION. The Company's right to
repurchase Units hereunder shall lapse on November 1, 2005. After that date, if
Employee desires to sell or otherwise transfer any of Employee's Units, then
Employee shall first give written notice thereof to the Company. The notice
shall name the proposed transferee and state the number of Units to be
transferred, the proposed consideration, and all other terms and conditions of
the proposed transfer. For thirty (30) days following receipt of such notice,
the Company shall have the option to purchase all (but not less than all) of the
Units specified in the notice at the price and upon the terms set forth in such
notice. In the event of a gift, property settlement or other transfer in which
the proposed transferee is not paying the full price for the shares, the price
shall be deemed to be the fair market value of the Units as determined under
Paragraph 6(b) above.
7. COVENANT NOT TO COMPETE. Upon the termination of Employee's
employment with the Company, Employee agrees that Employee will not, directly or
indirectly, own, manage, join, control, be employed by, or participate in the
ownership, management, control of, or act as a consultant to, any business that
is competitive to the business of the Company, without first obtaining the
written consent of the Company.
The Company is currently actively involved in the production and
marketing of online publishing services. Any electronic media product which is
editorially similar to the Company's online publishing services and which
derives its revenues from the same commercial sources as the Company's
electronic media product shall be deemed competitive. As the Company actively
creates new media products, these shall also be included in the listing of
competitive activities. This covenant not to compete will continue for one (1)
year after termination from employment, and shall apply in all counties, states
and countries in which the Company or its affiliates do business.
4.
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8. TRADE SECRETS.
(a) The Company and Employee acknowledge and agree that while
Employee is employed by the Company, and in the course of performing his duties
as set forth above, Employee shall have access to and become acquainted with
information concerning the operation of the Company. This information includes,
but is not limited to, subscription and advertiser lists as well as financial,
personnel, sales, planning, artistic, editorial and other information that is
owned by the Company and regularly used in the operation of the Company's
business. This information constitutes the Company's trade secrets.
(b) Employee agrees that Employee shall not disclose any such
trade secrets, directly or indirectly, to any other person or use them in any
way, either while Employee is employed by the Company or at any other time
thereafter, except as is required in the course of Employee's employment for the
Company.
9. COMPETITIVE ACTIVITIES. Employee agrees that, while Employee is
employed by the Company, Employee will not, directly or indirectly, own, manage,
join, control, be employed by, or participate in the ownership, management,
control of, or act as a consultant to, any business that is directly competitive
to the business of the Company, without first obtaining the written consent of
the Company.
The Company is currently actively involved in the production and
marketing of online publishing services. Any electronic media product which is
editorially similar to the Company's online publishing services and which
derives its revenues from the same commercial sources as the Company's
electronic media product shall be deemed competitive. As the Company actively
creates new media products, these shall also be included in the listing of
competitive activities.
10. OWNERSHIP OF WORK PRODUCT.
(a) Employee and the Company agree that, while Employee is
employed by the Company, all intellectual properties, including but not limited
to, all art, drawings, ideas, concepts, themes, inventions, designs,
improvements, and discoveries conceived, created, developed, or written by
Employee, either individually or jointly in collaboration with others, pursuant
to this agreement, shall belong to and be the sole and exclusive property of the
Company, unless otherwise agreed to in writing by the Company.
(b) Employee and the Company further agree that all rights in
all intellectual properties prepared by Employee pursuant to this agreement,
including patent and copyrights applicable to any of the intellectual properties
described in subparagraph (a) above, shall belong exclusively to the Company,
shall constitute "works made for hire," and shall be assigned promptly by
Employee to the Company, unless otherwise agreed to in writing by the Company's
Manager. Employee agrees to assist the Company in obtaining patents on all such
inventions, designs, improvements, and discoveries that are patentable, or
copyright registration on all such works of creation that are copyrightable, and
shall execute all patent or copyright registration, vest the Company with full
and exclusive title, and protect against infringement by others.
5.
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11. ENTIRE AGREEMENT. This agreement supersedes all other
agreements, either oral or in writing, between the Company and Employee with
respect to the employment of Employee by the Company. It contains all of the
agreements between Employee and the Company with respect to that employment in
any matter whatsoever. Employee and the Company acknowledge that no
representations, inducements, promises, or agreements, orally or otherwise, have
been made by any party, or anyone acting on behalf of any party, which are not
contained in this agreement, and that no other agreement, statement or promise
not contained herein shall be valid or binding on either party. Any modification
of this agreement will be effective only if it is in writing and signed by both
parties.
12. COMPULSORY ARBITRATION. Any controversy or claim arising
out of or relating to this agreement, or the breach thereof, shall be settled by
arbitration in accordance with the rules of the American Arbitration
Association, and any judgment on the award rendered may be entered in any court
having jurisdiction.
13. NOTICES. Any notices which are required to be given by
this agreement shall be delivered in writing by personal delivery, by fax, or by
mail, or by certified mail, return receipt requested. Mailed notices shall be
addressed to the parties at the addresses listed in the first paragraph of this
agreement, but each party may change the address for receipt of this notice by
delivering written notice to the other party in accordance with this paragraph.
Notices delivered personally shall be deemed communicated as of actual receipt;
mailed notices shall be deemed communicated as of three days after the date of
mailing.
14. GOVERNING LAW. This agreement shall be governed by and
construed in accordance with the laws of the State of California.
15. SEVERABILITY. If any of the provisions of this Agreement
shall be declared by a court of competent jurisdiction to be invalid, void, or
unenforceable, the remaining provisions shall continue in full force and effect.
Dated this 12th day of October, 1995.
HOTWIRED VENTURES LLC
BY: /s/ ANDREW L. ANKER /s/ JEFFREY SIMON
------------------------- ---------------------------
ANDREW L. ANKER JEFFREY SIMON
PRESIDENT
6.
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[LETTERHEAD Wired Ventures, Inc.]
June 20, 1996
Jeffrey Simon
6329 Chelton Dr.
Oakland, CA 94611
Dear Jeffrey:
As you know, the ownership of Wired Magazine, HotWired and their
related businesses have been restructured as set forth in the attached chart. We
believe that this new structure, which puts all equity ownership in a new parent
company, Wired Ventures, Inc., will benefit the company and its employees by,
among other things, allowing the use of broad-based equity incentive programs to
reward full-time regular employees. This letter outlines the terms of your
continuing employment.
You will continue to perform your duties and responsibilities as CFO
and Secretary at Wired Ventures, Inc. (the "Company"). In that capacity, we
expect you to devote your full time and best efforts to the performance of your
duties and to abide by the Company's policies and procedures.
As a result of the restructuring, your existing equity interest was
converted to shares of Series A Preferred Stock of Wired Ventures, Inc.
("Conversion Shares"). The details of that conversion are described in the
Information Statement sent to you previously. The 20,216 Conversion Shares
representing your former limited partnership or limited liability company units
are subject to a repurchase option in favor of the Company, which lapses in
accordance with the schedule and procedure attached as Exhibit A.
We have implemented an Equity Incentive Plan to reward you for your
contribution to the success of our business. Upon execution of this letter, you
will be offered the opportunity to participate in the Equity Incentive Plan. The
details of your new equity participation in Wired Ventures are described in the
attached stock option grant(s). The option(s) will be subject to the terms and
conditions of the Equity Incentive Plan.
You are eligible to continue your participation in the Wired 401(k)
Plan under the terms of such Plan. In addition, you may continue participating
in Wired group insurance plans, subject to the requirements of the insurance
policies and Company practices. The restructuring will not affect the terms of
those plans and policies.
In our business, we receive and generate a great deal of confidential
information and proprietary material. All employees are required, both during
and after employment, to refrain from revealing or using such information and
materials for any purpose other than performing services for the Wired
companies, unless prior written authorization is obtained. You will be required
to sign the Company's Proprietary Information, Authorship and Inventions
Agreement. That document will further explain your rights and obligations
regarding confidential and proprietary information.
You agree not to engage in work activities for companies other than the
Wired companies without obtaining Wired's prior written approval as set forth in
the Proprietary Information, Authorship and Inventions Agreement.
Both you and the Company may terminate the employment relationship at
any time with or without cause or notice subject to the following terms and
conditions:
(1) If the Company terminates employment of Jeff Simon ("Employee"),
without cause within twelve (12) months following the effective
employment start date of 11/6/95, Employee will receive, as severance,
continued payment of his base salary through the end of such initial
12-month period (i.e., November 5, 1996). In addition, all
<PAGE> 8
accrued vacation, unreimbursed travel and business expenses will be
paid to Employee within sixty (60) days of the effectiveness of his
termination.
(2) If Employee resigns or his employment is terminated for cause, all
compensation and benefits will cease immediately; all accrued salary,
vacation, unreimbursed travel and business expenses and bonuses will be
paid, but Employee will receive no severance benefits. For purposes of
this Employment Agreement, "cause" shall mean misconduct, including:
(i) conviction of any felony or any crime involving moral turpitude or
dishonesty; (ii) participation in a fraud or act of dishonesty against
the Company; (iii) willful breach of the Company's policies; (iv)
intentional damage to the Company's property; (v) material breach of
this Employment Agreement or any subsequent agreement relating to the
subject matter hereof; or (vi) conduct by you which in the good faith
and reasonable determination of the Company demonstrates gross
unfitness to serve. Physical or mental disability shall not constitute
"cause".
The Company may also change your title, responsibilities, duties, salary and
benefits from time to time at its sole discretion. This at-will employment
relationship cannot be changed except in a written agreement signed by you and a
Company officer.
To ensure rapid and economical resolution of disputes or claims that
may arise from or relate to your employment relationship with the Company, and
in exchange for participation in the Equity Incentive Plan, any such disputes or
claims (including, but not limited to, all state and federal statutory and
discrimination claims) will be resolved by final and binding arbitration (rather
than by a court, jury, or administrative agency) conducted by the Judicial
Arbitration and Mediation Services/Endispute, Inc. ("JAMS") under the then
current rules of JAMS, in San Francisco.
This letter constitutes the entire statement of the terms of your
employment and it supersedes any prior agreements or representations concerning
your employment relationship, except as embodied in the Proprietary Information,
Authorship and Inventions Agreement and the Equity Incentive Plan referred to
above. It can only be modified in writing signed by you and a duly authorized
Company officer.
As always, your continuing employment is contingent upon your
eligibility to work in the United States.
To confirm your acceptance of these terms of employment, please sign
and date this letter, and return it to me within 5 business days of receipt.
Sincerely,
/s/ Jane Metcalfe
-------------------
Jane Metcalfe
President
Wired Ventures, Inc.
I UNDERSTAND AND AGREE TO THE TERMS SET FORTH ABOVE
/s/ Jeffrey Simon
___________________________
Jeffrey Simon
July 5, 1996
___________________________
Date