Exhibit 99.3
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, made this 17th day of October, 2001, by
and between Ion Networks, Inc., a Delaware corporation, with its principal place
of business at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, (the
"Company") and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ residing at ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ (the "Employee").
W I T N E S S E T H:
WHEREAS, the Company desires to employ the Employee as Chief
Technology Officer and Vice President and wishes to acquire and be assured of
Employee's continued services on the terms and conditions hereinafter set forth;
WHEREAS, the Employee desires to be employed by the Company as
Chief Technology Officer and Vice President and to perform and to serve the
Company on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual terms,
covenants, agreements and conditions hereinafter set forth, the Company and the
Employee hereby agree as follows:
1. EMPLOYMENT. The Company hereby employs the Employee to serve as a
full time Employee of the Company, and the Employee hereby accepts such
employment with the Company, for the period set forth in Section 2 below. The
Employee's principal place of employment shall be in the Company's offices in
Piscataway, New Jersey or other such places as are reasonably directed by the
Company. The Employee hereby accepts such employment and agrees to undertake the
duties and responsibilities inherent in such position.
2. TERM. Unless earlier terminated as provided in this Agreement, the
term of the Employee's employment under this Agreement shall commence on October
17, 2001 (the "Engagement Date") and shall continue until September 30, 2004,
but shall be terminable prior thereto, for the reasons set forth in paragraph 7,
including for "Cause" (as defined in paragraph 7(a)(iii)). The period of
Employee's employment hereunder shall hereinafter be known as the "Employment
Term." Any renewal of this agreement shall be only by mutual agreement of the
parties. The parties will commence discussion of any possible renewal not later
than June 30, 2004.
3. DUTIES AND AUTHORITY.
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(a) Duties. The Employee shall be employed as the Chief Technology
Officer and Vice President of the Company, shall faithfully and competently
perform such duties at such times and places and in such manner as the Board of
Directors of the Company (the "Board"), may from time to time reasonably direct,
and Employee shall report to the Chief Executive Officer of the Company. The
Employee will be primarily responsible for leading the development of product
and technology strategy and for the creation and management of an innovation
process for leveraging intellectual property for the Company. Except as
otherwise may be approved in advance by the Board, and except during vacation
periods and reasonable periods of absence, including absences due to sickness,
personal injury, family leave as permitted
by law, or other disability, the Employee shall devote Employee's full time
throughout the Employment Term to the services required of Employee hereunder.
The Employee shall render Employee's services exclusively to the Company during
the Employment Term and shall use Employee's best efforts, judgment and energy
to improve and advance the business and interests of the Company in a manner
consistent with the duties of Employee's position.
(b) Authority. The Employee shall have such authority, duties and
responsibilities consistent with his position, subject to the supervision and
authority of the Board.
(c) Assistance. The Company will assist the Employee by furnishing all
necessary information with respect to its products and with respect to all
technical and administrative support as is reasonably required. The Company will
keep the Employee informed concerning its new products, sales strategies and
general business developments. The Company will provide Employee with office
facilities adequate to his function and position, comparable to that provided by
the Company to other senior executives.
4. COMPENSATION.
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(a) Base Salary. In consideration of the services of the Employee
rendered to the Company hereunder, the Company shall pay the Employee (i) a base
salary at an annual rate of $148,000 during the period of the Employment Term
commencing October 17, 2001 and ending September 30, 2002, and (ii) certain
bonus payments as set forth below. Upon expiration or termination of this
Agreement, payments made pursuant to this section shall cease (unless Employee
is terminated in a manner specified in Section 7(e), in which event that
subparagraph's provisions shall control); provided, however, that the Employee
shall be entitled to payments for periods or partial periods that occurred prior
to the date of termination and for which the Employee has not yet been paid.
Ninety days prior to the end of each year of the Employment Term, Employee and
the Company will commence discussions of any adjustment in compensation for the
succeeding year. If no agreement on an adjustment is made on or prior to 60 days
before the end of each such year, the salary payable to Employee shall continue
in accordance with the salary in effect at the end of such year of the
Employment Term. In the alternative, at Employee's option, if Employee and the
Company are unable to come to an agreement on such adjustment, the Employee
shall be entitled to resign, and the Company shall have no recourse against
Employee for any damages it may suffer as a result of Employee resigning from
the Company. If Employee determines to continue in the Company's employ, any
other amounts due Employee under subparagraphs (b) and (c) below will not be
altered as a result of Employee and the Company failing to agree on an
adjustment to Employee's compensation.
(b) Provided Employee continues to remain employed on the date which is
16 days prior to the end of each of the applicable fiscal quarters of the
Company referenced herein, Employee shall be entitled to a bonus payment of
$12,500 each time the Company achieves gross sales in such fiscal quarter (as
calculated by the Company's independent auditors) as follows:
Gross sales - quarter ending 12/31/01 - $2,200,000
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Gross sales - quarter ending 3/31/02 - $2,600,000
Gross sales - quarter ending 6/30/02 - $3,200,000
Gross sales - quarter ending 9/30/02 - $3,800,000
Gross sales - quarter ending 12/31/02 - $4,400,000
Gross sales - quarter ending 3/31/03 - $5,000,000
(a) Equity Position. The Employee will be granted restricted
stock, consisting of 300,000 shares of the Company's Common Stock at a price of
$0.31 ( thirty-one cents) per share, which is equal to the closing price for the
trading day preceding the execution of this Agreement. The restricted stock will
be subject to a repurchase right which will permit the Company to repurchase any
of the Employee's stock which has not yet vested at the effective date of the
termination of the Employee's employment with the Company, in accordance with
the vesting schedule specified below, for an amount equal to the purchase price
per share paid by Employee. The Company's repurchase rights will lapse, and
Employee's rights in such shares shall be fully vested, according to the
following schedule:
(i) 37,500 - on execution of this agreement
(ii) 82,500 - on September 30, 2002
(iii) 22,500 at the end of each quarter, commencing with the
quarter ended December 31, 2002, and ending with the quarter ending September
30, 2004, for a total of 180,000 shares.
The Employee will, contemporaneous with the effectiveness of
this Agreement, purchase all of the shares subject to the restricted stock
grant, by the execution of a series of promissory notes. Each note will bear
interest at the minimum rate provided by the Internal Revenue Code to avoid
imputation of interest and will be secured by a pledge on the shares applicable
to the purchase price represented by each such note. The shares will be held in
escrow until the Company's repurchase rights lapse as to such shares, subject to
the continuation of the pledge securing the notes. The form of stock grant
agreement, note and pledge evidencing the terms set forth above and related
provisions, shall be annexed hereto as Appendices A, B and C, and shall be
negotiated in good faith by the parties, immediately subsequent to the execution
of this Agreement, based upon the principles set forth herein. Each note will
provide for repayment upon the earlier of 10 years, or the date upon which
Employee disposes of the shares applicable to the purchase price represented by
each such note, or upon certain insolvency events with respect to Employee. The
Company may effect its repurchase rights through offset of each such note
representing the purchase price of the shares repurchased. Each such note will
also provide that Employee will be personally responsible for the repayment of
40% of the principal amount and accrued interest on each such note, if the
shares pledged to secure such note will not, after foreclosure in accordance
with law, net to the Company the amounts due under each such note. Employee
understands that the Company's obligation to issue the shares set forth above is
subject to Nasdaq approval of said grant, which in turn may require stockholder
approval. This
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grant shall not be binding on the Company unless any such necessary approval is
granted, but the Company will use reasonable efforts to obtain any such required
approvals.
The Company's repurchase rights as to all shares granted
hereunder will lapse, and Employee will become fully vested in such shares, upon
a "Change in Control"; provided however, that if the surviving company of such
Change in Control offers Employee continued employment, at a level comparable to
that existing immediately prior to the Change in Control, such repurchase rights
will not lapse but will continue in accordance with the above schedule, subject
to the limited right of acceleration specified below. The Employee will be
deemed to have been offered continued employment at a comparable level if he is
offered a CTO level position in the surviving company and, for the next six
months after the Change in Control, Employee is not terminated without "Cause"
as defined below and the Employee does not resign in such period for conditions
constituting "Good Reason" as defined below.
A Change in Control is defined as of (i) a proposed
dissolution or liquidation of the Company, or (ii) a proposed sale of all or
substantially all of the assets or outstanding equity of the Company, or (iii)
the merger or consolidation of the Company with or into another entity or any
other corporate reorganization if persons who were not shareholders of the
Company immediately prior to such merger, consolidation or other reorganization
own immediately after such merger, consolidation or other reorganization fifty
percent (50%) or more of the voting power of the outstanding securities of each
of (A) the continuing or surviving entity and (B) any direct or indirect parent
corporation of such continuing or surviving entity.
"Good Reason" is defined as (i) without Employee's express
written consent, a change in Employee's responsibilities, status, or titles,
which represents a material diminution of Employee's responsibilities, status,
or titles with the Company as of the date of this Agreement, or any removal of
Employee from, or any failure to re-appoint Employee to, any of such titles,
except in connection with (a) the termination of Employee's employment as a
result of Employee's death; (b) a termination by the Company as a result of
Employee's disability as specified in paragraph 7(a)(ii); (c) a termination by
the Company for Cause as specified in paragraph 7(a)(iii); or (d) a termination
initiated by Employee other than for reasons specified in this paragraph; (ii) a
reduction by the Company in Employee's base salary as in effect as of the date
of this Agreement plus all increases therein subsequent to such date; (iii) an
intentional, material reduction by the Company in Employee's aggregate target
incentive awards granted to Employee in this Agreement or in subsequent
agreements; or (iv) the unjustified failure by the Company to pay Employee any
material amount of Employee's salary, or any material amount of Employee's
compensation deferred under any plan, agreement or arrangement of or with the
Company, within ten (10) days after Employee's written demand for such amount.
Notwithstanding the foregoing, in the event of a Change in
Control in which the conditions specified above for lapse of the Company's
repurchase rights are not met, Employee will nevertheless be entitled to a 12
month acceleration of the schedule for the lapse of such repurchase rights, so
that any repurchase rights existing at the date of the Change in Control, will
be those that would exist at the 1 year anniversary after such date, instead of
those existing at such date in accordance with the original schedule set forth
above. The remainder of the vesting schedule shall be complied with so that such
schedule shall be applicable to the remaining shares not vested after the
adjustment provided for herein. For example, if the Change in Control
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occurs on December 31, 2002, 142,500 shares would have been vested under the
original schedule. The adjustment provided for herein would cause the vesting
which would have been in effect at December 31, 2003 to be accelerated to
December 31, 2002. As a result, 232,500 shares will be vested at December 31,
2002. The remaining 67,500 shares will vest in three installments on March 31,
June 30 and September 30, 2003.
Any profit received from the grant of shares specified above,
or their subsequent sale, shall be forfeited to the Company if Employee violates
Section 6 (Confidentiality) or Section 8 (Non-Competition) of this Agreement.
Employee will grant the Company an irrevocable proxy on all shares granted
hereby, which shall be in effect until the shares are sold in open market
transactions. The proxy will permit the Board to vote such shares on any matter
for which a vote or consent is necessary or permitted under law. The Company
will use its best efforts to register, on a Form S-8, combined with a reoffer
prospectus, all shares granted hereby for public resale by Employee and to keep
such registration statement effective until the earlier of (i) the sale of all
of Employee's shares or (ii) such date that the Company ceases to be a reporting
company under the Securities Exchange Act of 1934. Employee agrees to comply
with any written Company request to delay, on one or more occasions, for a
limited period not to exceed thirty days on each such occasion, any sale or
proposed sale of shares, if the Company advises that there is an undisclosed
material business situation, transaction or negotiation that the Company would
be required to disclose to keep such registration statement current, if the
Company reasonably determines that it is in its best interests not to make such
disclosure for such limited period of time.
(c) Withholding, Etc. Payroll taxes will be withheld from
payment of amounts payable hereunder, in accordance with then-applicable New
Jersey and federal tax guidelines.
5. BENEFITS. During the Employment Term, the Employee shall be entitled
to:
(a) 20 annual paid vacation days; such vacation to be taken at
a time mutually convenient to Company and the Employee; any vacation time not
used by Employee during any calendar year of the Employment Term shall be
carried over for two calendar years after the vacation time was earned. On the
first December 31st after such two year period, if the vacation time has not
been used, cash payment shall be made to Employee for any such unused vacation
time, based on Employee's base salary in the year the vacation time was earned.
If the Employee's employment is terminated, any unused vacation time shall be
paid at the time of termination, except in the event of termination for "Cause"
under Paragraph 7(a)(iii), in which event all such time shall be forfeited.
Vacation time shall be deemed utilized in the order in which it is earned so
that unused time from prior years shall be utilized before time for the then
current year is utilized;
(b) 8 days paid sick leave and 2 personal days in each year of
employment as is deemed appropriate;
(c) 8 days of paid holidays during each calendar year;
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(d) reimbursement for all reasonable and necessary
out-of-pocket business expenses, such expenses to be properly receipted or
otherwise documented, incurred by the Employee in the performance of Employee's
duties hereunder in accordance with the Company's policies applicable on or
after the Engagement Date;
(e) coverage under the Company's medical, dental and eye care
health insurance plans, as the same may be in effect for senior executives of
the Company from time to time, for the Employee and his beneficiaries, at no
cost to the Employee;
(f) coverage under the Company's pension, profit sharing,
welfare benefit and other similar plans and programs, including the Company's
401K Plan, upon terms comparable to those provided by the Company to other
senior executives. Employee acknowledges that the Company does not currently
make matching contributions to the 401K Plan; and
(g) reimbursement for automobile mileage, to extent utilized
on Company business at the then applicable Internal Revenue Service deduction
rate.
6. DEVELOPMENTS AND CONFIDENTIAL INFORMATION. The Employee hereby
covenants, agrees and acknowledges as follows:
(a) The Company is engaged in a continuous program of
research, design, development, production, marketing and servicing with respect
to its business.
(b) The Employee's employment hereunder creates a relationship
of confidence and trust between the Employee and the Company with respect to
certain information pertaining to the business of the Company and its Affiliates
(as hereinafter defined) or pertaining to the business of any client or customer
of the Company or its Affiliates which may be made known to the Employee by the
Company or any of its Affiliates or by any client or customer of the Company or
any of its Affiliates or learned by the Employee during the period of Employee's
employment by the Company.
(c) The Company possesses and will continue to possess
information that has been created, discovered or developed by, or otherwise
become known to it (including, without limitation, information created,
discovered or developed by, or made known to, the Employee during the period of
Employee's employment or arising out of Employee's employment) or in which
property rights have been or may be assigned or otherwise conveyed to the
Company, which information has commercial value in the business in which the
Company is engaged and is treated by the Company as confidential.
(d) Any and all inventions, products, discoveries,
improvements, processes, manufacturing, marketing and services methods or
techniques, formulae, designs, styles, specifications, data bases, computer
programs (whether in source code or object code), know-how, strategies and data,
whether or not patentable or registrable under copyright or similar statutes,
made, developed or created by the Employee (whether at the request or suggestion
of the Company, any of its Affiliates, or otherwise, whether alone or in
conjunction with others, and whether during regular hours of work or otherwise)
during the period of Employee's employment by the Company which pertains to the
Company's actual or contemplated business, products, intellectual property or
processes of the Company or any of its Affiliates (collectively
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hereinafter referred to as "Developments"), shall be the sole property of the
Company and will be promptly and fully disclosed by the Employee to the Board
without any additional compensation therefor, including, without limitation, all
papers, drawings, models, data, documents and other material pertaining to or in
any way relating to any Developments made, developed or created by Employee as
aforesaid. The Company shall own all right, title and interest in and to the
Developments and such Developments shall be considered "works made for hire" for
the Company under US Copyright Law. If any of the Developments are held for any
reason not to be "works made for hire" for the Company or if ownership of all
right, title and interest in and to the Developments has not vested exclusively
and immediately in the Company upon creation, Employee irrevocably assigns,
without further consideration any and all, all right, title and interest in and
to the Developments to the Company, including any and all moral rights, and
"shop rights" in the Developments recognized by applicable law. Employee
irrevocably agrees to execute any document requested by the Company or its
Affiliates to give effect to this paragraph such as assignment of invention or
other general assignments of intellectual property rights, without additional
compensation therefor. For the purposes of this Agreement, the term "Affiliate"
or "Affiliates" shall mean any person, corporation or other entity directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company. For the purposes of this definition, "control" when
used with respect to any person, corporation or other entity means the power to
direct the management and policies of such person or entity, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
(e) The Employee will keep confidential and will hold for the
Company's sole benefit any Development which is to be the exclusive property of
the Company under this Section 6 irrespective of whether any patent, copyright,
trademark or other right or protection is issued in connection therewith.
(f) The Employee also agrees that the Employee will not
without the prior approval of the Board (i) use for Employee's benefit or
disclose at any time during Employee's employment by the Company, or thereafter,
except to the extent required by the performance by Employee of Employee's
duties as an employee of the Company, any information obtained or developed by
Employee while in the employ of the Company with respect to any Developments or
with respect to any customers, clients, suppliers, products, services, prices,
executives, financial affairs, or methods of design, distribution, marketing,
service, procurement or manufacture of the Company or any of its Affiliates, or
any confidential matter, except information which at the time is generally known
to the public other than as a result of disclosure by Employee not permitted
hereunder, or (ii) take with Employee upon leaving the employ of the Company any
document or paper relating to any of the foregoing or any physical property of
the Company or any of its Affiliates. Notwithstanding the foregoing, the
following will not constitute confidential information for purposes of this
Agreement: (i) information which is or becomes publicly available other than as
a result of disclosure by the Employee; (ii) information designated in writing
by the Company as no longer confidential, or (iii) information known by the
Employee as of the Engagement Date and identified as such in writing to the
Board. Employee will comply with all intellectual property disclosure policies
established by the Company from time to time with respect to the Company's
confidential information, including without respect to Developments.
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(g) The Employee acknowledges and agrees that a remedy at law
for any breach or threatened breach of the provisions of this Section 6 would be
inadequate and, therefore, agrees that the Company and its Affiliates shall be
entitled to injunctive relief in addition to any other available rights and
remedies in case of any such breach or threatened breach; provided, however,
that nothing contained herein shall be construed as prohibiting the Company or
any of its Affiliates from pursuing any other rights and remedies available for
any such breach or threatened breach.
(h) The Employee agrees that upon termination of Employee's
employment for any reason, the Employee shall forthwith return to the Company
all documents and other property in Employee's possession or under the
Employee's control belonging to the Company or any of its Affiliates.
(i) The Employee represents and warrants that he has
terminated employment with one or more prior employers and that his employment
by the Company and the use by the Company of any skills and knowledge that he
may have, are not in violation of the terms of any contract that he is a party
to or any other applicable provision of the law.
(j) The Employee represents and warrants that his performance
of all the terms of this Agreement and his duties as an employee of the Company
does not now and will not knowingly breach any agreement to keep in confidence
confidential information acquired by him in confidence or in trust prior to his
employment with the Company. The Employee further represents and warrants that
he has not entered into and he will not enter into any agreement either written
or oral in conflict herewith.
(k) The Employee represents and warrants that he has not
brought and will not bring with him to the Company or use in the performance of
his responsibilities at the Company (a) any materials, documents or confidential
information of a former employer which are not generally available to the
public, unless he has obtained written authorization from the former employer
for their possession and use, or (b) any confidential information which he knows
or should have known has been acquired by improper means, or otherwise
misappropriated from another person.
(l) Without limiting the generality of Section 9 hereof, the
Employee hereby expressly agrees that the foregoing provisions of this Section 6
shall be binding upon the Employee's heirs, successors and legal
representatives.
(m) The provisions of paragraph 6 shall be binding
irrespective of any claim by Employee for breach of this Agreement by the
Company.
(n) The provisions of paragraph 6 shall survive any
termination of this Agreement.
7. TERMINATION.
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(a) The Employee's employment hereunder shall be terminated:
(i) upon death of the Employee; or
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(ii) upon the Employee's inability to perform
Employee's duties on account of disability or incapacity for a period of ninety
(90) or more days, whether or not consecutive, occurring within any period of
twelve (12) consecutive months, such termination to take effect on 30 days prior
written notice from the Company to the Employee. A determination of disability
shall be made by a physician satisfactory to both the Employee and the Company;
provided that if the Employee and the Company do not agree on a physician, they
shall each select a physician and these two together shall select a third
physician, whose determination as to disability shall be binding on all parties;
or
(iii) at any time, by the Company, for "Cause";
"Cause" shall be defined as (1) conviction of a felony, or (2) acts of
dishonesty or moral turpitude constituting fraud or embezzlement or otherwise
materially adversely affecting the business or properties of the Company and/or
its Affiliates; (3) failure to obey the reasonable and lawful directions of the
Board; (4) repeated negligence by the Employee in the performance of, or willful
disregard by Employee of his obligations under, this Agreement; or (5) if
Employee is indicted for a criminal violation of the securities laws.
(b) Employee's employment may be terminated, at any time
immediately, upon written notice by the Company, without "Cause". If Employee is
terminated other than for "Cause," Employee shall be entitled to a severance
payment equal to the lesser of (i) the remaining salary due Employee for the
balance of the Employment Term at the date of such termination; (ii) a payment
of salary for the next three months as if the Agreement had not been terminated.
Employee and Company agree that such severance payment shall also constitute
liquidated damages and is a reasonable approximation of Employee's damages as a
result of such termination.
(c) Employee and Company agree that no acceleration of vesting
of Employee's shares granted under Section 4 shall occur in the event of (i) a
termination under Section 7(a)(i),(ii) or (iii) hereof, or (ii) a termination
without "Cause", except in the context of a "Change in Control", to the extent
specified in Section 4. In the event of a "Change in Control", as defined above,
Employee shall be entitled to treat this Agreement as terminated, and shall be
entitled to such severance payments (as specified in Section 7(b) above) as
liquidated damages, unless Employee is offered employment as the CTO of the
successor or surviving corporation of such "Change in Control", in which event
Employee will not be entitled to such severance payments, unless he is
terminated without "Cause" within the 6 month period following such "Change in
Control" or resigns for "Good Reason" during such period. In addition, the
provisions of Section 4, with respect to accelerated vesting of Employee's
shares, shall apply in the event of a "Change of Control".
(d) Except as required by applicable law, and except as
expressly provided elsewhere in this Agreement, the Company and its Affiliates
shall not be obligated to make any payments to the Employee or on Employee's
behalf of whatever kind or nature by reason of the Employee's cessation of
employment, other than (i) such amounts, if any, of Employee's salary, and
unused vacation time, as shall have accrued and remained unpaid as of the date
of said cessation and (ii) such other amounts which may be then otherwise
payable to the Employee from the Company's benefits plans or reimbursement
policies, if any. Variable bonus payments under Section 4(b) for any fiscal
quarter shall not be paid if Employee is not employed on the
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date which is 16 days prior to the end of the fiscal quarter for which the bonus
payment for such quarter is to be determined.
(e) Upon termination of this Agreement, all Company owned
property, documentation and other Company proprietary materials furnished to
Employee shall be immediately returned to the Company.
(f) Upon notice of termination, at the Company's request,
Employee shall not continue to perform services for the Company or represent the
Company in any manner, shall not appear at the Company's offices and shall
otherwise refrain from any activity not specifically requested by the Company
under this Agreement.
8. NON-COMPETITION.
(a) During the period during which Employee is employed
hereunder (the "Non-Competition Period"), and, at the Company's option, for a
period of six months thereafter, provided the Company continues to pay Employee
his base salary, as in effect at the date Employee's employment ended (with any
severance payments made to Employee credited to such payments), during such six
month period, irrespective of any claim by Employee of a breach by Company of
this Agreement:
(i) the Employee will not make any statement or perform any
act intended to advance an interest of any existing or prospective Competitor
(as defined in subparagraph (iii) below) of the Company or any of its Affiliates
in any way that will or may injure an interest of the Company or any of its
Affiliates in its relationship and dealings with existing or potential customers
or clients, or solicit or encourage any other Employee of the Company or any of
its Affiliates to do any act that is disloyal to the Company or any of its
Affiliates or inconsistent with the interest of the Company or any of its
Affiliates' interests or in violation of any provision of this Agreement;
(ii) the Employee will not solicit, divert or take away, or
attempt to solicit, divert or to take away, the business or patronage of any of
the clients, customers, dealers, distributors, representatives or accounts, or
prospective clients, customers, dealers, distributors, representatives or
accounts, of the Company or its Affiliates which were contacted, solicited or
served by employees of the Company while the Employee was employed by the
Company. This subparagraph (ii) shall only apply to such actions taken by the
Employee on behalf of a Competitor of the Company, such term is described in
subparagraph (iii) below;
(iii) the Employee will not directly or indirectly (as a
director, stockholder, officer, executive, manager, consultant, independent
contractor, advisor or otherwise) engage in competition with, or own any
interest in, perform any services for, participate in or be connected with (a)
any business or organization which engages in competition with the Company or
any of its Affiliates in the United States or any other geographical area where
any business is presently carried on by the Company or any of its Affiliates, or
(b) any business or organization which engages in competition in such area of
business with the Company or any of its Affiliates in any geographical area
where any such business shall be hereafter, during the period of the Employee's
employment by the Company, carried on by the Company or any of its Affiliates,
if
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such business is also being carried on by the Company or any of its Affiliates
in such geographical area during the Non-Competition Period. Competition shall
be deemed to exist between the Company and any other person or firm which
primarily engages in the business of manufacturing, sale or distribution of
network management products, such person or firm to be defined herein as a
"Competitor"; and
(iv) the Employee will not directly or indirectly solicit for
employment, or advise or recommend to any other person that they employ or
solicit for employment, for or on behalf of a Competitor, any employee of the
Company or any of its Affiliates; provided, however, that the provisions of this
Section 8(a) shall not be deemed to prohibit the Employee's ownership of not
more than five percent (5%) of the total shares of all classes of stock
outstanding of any publicly held company.
(b) (i) The Employee further agrees that the limitations set
forth in this Section 8 (including, without limitation, any time or territorial
limitations) are reasonable and properly required for the adequate protection of
the businesses of the Company and its Affiliates. It is understood and agreed
that the covenants made by the Employee in this Section 8 shall survive the
expiration or termination of this Agreement.
(ii) The Employee acknowledges and agrees that a remedy at law
for any breach or threatened breach of the provisions of this Section 8 would be
inadequate and, therefore, agrees that the Company and any of its Affiliates
shall be entitled to injunctive relief in addition to any other available rights
and remedies in cases of any such breach or threatened breach; provided,
however, that nothing contained herein shall be construed as prohibiting the
Company or any of its Affiliates from pursuing any other rights and remedies
available for any such breach or threatened breach.
9. NON-ASSIGNABILITY. Neither this Agreement nor any right or interest
hereunder shall be assignable by the Employee, Employee's beneficiaries, or
legal representatives without the Company's prior written consent; provided,
however, that nothing in this Section 9 shall preclude the Employee from
designating a beneficiary to receive any benefit payable hereunder upon
Employee's death or incapacity.
10. BINDING EFFECT. Without limiting or diminishing the effect of
Section 9 hereof, this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective heirs, successors, legal
representatives and assigns.
11. NOTICE. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and either delivered in person or
sent by first class certified or registered mail, postage prepaid, if to the
Company, at the Company's principal place of business, and if to the Employee,
at Employee's home address set forth on the signature hereto, or to such other
address or addresses as either party shall have designated in writing to the
other party hereto. Notices may also be given by recognized overnight courier
service. Notices shall be effective (i) upon receipt if given personally, (ii) 3
days after dispatch if by mail, or (iii) 1 day after dispatch if by overnight
courier services.
11
12. SEVERABILITY. The Employee agrees that in the event that any court
of competent jurisdiction or arbitral forum shall finally hold that any
provision of Section 6 or 8 hereof is void or constitutes an unreasonable
restriction against the Employee, such provision shall not be rendered void but
shall apply to such extent as such court may judicially determine constitutes a
reasonable restriction under the circumstances. If any part of this Agreement
other than Section 6 or 8 is held by a court of competent jurisdiction or
arbitral forum to be invalid, ineligible or incapable of being enforced in whole
or in part by reason of any rule of law or public policy, such part shall be
deemed to be severed from the remainder of this Agreement for the purpose only
of the particular legal proceedings in question and all other covenants and
provisions of this Agreement shall in every other respect continue in full force
and effect and no covenant or provision shall be deemed dependent upon any other
covenant or provision.
13. WAIVER. Failure to insist upon strict compliance with any of the
terms, covenants or conditions hereof shall not be deemed a waiver of such term,
covenant or condition, nor shall any waiver or relinquishment of any right or
power hereunder at any one or more times be deemed a waiver or relinquishment of
such right or power at any other time or times.
14. ENTIRE AGREEMENT; MODIFICATIONS. This Agreement constitutes the
entire and final expression of the agreement of the parties with respect to the
subject matter hereof and supersedes all prior agreements, oral and written,
between the parties hereto with respect to the subject matter hereof. This
Agreement may be modified or amended only by an instrument in writing signed by
both parties hereto.
15. GOVERNING LAW AND ARBITRATION OF DISPUTES. This Agreement shall be
construed and enforced in accordance with the internal laws of the State of New
Jersey without regard to those that would defer to the substantive laws of other
jurisdiction. Any dispute arising hereunder, except as provided in the last
sentence below, shall be settled by arbitration in Bergen County, New Jersey, in
accordance with the then effective rules of the American Arbitration Association
("AAA"). One Arbitrator will be chosen by the parties who shall be an attorney
experienced in employment law. If the parties cannot agree on the identity of
the Arbitrator, he will be appointed by the head of the AAA in New Jersey.
Employee submits to the jurisdiction of the AAA in New Jersey to resolve any
such disputes. The Company reserves the right to enforce Section 6 or Section 8
of this Agreement any jurisdiction where such enforcement is necessary or
desirable, through a Court or arbitration proceeding, as the Company elects.
16. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may be
executed by facsimile.
17. REPRESENTATION BY COUNSEL; NO DURESS. Employee acknowledges that
this Agreement has been negotiated at arms length; that he has had full
opportunity for representation by counsel in connection with the negotiation and
review of this Agreement and has either been adequately represented by counsel
or chosen to forego his opportunity to be so represented; that this Agreement
will be deemed to have been drafted by both parties and, as such, ambiguities
shall not be construed against any one party; and that he enters into this
Agreement freely and without duress or compulsion of any kind.
12
18. DIRECTORSAND OFFICERS INSURANCE COVERAGE. The Company will provide
Employee with a Directors and Officers insurance coverage in an amount
consistent with the levels currently maintained by the Company.
IN WITNESS WHEREOF, the Company and the Employee have duly executed and
delivered this Agreement as of the day and year first above written.
ION NETWORKS, INC.
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
13
Appendix A
ION NETWORKS, INC.
STOCK PURCHASE AGREEMENT
------------------------
AGREEMENT made as of this ____ day of October 2001, by and
between Ion Networks, Inc., a Delaware Company, (the "Company") and ▇▇▇▇▇
▇▇▇▇▇▇▇▇ (the "Employee").
A. DEFINITIONS. As used herein, the following definitions
shall apply:
1. "Agreement" shall mean this Stock Purchase Agreement.
2. "Board" shall mean the Company's Board of Directors.
3. "Change in Control" shall have the same meaning as defined
in the Employment Agreement.
4. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
5. "Common Stock" shall mean the Company's common stock, as
well as all securities received in replacement of the Company's common stock, as
a stock dividend, or as a result of any stock split, recapitalization, merger,
reorganization, exchange or the like, and all new, substituted or additional
securities or other properties that a holder of common stock is entitled to by
reason of the holder's ownership of the common stock.
6. "Company" shall mean Ion Networks, Inc., a Delaware
Company.
7. "Change in Control" shall have the same meaning as defined
in the Employment Agreement.
8. "1933 Act" shall mean the Securities Act of 1933, as
amended.
9. "Employment Agreement" shall mean that certain Employment
Agreement dated October 17, 2001, between the Company and Employee.
10. "Notes" shall mean those certain promissory notes issued
by Employee to the Company, dated October __, 2001, in payment for the Purchased
Shares.
11. "Owner" shall mean Employee and all subsequent holders of
the Purchased Shares who derive their chain of ownership through a Permitted
Transfer from Employee.
12. "Permitted Transfer" shall mean (i) a gratuitous transfer
of the Purchased Shares (as defined in Paragraph B.1.), provided and only if
Employee obtains the Company's prior written consent to such transfer, (ii) a
transfer of title to the Purchased Shares effected pursuant to Employee's will
or the laws of intestate succession following Employee's death, or (iii) a
transfer to the Company in pledge as security for any purchase-money
indebtedness incurred by Employee in connection with the acquisition of the
Purchased Shares.
13. "Person" means an individual, a partnership, a
corporation, a trust, a joint venture, a limited liability company, an
unincorporated organization, a government or any department or agency thereof or
any other entity.
14. "Recapitalization" shall mean any stock split, stock
dividend, recapitalization, combination of shares, merger, consolidation,
exchange of shares or other change affecting the Company's outstanding Common
Stock as a class, other than if such event is also a Change in Control.
15. "SEC" shall mean the Securities and Exchange Commission.
16. "Service" shall mean Employee's provision of services to
the Company (or a Parent or Subsidiary) pursuant to the Employment Agreement.
17. "Stock Pledge Agreement" shall mean that certain stock
pledge agreement dated October __, 2001, between the Employee and the Company.
18. "Vesting Schedule" shall mean the vesting schedule
specified in the Employment Agreement pursuant to which Employee is to vest in
the Purchased Shares (as defined below) in a series of installments over his
period of Service, subject to certain acceleration events in the event of a
"Change in Control."
B. PURCHASE OF SHARES
---------------------
1. PURCHASE. Employee hereby purchases 300,000 shares of
Common Stock (the "Purchased Shares") at a purchase price of $0.31 per share
(the "Per Share Purchase Price"), or an aggregate total of $93,000 (the
"Purchase Price").
2. PAYMENT. Concurrently with the delivery of this Agreement
to the Company, Employee shall pay the Purchase Price for the Purchased Shares
in accordance with the provisions of the Employment Agreement and shall deliver
whatever additional documents may be required by the Employment Agreement as a
condition for issuance, together with a duly-executed blank Assignment Separate
from Certificate and blank Proxy (both in the form attached hereto as Exhibits I
and II, respectively) with respect to the Purchased Shares.
3. ESCROW. The Company shall hold the certificates
representing any Purchased Shares which are subject to the Repurchase Right (as
defined below) in escrow, provided that upon the request of Employee, any
Purchased Shares held in escrow shall be released from escrow and delivered to
Employee as and when such shares are no longer subject to the Repurchase Right,
subject to Employee's obligations under the Notes and Stock Pledge Agreement in
relation to such shares.
4. STOCKHOLDER RIGHTS. Until such time as the Company
exercises the Repurchase Right, Employee (or any successor in interest) shall
have all the rights of a stockholder (including voting, dividend and liquidation
rights) with respect to the Purchased Shares, including any Purchased Shares
held in escrow hereunder, subject, however, to the transfer restrictions of
Article C and D hereof, and subject to the proxy rights described in Article H
hereof.
2
C. SECURITIES LAW COMPLIANCE
----------------------------
1. REGISTRATION OF SECURITIES. The Purchased Shares have been
registered under the Act and are being issued to Employee pursuant to a Form S-8
registration statement.
2. RESTRICTIONS ON DISPOSITION OF PURCHASED SHARES. Employee
shall make no disposition of the Purchased Shares (other than a Permitted
Transfer) unless and until there is compliance with all of the following
requirements:
(i) Employee shall have provided the Company with a written
summary of the terms and conditions of the proposed disposition.
(ii) Employee shall have complied with all requirements of
this Agreement applicable to the disposition of the Purchased Shares.
(iii) Employee shall have provided the Company with written
assurances, in form and substance satisfactory to the Company, that (a)
the proposed disposition does not require registration of the Purchased
Shares under the 1933 Act or (b) all appropriate action necessary for
compliance with the registration requirements of the 1933 Act or any
exemption from registration available under the 1933 Act (including
Rule 144) has been taken.
The Company shall not be required (i) to transfer on its books
any Purchased Shares which have been sold or transferred in violation of the
provisions of this Agreement or (ii) to treat as the owner of the Purchased
Shares, or otherwise to accord voting, dividend or liquidation rights to, any
transferee to whom the Purchased Shares have been transferred in contravention
of this Agreement.
3. RESTRICTIVE LEGENDS. The stock certificates for the
Purchased Shares shall be endorsed with the following legends:
(i) "The shares represented by this certificate are unvested
and are subject to certain repurchase rights granted to the Company and
accordingly may not be sold, assigned, transferred, encumbered, or in
any manner disposed of except in conformity with the terms of a Stock
Purchase Agreement dated October __, 2001 (the "Stock Purchase
Agreement"), between the Company and the registered holder of the
shares (or the predecessor in interest to the shares). A copy of such
agreement is maintained at the Company's principal corporate offices."
(ii) "The shares represented by this certificate are subject
to an IRREVOCABLE PROXY as set forth in the Stock Purchase Agreement
and in the form of Irrevocable Proxy attached thereto."
3
D. TRANSFER RESTRICTIONS
------------------------
1. RESTRICTION ON TRANSFER. Except for any Permitted Transfer,
Employee shall not transfer, assign, encumber or otherwise dispose of any of the
Purchased Shares which are subject to the Repurchase Right.
2. TRANSFEREE OBJECTIONS. Each Person (other than the Company)
to whom the Purchased Shares are transferred by means of a Permitted Transfer
must, as a condition precedent to the validity of such transfer, acknowledge in
writing to the Company that such Person is bound by the provisions of this
Agreement and that the transferred shares are subject to the Repurchase Right.
E. REPURCHASE RIGHT
-------------------
1. GRANT. The Company is hereby granted the right (the
"Repurchase Right"), exercisable at any time during the ninety (90)-day period
following the date Employee ceases for any reason to remain in Service, to
repurchase at the Per Share Purchase Price all or any portion of the Purchased
Shares in which Employee is not, at the time of his or her cessation of Service,
vested in accordance with the Vesting Schedule (such shares to be hereinafter
referred to as the "Unvested Shares").
2. EXERCISE OF THE REPURCHASE RIGHTS. The Repurchase Right
shall be exercisable by written notice delivered to each Owner of the Unvested
Shares prior to the expiration of the ninety (90)-day exercise period. The
notice shall indicate the number of Unvested Shares to be repurchased and the
date on which the repurchase is to be effected, such date to be not more than
thirty (30) days after the date of such notice. In order to effect any such
repurchase, the Company shall pay to Owner, in cash or cash equivalents, an
amount equal to the Per Share Purchase Price multiplied by the number of
Unvested Shares which are to be repurchased from Owner; provided, however, that
such repurchase price may be paid through an offset of such repurchase price
against any amounts owing to the Company by Employee pursuant to any promissory
note issued by Employee to the Company in connection with the purchase of the
Unvested Shares.
3. TERMINATION OF THE REPURCHASE RIGHT. The Repurchase Right
shall terminate with respect to any Unvested Shares for which it is not timely
exercised under Paragraph E.2. In addition, the Repurchase Right shall terminate
and cease to be exercisable with respect to any and all Purchased Shares in
which Employee vests in accordance with the Vesting Schedule.
4. RECAPITALIZATION. Any new, substituted or additional
securities or other property (including cash paid other than as a regular cash
dividend) which is by reason of any Recapitalization distributed with respect to
or in exchange for the Purchased Shares shall be immediately subject to the
Repurchase Right, but only to the extent the Purchased Shares are at the time
covered by such right. Appropriate adjustments to reflect such distribution
shall be made to the number and/or class of Purchased Shares subject to this
Agreement and to the price per share to be paid upon the exercise of the
Repurchase Right in order to reflect the effect of any such Recapitalization
upon the Company's capital structure; provided, however, that the
4
aggregate Purchase Price shall remain the same. Any securities or other property
(including cash) distributed with respect to the Purchased Shares shall be held
in escrow.
5. CHANGE IN CONTROL. To the extent the Repurchase Right
remains in effect following a Change in Control, such right shall apply to the
new capital stock or other property (including any cash payments) received in
exchange for the Purchased Shares in consummation of the Change in Control, but
only to the extent the Purchased Shares are at the time covered by such right.
Appropriate adjustments shall be made to the price per share payable upon
exercise of the Repurchase Right to reflect the effect of the Change in Control
upon the Company's capital structure; provided, however, that the aggregate
Purchase Price shall remain the same. Any capital stock or other property
(including any cash payments) received in exchange for the Purchased Shares
shall be held in escrow.
F. SPECIAL TAX ELECTION
-----------------------
The acquisition of the Purchased Shares may result in adverse
tax consequences which may be avoided or mitigated by filing an election under
Code Section 83(b). Such election must be filed within thirty (30) days after
the date of this Agreement. The form for making the Code Section 83(b) election
are set forth in Exhibit III. EMPLOYEE SHOULD CONSULT WITH HIS OR HER TAX
ADVISOR TO DETERMINE THE TAX CONSEQUENCES OF ACQUIRING THE PURCHASED SHARES AND
THE ADVANTAGES AND DISADVANTAGES OF FILING THE CODE SECTION 83(B) ELECTION.
EMPLOYEE ACKNOWLEDGES THAT IT IS EMPLOYEE'S SOLE RESPONSIBILITY, AND NOT THE
COMPANY'S, TO FILE A TIMELY ELECTION UNDER CODE SECTION 83(B) , EVEN IF EMPLOYEE
REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON HIS OR HER
BEHALF.
G. PROXY.
---------
1. GRANT. Subject to the terms hereof and in consideration of
the agreements set forth in the Employment Agreement, Employee hereby grants to
the Company an irrevocable proxy and power of attorney to all of the Purchased
Shares (the "Proxy Rights"). Employee hereby acknowledges that the Board of
Directors of the Company, as constituted from time to time, will direct the
manner in which the Purchased Shares are voted. In order to further enforce the
Proxy Rights, Employee shall execute a form of proxy, a copy of which is
attached hereto as Exhibit II.
2. TERMINATION OF PROXY RIGHTS. The Proxy Rights shall remain
in effect so long as the Purchased Shares are outstanding and shall only lapse
with respect to such Purchased Shares which are sold in sales on NASDAQ or any
exchange or market on which the Company's common stock is publicly traded.
3. RECAPITALIZATION. Any new, substituted or additional
securities or other property (including cash paid other than as a regular cash
dividend) which is by reason of any Recapitalization distributed with respect to
or in exchange for the Purchased Shares shall be immediately subject to the
Proxy Rights, but only to the extent the Purchased Shares are at the time
covered by such right.
5
4. CHANGE IN CONTROL. The Proxy Rights shall remain in effect
following a Change in Control, and such rights shall apply to any of the new
securities received in exchange for the Purchased Shares in consummation of the
Change in Control, until such new securities are sold on NASDAQ or such exchange
or market on which such securities are then publicly traded.
H. GENERAL PROVISIONS.
----------------------
1. ASSIGNMENT. The Company may assign the Repurchase Right and
the Proxy Rights to any Person selected by the Board, including (without
limitation) one or more stockholders of the Company.
2. NO EMPLOYMENT OR SERVICE CONTRACT. Nothing in this
Agreement shall confer upon Employee any right to continue in Service for any
period of specific duration or interfere with or otherwise restrict in any way
the rights of the Company or Employee, other than as set forth in the Employment
Agreement.
3. NOTICES. Any notice required to be given under this
Agreement shall be in writing and shall be deemed effective upon personal
delivery or upon delivery through the U. S. mail, registered or certified,
postage prepaid and properly addressed to the party entitled to such notice at
the address indicated below such party's signature line on this Agreement or at
such other address as such party may designate by ten (10) days' advance written
notice under this paragraph to all other parties to this Agreement.
4. NO WAIVER. The failure of the Company in any instance to
exercise the Repurchase Right shall not constitute a waiver of any other
repurchase rights that may subsequently arise under the provisions of this
Agreement or any other agreement between the Company and Employee. No waiver of
any breach or condition of this Agreement shall be deemed to be a waiver of any
other or subsequent breach or condition, whether of like or different nature.
5. CANCELLATION OF SHARES. If the Company shall make
available, at the time and place and in the amount and form provided in this
Agreement, the consideration for the Purchased Shares to be repurchased in
accordance with the provisions of this Agreement, then from and after such time
the person from whom such shares are to be repurchased shall no longer have any
rights as a holder of such shares (other than the right to receive payment of
such consideration in accordance with this Agreement). Such shares shall be
deemed purchased in accordance with the applicable provisions hereof, and the
Company shall be deemed the owner and holder of such shares, whether or not the
certificates therefor have been delivered as required by this Agreement.
6. EMPLOYEE UNDERTAKING. Employee hereby agrees to take
whatever additional action and execute whatever additional documents the Company
may deem necessary or advisable in order to carry out or effect one or more of
the obligations or restrictions imposed on either Employee or the Purchased
Shares pursuant to the provisions of this Agreement.
6
7. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New Jersey, other than
those laws which would defer to the substantive laws of another jurisdiction,
and those provisions of this Agreement governed by the corporate laws of the
State of Delaware. Any controversy between the parties hereto involving the
construction or application of any terms, covenants or conditions of this
Agreement, or any claims arising out of or relating to this Agreement, or the
breach hereof, will be resolved in accordance with Section 15 of the Employment
Agreement.
8. SUCCESSORS AND ASSIGNS. The provisions of this Agreement
shall inure to the benefit of, and be binding upon, the Company and its
successors and assigns and upon Employee, Employee's permitted assigns and the
legal representatives, heirs and legatees of Employee's estate, whether or not
any such person shall have become a party to this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement
on the day and year first indicated above.
Ion Networks, Inc.
By:
----------------------------------------
Title:
-------------------------------------
Address:
-----------------------------------
----------------------------------------
By:
----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Address:
------------------------------------
----------------------------------------
7
EXHIBIT I
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED _________________________ hereby sell(s),
assign(s)and transfer(s) unto Ion Networks, Inc. (the "Company"),
_________________________ (__________) shares of the Common Stock of the Company
standing in his or her name on the books of the Company represented by
Certificate No. _________________________ herewith and do(es) hereby irrevocably
constitute and appoint _________________________ Attorney to transfer the said
stock on the books of the Company with full power of substitution in the
premises.
Dated: _________________________
Signature: _________________________
INSTRUCTION: Please do not fill in any blanks other than the signature line.
Please sign exactly as you would like your name to appear on the issued stock
certificate. The purpose of this assignment is to enable the Company to exercise
the Repurchase Right without requiring additional signatures on the part of
Employee.
EXHIBIT II
FORM OF IRREVOCABLE PROXY
IRREVOCABLE PROXY AND POWER OF ATTORNEY
---------------------------------------
I, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, having an address at ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, hereby constitute and appoint Ion Networks, Inc.,
a Delaware company (the "Company") currently having its principal place of
business located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇,
or its designee, as my proxy and attorney-in-fact, with full power of
substitution, to vote 300,000 shares of the Company's common stock owned by me,
at any meeting of stockholders of the Company or in connection with any action
by written consent of the stockholders of the Company in lieu of a meeting
thereof, with respect to any matter or business which may properly come before
such meeting or be subject to such consent, hereby granting unto said proxy and
attorney-in-fact full power and authority to do and perform each and every act
and thing requisite to be done in and about the premises, as fully to all
intents and purposes as the undersigned might or could do in person, and hereby
ratifying and confirming all that said proxy and attorney-in-fact may lawfully
do or cause to be done by virtue hereof. This proxy shall also extend to any
securities received as a result of a Recapitalization or Change in Control, all
to the extent provided in that certain Stock Purchase Agreement dated October
__, 2001, between myself and the Company.
This proxy is irrevocable, shall be deemed coupled with an interest and
shall be and continue in effect for as long as any securities subject to this
proxy are outstanding; provided, however, that this proxy and power of attorney
shall lapse with respect to any securities subject to this proxy which are sold
on the NASDAQ Stock Market or any other exchange or market on which such
securities are publicly traded.
The shares subject to this proxy shall be voted by the Company, as the
Board of Directors of the Company, as constituted from time to time, shall
direct.
Dated: October ____, 2001
By:___________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
EXHIBIT III
SECTION 83(B) ELECTION
This statement is being made under Section 83(b) of the
Internal Revenue Code, pursuant to Treas. Reg. Section 1.83-2.
(1) The taxpayer who performed the services is:
Name:
Address:
Taxpayer Ident. No.:
(2) The property with respect to which the election is being made is
____________ shares of the common stock of Ion Networks, Inc., (the
"Company")
(3) The property was issued on [_____ __], 2001.
(4) The taxable year in which the election is being made is the calendar
year 2001.
(5) The property is subject to a repurchase right pursuant to which the
issuer has the right to acquire the property at the original purchase
price if taxpayer's employment with the issuer is terminated under
certain circumstances.
(6) The fair market value at the time of transfer (determined without
regard to any restriction other than a restriction which by its terms
will never lapse) is [$ ] per share.
(7) The amount paid for such property is [$ ] per share.
(8) A copy of this statement was furnished to the Company.
(9) This statement is executed [____ __], 200_.
------------------------------ ------------------------------------------
Spouse (if any) Taxpayer
THIS ELECTION MUST BE FILED WITH THE INTERNAL REVENUE SERVICE CENTER WITH WHICH
TAXPAYER FILES HIS OR HER FEDERAL INCOME TAX RETURNS AND MUST BE MADE WITHIN
THIRTY (30) DAYS AFTER THE EXECUTION DATE OF THE STOCK PURCHASE AGREEMENT. THIS
FILING SHOULD BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED.
TAXPAYER MUST RETAIN TWO (2) COPIES OF THE COMPLETED FORM FOR FILING WITH HIS OR
HER FEDERAL AND STATE TAX RETURNS FOR THE CURRENT TAX YEAR AND AN ADDITIONAL
COPY FOR HIS OR HER RECORDS.
▇-▇
▇▇▇▇▇▇▇▇ ▇
PARTIAL-RECOURSE PROMISSORY NOTE
$__________ October ____, 2001
Piscataway, New Jersey
FOR VALUE RECEIVED, the undersigned Borrower promises to pay
to Ion Networks, Inc. (the "Company") at its principal executive offices the
principal sum of _____________________ Dollars ($_____________), together with
interest from the date of this Note on the unpaid principal balance, upon the
terms and conditions specified below.
1. TERM. The principal balance of this Note, together with all
interest accrued and unpaid to date, shall be due and payable in full at the
close of business on October ___, 2011.
2. RATE OF INTEREST. Interest shall accrue under this Note on
any unpaid principal balance at the rate of 5.39% per annum, compounded
annually.
3. PREPAYMENT. Prepayment of principal and interest may be
made at any time, without penalty.
4. EVENTS OF ACCELERATION. The following items (a)-(i) shall
constitute "Acceleration Events" under this Note. Upon the occurrence of an
Acceleration Event, the Company or Borrower, as the case may be, shall notify
the other of the occurrence of the Acceleration Event. Ten (10) days after
receipt by the Borrower or the Company, as the case may be, of the notice of the
Acceleration Event, if the event that caused the Acceleration Event to occur has
not been cured, the entire unpaid principal sum and accrued interest under this
Note shall become immediately due and payable.
(a) The date when the Borrowers disposes of any or all of the
shares of the Company's common stock acquired by him with the proceeds
of this Note and represented by Certificate Number _________ (the
"Shares"), including (without limitation) a sale of the Shares to the
Company; provided, however, that the principal amount and interest of
the Note representing proceeds used by Borrower to purchase any Shares
which have not been disposed, shall not become due and payable and
shall remain outstanding until any such subsequent disposition by
Borrower.
(b) The date when the Borrower's employment with the Company,
or any successor thereof, terminates for any reason; provided that the
principal and interest attributable to unvested Shares shall become due
and payable under this Paragraph (b) only to the extent that the
Company exercises its right to repurchase such Shares;
(c) The failure of the Borrower to pay when due the principal
balance and accrued interest under this Note;
(d) The filing of a petition by or against the Borrower under
any provision of the Bankruptcy Reform Act (Title 11 of the United
States Code), as amended or recodified from time to time, or under any
other law relating to bankruptcy, insolvency, reorganization or other
relief for debtors;
(e) The appointment of a receiver, trustee, custodian or
liquidator of or for any part of the assets or property of the
Borrower;
(f) The execution by the Borrower of a general assignment for
the benefit of creditors;
(g) The insolvency of the Borrower or the Borrower's failure
to pay his or her debts as they become due;
(h) Any attachment or like levy on any property of the
Borrower; or
(i) The occurrence of an event of default under the Stock
Pledge Agreement securing this Note.
5. SECURITY AND PARTIAL RECOURSE. The Borrower's obligations
under this Note shall be secured by a first-priority security interest in all of
the Shares. The Shares shall be pledged pursuant to a Stock Pledge Agreement to
be executed by the Borrower, all terms of which are incorporated herein by this
reference. Regardless of any realization from collateral that may secure the
Borrower's obligations under this Note, the Borrower shall remain personally
liable only for an amount equal to Forty (40%) Percent of the original principal
amount of the Note, plus 40% of any interest accrued and unpaid on such original
principal amount. The Company shall have recourse, to the extent described
above, to any and all other assets of the Borrower, in addition to any Shares
pledged pursuant to the Stock Pledge Agreement, to satisfy the Borrower's
obligations hereunder.
6. COLLECTION AND ATTORNEYS' FEES. If any action is instituted
to collect this Note, the Borrower, in addition to his liability under Section
5, promises to pay all reasonable costs and expenses (including reasonable
attorney's fees) incurred by the Company in connection with such action.
7. WAIVER. No previous waiver and no failure or delay by the
Company or the Borrower in acting with respect to the terms of this Note or the
Stock Pledge Agreement shall constitute a waiver of any breach, default or
failure of condition under this Note, the Stock Pledge Agreement or the
obligations secured thereby. A waiver of any term of this Note, the Stock Pledge
Agreement or of any of the obligations secured thereby must be made in writing
and signed by a duly authorized officer of the Company and shall be limited to
the express terms of such waiver. The Borrower hereby expressly waives
presentment and demand for payment when any payments are due under this Note.
8. SUCCESSORS AND ASSIGNS. This note shall inure to the
benefit of the Company and its successors and assigns.
9. CONFLICTING AGREEMENTS. In the event of any inconsistencies
between the terms of this Note and the terms of any other document related to
the loan evidenced by this Note, the terms of this Note shall prevail.
10. GOVERNING LAW. This Note shall be construed in accordance
with the laws of the State of New Jersey, other than those laws which would
defer to the substantive laws of another jurisdiction.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name of Borrower Signature of Borrower
Address:
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Appendix C
STOCK PLEDGE AGREEMENT
In order to secure payment of all obligations of ___________
(the "Borrower") to Ion Networks, Inc., a Delaware corporation (the "Company"),
under the promissory note dated October __, 2001, in the original principal
amount of $______ (the "Note"), the Borrower hereby grants to the Company a
security interest in, and assigns, transfers and pledges to the Company, the
following securities and other property:
(a) The __________ shares of the Company's Common Stock
delivered to and deposited with the Company as collateral for the Note
and represented by Certificate Number ______________(the "Shares"); and
(b) Any and all new, additional or different securities or
other property subsequently distributed with respect to the Shares that
are to be delivered to and deposited with the Company pursuant to the
requirements of Section 3 of this Agreement; and
(c) Any and all other property and money that is delivered to
or comes into the possession of the Company pursuant to the terms and
provisions of this Agreement.
All of the foregoing securities, property and money are referred to herein as
the "Collateral" and shall be accompanied by one or more stock power assignments
properly endorsed to the Company by the Borrower. The Company shall hold the
Collateral in accordance with the following terms and provisions:
1. WARRANTIES. The Borrower hereby warrants to the Company
that the Borrower is the owner of the Collateral and has the right to pledge the
Collateral and that the Collateral is free from all liens, advance claims and
other security interests (other than those created hereby).
2. RIGHTS AND POWERS. The Company may, without obligation to
do so, exercise one or more of the following rights and powers with respect to
the Collateral:
(a) Accept in its discretion, but subject to the applicable
limitations of Section 7, other property of the Borrower in exchange
for all or part of the Collateral and release Collateral to the
Borrower to the extent necessary to effect such exchange, and in such
event the money, property or securities received in the exchange shall
be held by the Company as substitute security for the Note and all
other indebtedness secured hereunder;
(b) Perform such acts as are necessary to preserve and protect
the Collateral and the rights, powers and remedies granted with respect
to such Collateral by this Agreement; and
(c) Transfer record ownership of the Collateral to the Company
or its nominee and receive, endorse and give receipt for, or collect by
legal proceedings or otherwise, dividends or other distributions made
or paid with respect to the Collateral, but only if there exists at the
time an outstanding event of default under Section 8 of this Agreement.
Any action by the Company pursuant to the provisions of this Section 2 may be
taken without notice to the Borrower. Any costs or expenses (including
attorneys' fees) reasonably incurred in connection with any such action shall be
payable by the Borrower and form part of the indebtedness secured hereunder, as
provided in Section 10. The Company shall act in accordance with the Uniform
Commercial Code of the State of New Jersey with respect to the exercise of any
of its rights hereunder.
As long as there exists no event of default under Section 8 of
this Agreement, and subject to the irrevocable proxy granted to the Company, the
Borrower may exercise all stockholder voting rights and be entitled to receive
any and all regular cash dividends paid on the Collateral. Accordingly, until
such time as an event of default occurs under this Agreement, all proxy
statements and other stockholder materials pertaining to the Collateral shall be
delivered to the Borrower at the address indicated below; provided, however,
that if an event of default has occurred hereunder and is continuing, any or all
Collateral may be registered, without notice, in the name of the Company or its
nominee, and thereafter the Company or its nominee may exercise, without notice,
all voting and corporate rights at any meeting of the stockholders of the
Company, any and all rights of conversion, exchange or subscription, or any
other rights, privileges or options pertaining to the Collateral, all as if the
Company were the absolute owner thereof.
Any cash sums that the Company may receive in the exercise of
its rights and powers under this Section 2 shall be applied to the payment of
the Note and any other indebtedness secured hereunder, in such order of
application as the Company deems appropriate. Any remaining cash shall be paid
over to the Borrower.
3. DUTY TO DELIVER. Any new, additional or different
securities that may now or hereafter become distributable with respect to the
Collateral by reason of (i) any stock dividend, stock split or reclassification
of the capital stock of the Company or (ii) any merger, consolidation or other
reorganization affecting the capital structure of the Company shall, upon
receipt by the Borrower, be promptly delivered to and deposited with the Company
as part of the Collateral hereunder. Such securities shall be accompanied by one
or more properly endorsed stock power assignments.
4. CARE OF COLLATERAL. The Company shall exercise reasonable
care in the custody and preservation of the Collateral but shall have no
obligation to initiate any action with respect to, or otherwise inform the
Borrower of, any conversion, call, exchange right, preemptive right,
subscription right, purchase offer or other right or privilege relating to or
affecting the Collateral; provided, however, that the Company will notify the
Borrower of any such rights of the Borrower to protect against adverse claims or
to protect the Collateral against the possibility of a decline in market value.
The Company shall not be obligated to take any action with respect to the
Collateral requested by the Borrower unless the request is made in writing and
the
11
Company determines that the requested action will not unreasonably jeopardize
the value of the Collateral as security for the Note and other indebtedness
secured hereunder.
The Company may at any time release and deliver all or part of
the Collateral to the Borrower, and the receipt thereof by the Borrower shall
constitute a complete and full acquittance for the Collateral so released and
delivered. The Company shall accordingly be discharged from any further
liability or responsibility for the Collateral, and the released Collateral
shall no longer be subject to the provisions of this Agreement. However, any and
all releases of the Collateral shall be effected in compliance with the
applicable limitations of Section 7.
5. PAYMENT OF TAXES AND OTHER CHARGES. The Borrower shall pay,
prior to the delinquency date, all taxes, liens, assessments and other charges
against the Collateral, and in the event of the Borrower's failure to do so, the
Company may at its election pay any or all of such taxes and charges without
contesting the validity or legality thereof. The payments so made shall become
part of the indebtedness secured hereunder and, until paid, shall bear interest
at the minimum per annum rate, compounded annually, required to avoid the
imputation of interest income to the Company and compensation income to the
Borrower under the federal tax laws.
6. TRANSFER OF COLLATERAL. In connection with the transfer or
assignment of all or part of the indebtedness evidenced by and in compliance
with the Note (whether by negotiation, discount or otherwise), the Company may
transfer all or any part of the Collateral, and the transferee shall thereupon
succeed to all the rights, powers and remedies granted the Company hereunder
with respect to the Collateral so transferred. Upon such transfer, the Company
shall be fully discharged from all liability and responsibility for the
transferred Collateral. With respect to any Collateral not transferred, the
Company shall retain all rights, powers, privileges and remedies provided
herein.
7. RELEASE OF COLLATERAL. Provided that (i) all indebtedness
secured hereunder (other than payments not yet due and payable under the Note)
has at the time been paid in full or cancelled and (ii) there does not otherwise
exist any event of default under Section 8, the Shares, together with any
additional Collateral that may hereafter be pledged and deposited hereunder,
shall be released from pledge and returned (subject to the escrow provisions of
the Stock Purchase Agreement entered into between the Borrower and the Company)
to the Borrower in accordance with the following provisions:
(a) Upon payment or prepayment of principal under the Note,
together with payment of all accrued interest to date, one or more of
the Shares shall (subject to the applicable limitations of Subsections
(d) and (e) below) be released to the Borrower within three days after
such payment or prepayment. The number of Shares to be so released
shall be equal to the number obtained by multiplying (i) the total
number of Shares held under this Agreement at the time of the payment
or prepayment by (ii) a fraction, the numerator of which shall be the
amount of the principal paid or prepaid and the denominator of which
shall be the unpaid principal balance of the Note immediately prior to
such payment or prepayment. In no event, however, shall any fractional
Shares be released.
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(b) One or more of the Shares shall (subject to the applicable
limitations of Subsections (d) and (e) below) be released for the sole
purpose of effecting an immediate sale of the released Shares, provided
that the purchaser or broker has agreed in writing to forward the
proceeds directly to the Company to be applied to the balance of
principal and interest due under the Note. If the Borrower sells any or
all of the Shares, all of the sales proceeds shall be forwarded to the
Company (up to the balance of principal and interest due under the
Note).
(c) Any additional Collateral that may hereafter be pledged
and deposited with the Company (pursuant to the requirements of Section
3) with respect to the Shares shall be released at the same time as the
particular Shares to which the additional Collateral relates are to be
released in accordance with the applicable provisions of Subsection (a)
or (b) above. Under no circumstances, however, shall any Shares or any
other Collateral be released if previously applied to the payment of
any indebtedness secured hereunder.
(d) To the extent required by regulations of the Federal
Reserve Board pertaining to margin securities, the number of Shares to
be released pursuant to Subsections (a), (b) and (c) above shall be
reduced.
8. EVENTS OF DEFAULT. The occurrence of one or more of the
following events shall constitute an event of default under this Agreement:
(a) Any default in the payment or performance of any
obligation or any defined event of default under the Note;
(b) The Borrower's failure to perform any obligation or
agreement contained herein;
(c) The discovery that any warranty made by the Borrower
herein is incorrect, false or misleading in any material respect and
such breach of warranty shall cause material damage to the Company; or
(d) Any attachment or like levy on any property of the
Borrower.
Upon the occurrence of any such event of default, the Company shall provide
written notice to Borrower of the occurrence of such event of default. Ten (10)
days after the receipt by Borrower of such notice, in the event such event of
default has not been cured such ten (10) day period, the Company may, at its
election, declare the Note and all other indebtedness secured hereunder to be
immediately due and payable and may exercise any or all of the rights and
remedies granted to a secured party under the provisions of the New Jersey
Uniform Commercial Code (as now or hereafter in effect), including (without
limitation) the power to dispose of the Collateral by public or private sale or
to accept the Collateral in full payment of the Note and all other indebtedness
secured hereunder. It is intended that the above ten (10) day period in which an
event of default may be cured shall run concurrently with the ten (10) day
period set forth in Section 4 of the Note.
Any proceeds realized from the disposition of the Collateral
pursuant to the foregoing power of sale shall be applied first to the payment of
reasonable expenses incurred by the Company in connection with the disposition,
then to the payment of the Note and finally to any other indebtedness secured
hereunder. Any surplus proceeds shall be paid over to the Borrower. However, in
the event such proceeds prove insufficient to satisfy all obligations of the
Borrower under the Note, then the Borrower shall remain personally liable for
any deficiency up to an amount equal to 40% of the original principal amount of
the Note and 40% of any accrued and unpaid interest on such original principal
amount.
9. CERTAIN WAIVERS. The Borrower waives, to the fullest extent
permitted by law:
(a) Any right of redemption with respect to the Collateral,
whether before or after sale hereunder, and all rights, if any, of
marshalling the Collateral or other collateral or security for the
Borrower's obligations under the Note;
(b) Any right to require the Company (i) to proceed against
any other person or entity, (ii) to exhaust any other collateral or
security for any of the Borrower's obligations under the Note, (iii) to
pursue any remedy in the Company's power, (iv) to make or give any
presentments, demands for performance, notices of nonperformance,
protests, notices of protests or notices of dishonor in connection with
any of the Collateral or (v) to direct the application of payments or
security for any obligations of the Borrower under the Note; and
(c) All claims, damages and demands against the Company
arising out of the repossession, retention, sale or application of the
proceeds of any sale of the Collateral.
10. OTHER REMEDIES. The rights, powers and remedies granted to
the Company and the Borrower pursuant to the provisions of this Agreement shall
be in addition to all rights, powers and remedies granted to the Company and the
Borrower under any statute or rule of law. Any forbearance, failure or delay by
the Company or the Borrower in exercising any right, power or remedy under this
Agreement shall not be deemed to be a waiver of such right, power or remedy. Any
single or partial exercise of any right, power or remedy under this Agreement
shall not preclude the further exercise thereof, and every right, power and
remedy of the Company and the Borrower under this Agreement shall continue in
full force and effect, unless such right, power or remedy is specifically waived
by an instrument executed by the Company or the Borrower, as the case may be.
11. COSTS AND EXPENSES. All reasonable costs and expenses
(including reasonable attorneys' fees) incurred by the Company in the exercise
or enforcement of any right, power or remedy granted it under this Agreement
shall become part of the indebtedness secured hereunder and shall constitute a
personal liability of the Borrower payable immediately upon demand and bearing
interest until paid at the Company's bank interest rate then being earned by the
Company on its deposits.
12. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey, other than
those which would defer to the substantive laws of another jurisdiction, and
shall be binding upon the executors, administrators, heirs and assigns of the
Borrower.
13. ARBITRATION. Any controversy between the parties hereto
involving the construction or application of any terms, covenants or conditions
of this Agreement or the Note, or any claims arising out of or relating to this
Agreement or the Note, or the breach hereof, will be resolved in accordance with
Section 15 of the Employment Agreement dated October 4, 2001, by and between
Borrower and the Company.
14. SEVERABILITY. If any provision of this Agreement is held
to be invalid under applicable law, then such provision shall be ineffective
only to the extent of such invalidity, and neither the remainder of such
provision nor any other provisions of this Agreement shall be affected thereby.
IN WITNESS WHEREOF, this Agreement has been executed by the
Borrower on October _, 2001.
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Signature of Borrower
Address:
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Agreed to and Accepted by:
ION NETWORKS, INC.
By:
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Title:
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Dated:
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