<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the period from _______ to _______.
Commission File Number: 000-21751
MESSAGEMEDIA, INC.
(Exact Name of Registrant as specified in its charter)
Delaware 33-0612860
------------------------------ --------------------------------------
(State or jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
6060 SPINE ROAD
BOULDER, CO 80301
(Address, including zip code, of principal executive offices)
(303) 440-7550
(Registrant's telephone number, including area code)
6685 GUNPARK DRIVE EAST #240
BOULDER, CO 80301
(Former name, former address & former fiscal year,
if changed since last report)
Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Applicable Only to Issuers Involved in Bankruptcy
Proceedings During the Preceding Five Years
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by the court. Yes [ ] No [ ]
Applicable Only to Corporate Issuers
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date.
Common Stock, $0.001 Par Value - 44,277,201 shares as of June 30, 1999.
<PAGE> 2
MESSAGEMEDIA, INC.
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 1999 (unaudited) and
December 31, 1998 3
Consolidated Statements of Operations (unaudited) for the three months
and six months ended June 30, 1999 and 1998 4
Consolidated Statements of Cash Flows (unaudited) for the six months
ended June 30, 1999 and 1998 5
Notes to the Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 7
Factors Affecting Operating Results and Market Price of Stock 13
Item 3. Quantitative and Qualitative Disclosures About Market Risk 21
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 21
Item 2. Changes in Securities and Use of Proceeds 21
Item 3. Defaults Upon Senior Securities 21
Item 4. Submission of Matters to a Vote of Security Holders 21
Item 5. Other Information 21
Item 6. Exhibits and Reports on Form 8-K 21
SIGNATURES 23
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MESSAGEMEDIA, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
------------ ------------
ASSETS (unaudited) (note 1)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 10,112,132 $ 4,659,375
Accounts receivable, net 947,303 680,927
Prepaid expenses and other 409,046 429,963
------------ ------------
Total current assets 11,468,481 5,770,265
Furniture, equipment and software, net 1,225,095 1,475,720
Patent and other costs, net 26,642 50,835
Intangible assets, net 17,661,312 23,894,715
Deposits and other 27,000 29,446
------------ ------------
Total assets $ 30,408,530 $ 31,220,981
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 642,506 $ 1,383,197
Accrued compensation and related liabilities 217,553 148,419
Accrued interest -- 15,226
Deferred revenue -- 36,000
Amount due to stockholders, current portion -- 395,000
Note payable and capital lease obligations, current portion 17,038 108,990
Merger integration and relocation accrual 378,345 --
Other accrued liabilities 791,615 583,770
------------ ------------
Total current liabilities 2,047,057 2,670,602
Note payable and capital lease obligations 6,935 53,786
Deferred rent -- 13,083
------------ ------------
Total long term liabilities 6,935 66,869
Stockholders' equity :
Preferred stock, 5,000,000 shares authorized, none
outstanding at June 30, 1999 and December 31, 1998 -- --
Common stock, $0.001 par value; 100,000,000 shares authorized,
44,277,201 and 40,121,048 shares issued and outstanding at
June 30, 1999 and December 31, 1998, respectively 44,277 40,121
Additional paid-in-capital 84,340,341 71,398,314
Warrants 1,430,828 1,430,828
Deferred compensation (577,117) (657,720)
Accumulated deficit (56,883,791) (43,728,033)
------------ ------------
Total stockholders' equity 28,354,538 28,483,510
------------ ------------
Total liabilities and stockholders' equity $ 30,408,530 $ 31,220,981
============ ============
</TABLE>
See accompanying notes.
3
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MESSAGEMEDIA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
------------------------------ ------------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $ 1,302,117 $ 217,625 $ 2,055,644 $ 498,294
Cost of revenues 272,756 16,037 380,803 34,637
------------ ------------ ------------ ------------
Gross profit 1,029,361 201,588 1,674,841 463,657
Operating expenses:
Marketing and sales 1,370,480 420,965 2,312,422 1,213,499
Research, development
and engineering 852,186 1,252,689 1,789,004 2,896,745
General and administrative 1,638,385 1,209,657 2,985,323 2,230,721
Restructuring charge -- 812,166 1,025,000 812,166
Depreciation and amortization 3,401,564 440,812 6,815,048 840,075
------------ ------------ ------------ ------------
Total operating expenses 7,262,615 4,136,289 14,926,797 7,993,206
------------ ------------ ------------ ------------
Loss from operations (6,233,254) (3,934,701) (13,251,956) (7,529,549)
Interest income 134,893 10,864 167,078 55,761
Interest expense (53,810) (37,073) (70,876) (64,258)
------------ ------------ ------------ ------------
Net loss (6,152,171) (3,960,910) (13,155,754) (7,538,046)
Dividend imputed on preferred stock -- (65,624) -- (153,126)
------------ ------------ ------------ ------------
Net loss applicable to
common shares $ (6,152,171) $ (4,026,534) $(13,155,754) $ (7,691,172)
Net loss per share, basic
and diluted $ (0.14) $ (0.32) $ (0.31) $ (0.69)
Shares used in per share
computation, basic and
diluted 43,971,636 12,763,183 42,286,890 11,183,418
</TABLE>
See accompanying notes.
4
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MESSAGEMEDIA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
------------------------------
1999 1998
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss $(13,155,754) $ (7,538,046)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 6,815,048 840,075
Loss on disposal of assets 975 19,146
Common stock issued for services 61,388 42,109
Compensation expense for stock options 155,565 405,718
Changes in operating assets and liabilities:
Accounts receivable (266,376) 143,925
Prepaid expenses and other 20,917 172,479
Deposits and other 2,446 53,350
Accounts payable (740,691) (282,440)
Accrued compensation and related liabilities 69,134 (194,228)
Deferred revenue (36,000) (224,516)
Accrued interest (15,226) --
Deferred rent (13,083) --
Merger integration and relocation accrual 378,345
Other accrued liabilities 220,845 170,035
------------ ------------
Net cash used in operating activities (6,502,467) (6,392,393)
INVESTING ACTIVITIES
Additions to furniture, equipment and software (322,610) (263,427)
Proceeds from sale of fixed assets 1,810 14,738
------------ ------------
Net cash used in investing activities (320,800) (248,689)
FINANCING ACTIVITIES
Proceeds from issuance of common stock, net 12,809,827 6,700,489
Proceeds from the issuance of warrants -- 8,523
Proceeds from SOFTBANK -- 1,411,578
Repayment of amount due to SOFTBANK -- (1,411,578)
Repayment of amount due to stockholder (395,000) (97,500)
Repayment of loan from bank (97,108) --
Repayment of capital lease obligations (41,695) --
------------ ------------
Net cash provided by financing activities 12,276,024 6,611,512
------------ ------------
Net increase (decrease) in cash and cash
equivalents 5,452,757 (29,570)
Cash and cash equivalents at the beginning
of period 4,659,375 6,331,059
------------ ------------
Cash and cash equivalents at the end
of period $ 10,112,132 $ 6,301,489
============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid $ 70,876 $ 64,258
</TABLE>
See accompanying notes.
5
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MESSAGEMEDIA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in acccordance with generally accepted accounting principles for interim
financial information and with instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three-month and six-month periods ended
June 30, 1999 are not necessarily indicative of the results that may be expected
for the year ended December 31, 1999.
The balance sheet at December 31, 1998 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
For further information, refer to the consolidated financial statements and
footnotes thereto included in MessageMedia's annual report on Form 10-K for the
year ended December 31, 1998.
2. PENDING ACQUISITIONS
On July 27, 1999, MessageMedia signed a definitive agreement to acquire Revnet
Systems Inc. ("Revnet"). Revnet is an Alabama-based developer and supplier of
advanced e-mail marketing software and services. The transaction, if
consummated, will involve the exchange of four million shares of MessageMedia
common stock (subject to adjustment for a significant decrease in the fair
market value of MessageMedia's common stock) for all equity interests in Revnet.
The transaction will be accounted for as a purchase and the number of shares to
be issued will be determined by a formula involving the average price of
MessageMedia common stock during a period prior to the closing of the
transaction. The transaction is contingent upon various factors, including
approval of the transaction by Revnet's shareholders.
On July 29, 1999, MessageMedia signed a definitive agreement to acquire Decisive
Technology ("Decisive"). Decisive is a California-based provider of e-survey
services to some of the world's largest technology and Internet companies. The
transaction, if consummated, will involve the exchange of MessageMedia common
stock for all equity interests in Decisive. The transaction will be accounted
for as a purchase and the number of shares to be issued will be determined by
dividing $50 million, the purchase price, by the average price of MessageMedia's
common stock during a period prior to the closing of the transaction. The
transaction is contingent upon various factors, including the approval of the
transaction by Decisive's shareholders.
6
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This Report on Form 10-Q contains, forward-looking statements including
statements regarding the Company's strategy, financial performance and revenue
sources, that involve risks and uncertainties. The Company's actual results may
differ significantly from the results discussed in the forward-looking
statements. Factors that might cause such a difference include, but are not
limited to, those discussed in the subsection entitled "Factors Affecting
Operating Results and Market Price of Stock" commencing on page 12. Readers are
urged to carefully review and consider the various disclosures made by the
Company in this report and in the Company's other reports filed with the SEC
that attempt to advise interested parties of certain risks and factors that may
affect the Company's business. The following discussion should be read in
conjunction with the Company's financial statements and notes thereto.
MessageMedia (NASDAQ: MESG) provides e-mail-based customer relationship
management and direct marketing services. The Company offers a comprehensive
suite of outsource messaging services for information delivery, permission-based
direct marketing, ongoing customer care and communications, and e-commerce
integration, using standard Internet e-mail. MessageMedia's comprehensive suite
of e-messaging services allows clients to easily control each step in the
messaging process and provides a flexible range of messaging options to suit
every communications need. E-messages can be personalized and carefully targeted
to segments of selected recipients based on multiple criteria. The result is a
richer relationship between a company and its customers. In addition, the
enhanced customer loyalty leads to retention and repetition of contact with the
customer leading to lower operating costs, improved service levels and higher
revenue generation per client.
MessageMedia's experience in Internet e-mail messaging began in 1994 when
leading e-mail scientists and marketers joined forces to develop solutions for
managing online customer relationships. Today, the Company helps more than 70
clients manage customer relations on the Internet. MessageMedia's client
portfolio includes customers from the financial services, publishing, direct
marketing, retailing and electronic commerce industries. Clients include:
Yahoo!, Intuit, Bertelsmann, E*TRADE, GeoCities, MapQuest.com, RealAge, Standard
& Poor's, CMP Media, and Barclays Bank.
A member of the SOFTBANK family of companies, MessageMedia focuses exclusively
on e-messaging, employing the most advanced technology, tools and applications
to help corporations fully utilize a revolutionary channel for building and
enhancing customer relationships online.
MessageMedia has incurred net operating losses in each quarter since inception.
As of June 30, 1999, MessageMedia had an accumulated deficit of $56.9 million.
To date, the Company has not generated significant revenues. There can be no
assurance that the Company's future revenues will increase and the Company's
ability to generate significant future revenues is subject to substantial
uncertainty. In addition, as the Company introduces the new functionality of its
messaging platform and explores opportunities to merge with or acquire
complementary businesses and technologies, the Company expects to continue to
incur significant operating losses for the foreseeable future.
7
<PAGE> 8
RESULTS OF OPERATIONS
Revenues
The Company has historically generated revenues from messaging services,
consulting services and the Company's Internet payment system. On August 17,
1998, the Company ceased the operations of the First Virtual Internet Payment
System ("FVIPS"). Revenue was earned as detailed in the table below:
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months ended June 30,
-------------------------- --------------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Messaging services $1,302,117 $ 25,700 $2,052,761 $ 25,700
Consulting -- 80,000 -- 120,000
First Virtual Internet Payment System -- 111,925 -- 352,594
Other -- -- 2,883 --
---------- ---------- ---------- ----------
Total revenues $1,302,117 $ 217,625 $2,055,644 $ 498,294
========== ========== ========== ==========
</TABLE>
For the three months ended June 30, 1999, revenues increased to $1,302,117 as
compared to $217,625 for the three months ended June 30, 1998. This increase is
primarily attributable to the change in the Company's business strategy from an
internet payment system product to e-mail messaging services and increases in
both the number of clients the Company has and increased messaging volume. The
Company began its messaging services, which is now the Company's primary
business, in July 1998 and phased out its FVIPS operations, which previously was
the Company's primary business, in August 1998. The messaging services revenue
earned for the three months ended June 30, 1998 was earned while the Company
completed final testing of its messaging product before its official release on
July 1, 1999. In addition, the Company had no consulting revenue for the three
months ended June 30, 1999.
For the six months ended June 30, 1999, revenues increased to $2,055,644 as
compared to $498,294 for the six months ended June 30, 1998. This increase is
primarily attributable to the change in the Company's business strategy and
increases in both the number of clients the Company has and increased messaging
volume.
Cost of Revenues
The Company incurred cost of revenues from messaging services and FVIPS, as
detailed in the table below:
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months ended June 30,
-------------------------- --------------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Messaging services $ 272,756 $ -- $ 380,803 $ --
First Virtual Internet Payment System -- 16,037 -- 34,637
---------- ---------- ---------- ----------
Total cost of revenues $ 272,756 $ 16,037 $ 380,803 $ 34,637
========== ========== ========== ==========
</TABLE>
For the three months ended June 30, 1999, the cost of revenues as a percentage
of messaging revenue was 20.9 %. The comparative cost of messaging revenues for
1998 is zero, because the Company was in the final phases of testing its
messaging services with several clients. The messaging services product was
officially released on July 1, 1999. However, the Company experienced an
increase in its cost of revenues as a percentage of messaging revenue of
approximately 6.5% compared to the cost of revenues for the three months ended
March 31, 1999. This increase is primarily attributable to increased headcount
needed to service the Company's growing customer base. As the Company introduces
new functionality of its messaging platform and explores opportunities to merge
with or acquire complementary businesses and technologies, the Company may
experience continued increases in its cost of revenues.
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For the six months ended June 30, 1999, the cost of revenues as a percentage of
messaging revenue was 18.5 %.
Operating Expenses
Operating expenses consist of marketing and sales, research, development and
engineering, and general and administrative expenses. In addition, during the
six months ended June 30, 1999, the Company incurred merger integration and
restructuring charges in connection with the relocation of its corporate
headquarters from San Diego, California to Boulder, Colorado. During the six
months ended June 30, 1998, the Company incurred a restructure charge in
connection with ceasing operations of its FVIPS. The Company expects operating
expenses to continue to be substantial as development and enhancement of
technological capabilities associated with its messaging services continues, as
the Company explores opportunities to merge with or acquire complementary
businesses or technologies and as the Company adds staff to service its growing
customer base. The Company also anticipates that expenses necessary for the
introduction of new services and promotion of its products will be substantial.
Marketing and sales expenses. Marketing and sales expenses, which include
salaries and wages, consulting fees, advertising, trade shows, travel and other
marketing expenses, increased to approximately $1.4 million for the three months
ended June 30, 1999, as compared to $420,965 for the three months ended June 30,
1998. This increase is primarily due to additions in headcount in sales, client
services and marketing staff, resulting in an increase in salaries, wages,
payroll taxes and health insurance of approximately $590,000, an increase in
travel related expenses of approximately $110,000 from additional headcount and
increased sales efforts, an increase in advertising and promotional spending to
promote sales of the Company's products and services of approximately $132,000,
an increase in recruiting expenses to hire additional staff of approximately
$73,500 and a general increase in spending of approximately $73,500 from
increased department headcount.
For the six months ended June 30, 1999, marketing and sales expenses increased
to $2.3 million as compared to approximately $1.2 million for the six months
ended June 30, 1998. This increase is primarily due to additions in headcount in
sales, client services and marketing staff, resulting in an increase in
salaries, wages, payroll taxes and health insurance of approximately $828,000,
an increase in travel related expenses of approximately $165,000 from additional
headcount and increased sales efforts, an increase in recruiting expenses to
hire additional staff of approximately $80,000 and a general increase in
spending of approximately $27,000 from increased department headcount.
Research, development and engineering expenses. Research, development and
engineering expenses, which include salaries and wages and consulting fees to
support the development, enhancement and maintenance of the Company's products
and services, decreased to $852,186 for the three months ended June 30, 1999, as
compared to approximately $1.25 million for the three months ended June 30,
1998. This decrease is primarily due to a reduction in development headcount due
to the elimination of the Company's FVIPS, resulting in a decrease in salaries,
wages, payroll taxes and health insurance of approximately $122,000 and a
decrease in consulting fees of approximately $275,000 due to the elimination of
development consultants associated with the Company's FVIPS.
For the six months ended June 30, 1999, research, development and engineering
expenses were approximately $1.8 million as compared to approximately $2.9
million for the six months ended June 30, 1998. This decrease resulted primarily
from a reduction in development headcount due to the elimination of the
Company's FVIPS, resulting in a decrease in salaries, wages, payroll taxes and
health insurance of approximately $442,000, a decrease in consulting fees of
approximately $465,000 due to the elimination of development consultants
associated with the Company's FVIPS, a decrease in communication expenses of
approximately $86,000 due to the elimination of communication lines needed for
the FVIPS, a decrease in rent of approximately $47,000 due to less office space
needed for reduced headcount, and a general decrease in spending of
approximately $60,000 from lower department headcount and reduced overhead
associated with the reduction in staff.
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General and administrative expenses. General and administrative expenses consist
primarily of salaries and wages, professional and consulting fees and other
expenses associated with the general management and administration of the
Company. General and administrative expenses increased to approximately $1.6
million for the three months ended June 30, 1999, as compared to approximately
$1.2 million for the three months ended June 30, 1998. This increase is
primarily due to an increase in salaries, wages, payroll taxes and health
insurance of approximately $312,000 from increased department headcount, an
increase in legal expenses of approximately $213,000 incurred for patent
litigation, an increase in travel related expenses of approximately $100,000
from increased sales efforts, offset by a decrease in bad debt expense of
approximately $50,000, charges for stock options of approximately $45,000 that
were granted or extended when executives were terminated from the Company in
1998 and a decrease in FVIPS related expenses of approximately $130,000 which
the Company did not incur because it ceased operations of its internet payment
system.
For the six months ended June 30, 1999, general and administrative expenses
increased to approximately $3.0 million as compared to approximately $2.2
million for the six months ended June 30, 1998. This increase is primarily due
to an increase in salaries, wages, payroll taxes and health insurance of
approximately $298,000 from increased department headcount, an increase in legal
expenses of approximately $311,000 incurred for patent litigation, an increase
in travel related expenses of approximately $130,000 from increased sales
efforts and a general increase in spending of approximately $111,000 to support
the merger of MessageMedia with Distributed Bits and Email Publishing and the
relocation of the Company to Boulder, offset by a decrease in charges for stock
options of approximately $50,000 that were granted or extended when executives
were terminated from the Company in 1998.
Merger integration and restructuring charge. In the first quarter of 1999, the
Company recorded a charge of $1,025,000 as a result of the Company's decision to
relocate its corporate headquarters from San Diego, California to a new facility
in Boulder, Colorado, and in addition to relocate its current Colorado
operations to the new facility. This decision was made to create efficiencies in
the Company's messaging services operations, reduce overhead by centralizing the
Company's offices to one facility and eliminate duplication of efforts from
similar positions in the separate offices. The merger integration and
restructuring activity of MessageMedia, Distributed Bits and Email Publishing
included the elimination of job responsibilities company wide, resulting in
approximately $225,000 of severance pay to 17 employees, relocation payments of
approximately $375,000 paid to nine San Diego employees to relocate to Colorado,
travel related expenses of approximately $32,000 related to the employee
relocation trips, cancellation fees of approximately $205,000 from contracts
relating to leased assets in the San Diego facility, losses of approximately
$50,000 from the sale of assets not being moved to Colorado, cancellation fees
of approximately $65,000 from contracts relating to facilities in both San Diego
and Colorado and approximately $75,000 for moving expenses related to moving
assets to the new Colorado corporate office.
In the second quarter of 1998, the Company recorded a charge of $812,166 as a
result of its efforts to focus on messaging services and move away from its
FVIPS. In doing so, the Company incurred expenses of approximately $545,000 for
severance compensation packages related to a reduction in staff and consultants,
booked expenses of approximately $170,000 related to the shut down of the FVIPS
and incurred expenses of approximately $95,500 related to moving the corporate
office to less expensive office space.
Fluctuations in operating results. The Company expects to experience significant
fluctuations in its future quarterly operating results. These fluctuations may
be due to several factors, many of which are beyond the control of the Company,
including, among others:
o Market response to our messaging platform;
o Difficulties in the development or deployment of new messaging
products or services;
o Market acceptance of Internet commerce, products and services in
general;
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<PAGE> 11
o Fluctuating market demand for our products and services;
o The degree of acceptance of the Internet as an advertising and
merchandising medium;
o The timing and effectiveness of collaborative marketing efforts
initiated by our strategic partners;
o The timing of the introduction of new products and services
offered by us;
o The timing of the release of enhancements to our products and
services;
o Product introductions and service offerings by our competitors;
o The mix of the products and services provided by us;
o The timing and rate at which we increase our expenses to support
projected growth;
o The cost of compliance with applicable government regulations;
o Competitive conditions in our marketplace; and
o General economic conditions.
In addition, the fees charged by the Company for advertising, messaging, and
consulting services, are subject to change as the Company introduces its
messaging services and assesses its marketing strategy and competitive position.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1999, the Company had $10.1 million in cash and cash equivalents.
The Company believes that existing cash resources will be sufficient to support
its currently anticipated working capital and capital expenditure requirements
through the end of 1999. The Company will need to raise additional funds through
the public or private sale of its equity or debt securities or from other
sources before the end of the first quarter 2000. The timing and amount of the
Company's capital requirements will depend on a number of factors, including
demand for the Company's products and services, the need to develop new or
enhanced products and services, competitive pressures and the availability of
complementary businesses or technologies that the Company may wish to acquire.
If additional funds are raised through the issuance of equity securities, the
percentage ownership of the Company's stockholders will be diluted and such
equities may have rights, preferences or privileges senior to those of the
holders of the Company's common stock. There can be no assurance that additional
financing will be available when needed or that, if available, will include
terms favorable to MessageMedia or its stockholders. If adequate funds are not
available on acceptable terms, MessageMedia may be unable to develop or enhance
its products or services, take advantage of opportunities or respond to
competition.
Net cash used in operating activities was approximately $6.5 million and $6.4
million for the six months ended June 30, 1999 and 1998, respectively. Net
operating cash flows were primarily attributable to net losses, increases in
accounts receivable and decreases in accounts payable, partially offset by
non-cash charges for depreciation, amortization and stock-based compensation, as
well as increases in merger integration and relocation accruals and other
accrued liabilities.
Net cash used in investing activities was approximately $321,000 and $249,000
for the six months ended June 30, 1999 and 1998, respectively, and consisted of
purchases of fixed assets.
Net cash provided by financing activities was approximately $12.3 million and
$6.6 million for the six months ended June 30, 1999 and 1998, respectively, and
resulted from net proceeds from issuance of the Company's common stock, offset
by payments of notes payable and capital lease obligations.
MessageMedia has no material financial commitments other than obligations under
operating leases. The Company expects to substantially increase expenditures for
applications including, computer equipment and furniture and fixtures associated
with new employees and facility expansion; bandwidth and networking equipment
and infrastructure; additional sales and marketing employees; equipment and
additional employees related to product development; increased promotion and
branding efforts; and development and acquisition of new technology.
Capital requirements in any particular period will depend on the timing of these
expenditures.
YEAR 2000 COMPLIANCE
Many computer systems and software products are coded to accept only two-digit
entries in date code fields. Beginning in the year 2000, these date code fields
will need to accept four-digit entries to distinguish 21st century dates from
20th century dates. As a result, in less than one year, computer systems and/or
software used by many companies may need to be upgraded to comply with "Year
2000" requirements. Since the Company just recently developed the software for
its messaging platform and is adding new
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enhancements and functionality regularly, the Company believes that its
messaging platform is Year 2000 compliant. There can be no assurance, however,
that coding errors or other defects will not be discovered in the future as more
testing is completed or new functionality added. The Company believes that
compliance testing will require approximately 100-200 man-hours and intends to
complete compliance testing and remediation efforts on or before December 31,
1999. To date, the Company has incurred minimal expenses related to Year 2000
compliance. However, the Company expects to incur $75,000 to $150,000 of
expenses in the second half of 1999 related to Year 2000 compliance. The Company
currently has no contingency plans in place in the event it does not complete
all its testing and remediation efforts.
The Company relies on a number of software and communications systems provided
by third parties to operate its messaging platform. Any of these could contain
coding that is not Year 2000 compliant. These systems include server software
used to operate the network servers, software controlling routers, switches and
other components of the data network, disk management software used to control
the data disk arrays, firewall, security, monitoring and back-up software used
by the Company, as well as desktop PC applications software. In each case, the
Company employs widely available software applications from leading third party
vendors, and expects that such vendors will provide any required upgrades or
modifications in a timely fashion. However, if any third party software
suppliers fail to provide Year 2000 compliant versions of the software,
operations, including our messaging platform, could be disrupted.
Year 2000 compliance problems could also undermine the general infrastructure
necessary to support the Company's operations. For instance, the Company depends
on third-party Internet service providers (known as "ISPs") to provide
connections to the Internet and to customer information systems. Any
interruption of service from ISPs could result in a temporary interruption of
the Company's interactive messaging and other services. The Company has
attempted to address this risk by obtaining the same service capacity from
multiple ISPs. In addition, the Company relies on a third-party data center to
house some of the Company's servers and communications systems. Any interruption
in the security, access, monitoring or power systems at the third-party data
center could result in an interruption of services. Moreover, it is difficult to
predict what effects Year 2000 compliance problems will have on the integrity
and stability of the Internet. If businesses and consumers are not able to
reliably access the Internet, the demand for the Company's services could
decline, resulting in an adverse impact to MessageMedia's business, financial
condition and results of operations.
MessageMedia's operations could also be adversely affected if its customers
fail to ensure that their software systems are Year 2000 compliant. The
messaging platform is designed to interface with customer databases and
communications systems to retrieve relevant information from customers'
electronic commerce systems or customer databases and to allow customers to
independently control certain features of the service, including the content of
transmitted messages. The Company cannot assess or control the degree of Year
2000 compliance in its customers' information systems. Disruptions in the
information systems of significant customers could temporarily prevent such
customers from accessing or using the messaging platform, which could materially
affect the Company's operating results. To address the risk of disruptions in
customer information systems, the Company designed its messaging platform to
include redundant manual control features which can be used by such customers.
Nevertheless, certain customers may elect to discontinue use of the interactive
messaging services until their internal information technology problems have
been alleviated, which would adversely affect the Company's business, financial
condition and results of operations. The spending patterns of current or
potential customers may be affected by Year 2000 issues as companies expend
significant resources to correct or update their systems for Year 2000
compliance. Because of these expenditures, the Company's customers may have less
money available to pay for services, which could have a material adverse affect
on the Company's business, financial condition and results of operations.
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FACTORS AFFECTING OPERATING RESULTS AND MARKET PRICE OF STOCK
MessageMedia operates in a rapidly changing environment that involves a number
of uncertainties, some of which are beyond the Company's control. In addition to
the uncertainties described elsewhere in this report, these uncertainties
include:
OUR HISTORY OF OPERATING LOSSES AND ANTICIPATED FUTURE LOSSES
We have incurred net operating losses in each quarter since our inception in
March 1994. To date, we have not generated significant revenues and we cannot
guarantee that our revenues will increase in the future. In addition, we are
currently making and plan to continue to make significant investments in our
systems, sales, marketing, research, development and engineering and
administrative infrastructure, introduce new functionality to our messaging
platform and explore opportunities to merge with or acquire complementary
businesses and technologies. As a result of these expenditures, we expect to
continue to incur significant operating losses for the foreseeable future. For
these and other reasons, we cannot assure you that we will ever operate
profitably.
OUR LIMITED OPERATING HISTORY
We began operations in March 1994. To date, we have generated substantially all
of our revenues from the following:
o Messaging fees;
o Consulting fees;
o The receipt of registration fees from consumers and merchants;
o Transaction processing fees;
o Merchandising fees; and
o Sales of our VirtualTAGs, an interactive banner.
Since discontinuing the FVIPS in August 1998, we have dedicated all of our
resources to developing and implementing our messaging platform and related
services and technologies.
Our future financial performance will depend significantly on customer
acceptance of our messaging platform and other new and enhanced products and
services. It is very difficult to predict what the demand will be for our
messaging platform because it is a relatively new type of product. Furthermore,
we believe that our prior experience in developing and operating the FVIPS does
not offer a meaningful basis to assess the future prospects of our messaging
platform and related products and services. Accordingly, we cannot assure you
that a significant market for our messaging platform or for any of our other
technologies or services will develop.
INTEGRATION OF POTENTIAL ACQUISITIONS
As part of our business strategy, we may focus on acquiring, or making
significant investments in, complementary companies, products and technologies.
On July 27, 1999, MessageMedia signed a definitive agreement to acquire Revnet
Systems Inc and on July 29, 1999, MessageMedia signed a definitive agreement to
acquire Decisive Technology. The following risks are common to the integration
of two companies, and may be associated with any of the Company's past or future
acquisitions:
o The difficulty of incorporating new operations, technology and
personnel into one company;
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o The potential disruption of our ongoing business;
o The additional expense associated with amortization of acquired
intangible assets;
o The maintenance of uniform standards, controls, procedures and
policies; and
o The impairment of relationships with employees and customers.
We cannot assure you that we will successfully overcome these risks or any other
problems that we encounter in connection with any past or future acquisitions.
OUR NEED FOR ADDITIONAL CAPITAL
We will need to raise additional funds through the public or private sale of our
equity or debt securities or from other sources for the following purposes:
o To fund our operations;
o To develop new or enhanced services;
o To respond to competitive pressures;
o To acquire complementary businesses or technologies; and
o To remain in compliance with requirements of the Nasdaq National
Market for continued listing.
We will need to raise additional funds through the public or private sale of our
equity or debt securities or from other securities, before the end of the first
quarter 2000. We cannot assure you that additional funds will be available when
we need them, or that if funds are available, they will be available on terms
favorable to MessageMedia or our stockholders. If we are not able to obtain
sufficient funds or if adequate funds are not available on terms acceptable to
us, we may not be able to develop or enhance our products and services. A lack
of sufficient funds could also prevent us from taking advantage of important
opportunities or from being able to respond to competitive pressures. Any of
these results could have a material adverse effect on our business, financial
condition and results of operations.
Our need to raise additional funds could also directly and adversely affect your
investment in the Company in another way. When a company raises funds by issuing
shares of stock, the percentage ownership of the existing stockholders of that
company is reduced or diluted. If we raise funds in the future by issuing
additional shares of stock, you may experience significant dilution.
Additionally, certain types of equity securities that we may issue in the future
could have rights, preferences or privileges senior to your rights as a holder
of our common stock.
OUR ABILITY TO ATTRACT AND RETAIN PERSONNEL
Our success greatly depends on the continued service of our key senior
management personnel. None of the persons currently in such positions are bound
by an employment agreement. The loss of any member of our senior management team
could have a material adverse effect on our future operating results. Our future
success will depend in large part upon our ability to attract, retain and
motivate highly skilled employees, in particular in the roles of Chief Executive
Officer and Chief Financial Officer as well as other senior management
positions. Brian Makare, the Company's Vice President of Development resigned
from his position as an officer of the Company on July 31, 1999. At the time of
this filing, the Company has an aggressive search in process to fill the
positions of Chief Financial Officer and Vice President of Development. We face
significant competition for individuals with the skills and experience required
to
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perform in such roles. We cannot assure you that we will be able to attract or
retain such individuals, or that the departure of such individuals from the
Company will not cause a disruption in our operations.
RISKS ASSOCIATED WITH NEW MANAGEMENT TEAM
Virtually all of our executive officers, including our Chief Executive Officer,
Vice President of Sales and Marketing, Vice President of Corporate Development,
Vice President of Client Services, and Vice President of Human Resources, have
joined our company within the past several months. Our future success will
depend in large part upon the ability of our executive officers and other
members of our management to operate effectively, both individually and as a
group. Due to the fact that many of our executive officers are new to our
company and have never worked together, and that we do not yet have a full
management team in place, we cannot assure you that our management will be able
to function effectively, individually or as a team. Failure to do so could have
a material adverse effect on our business, financial condition and results of
operations.
ANTICIPATED FLUCTUATIONS IN OUR OPERATING RESULTS
We expect that our future operating results will fluctuate significantly. These
fluctuations may be due to a number of factors, many of which are beyond our
control. Some of the factors that may cause fluctuations include the following:
o Market response to our messaging platform;
o Difficulties in the development or deployment of new messaging
products or services;
o Market acceptance of Internet commerce, products and services in
general;
o Fluctuating market demand for our products and services;
o The degree of acceptance of the Internet as an advertising and
merchandising medium;
o The timing and effectiveness of collaborative marketing efforts
initiated by our strategic partners;
o The timing of the introduction of new products and services
offered by us;
o The timing of the release of enhancements to our products and
services;
o Product introductions and service offerings by our competitors;
o The mix of the products and services provided by us;
o The timing and rate at which we increase our expenses to support
projected growth;
o The cost of compliance with applicable government regulations;
o Competitive conditions in our marketplace; and
o General economic conditions.
The fees we charge for messaging and consulting services may change as we assess
our marketing strategy and competitive position. We believe period-to-period
comparisons of our operating results are not meaningful and should not be relied
upon as an indication of our future performance. Due to the factors we have
listed above and other factors, it is likely that our future operating results
will at times not meet the
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expectations of market analysts or investors. If our operating results fail to
meet expectations, the price of our common stock could be materially and
adversely affected.
UNCERTAIN ACCEPTANCE OF OUR MESSAGING SERVICES
Market demand for new product and service types such as interactive messaging is
inherently uncertain. The messaging platform is very different from the
traditional methods of marketing and information exchange used by our target
customers, who have typically relied on advertising and direct mail to attract
new customers and maintain customer relationships. We believe that the messaging
platform will prove to be an efficient and cost-effective marketing and
relationship-management tool for a broad variety of customers. However, we
cannot assure you that prospective customers will be able to implement the
messaging platform without substantial additional cost or that it will be cost
efficient when compared to traditional methods of marketing and information
exchange. If the messaging platform fails to meet customers' demands, the use of
our interactive messaging services may decline over time. If this were to
happen, our business, financial condition and results of operations would be
materially and adversely affected.
OUR DEPENDENCE ON THIRD-PARTY PROVIDERS
We depend heavily on several third-party providers of Internet and related
telecommunication services in operating our messaging platform. We cannot assure
you that these companies will continue to provide services to us without
disruptions in service, at the current cost, or at all. Although we believe that
we could obtain these services from other sources if need be, the costs
associated with any transition to a new service provider would be substantial.
We would have to reengineer our computer systems and telecommunications
infrastructure to accommodate a new service provider. This process would be both
expensive and time-consuming. Any interruption by our service providers would
also be likely to disrupt the operation of the messaging platform, causing a
loss of revenues and potential loss of customers. Such losses could have a
material adverse effect on our business, financial condition and results of
operations.
OUR RELIANCE ON SIGNIFICANT CUSTOMERS
A significant portion of our revenues are generated by a limited number of
customers. We expect that we will continue to depend on large contracts with a
small number of significant customers for this portion of our business. This
situation can cause our revenue and earnings to fluctuate between quarters based
on the timing of contracts. None of our customers has any obligation to purchase
additional products or services from us. Consequently, if we fail to develop
relationships with significant new customers, our business, financial condition
and results of operations will be materially and adversely affected.
COMPETITION
The market for our products and services is intensely competitive. There are no
substantial barriers to entry into our business, and we expect that established
and new entities will enter the market for interactive messaging services and
interactive Internet communications in the near future.
Our principal competitors in the interactive messaging services arena include
providers of e-mail based services such as Axciom, Cyber Data Systems, Digital
Impact, MarketHome, eGain, Email Channel, Exactis.com, Inc. (formerly Infobeat),
Matchlogic, Mustang, Postmaster Direct, PostX, ReplyNet and RevNet. We also
compete with BroadVision, Mypoints.com and E-Care Group for one-to-one
marketing. While potential customers continue broadening their mix of
advertising and marketing efforts to include on-line and Internet initiatives,
we will continue competing with traditional advertising, merchandising and
direct marketing companies that use more conventional means of delivering
information and marketing messages to consumers.
We may experience additional competition from Internet service providers,
advertising and direct marketing agencies and other large established businesses
that enter the market for interactive messaging services. Companies such as
America Online, Microsoft, IBM, Integrion, AT&T, Hewlett-Packard, Harte-Hanks
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Data Technology, ADVO, The Interpublic Group of Companies and Foote, Cone and
Belding, which possess large, existing customer bases, substantial financial
resources and established distribution channels, could develop, market or resell
a number of messaging services. Such potential competitors may also choose to
enter the market for messaging services by acquiring one of our existing
competitors or by forming strategic alliances with such competitors. Either of
these occurrences could harm our ability to compete effectively.
Many of our current and potential competitors have longer operating histories,
greater name recognition, larger customer bases, more diversified lines of
products and services and significantly greater resources than we do. Such
competitors may be able to undertake more extensive marketing campaigns, adopt
more aggressive pricing policies and make more attractive offers to potential
customers. In addition, many of our current or potential competitors have broad
distribution channels that may be used to bundle competing products or services
directly to end-users or purchasers. If such competitors bundle competing
products or services for their customers, the demand for our products and
services could substantially decline. As a result of the above factors, we
cannot assure you that we will compete effectively with current or future
competitors or that competitive pressures will not have a material adverse
effect on our business, financial condition and results of operations.
UNDEVELOPED AND RAPIDLY CHANGING MARKETS FOR OUR PRODUCTS
The markets for our products and services are at a very early stage of
development and are rapidly changing. An increasing number of entities and
individuals continue to enter the market in which we compete. These market
entrants have introduced or are developing products and services for use on the
Internet and the World Wide Web that compete with our products. Demand for and
market acceptance of recently introduced products and services is both uncertain
and risky. The degree to which the messaging platform is accepted and used in
the marketplace will depend on continued growth in the use of e-mail as a
primary means of communications by businesses and consumers. An increase in the
use of interactive messaging will also depend on market acceptance of e-mail as
a method for targeted marketing of products and services. Our ability to
successfully differentiate our services from random mass e-mailing products and
services which have encountered substantial resistance from consumers will also
be important. Businesses that already have invested substantial resources in
traditional or other methods of conducting business may be reluctant to adopt
new commercial methods or strategies that may limit or compete with their
existing businesses. Individuals with established patterns of purchasing goods
and services may be reluctant to alter those patterns. Accordingly, we cannot
assure you that sufficient demand for our products and services will develop to
sustain our business.
RISKS OF TECHNOLOGICAL CHANGE AND EVOLVING INDUSTRY STANDARDS
Our products and services are designed around current technical standards and
our revenues depend on continued industry acceptance of these standards. While
we intend to provide compatibility with the most popular industry standards,
widespread adoption of a proprietary or closed standard could prevent us from
doing so. We cannot assure you that the standards on which our products and
services are or will be based will be accepted by the industry. Nor can we
assure you that products, services or technologies developed by others will not
render our products and services noncompetitive or obsolete. If we are unable to
respond to changing market conditions, technological developments, emerging
industry standards or changing customer requirements, our business, financial
condition and results of operations could be materially and adversely affected.
RISKS OF DEFECTS AND DEVELOPMENT DELAYS IN OUR PRODUCTS AND SERVICES
Products and services based on sophisticated software and computing systems
often encounter development delays. Our underlying software may contain hidden
errors and failures when introduced or when usage increases. It is possible that
we may experience delays in the development of the software and computing
systems underlying our services. We cannot assure you that, despite testing that
our clients and we conduct, we will locate errors if they occur. Nor can we
assure you that we will not experience development delays.
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Either of these occurrences could have a material adverse effect on our
business, financial condition and results of operations.
OUR RISK OF CAPACITY CONSTRAINTS
If the volume of messages that our systems process significantly increases, the
capacity of our software or hardware could be strained. This could lead to
slower response time or system failures. We have made and intend to continue to
make substantial investments to increase our server capacity by adding new
servers and upgrading our software as necessary. We cannot assure you, however,
that our products and services will be able to meet anticipated demand as the
number of Web and Internet users increases. We also depend, as do our customers,
on Web browsers, e-mail clients and Internet and online service providers for
access to our services. Some users of our services have experienced difficulties
due to system failures unrelated to our system, products or services. If we
cannot effectively address these capacity constraints, our business, financial
condition and results of operations could be materially and adversely affected.
OUR DEPENDENCE ON INCREASED USAGE AND STABILITY OF THE INTERNET
The future of the Internet as a center for commerce will depend in significant
part on the following factors:
o Continued rapid growth in the number of households and
commercial, educational and government institutions with access
to the Internet;
o The level of usage by individuals;
o The number and quality of products and services designed for use
on the Internet; and
o Expansion of the Internet infrastructure.
The degree to which e-mail will become a common method of communication depends
in part on the extent that users increasingly prefer e-mail over traditional
means of communication. The growth of e-mail also depends on widespread access
to reliable and affordable e-mail services by individuals, businesses and other
organizations. Because usage of the Internet as a medium for on-line exchange of
information, advertising, merchandising and entertainment is a recent
phenomenon, it is difficult to predict whether the number of users drawn to the
Internet will continue to increase and whether any significant market for our
messaging platform, or any substantial commercial use of the Internet, will
develop. We cannot assure you that Internet usage patterns, and reliance on
e-mail communication in particular, will continue to grow and will not decline
as the newness of this method of communication wears off. It is also uncertain
whether the cost of Internet access will decrease. If either the Internet or
e-mail communication fails to achieve increased acceptance and does not become
accessible to a broad audience at moderate costs, the viability of Internet
commerce and the market for our products and services will be jeopardized.
The success of our business also depends on the significant expansion of the
Internet infrastructure to provide adequate Internet access and proper
management of Internet traffic. Our success also depends on the degree of
confidence that the public has in the integrity and security of Internet
commerce. If the Internet infrastructure is not adequately expanded or managed,
or if our products and services do not achieve sufficient market acceptance,
then our business, financial condition and results of operations will be
materially and adversely affected.
OUR RISK OF SYSTEMS FAILURES, SECURITY RISKS, AND LACK OF SUFFICIENT INSURANCE
Risk of System Failures
The success of our services also depends on our ability to protect our computer
equipment and the information stored in our data centers against loss or damage.
We must protect against system overloads,
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fire, power loss, telecommunications failures, unauthorized intrusion, infection
by computer viruses and similar events. We cannot assure you that a system
failure would not materially and adversely affect our ability to provide our
products and services.
Security Risks
We currently retain highly confidential customer information in a secure
database server. We cannot assure you, however, that we will be able to prevent
unauthorized individuals from gaining access to this database server. Any
unauthorized access to our servers could result in the theft of confidential
customer information such as e-mail addresses. It is also possible that one of
our employees could attempt to misuse confidential customer information,
exposing us to liability. We use disclaimers and limitation of warranty
provisions in our client agreements in an attempt to limit our liability to
clients, including liability arising out of systems failure. However, we cannot
guarantee that such provisions will be enforceable or will be effective in
limiting our exposure to damage claims.
Lack of Sufficient Insurance
Although we carry insurance, which we believe to be sufficient, the coverage it
provides may not be adequate to compensate us for all losses that may occur. We
are in the process of taking precautions to protect both our company and our
customers from events that could interrupt delivery of our products and services
or that could result in a loss of transaction or customer data. However, these
measures will not eliminate a significant risk to our operations from a natural
disaster or systems failure. We cannot guarantee that these measures would
protect the company from an organized effort to inundate our servers with
massive quantities of e-mail or other Internet message traffic which could
overload our systems and result in a significant interruption of service. Our
business interruption insurance would not fully compensate us for lost revenues,
income, additional costs or increased costs that we would experience during the
occurrence of any disruption of our computer systems. We cannot guarantee that
we will be able to obtain sufficient coverage on reasonable terms or at all in
the future.
LIMITED INTELLECTUAL PROPERTY
We rely on a combination of trade secret, copyright and trademark laws,
nondisclosure agreements, and other contractual provisions and technical
measures to protect our proprietary rights. We believe that, due to the rapid
pace of technological innovation for Internet products, our ability to establish
and maintain a position of technology leadership in the industry depends more on
the skills of our development personnel than upon the legal protections afforded
our existing technology. There can be no assurance that trade secret, copyright
and trademark protections will be adequate to safeguard the proprietary software
underlying our products and services, or that our agreements with employees,
consultants and others who participate in the development of our software will
not be breached, that we will have adequate remedies for any breach or our trade
secrets will not otherwise become known. Moreover, notwithstanding our efforts
to protect our intellectual property, there is no assurance that competitors
will not be able to develop functionally equivalent interactive messaging
technologies without infringing any of our intellectual property rights. Despite
the our efforts to protect our proprietary rights, unauthorized parties may
attempt to copy or otherwise obtain and use products or technology that the we
consider proprietary, and third parties may attempt to develop similar
technology independently. In addition, effective protection of intellectual
property rights may be unavailable or limited in certain countries. Accordingly,
there can be no assurance that our means of protecting our proprietary rights
will be adequate or that our competitors will not independently develop similar
technology.
As the volume of Internet commerce increases, and the number of products and
service providers that support Internet commerce increases, we believe that
Internet commerce technology providers may become increasingly subject to
infringement claims. There can be no assurance that infringement claims will not
be filed against us in the future. In particular, on October 19, 1998,
Exactis.com, Inc. filed a complaint against our subsidiary Email Publishing in
the Federal District Court of Colorado. The complaint alleges infringement of a
patent held by Exactis.com. The complaint seeks injunctive relief and
unspecified
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damages. Any such claims, with or without merit, could be time consuming, result
in costly litigation, disrupt or delay the enhancement or shipment of our
products and services or require us to enter into royalty or licensing
agreements. Such royalty or licensing agreements, if required, may not be
available on terms acceptable or favorable to us, which could have a material
adverse effect on our business, financial condition and results of operations.
In addition, we may initiate claims or litigation against third parties for
infringement of our proprietary rights or to establish the validity of our
proprietary rights. In particular, on October 29, 1998, we filed a complaint in
the U.S. District Court for the Southern District of California against
Exactis.com. The complaint alleges infringement of a patent held by MessageMedia
and seeks injunctive relief and unspecified damages. Litigation to determine the
validity of any claims could result in significant expense to us and divert the
efforts of our technical and management personnel from productive tasks, whether
or not such litigation is determined in our favor. In addition, patent
litigation such as the Exactis.com lawsuit often gives rise to counterclaims by
the defendants, which could include challenges to the validity of patents held
by us. In the event of an adverse ruling in any such litigation, we may be
required to pay substantial damages, discontinue the use and sale of infringing
products, expend significant resources to develop non-infringing technology or
obtain licenses to infringing technology. The failure by us to develop or
license a substitute technology could have a material adverse effect on our
business, financial condition and results of operations.
GOVERNMENT REGULATION
There are currently few laws or regulations that directly apply to our
activities on the Internet. We believe we are not currently subject to direct
regulation by any government agency in the United States, other than regulations
that are generally applicable to all businesses and newly enacted laws
prohibiting Unsolicited Commercial E-mail ("spam") or laws intended to protect
minors. A number of legislative and regulatory proposals are under consideration
by federal and state lawmakers and regulatory bodies and may be adopted with
respect to the Internet. Some of the issues that such laws or regulations may
cover include user privacy, obscenity, fraud, pricing and characteristics and
quality of products and services. The adoption of any such laws or regulations
may decrease the growth of the Internet, which could in turn decrease the
projected demand for our products and services or increase our cost of doing
business. Moreover, the applicability to the Internet of existing U.S. and
international laws governing issues such as property ownership, copyright, trade
secret, libel, taxation and personal privacy is uncertain and developing. Any
new legislation or regulation, or application or interpretation of existing
laws, could have a material adverse effect on our business, results of
operations, financial condition and prospects.
OUR STOCK MAY BE VOLATILE
The stock market in general, and Internet commerce companies in particular,
including our company, have experienced extreme price and volume fluctuations
that have often been unrelated or disproportionate to operating performance. The
trading prices of many Internet commerce companies' stocks are at or near
historical highs and these trading prices and multiples are substantially above
historical levels. These trading prices and multiples may not be sustained.
Broad market and industry factors may reduce our stock price, regardless of our
actual operating performance. In addition, the trading price of our common stock
could fluctuate in response to factors such as:
o quarterly fluctuations in our revenues and financial results
both in absolute terms and relative to analyst and investor
expectations;
o changes in recommendations of securities analysts;
o announcements of technological innovations or new services or
products;
o publicity regarding actual or potential results with respect to
technologies, services or products under development;
o disputes or other development concerning proprietary rights,
including copyright
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and litigation matters; and
o other events or factors, many of which are beyond our control.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our interest income is sensitive to changes in the general level of U.S.
interest rates, particularly since the majority of our investments are in
short-term investments. Due to the nature of our short-term investments, we have
concluded that there is no material interest rate risk exposure. Therefore, no
quantitative disclosures are required.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held an Annual Meeting of Stockholders on May 28, 1999.
Proxies were solicited for the meeting. The matters described below
were voted on at the meeting. Of the 43,796,108 shares of common stock
outstanding and eligible to vote at the meeting, 25,109,604 shares of
common stock were actually voted and the results of the votes taken at
such meeting were as follows:
1. Of 25,109,604 shares voted, 25,062,254 shares voted to ratify and
approve the election of Dennis J. Cagan, R. Terry Duryea, Bradley
A. Feld, Ronald D. Fisher, A. Laurence Jones, Pamela H. Patsley,
Gerald A. Poch, Gary E. Rieschel and Lee H. Stein as directors to
serve for the ensuing year and until their successors are
elected. There were 47,350 votes against such ratification and no
votes abstaining.
2. Of 25,109,604 shares voted, 24,866,437 shares voted to approve an
amendment to the Company's 1995 Stock Plan to increase the
aggregate number of shares of common stock authorized under such
plan from 6,000,000 to 7,000,000. There were 225,398 votes
against such ratification and 17,769 votes abstaining.
3. Of 25,109,604 shares voted, 25,095,779 shares voted to ratify the
selection of Ernst & Young LLP as independent auditors of the
Company for the fiscal year ending December 31, 1999. There were
4,600 votes against such ratification and 9,225 votes abstaining.
ITEM 5. OTHER INFORMATION
The management of the Company is not aware of any events required to
be reported hereunder.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit Index
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Exhibit 10.43 - Robin Green Employment Agreement
Exhibit 10.44 -Mary Beth Loesch Employment Agreement
Exhibit 10.45 -Elizabeth Wallace Employment Agreement
Exhibit 10.46 -Sue Morse Employment Agreement
Exhibit 10.47 -Bert Klein Amended Employment Agreement
Exhibit 27.1 - Financial Data Schedule
(b) Reports on Form 8-K.
The Company filed Form 8-K dated April 5, 1999, reporting information under Item
5 with respect to the Company's previous announcement of its agreement to sell
$10 million of its common stock to Pequot Private Equity Funds. The following
exhibits were filed as part of the Form 8-K:
Exhibit 99.1 - Press Release dated March 25, 1999.
Exhibit 99.2 - Registration Rights Agreement dated March 24, 1999,
between MessageMedia and each of Pequot Private Equity
Fund, L.P. and Pequot Offshore Private Equity Fund, Inc.
22
<PAGE> 23
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: August 4, 1999 MESSAGEMEDIA, INC.
By: /s/ A. Laurence Jones
------------------------------------
A. Laurence Jones
Chief Executive Officer
(Principal Executive Officer)
Date: August 4, 1999 By: /s/ A. Laurence Jones
------------------------------------
A. Laurence Jones
Chief Executive Officer
(Principal Financial and
Accounting Officer)
23
<PAGE> 1
EXHIBIT 10.43
April 5, 1999
Robin Green
Dear Robin:
MessageMedia, Inc. ("MessageMedia" or the "Company") is pleased to offer you the
position of Vice President, Sales and Marketing, on the terms and conditions
stated in this letter. Of course, MessageMedia may change your position and
duties from time to time as it deems necessary. If you accept this offer, we
would like for you to begin work with MessageMedia on April 15, 1999 working 50%
of a regular full-time position and beginning full-time employment as of May 1,
1999.
Your initial rate of compensation will be $200,000 per year, less payroll
deductions and all required withholdings, paid on the Company's regular pay
periods. You will be eligible for all fringe benefits presently offered and
offered in the future to MessageMedia employees and senior executives. Details
about such benefits are available for your review. MessageMedia may modify your
compensation and benefits as it deems necessary.
In addition to your base salary, you will be eligible to earn an annual
performance bonus of up to $200,000, less applicable taxes, based upon your
attainment of quarterly performance targets to be defined by the Board of
Directors within a reasonable period of time after the execution of this offer
letter. The Company further agrees that you will be guaranteed at least $150,000
of the performance bonus for year-end 1999, with the balance of the performance
bonus to be awarded, if at all, at the sole discretion of the Board of
Directors. In addition, you will receive a monthly draw of $8,333 (less payroll
deductions and all required withholdings) again your annual bonus plan defined
above. After year-end 1999, the performance bonus will be granted, if at all, in
the sole discretion of the Board of Directors, based upon your performance.
Subject to approval by the Compensation Committee of the Board of Directors you
will be eligible to receive an option to purchase 400,000 shares of the
Company's Common Stock (the "Option"), with an exercise price per share equal to
the closing fair market value of the Company's Common Stock on this letter,
April 5, 1999 ("Vesting Commencement Date) with a stock price of $10.25 per
share. To the maximum extent possible, the Option shall be an incentive stock
option as such term is defined in Section 422 of the Internal Revenue Code of
1986, as amended. This Option will be issued in accordance with the terms and
conditions of the 1995 Stock Option Plan.
The Option shall vest in accordance with the Company's standard form of option
agreement under the 1995 Stock Option Plan, as amended, which provides that 25%
of the shares subject to the option shall vest and become exercisable on the
first anniversary of the Vesting Commencement Date, and an additional 1/48th of
the shares subject to the option at the end of
<PAGE> 2
Robin Green
April 5, 1999
Page 2
each one-month period thereafter shall vest and become exercisable provided in
each case that the optionee remains an employee and/or consultant of the
Company.
You will be entitled to four weeks of paid vacation during your first year of
service which shall begin accruing monthly upon commencement of employment. You
will be eligible to use your accrued vacation after your first thirty (30) days
of employment in accordance with the provisions of the Employee Handbook.
The Company also agrees to pay you a one-time hiring bonus of $25,000, subject
to payroll deductions and all required deductions, payable on May 1, 1999. You
will also receive relocation benefits for actual and reasonable expenses
incurred in your move from Texas to Colorado, up to a maximum reimbursement of
$75,000. The Company will reimburse you for moving expenses, temporary living
expenses, commissions/points on the sale of your home in Texas and the purchase
of a home in Boulder, Colorado; provided that, you incur such expenses within 12
months of the commencement of your employment. In addition, the Company will
reimburse you for the tax consequences that you incur from the relocation
benefits so long as the total amount you receive in relocation benefits and tax
gross-up payments does not exceed $75,000.
Should you accept this offer, your employment with MessageMedia will not be for
a specified term and may be terminated with or without cause and with or without
notice by you or by the Company at any time, for any reason or no reason. Any
contrary representations or agreements which may have been made to you are
superseded by this offer. The "at will" nature of your employment described in
this offer letter shall constitute the entire agreement between you and
MessageMedia concerning the nature and duration of your employment. Though your
job duties, title, compensation and benefits may change over time and you may be
subject to incremental discipline that doesn't include a termination, none of
these events change our agreement that you are an "at will" employee. The "at
will" nature of your employment with MessageMedia can only be changed in a
writing signed by you and the President of the Company.
Notwithstanding the at-will nature of your employment, if the Company terminates
your employment without "cause" at any time, then upon your furnishing to the
Company an executed waiver and release form (a form of which is attached as
Appendix D), it will continue to pay you, as severance, six months of your then
current base salary, subject to standard payroll deductions and withholdings. If
you resign or your employment is terminated for "cause", all compensation and
benefits will cease immediately upon your last day of employment and you will
receive no severance benefits. For purposes of this letter agreement, the
definition of "cause" shall be limited to the occurrence of any of the following
events: (i) your engaging or in any manner participating in an activity which is
intentionally and materially injurious to the Company; (ii) your commission of
any fraud or embezzlement against the Company; (iii) your conviction of any
crime involving dishonesty or moral turpitude; (iv) conduct by you which in good
faith and reasonable determination of the Board demonstrates gross unfitness to
serve; or (v) your incurable material breach of any element of the Company's
Confidential Information and
<PAGE> 3
Robin Green
April 5, 1999
Page 3
Inventions Assignment Agreement, including without limitation, your theft or
other misappropriation of the Company's proprietary information.
During your employment with the Company and for one year thereafter, you agree
that you will not engage in competition with the Company, either directly or
indirectly, in any manner or capacity, as an advisor, principal, agent, partner,
officer, director, employee, member of any association or otherwise, in any
phase of the business of developing, manufacturing and marketing of products
which are in the same field of use or which otherwise compete in a material way
with the products or proposed products of MessageMedia. While employed by the
Company and for one year thereafter, you also agree that in order to protect the
Company's confidential and proprietary information from unauthorized use, that
you will not, either directly or through others, solicit or attempt to solicit
any employee, consultant or independent contractor of the Company to terminate
his or her relationship with the Company in order to become and employee,
consultant or independent contractor to or for any other person or business
entity.
One of the conditions of your employment with MessageMedia is the maintenance of
the confidentiality of MessageMedia's proprietary and confidential information.
Upon commencement of employment, you will be required to execute the Company's
Confidential Information and Inventions Assignment Agreement, attached hereto as
Appendix A, the Company's Voice-Mail Policy Statement, attached hereto as
Appendix B, and the E-Mail Policy Statement, attached hereto as Appendix C.
In your work for the Company, you will be expected not to use or disclose any
confidential information, including trade secrets, of any former employer or
other person to whom you have an obligation of confidentiality. You agree that
you will not bring onto Company premises any unpublished documents or property
belonging to any former employer or other person to whom you have an obligation
of confidentiality. In the performance of your duties for the Company, you will
be expected to use only that information which is generally known and used by
persons with training and experience comparable to your own, which is common
knowledge in the industry or otherwise legally in the public domain, or which is
otherwise provided or developed by the Company.
As an employee of MessageMedia, you will be required to comply with all Company
policies and procedures. In particular, you will be required to familiarize
yourself with, and to comply with, MessageMedia's policy prohibiting harassment
and discrimination, and the policy concerning drugs and alcohol. As required by
law, this offer is subject to satisfactory proof of your right to work in the
United States.
<PAGE> 4
Robin Green
April 5, 1999
Page 4
We are looking forward to having you join MessageMedia, Inc. If you wish to
accept this offer, please sign below and return the fully executed letter to us.
You should keep one copy of this letter for your own records.
Very truly yours,
MESSAGEMEDIA, INC.
- ----------------------------- ----------------------------
Larry Jones Date
President & Chief Financial Officer
ACCEPTANCE:
I have read, understand, and accept the foregoing terms and conditions of
employment. I further understand my job duties, title, compensation and benefits
may change over time without a written modification of this agreement. Further
the "at will" term of my employment (i.e., my right and MessageMedia's right to
terminate our employment relationship at any time, with or without cause) is a
term of employment which cannot be altered or modified. I understand and agree
that any contrary representations or agreements which may have been made to me
are superseded by this offer and my acceptance of the same.
As further consideration for the offer of employment with MessageMedia that is
contained in this offer letter and accepted by me, I agree to be bound by the
following policies and procedures:
1. Appendix A - Confidential Information and Inventions Assignment
Agreement.
2. Appendix B - Voice-Mail Policy Statement.
3. Appendix C - E-Mail Policy Statement.
4. Employee Manual, a copy of which has been provided to me.
5. Appendix D - Waiver and Release
- ----------------------------- -----------------------------
Robin Green Date
<PAGE> 5
APPENDIX A
MESSAGEMEDIA, INC.
CONFIDENTIAL INFORMATION AND INVENTIONS
ASSIGNMENT AGREEMENT
As a condition of my employment with MESSAGEMEDIA, INC., its subsidiaries,
affiliates, successors or assigns (together the "Company,") and in consideration
of my employment with the Company and my receipt of the compensation now and
hereafter paid to me by Company, I agree to the following:
1. CONFIDENTIAL INFORMATION
(a) COMPANY INFORMATION. At all times during the term of my
employment and thereafter, I will hold in strictest confidence, and will not
use, except for the benefit of the Company, nor disclose to any person, firm or
corporation without written authorization of the Board of Directors of the
Company, any Confidential Information of the Company. I understand that
"Confidential Information" means any Company proprietary information, technical
data, trade secrets or know-how, including, but not limited to, research,
product plans, products, services, customer lists and customers (including but
not limited to, customers of the Company on whom I called or with whom I became
acquainted during the term of my employment), markets, software, developments,
inventions, processes, formulas, technology, designs, drawings, engineering,
hardware configuration information, marketing, finances or other business
information disclosed to me by the Company either directly or indirectly in
writing, orally or by drawings or observation of parts or equipment. I further
understand that Confidential Information does not include any of the foregoing
items which has become publicly known and made generally available through no
wrongful act of mine or of others who were under confidentiality obligations as
to the item or items involved.
(b) FORMER EMPLOYER INFORMATION. I will not, during my
employment with the Company, improperly use or disclose any proprietary
information or trade secrets of any former or concurrent employer.
(c) THIRD PARTY INFORMATION. I recognize that the Company has
received and in the future will receive from third parties their confidential or
proprietary information subject to a duty on the Company's part to maintain the
confidentiality of such information and to use it only for certain limited
purposes. I agree to hold all such confidential or proprietary information in
the strictest confidence and not to disclose it to any person, firm or
corporation or to use it except as necessary in carrying out my work for the
Company consistent with the Company's agreement with such third party.
Appendix A-1
<PAGE> 6
2. INVENTIONS.
(a) INVENTIONS RETAINED AND LICENSED. I have attached hereto as
Exhibit A the List of Prior Inventions and Original Works of Authorship,
describing all inventions, original works of authorship, developments,
improvements, and trade secrets which were made by me prior to my employment
with the Company (collectively referred to as "Prior Inventions"), which belong
to me, which relate to the Company's proposed business, products or research and
development, and which are not assigned to the Company hereunder; or, if no such
list is attached, I represent that there are no such Prior Inventions. If in the
course of my employment with the Company, I incorporate into a Company product,
process or machine a Prior Invention owned by me or in which I have an interest,
the Company is hereby granted and shall have a nonexclusive, royalty-free,
irrevocable, perpetual, worldwide license, including the right to grant
sublicenses, to make, have made, modify, use and sell such Prior Invention as
part of or in connection with such product, process or machine.
(b) ASSIGNMENT OF INVENTIONS. I agree that I will make full
written disclosure to the Company, and hereby assign to the Company, all my
right, title, and interest in all inventions ("Inventions"), whether or not
patentable or registrable under copyright or similar laws, which I may
individually or jointly conceive or develop or reduce to practice, during the
period of time I am in the employ of the Company, except as provided in Section
2 (d) below. I further acknowledge that all original works of authorship which
are made by me (solely or jointly with others) within the scope of and during
the period of my employment with the Company and which are protectible by
copyright are "works made for hire," as that term is defined in the United
States Copyright Act.
(c) PATENT AND COPYRIGHT REGISTRATION. I agree to assist the
Company, or its designee, at the Company's expense, in every proper way to
secure the Company's rights in the Inventions and any copyrights, patents, or
other intellectual property rights relating thereto in any and all countries. I
further agree that my duties to assist the company in this regard shall continue
after the termination of this Agreement. If the Company is unable because of my
mental or physical incapacity or for any other reason to secure my signature to
apply for or to pursue any application for any United States or foreign patents
or copyright registrations covering Inventions or original works of authorship
assigned to the Company as above, then I hereby irrevocably designate and
appoint the Company and its duly authorized officers and agents as my agent and
attorney in fact, to act for and in my behalf and stead to execute and file any
such applications and to do all other lawfully permitted acts to further the
prosecution and issuance of letters patent or copyright registrations thereon
with the same legal force and effect as if executed by me.
(d) EXCEPTION TO ASSIGNMENTS. I understand that the provisions
of this Agreement requiring assignment of Inventions to the Company do not apply
to any Invention which qualifies fully under the provisions of California Labor
Code Section 2870. (A copy of California Labor Code Section 2870, Employment
Agreements; Assignment of Rights is attached hereto as Exhibit B.) I will advise
the Company promptly in writing of any Inventions that I believe meet the
criteria in California Labor Code Section 2870 and not otherwise disclosed on
Exhibit A.
Appendix A-2
<PAGE> 7
(e) REPRESENTATION AS TO INVENTIONS DURING EMPLOYMENT. I
understand that while performing work for the Company wherein I develop
Inventions, I am not authorized to steal, borrow or use what I know to be the
property of any other individual or entity without license or permission of the
author or owner. I hereby represent that any work I represent as authored or
invented by me is such, and will not pass off any other person's work as my own
for any purpose. I understand that doing so can result in immediate termination
of my employment.
3. CONFLICTING EMPLOYMENT. I agree that, during the term of my
employment with the Company, I will not accept any other employment, occupation,
consulting or other business activity directly related to the business in which
the Company is now involved or becomes involved during the term of my
employment, nor will I engage in any other activities that conflict with my
obligations to the Company, except with the written consent of the Company.
4. RETURNING COMPANY DOCUMENTS. I agree that, at the time of leaving the
employ of the Company, I will deliver to the Company (and will not keep in my
possession, recreate or deliver to anyone else) any and all devices, records,
data, notes, reports, proposals, lists, correspondence, specifications,
drawings, blueprints, sketches, materials, equipment, other documents or
property, or reproductions of any aforementioned items developed by me pursuant
to my employment with the Company or otherwise belonging to the Company, its
successors or assigns.
5. NOTIFICATION OF NEW EMPLOYER. In the event that I leave the employ of
the Company, I hereby grant consent to notification by the Company to my new
employer about my rights and obligations under this Agreement.
6. SOLICITATION OF EMPLOYEES. I agree that for a period of twelve (12)
months immediately following the termination of my relationship with the Company
for any reason, whether with or without cause, I shall not either directly or
indirectly solicit, induce, recruit or encourage any of the Company's employees
to leave their employment, or take away such employees, or attempt to solicit,
induce, recruit, encourage or take away employees of the Company, either for
myself or for any other person or entity.
7. CONFLICT OF INTEREST GUIDELINES. I agree to diligently adhere to the
Conflict of Interest Guidelines attached as Exhibit C hereto.
8. REPRESENTATIONS. I agree to execute any proper oath or verify any
proper document required to carry out the terms of this Agreement. I represent
that my performance of all the terms of this Agreement will not breach any
agreement to keep in confidence proprietary information acquired by me in
confidence or in trust prior to my employment by the Company. I have not entered
into, and I agree I will not enter into, any oral or written agreement in
conflict herewith.
Appendix A-3
<PAGE> 8
9. ARBITRATION. In the event of any dispute, controversy or claim
arising out of, connected with, or relating to this letter, or the breach,
validity, or enforceability of any provision of this letter, such dispute,
controversy or claim shall be resolved by final and binding arbitration by a
panel of three (3) arbitrators in accordance with and subject to the Rules of
Judicial Arbitration and Mediation Services, Inc. ("JAMS") then in effect.
Following notice of a Party's election to require arbitration, each Party will
within thirty (30) days, select one arbitrator from the JAMS list of commercial
arbitrators, and those two arbitrators will within thirty (30) days thereafter,
select a third arbitrator. If the two arbitrators are unable to agree on a third
arbitrator within thirty (30) days, JAMS will within thirty (30) days
thereafter, select such third arbitrator. In the event any Party fails to select
an arbitrator within the requisite period, JAMS is hereby given the right to
select the arbitrator on behalf of such Party. Arbitration shall take place at a
location within California chosen by the arbitrators. All expenses associated
with obtaining and utilizing the services of the JAMS and the arbitrators, shall
be shared equally by the Parties. JAMS and the arbitrators shall be made aware
of this provision and shall agree to request payment separately from each of the
Parties for said services, including all expenses directly related to the
arbitration, other than the expense of witnesses, which shall be borne by the
Party producing such witnesses.
Notwithstanding the foregoing, each Party shall bear its own respective
costs of preparing for and participating in the arbitration, including, without
limitation, attorneys' fees, expert and/or witness fees, and the Party's costs
of complying with discovery requests. Discovery as permitted by the Federal
Rules of Civil Procedure then in effect will be allowed in connection with
arbitration to the extent consistent with the purpose of arbitration and as
allowed by the arbitrators. Judgment upon the award rendered in any arbitration
may be entered in any court of competent jurisdiction, or application be made to
such court for a judicial acceptance of the award and an enforcement, as the law
of the state having jurisdiction may require or allow. The fact that arbitration
is or may be allowed will not impair the exercise of any termination rights
under this letter."
10. GENERAL PROVISIONS.
(a) GOVERNING LAW: CONSENT TO PERSONAL JURISDICTION. This
Agreement will be governed by the laws of the State of California. I hereby
expressly consent to the personal jurisdiction of the state and federal courts
located in California for any lawsuit filed there against me by the Company
arising from or relating to this Agreement.
(b) ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement and understanding between the Company and me relating to the subject
matter herein and merges all prior discussions between us. No modification of or
amendment to this Agreement, nor any waiver of any rights under this agreement,
will be effective unless in writing signed by the party to be charged. Any
subsequent change or changes in my duties, salary or compensation will not
affect the validity or scope of this Agreement.
Appendix A-4
<PAGE> 9
(c) SEVERABILITY. If one or more of the provisions in this
Agreement are deemed void by law, then the remaining provisions will continue in
full force and effect.
(d) SUCCESSORS AND ASSIGNS. This Agreement will be binding upon
my heirs, executors, administrators and other legal representatives and will be
for the benefit of the Company, its successors, and its assigns.
__________________________________ ____________________________________
Date Signature
____________________________________
Print Name
Appendix A-5
<PAGE> 10
EXHIBIT A
LIST OF PRIOR INVENTIONS
AND ORIGINAL WORKS OF AUTHORSHIP
<TABLE>
<CAPTION>
TITLE DATE IDENTIFYING NUMBER OR BRIEF DESCRIPTION
- --------------------------------------------------------------------------------
<S> <C> <C>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
_______ No inventions or improvements
_______ Additional Sheets Attached
__________________________________ ____________________________________
Date Signature
____________________________________
Print Name
Exhibit A
<PAGE> 11
EXHIBIT B
CALIFORNIA LABOR CODE SECTION 2870
EMPLOYMENT AGREEMENTS; ASSIGNMENT OF RIGHTS
(a) Any provision in an employment agreement which provides that an
employee shall assign, or offer to assign, any of his or her rights in an
invention to his or her employer shall not apply to an invention that the
employee developed entirely on his or her own time without using the employer's
equipment, supplies, facilities, or trade secret information except for those
inventions that either:
(1) Relate at the time of conception or reduction to practice of
the invention to the employer's business, or actual or demonstrably anticipated
research or development of the employer.
(2) Result from any work performed by the employee for the
employer.
(b) To the extent a provision in an employment agreement purports to
require an employee to assign an invention otherwise excluded from being
required to be assigned under subdivision (a), the provision is against the
public policy of this state and is unenforceable.
Exhibit B
<PAGE> 12
EXHIBIT C
MESSAGEMEDIA, INC.
CONFLICT OF INTEREST GUIDELINES
It is the policy of MESSAGEMEDIA, INC. (the "Company") to conduct its
affairs in strict compliance with the letter and spirit of the law and to adhere
to the highest principles of business ethics. Accordingly, all officers,
employees and independent contractors must avoid activities which are in
conflict, or give the appearance of being in conflict, with these principles and
with the interests of the Company. The following sets forth examples of
potentially compromising situations which must be avoided but is not all
inclusive of the types of conduct which may be considered a violation of this
policy. Any violations of this policy must be reported to the President.
1. Revealing confidential information to outsiders or misusing
confidential information. Unauthorized divulging of information is a violation
of this policy whether or not for personal gain and whether or not harm to the
Company is intended. (The Confidential Information and Inventions Assignment
Agreement elaborates on this principle and is a binding agreement.)
2. Accepting or offering substantial gifts, excessive entertainment,
favors or payments which may be deemed to constitute undue influence or
otherwise be improper or embarrassing to the Company.
3. Initiating or approving personnel actions affecting reward or
punishment of employees or applicants where there is a family relationship or is
or appears to be a personal or social involvement.
4. Initiating or approving any form of personal or social harassment of
employees.
5. Investing or holding outside directorship in suppliers, customers, or
competing companies, including financial speculations, where such investment or
directorship might influence in any manner a decision or course of action of the
Company.
6. Borrowing from or lending to other employees, customers or suppliers.
7. Improperly using or disclosing to the Company any proprietary
information or trade secrets of any former or concurrent employer or other
person or entity with whom obligations of confidentiality exist.
8. Unlawfully discussing prices, costs, customers, sales or markets with
competing companies or their employees.
9. Making any unlawful agreement with distributors with respect to
prices.
10. Improperly using or authorizing the use of any inventions which are
the subject of valid patent claims of any other person or entity.
Each officer, employee and independent contractor must take appropriate
action to ensure compliance with these guidelines and to bring problem areas to
the attention of higher management for review. Violations of this Conflict of
Interest Policy may result in discharge without warning.
Appendix C
<PAGE> 13
APPENDIX B
MESSAGEMEDIA, INC.
VOICE-MAIL POLICY STATEMENT
1. The Company may maintain as part of its technology platform a
voice-mail system. This system is provided to assist in the conduct of business
within the Company.
2. Voice-mail and the data stored on it are and remain at all times the
property of the Company. As such, all voice-mail messages created, sent, and
received are and remain the property of the Company.
3. The Company reserves the right to retrieve and listen to any message
composed, sent, or received. Please note that even when a message is deleted, it
is still possible to recreate the message; therefore, ultimate privacy of
messages cannot be guaranteed to anyone.
4. Although voice-mail may accommodate the use of passwords for
security, the reliability of such for maintaining confidentiality cannot be
guaranteed. You must assume that any and all messages may be listened to by
someone other than the intended or designated recipient. Moreover, all passwords
must be made available to the Company. The reason for this is simple. Your
voice-mail may need to be accessed by the Company when you are absent.
5. Notwithstanding the Company's right to retrieve any voice-mail
message, all messages sent by voice-mail are considered to be confidential, and
as such are to be accessed only by the addressed recipient or by direction of
the addressed recipient. Any exception to this policy must be approved by the
Executive Committee.
6. Employees learning of any misuse of the voice-mail system or
violations of this policy shall notify General Counsel or Director of Human
Resources.
7. Voice-mail messages may not contain material that may reasonably be
considered offensive or disruptive to any employee. Offensive content would
include, but not be limited to, sexual comments, racial slurs, gender-specific
comments, or any comments that might offend someone on account of his or her
age, sex, sexual orientation, religious or political beliefs, national origin,
race or disability.
8. Any employee who violates this policy shall be subject to
disciplinary action, up to and including termination.
Appendix B
<PAGE> 14
APPENDIX C
MESSAGEMEDIA, INC.
E-MAIL POLICY STATEMENT
1. The Company maintains as part of its technology platform an e-mail
system. This system is provided to assist in the conduct of business both inside
and outside of the Company.
2. All computers and the data stored on them are and remain at all times
the property of the Company. As such, all e-mail messages composed, sent, and
received are and remain the property of the Company.
3. The Company reserves the right to retrieve and read any message
composed, sent, or received. Please note that even when a message is erased, it
is still possible to recreate the message; therefore, ultimate privacy of
messages cannot be guaranteed to anyone.
4. The Company reserves the right to retain any electronic message on
the system.
5. Although e-mail may accommodate the use of passwords for security,
the reliability of such for maintaining confidentiality cannot be guaranteed.
You must assume that any and all messages may be read by someone other than the
intended or designated recipient. Moreover, all passwords must be made available
to the Company. The reason for this is simple. Your e-mail may need to be
accessed by the Company when you are absent.
6. Notwithstanding the Company's right to retrieve and read any e-mail
message, all messages sent by e-mail are considered to be confidential, and as
such are to be read only by the addressed recipient or at the direction of the
addressed recipient. Any exception to this policy must be approved by the
Executive Committee.
7. Employees learning of any misuse of the e-mail system or violations
of this policy shall notify General Counsel or Director of Human Resources.
8. E-mail messages may not contain material that may reasonably be
considered offensive or disruptive to any employee. Offensive content would
include, but not be limited to, sexual comments or images, racial slurs,
gender-specific comments, or any comments that might offend someone on account
of his or her age, sex, sexual orientation, religious or political beliefs,
national origin, race or disability.
9. Any employee who violates this policy shall be subject to
disciplinary action, up to and including termination.
Appendix C
<PAGE> 15
APPENDIX D
MESSAGEMEDIA, INC.
WAIVER AND RELEASE OF CLAIMS
In exchange for the severance payments provided for in my offer letter agreement
(the "Agreement"), to which this form is attached, I hereby furnish
MESSAGEMEDIA, INC. (the "Company") with the following release and waiver.
I hereby release, and forever discharge the Company, its officers, directors,
agents, employees, stockholders, successors, assigns and affiliates, of and from
any and all claims, liabilities, demands, causes of action, costs, expenses,
attorneys' fees, damages, indemnities and obligations of every kind and nature,
in law, equity, or otherwise, known and unknown, suspected and unsuspected,
disclosed and undisclosed, arising at any time prior to and including my
employment termination date with respect to any claims relating to my employment
and the termination of my employment, including but not limited to, claims
pursuant to any federal, state or local law relating to employment, including,
but not limited to, discrimination claims, claims under the California Fair
Employment and Housing Act, and the Federal Age Discrimination in Employment Act
of 1967, as amended ("ADEA"), or claims for wrongful termination, breach of the
covenant of good faith, contract claims, tort claims, and wage or benefit
claims, including but not limited to, claims for salary, bonuses, commissions,
stock, stock options, vacation pay, fringe benefits, severance pay or any form
of compensation (other than the obligations under Section 6.3 of the Agreement).
I also acknowledge that I have read and understand Section 1542 of the
California Civil Code which reads as follows: "A general release does not extend
to claims which the creditor does not know or suspect to exist in his favor at
the time of executing the release, which if known by him must have materially
affected his settlement with the debtor." I hereby expressly waive and
relinquish all rights and benefits under that section and any law of any
jurisdiction of similar effect with respect to any claims I may have against the
Company.
I acknowledge that, among other rights, I am waiving and releasing any rights I
may have under ADEA, that this waiver and release is knowing and voluntary, and
that the consideration given for this waiver and release is in addition to
anything of value to which I was already entitled as an employee of the Company.
I further acknowledge that I have been advised, as required by the Older Workers
Benefit Protection Act, that: (a) the waiver and release granted herein does not
relate to claims which may arise after this agreement is executed; (b) I have
the right to consult with an attorney prior to executing this agreement
(although I may choose voluntarily not to do so); (c) I have twenty-one (21)
days from the date I receive this agreement, in which to consider this agreement
(although I may choose voluntarily to execute this agreement earlier); (d) I
have seven (7) days following the execution of this agreement to revoke my
consent to the agreement; and (e) this agreement shall not be effective until
the seven (7) day revocation period has expired.
Date: __________________ By: ________________________________
ROBIN GREEN
Appendix D
<PAGE> 1
EXHIBIT 10.44
April 7, 1999
Mary Beth Loesch
Dear Mary Beth:
MessageMedia, Inc. ("MessageMedia" or the "Company") is pleased to offer you the
position of Vice President Corporate Development on the terms and conditions
stated in this letter. Of course, MessageMedia may change your position and
duties from time to time as it deems necessary. If you accept this offer, we
would like for you to begin work with MessageMedia as soon as possible. You will
report directly to Larry Jones, CEO.
Your initial rate of compensation will be $170,000 per year, less payroll
deductions and all required withholdings, paid on the Company's regular pay
periods. You will be eligible for all fringe benefits presently offered and
offered in the future to MessageMedia employees and senior executives. Details
about such benefits are available for your review. MessageMedia may modify your
compensation and benefits, as it deems necessary, however, your salary will
remain at a minimum of $170,000.
In addition to your base salary, you will be eligible to earn an annual
performance bonus with a target of $85,000, less applicable taxes, based upon
performance targets to be defined by the CEO and will be paid on a calendar
basis. The Company further agrees that you will be guaranteed at least $50,000
of the performance bonus for the period through December 31, 1999.
The Company also agrees that in the case of a short term disability claim , you
will be paid your normal salary during the first ninety days until the LTD
insurance begins.
Subject to approval by the Compensation Committee of the Board of Directors you
will be eligible to receive an option to purchase 300,000 shares of the
Company's Common Stock (the "Option"), with an exercise price per share equal to
the closing fair market value of the Company's Common Stock on the date of this
letter April 7, 1999 ("Vesting Commencement Date). To the maximum extent
possible, the Option shall be an incentive stock option as such term is defined
in Section 422 of the Internal Revenue Code of 1986, as amended. This Option
will be issued in accordance with the terms and conditions of the 1995 Stock
Option Plan.
<PAGE> 2
Mary Beth Loesch Offer
April 7, 1999
Page 2
The Option shall vest in accordance with the Company's standard form of option
agreement under the 1995 Stock Option Plan, as amended, which provides that 25%
of the shares subject to the option shall vest and become exercisable on the
first anniversary of the Vesting Commencement Date, and an additional 1/48th of
the shares subject to the option at the end of each one-month period thereafter
shall vest and become exercisable provided in each case that the optionee
remains an employee and/or consultant of the Company.
You will be entitled to four weeks of paid vacation during your first year of
service which shall begin accruing monthly upon commencement of employment. You
will be eligible to use your accrued vacation after your first thirty (30) days
of employment in accordance with the provisions of the Employee Handbook.
Should you accept this offer, your employment with MessageMedia will not be for
a specified term and may be terminated with or without cause and with or without
notice by you or by the Company at any time, for any reason or no reason. Any
contrary representations or agreements which may have been made to you are
superseded by this offer. The "at will" nature of your employment described in
this offer letter shall constitute the entire agreement between you and
MessageMedia concerning the nature and duration of your employment. Though your
job duties, title, compensation and benefits may change over time and you may be
subject to incremental discipline that doesn't include a termination, none of
these events change our agreement that you are an "at will" employee. The "at
will" nature of your employment with MessageMedia can only be changed in a
writing signed by you and the President of the Company.
Notwithstanding the at-will nature of your employment, if the Company terminates
your employment without "cause" at any time, or your responsibilities changes
such that you do not report to the President or the CEO, then upon your
furnishing to the Company an executed waiver and release form (a form of which
is attached as Appendix D), it will continue to pay you monthly for twelve
months, as severance, of your then current base salary, subject to standard
payroll deductions and withholdings. If you resign or your employment is
terminated for "cause", all compensation and benefits will cease immediately
upon your last day of employment and you will receive no severance benefits. For
purposes of this letter agreement, the definition of "cause" shall be limited to
the occurrence of any of the following events: (i) your engaging or in any
manner participating in an activity which is intentionally and materially
injurious to the Company; (ii) your commission of any fraud or embezzlement
against the Company; (iii) your conviction of any crime involving dishonesty or
moral turpitude; (iv) conduct by you which in good faith and reasonable
determination of the Board demonstrates gross unfitness to serve; or (v) your
incurable material breach of any element of the Company's Confidential
Information and Inventions Assignment Agreement, including without limitation,
your theft or other misappropriation of the Company's proprietary information.
During your employment with the Company and for one year thereafter, you agree
that you will not engage in competition with the Company, either directly or
indirectly, in any manner or capacity, as an advisor, principal, agent, partner,
officer, director, employee, member of any
<PAGE> 3
Mary Beth Loesch Offer
April 7, 1999
Page 3
association or otherwise, in any phase of the business of developing,
manufacturing and marketing of products which are in the same field of use or
which otherwise compete in a material way with the products or proposed products
of MessageMedia. While employed by the Company and for one year thereafter, you
also agree that in order to protect the Company's confidential and proprietary
information from unauthorized use, that you will not, either directly or through
others, solicit or attempt to solicit any employee, consultant or independent
contractor of the Company to terminate his or her relationship with the Company
in order to become and employee, consultant or independent contractor to or for
any other person or business entity.
One of the conditions of your employment with MessageMedia is the maintenance of
the confidentiality of MessageMedia's proprietary and confidential information.
Upon commencement of employment, you will be required to execute the Company's
Confidential Information and Inventions Assignment Agreement, attached hereto as
Appendix A, the Company's Voice-Mail Policy Statement, attached hereto as
Appendix B, and the E-Mail Policy Statement, attached hereto as Appendix C.
In your work for the Company, you will be expected not to use or disclose any
confidential information, including trade secrets, of any former employer or
other person to whom you have an obligation of confidentiality. You agree that
you will not bring onto Company premises any unpublished documents or property
belonging to any former employer or other person to whom you have an obligation
of confidentiality. In the performance of your duties for the Company, you will
be expected to use only that information which is generally known and used by
persons with training and experience comparable to your own, which is common
knowledge in the industry or otherwise legally in the public domain, or which is
otherwise provided or developed by the Company.
As an employee of MessageMedia, you will be required to comply with all Company
policies and procedures. In particular, you will be required to familiarize
yourself with, and to comply with, MessageMedia's policy prohibiting harassment
and discrimination, and the policy concerning drugs and alcohol. As required by
law, this offer is subject to satisfactory proof of your right to work in the
United States.
We are looking forward to having you join MessageMedia, Inc. If you wish to
accept this offer, please sign below and return the fully executed letter to us.
You should keep one copy of this letter for your own records.
Very truly yours,
MESSAGEMEDIA, INC.
- ----------------------------- -----------------------------
Larry Jones Date
Chief Executive Officer
<PAGE> 4
Mary Beth Loesch Offer
April 7, 1999
Page 4
ACCEPTANCE:
I have read, understand, and accept the foregoing terms and conditions of
employment. I further understand my job duties, title, compensation and benefits
may change over time without a written modification of this agreement. Further
the "at will" term of my employment (i.e., my right and MessageMedia's right to
terminate our employment relationship at any time, with or without cause) is a
term of employment which cannot be altered or modified. I understand and agree
that any contrary representations or agreements which may have been made to me
are superseded by this offer and my acceptance of the same.
As further consideration for the offer of employment with MessageMedia that is
contained in this offer letter and accepted by me, I agree to be bound by the
following policies and procedures:
1. Appendix A - Confidential Information and Inventions Assignment
Agreement.
2. Appendix B - Voice-Mail Policy Statement.
3. Appendix C - E-Mail Policy Statement.
4. Employee Manual, a copy of which has been provided to me.
5. Appendix D - Waiver and Release
- ----------------------------- -----------------------------
Mary Beth Loesch Date
<PAGE> 5
APPENDIX A
MESSAGEMEDIA, INC.
CONFIDENTIAL INFORMATION AND INVENTIONS
ASSIGNMENT AGREEMENT
As a condition of my employment with MESSAGEMEDIA, INC., its subsidiaries,
affiliates, successors or assigns (together the "Company,") and in consideration
of my employment with the Company and my receipt of the compensation now and
hereafter paid to me by Company, I agree to the following:
1. CONFIDENTIAL INFORMATION
(a) COMPANY INFORMATION. At all times during the term of my
employment and thereafter, I will hold in strictest confidence, and will not
use, except for the benefit of the Company, nor disclose to any person, firm or
corporation without written authorization of the Board of Directors of the
Company, any Confidential Information of the Company. I understand that
"Confidential Information" means any Company proprietary information, technical
data, trade secrets or know-how, including, but not limited to, research,
product plans, products, services, customer lists and customers (including but
not limited to, customers of the Company on whom I called or with whom I became
acquainted during the term of my employment), markets, software, developments,
inventions, processes, formulas, technology, designs, drawings, engineering,
hardware configuration information, marketing, finances or other business
information disclosed to me by the Company either directly or indirectly in
writing, orally or by drawings or observation of parts or equipment. I further
understand that Confidential Information does not include any of the foregoing
items which has become publicly known and made generally available through no
wrongful act of mine or of others who were under confidentiality obligations as
to the item or items involved.
(b) FORMER EMPLOYER INFORMATION. I will not, during my employment
with the Company, improperly use or disclose any proprietary information or
trade secrets of any former or concurrent employer.
(c) THIRD PARTY INFORMATION. I recognize that the Company has
received and in the future will receive from third parties their confidential or
proprietary information subject to a duty on the Company's part to maintain the
confidentiality of such information and to use it only for certain limited
purposes. I agree to hold all such confidential or proprietary information in
the strictest confidence and not to disclose it to any person, firm or
corporation or to use it except as necessary in carrying out my work for the
Company consistent with the Company's agreement with such third party.
Appendix A-1
<PAGE> 6
2. INVENTIONS.
(a) INVENTIONS RETAINED AND LICENSED. I have attached hereto as
Exhibit A the List of Prior Inventions and Original Works of Authorship,
describing all inventions, original works of authorship, developments,
improvements, and trade secrets which were made by me prior to my employment
with the Company (collectively referred to as "Prior Inventions"), which belong
to me, which relate to the Company's proposed business, products or research and
development, and which are not assigned to the Company hereunder; or, if no such
list is attached, I represent that there are no such Prior Inventions. If in the
course of my employment with the Company, I incorporate into a Company product,
process or machine a Prior Invention owned by me or in which I have an interest,
the Company is hereby granted and shall have a nonexclusive, royalty-free,
irrevocable, perpetual, worldwide license, including the right to grant
sublicenses, to make, have made, modify, use and sell such Prior Invention as
part of or in connection with such product, process or machine.
(b) ASSIGNMENT OF INVENTIONS. I agree that I will make full
written disclosure to the Company, and hereby assign to the Company, all my
right, title, and interest in all inventions ("Inventions"), whether or not
patentable or registrable under copyright or similar laws, which I may
individually or jointly conceive or develop or reduce to practice, during the
period of time I am in the employ of the Company, except as provided in Section
2 (d) below. I further acknowledge that all original works of authorship which
are made by me (solely or jointly with others) within the scope of and during
the period of my employment with the Company and which are protectible by
copyright are "works made for hire," as that term is defined in the United
States Copyright Act.
(c) PATENT AND COPYRIGHT REGISTRATION. I agree to assist the
Company, or its designee, at the Company's expense, in every proper way to
secure the Company's rights in the Inventions and any copyrights, patents, or
other intellectual property rights relating thereto in any and all countries. I
further agree that my duties to assist the company in this regard shall continue
after the termination of this Agreement. If the Company is unable because of my
mental or physical incapacity or for any other reason to secure my signature to
apply for or to pursue any application for any United States or foreign patents
or copyright registrations covering Inventions or original works of authorship
assigned to the Company as above, then I hereby irrevocably designate and
appoint the Company and its duly authorized officers and agents as my agent and
attorney in fact, to act for and in my behalf and stead to execute and file any
such applications and to do all other lawfully permitted acts to further the
prosecution and issuance of letters patent or copyright registrations thereon
with the same legal force and effect as if executed by me.
(d) EXCEPTION TO ASSIGNMENTS. I understand that the provisions of
this Agreement requiring assignment of Inventions to the Company do not apply to
any Invention which qualifies fully under the provisions of California Labor
Code Section 2870. (A copy of California Labor Code Section 2870, Employment
Agreements; Assignment of Rights is attached hereto as Exhibit B.) I will advise
the Company promptly in writing of any Inventions that I believe meet the
criteria in California Labor Code Section 2870 and not otherwise disclosed on
Exhibit A.
Appendix A-2
<PAGE> 7
(e) REPRESENTATION AS TO INVENTIONS DURING EMPLOYMENT. I
understand that while performing work for the Company wherein I develop
Inventions, I am not authorized to steal, borrow or use what I know to be the
property of any other individual or entity without license or permission of the
author or owner. I hereby represent that any work I represent as authored or
invented by me is such, and will not pass off any other person's work as my own
for any purpose. I understand that doing so can result in immediate termination
of my employment.
3. CONFLICTING EMPLOYMENT. I agree that, during the term of my
employment with the Company, I will not accept any other employment, occupation,
consulting or other business activity directly related to the business in which
the Company is now involved or becomes involved during the term of my
employment, nor will I engage in any other activities that conflict with my
obligations to the Company, except with the written consent of the Company.
4. RETURNING COMPANY DOCUMENTS. I agree that, at the time of leaving the
employ of the Company, I will deliver to the Company (and will not keep in my
possession, recreate or deliver to anyone else) any and all devices, records,
data, notes, reports, proposals, lists, correspondence, specifications,
drawings, blueprints, sketches, materials, equipment, other documents or
property, or reproductions of any aforementioned items developed by me pursuant
to my employment with the Company or otherwise belonging to the Company, its
successors or assigns.
5. NOTIFICATION OF NEW EMPLOYER. In the event that I leave the employ of
the Company, I hereby grant consent to notification by the Company to my new
employer about my rights and obligations under this Agreement.
6. SOLICITATION OF EMPLOYEES. I agree that for a period of twelve (12)
months immediately following the termination of my relationship with the Company
for any reason, whether with or without cause, I shall not either directly or
indirectly solicit, induce, recruit or encourage any of the Company's employees
to leave their employment, or take away such employees, or attempt to solicit,
induce, recruit, encourage or take away employees of the Company, either for
myself or for any other person or entity.
7. CONFLICT OF INTEREST GUIDELINES. I agree to diligently adhere to the
Conflict of Interest Guidelines attached as Exhibit C hereto.
8. REPRESENTATIONS. I agree to execute any proper oath or verify any
proper document required to carry out the terms of this Agreement. I represent
that my performance of all the terms of this Agreement will not breach any
agreement to keep in confidence proprietary information acquired by me in
confidence or in trust prior to my employment by the Company. I have not entered
into, and I agree I will not enter into, any oral or written agreement in
conflict herewith.
Appendix A-3
<PAGE> 8
9. ARBITRATION. In the event of any dispute, controversy or claim
arising out of, connected with, or relating to this letter, or the breach,
validity, or enforceability of any provision of this letter, such dispute,
controversy or claim shall be resolved by final and binding arbitration by a
panel of three (3) arbitrators in accordance with and subject to the Rules of
Judicial Arbitration and Mediation Services, Inc. ("JAMS") then in effect.
Following notice of a Party's election to require arbitration, each Party will
within thirty (30) days, select one arbitrator from the JAMS list of commercial
arbitrators, and those two arbitrators will within thirty (30) days thereafter,
select a third arbitrator. If the two arbitrators are unable to agree on a third
arbitrator within thirty (30) days, JAMS will within thirty (30) days
thereafter, select such third arbitrator. In the event any Party fails to select
an arbitrator within the requisite period, JAMS is hereby given the right to
select the arbitrator on behalf of such Party. Arbitration shall take place at a
location within California chosen by the arbitrators. All expenses associated
with obtaining and utilizing the services of the JAMS and the arbitrators, shall
be shared equally by the Parties. JAMS and the arbitrators shall be made aware
of this provision and shall agree to request payment separately from each of the
Parties for said services, including all expenses directly related to the
arbitration, other than the expense of witnesses, which shall be borne by the
Party producing such witnesses.
Notwithstanding the foregoing, each Party shall bear its own respective
costs of preparing for and participating in the arbitration, including, without
limitation, attorneys' fees, expert and/or witness fees, and the Party's costs
of complying with discovery requests. Discovery as permitted by the Federal
Rules of Civil Procedure then in effect will be allowed in connection with
arbitration to the extent consistent with the purpose of arbitration and as
allowed by the arbitrators. Judgment upon the award rendered in any arbitration
may be entered in any court of competent jurisdiction, or application be made to
such court for a judicial acceptance of the award and an enforcement, as the law
of the state having jurisdiction may require or allow. The fact that arbitration
is or may be allowed will not impair the exercise of any termination rights
under this letter."
10. GENERAL PROVISIONS.
(a) GOVERNING LAW: CONSENT TO PERSONAL JURISDICTION. This
Agreement will be governed by the laws of the State of California. I hereby
expressly consent to the personal jurisdiction of the state and federal courts
located in California for any lawsuit filed there against me by the Company
arising from or relating to this Agreement.
(b) ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement and understanding between the Company and me relating to the subject
matter herein and merges all prior discussions between us. No modification of or
amendment to this Agreement, nor any waiver of any rights under this agreement,
will be effective unless in writing signed by the party to be charged. Any
subsequent change or changes in my duties, salary or compensation will not
affect the validity or scope of this Agreement.
Appendix A-4
<PAGE> 9
(c) SEVERABILITY. If one or more of the provisions in this
Agreement are deemed void by law, then the remaining provisions will continue in
full force and effect.
(d) SUCCESSORS AND ASSIGNS. This Agreement will be binding upon
my heirs, executors, administrators and other legal representatives and will be
for the benefit of the Company, its successors, and its assigns.
- ---------------------------------- ------------------------------------
Date Signature
------------------------------------
Print Name
Appendix A-5
<PAGE> 10
EXHIBIT A
LIST OF PRIOR INVENTIONS
AND ORIGINAL WORKS OF AUTHORSHIP
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
TITLE DATE IDENTIFYING NUMBER OR BRIEF DESCRIPTION
- ------------------------------------------------------------------------------------
<S> <C> <C>
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
</TABLE>
______ No inventions or improvements
______ Additional Sheets Attached
- ---------------------------------- ------------------------------------
Date Signature
------------------------------------
Print Name
Exhibit A
<PAGE> 11
EXHIBIT B
CALIFORNIA LABOR CODE SECTION 2870
EMPLOYMENT AGREEMENTS; ASSIGNMENT OF RIGHTS
(a) Any provision in an employment agreement which provides that an
employee shall assign, or offer to assign, any of his or her rights in an
invention to his or her employer shall not apply to an invention that the
employee developed entirely on his or her own time without using the employer's
equipment, supplies, facilities, or trade secret information except for those
inventions that either:
(1) Relate at the time of conception or reduction to practice of
the invention to the employer's business, or actual or demonstrably anticipated
research or development of the employer.
(2) Result from any work performed by the employee for the
employer.
(b) To the extent a provision in an employment agreement purports to
require an employee to assign an invention otherwise excluded from being
required to be assigned under subdivision (a), the provision is against the
public policy of this state and is unenforceable.
Exhibit B
<PAGE> 12
EXHIBIT C
MESSAGEMEDIA, INC.
CONFLICT OF INTEREST GUIDELINES
It is the policy of MESSAGEMEDIA, INC. (the "Company") to conduct its
affairs in strict compliance with the letter and spirit of the law and to adhere
to the highest principles of business ethics. Accordingly, all officers,
employees and independent contractors must avoid activities which are in
conflict, or give the appearance of being in conflict, with these principles and
with the interests of the Company. The following sets forth examples of
potentially compromising situations which must be avoided but is not all
inclusive of the types of conduct which may be considered a violation of this
policy. Any violations of this policy must be reported to the President.
1. Revealing confidential information to outsiders or misusing
confidential information. Unauthorized divulging of information is a violation
of this policy whether or not for personal gain and whether or not harm to the
Company is intended. (The Confidential Information and Inventions Assignment
Agreement elaborates on this principle and is a binding agreement.)
2. Accepting or offering substantial gifts, excessive entertainment,
favors or payments which may be deemed to constitute undue influence or
otherwise be improper or embarrassing to the Company.
3. Initiating or approving personnel actions affecting reward or
punishment of employees or applicants where there is a family relationship or is
or appears to be a personal or social involvement.
4. Initiating or approving any form of personal or social harassment of
employees.
5. Investing or holding outside directorship in suppliers, customers, or
competing companies, including financial speculations, where such investment or
directorship might influence in any manner a decision or course of action of the
Company.
6. Borrowing from or lending to other employees, customers or suppliers.
7. Improperly using or disclosing to the Company any proprietary
information or trade secrets of any former or concurrent employer or other
person or entity with whom obligations of confidentiality exist.
8. Unlawfully discussing prices, costs, customers, sales or markets with
competing companies or their employees.
9. Making any unlawful agreement with distributors with respect to
prices.
10. Improperly using or authorizing the use of any inventions which are
the subject of valid patent claims of any other person or entity.
Each officer, employee and independent contractor must take appropriate
action to ensure compliance with these guidelines and to bring problem areas to
the attention of higher management for review. Violations of this Conflict of
Interest Policy may result in discharge without warning.
Appendix C
<PAGE> 13
APPENDIX B
MESSAGEMEDIA, INC.
VOICE-MAIL POLICY STATEMENT
1. The Company may maintain as part of its technology platform a
voice-mail system. This system is provided to assist in the conduct of business
within the Company.
2. Voice-mail and the data stored on it are and remain at all times the
property of the Company. As such, all voice-mail messages created, sent, and
received are and remain the property of the Company.
3. The Company reserves the right to retrieve and listen to any message
composed, sent, or received. Please note that even when a message is deleted, it
is still possible to recreate the message; therefore, ultimate privacy of
messages cannot be guaranteed to anyone.
4. Although voice-mail may accommodate the use of passwords for
security, the reliability of such for maintaining confidentiality cannot be
guaranteed. You must assume that any and all messages may be listened to by
someone other than the intended or designated recipient. Moreover, all passwords
must be made available to the Company. The reason for this is simple. Your
voice-mail may need to be accessed by the Company when you are absent.
5. Notwithstanding the Company's right to retrieve any voice-mail
message, all messages sent by voice-mail are considered to be confidential, and
as such are to be accessed only by the addressed recipient or by direction of
the addressed recipient. Any exception to this policy must be approved by the
Executive Committee.
6. Employees learning of any misuse of the voice-mail system or
violations of this policy shall notify General Counsel or Director of Human
Resources.
7. Voice-mail messages may not contain material that may reasonably be
considered offensive or disruptive to any employee. Offensive content would
include, but not be limited to, sexual comments, racial slurs, gender-specific
comments, or any comments that might offend someone on account of his or her
age, sex, sexual orientation, religious or political beliefs, national origin,
race or disability.
8. Any employee who violates this policy shall be subject to
disciplinary action, up to and including termination.
Appendix B
<PAGE> 14
APPENDIX C
MESSAGEMEDIA, INC.
E-MAIL POLICY STATEMENT
1. The Company maintains as part of its technology platform an e-mail system.
This system is provided to assist in the conduct of business both inside and
outside of the Company.
2. All computers and the data stored on them are and remain at all times
the property of the Company. As such, all e-mail messages composed, sent, and
received are and remain the property of the Company.
3. The Company reserves the right to retrieve and read any message
composed, sent, or received. Please note that even when a message is erased, it
is still possible to recreate the message; therefore, ultimate privacy of
messages cannot be guaranteed to anyone.
4. The Company reserves the right to retain any electronic message on
the system.
5. Although e-mail may accommodate the use of passwords for security,
the reliability of such for maintaining confidentiality cannot be guaranteed.
You must assume that any and all messages may be read by someone other than the
intended or designated recipient. Moreover, all passwords must be made available
to the Company. The reason for this is simple. Your e-mail may need to be
accessed by the Company when you are absent.
6. Notwithstanding the Company's right to retrieve and read any e-mail
message, all messages sent by e-mail are considered to be confidential, and as
such are to be read only by the addressed recipient or at the direction of the
addressed recipient. Any exception to this policy must be approved by the
Executive Committee.
7. Employees learning of any misuse of the e-mail system or violations
of this policy shall notify General Counsel or Director of Human Resources.
8. E-mail messages may not contain material that may reasonably be
considered offensive or disruptive to any employee. Offensive content would
include, but not be limited to, sexual comments or images, racial slurs,
gender-specific comments, or any comments that might offend someone on account
of his or her age, sex, sexual orientation, religious or political beliefs,
national origin, race or disability.
9. Any employee who violates this policy shall be subject to
disciplinary action, up to and including termination.
Appendix C
<PAGE> 15
APPENDIX D
MESSAGEMEDIA, INC.
WAIVER AND RELEASE OF CLAIMS
In exchange for the severance payments provided for in my offer letter agreement
(the "Agreement"), to which this form is attached, I hereby furnish
MESSAGEMEDIA, INC. (the "Company") with the following release and waiver.
I hereby release, and forever discharge the Company, its officers, directors,
agents, employees, stockholders, successors, assigns and affiliates, of and from
any and all claims, liabilities, demands, causes of action, costs, expenses,
attorneys' fees, damages, indemnities and obligations of every kind and nature,
in law, equity, or otherwise, known and unknown, suspected and unsuspected,
disclosed and undisclosed, arising at any time prior to and including my
employment termination date with respect to any claims relating to my employment
and the termination of my employment, including but not limited to, claims
pursuant to any federal, state or local law relating to employment, including,
but not limited to, discrimination claims, claims under the California Fair
Employment and Housing Act, and the Federal Age Discrimination in Employment Act
of 1967, as amended ("ADEA"), or claims for wrongful termination, breach of the
covenant of good faith, contract claims, tort claims, and wage or benefit
claims, including but not limited to, claims for salary, bonuses, commissions,
stock, stock options, vacation pay, fringe benefits, severance pay or any form
of compensation (other than the obligations under Section 6.3 of the Agreement).
I also acknowledge that I have read and understand Section 1542 of the
California Civil Code which reads as follows: "A general release does not extend
to claims which the creditor does not know or suspect to exist in his favor at
the time of executing the release, which if known by him must have materially
affected his settlement with the debtor." I hereby expressly waive and
relinquish all rights and benefits under that section and any law of any
jurisdiction of similar effect with respect to any claims I may have against the
Company.
I acknowledge that, among other rights, I am waiving and releasing any rights I
may have under ADEA, that this waiver and release is knowing and voluntary, and
that the consideration given for this waiver and release is in addition to
anything of value to which I was already entitled as an employee of the Company.
I further acknowledge that I have been advised, as required by the Older Workers
Benefit Protection Act, that: (a) the waiver and release granted herein does not
relate to claims which may arise after this agreement is executed; (b) I have
the right to consult with an attorney prior to executing this agreement
(although I may choose voluntarily not to do so); (c) I have twenty-one (21)
days from the date I receive this agreement, in which to consider this agreement
(although I may choose voluntarily to execute this agreement earlier); (d) I
have seven (7) days following the execution of this agreement to revoke my
consent to the agreement; and (e) this agreement shall not be effective until
the seven (7) day revocation period has expired.
Date: __________________ By:__________________________
MARY BETH LOESCH
Appendix D
<PAGE> 1
EXHIBIT 10.45
May 7, 1999
Elizabeth Wallace
Dear Elizabeth:
MessageMedia, Inc. ("MessageMedia" or the "Company") is pleased to offer you the
position of Vice President of Client Services on the terms and conditions stated
in this letter. Of course, MessageMedia may change your position and duties from
time to time as it deems necessary. If you accept this offer, we would like for
you to begin work with MessageMedia on May 12, 1999. You will report directly to
Larry Jones, CEO.
Your initial rate of compensation will be $150,000 per year, less payroll
deductions and all required withholdings, paid on the Company's regular pay
periods. You will be eligible for all fringe benefits presently offered and
offered in the future to MessageMedia employees and senior executives. Details
about such benefits are available for your review.
In addition to your base salary, you will be eligible to earn an annual
performance bonus with a target of $75,000, less applicable taxes, based upon
performance targets to be defined by the CEO and will be paid on a calendar
basis. The Company further agrees that you will be guaranteed at least $35,000
of the performance bonus for the period through December 31, 1999.
Subject to approval by the Compensation Committee of the Board of Directors you
will be eligible to receive an option to purchase 125,000 shares of the
Company's Common Stock (the "Option"), with an exercise price per share equal to
the closing fair market value of the Company's Common Stock on the date of this
letter May 7, 1999 ("Vesting Commencement Date). To the maximum extent possible,
the Option shall be an incentive stock option as such term is defined in Section
422 of the Internal Revenue Code of 1986, as amended. This Option will be issued
in accordance with the terms and conditions of the 1995 Stock Option Plan.
The Option shall vest in accordance with the Company's standard form of option
agreement under the 1995 Stock Option Plan, as amended, which provides that 25%
of the shares subject to the option shall vest and become exercisable on the
first anniversary of the Vesting Commencement Date, and an additional 1/48th of
the shares subject to the option at the end of each one-month period thereafter
shall vest and become exercisable provided in each case that the optionee
remains an employee and/or consultant of the Company.
<PAGE> 2
Page 2
You will be entitled to four weeks of paid vacation during your first year of
service which shall begin accruing monthly upon commencement of employment. You
will be eligible to use your accrued vacation after your first thirty (30) days
of employment in accordance with the provisions of the Employee Handbook.
Should you accept this offer, your employment with MessageMedia will not be for
a specified term and may be terminated with or without cause and with or without
notice by you or by the Company at any time, for any reason or no reason. Any
contrary representations or agreements which may have been made to you are
superseded by this offer. The "at will" nature of your employment described in
this offer letter shall constitute the entire agreement between you and
MessageMedia concerning the nature and duration of your employment. Though your
job duties, title, compensation and benefits may change over time and you may be
subject to incremental discipline that doesn't include a termination, none of
these events change our agreement that you are an "at will" employee. The "at
will" nature of your employment with MessageMedia can only be changed in a
writing signed by you and the President of the Company.
Notwithstanding the at-will nature of your employment, if the Company terminates
your employment without "cause" at any time, then upon your furnishing to the
Company an executed waiver and release form (a form of which is attached as
Appendix D), it will continue to pay you monthly for four months, as severance,
of your then current base salary, subject to standard payroll deductions and
withholdings. If you resign or your employment is terminated for "cause", all
compensation and benefits will cease immediately upon your last day of
employment and you will receive no severance benefits. For purposes of this
letter agreement, the definition of "cause" shall be limited to the occurrence
of any of the following events: (i) your engaging or in any manner participating
in an activity which is intentionally and materially injurious to the Company;
(ii) your commission of any fraud or embezzlement against the Company; (iii)
your conviction of any crime involving dishonesty or moral turpitude; (iv)
conduct by you which in good faith and reasonable determination of the Board
demonstrates gross unfitness to serve; or (v) your incurable material breach of
any element of the Company's Confidential Information and Inventions Assignment
Agreement, including without limitation, your theft or other misappropriation of
the Company's proprietary information.
During your employment with the Company and for one year thereafter, you agree
that you will not engage in competition with the Company, either directly or
indirectly, in any manner or capacity, as an advisor, principal, agent, partner,
officer, director, employee, member of any association or otherwise, in any
phase of the business of developing, manufacturing and marketing of products
which are in the same field of use or which otherwise compete in a material way
with the products or proposed products of MessageMedia. While employed by the
Company and for one year thereafter, you also agree that in order to protect the
Company's confidential and proprietary information from unauthorized use, that
you will not, either directly or through others, solicit or attempt to solicit
any employee, consultant or independent contractor of the Company to terminate
his or her relationship with the Company in order to become and employee,
consultant or independent contractor to or for any other person or business
entity.
<PAGE> 3
Page 3
One of the conditions of your employment with MessageMedia is the maintenance of
the confidentiality of MessageMedia's proprietary and confidential information.
Upon commencement of employment, you will be required to execute the Company's
Confidential Information and Inventions Assignment Agreement, attached hereto as
Appendix A, the Company's Voice-Mail Policy Statement, attached hereto as
Appendix B, and the E-Mail Policy Statement, attached hereto as Appendix C.
In your work for the Company, you will be expected not to use or disclose any
confidential information, including trade secrets, of any former employer or
other person to whom you have an obligation of confidentiality. You agree that
you will not bring onto Company premises any unpublished documents or property
belonging to any former employer or other person to whom you have an obligation
of confidentiality. In the performance of your duties for the Company, you will
be expected to use only that information which is generally known and used by
persons with training and experience comparable to your own, which is common
knowledge in the industry or otherwise legally in the public domain, or which is
otherwise provided or developed by the Company.
As an employee of MessageMedia, you will be required to comply with all Company
policies and procedures. In particular, you will be required to familiarize
yourself with, and to comply with, MessageMedia's policy prohibiting harassment
and discrimination, and the policy concerning drugs and alcohol. As required by
law, this offer is subject to satisfactory proof of your right to work in the
United States.
We are looking forward to having you join MessageMedia, Inc. If you wish to
accept this offer, please sign below and return the fully executed letter to us.
You should keep one copy of this letter for your own records.
Very truly yours,
MESSAGEMEDIA, INC.
- ----------------------------- -----------------------------
Larry Jones Date
President and Chief Executive Officer
ACCEPTANCE:
<PAGE> 4
Page 4
I have read, understand, and accept the foregoing terms and conditions of
employment. I further understand my job duties, title, compensation and benefits
may change over time without a written modification of this agreement. Further
the "at will" term of my employment (i.e., my right and MessageMedia's right to
terminate our employment relationship at any time, with or without cause) is a
term of employment which cannot be altered or modified. I understand and agree
that any contrary representations or agreements which may have been made to me
are superseded by this offer and my acceptance of the same.
As further consideration for the offer of employment with MessageMedia that is
contained in this offer letter and accepted by me, I agree to be bound by the
following policies and procedures:
1. Appendix A - Confidential Information and Inventions Assignment Agreement.
2. Appendix B - Voice-Mail Policy Statement.
3. Appendix C - E-Mail Policy Statement.
4. Employee Manual, a copy of which has been provided to me.
5. Appendix D - Waiver and Release
- ----------------------------- -----------------------------
Date Elizabeth Wallace
<PAGE> 5
APPENDIX A
MESSAGEMEDIA, INC.
CONFIDENTIAL INFORMATION AND INVENTIONS
ASSIGNMENT AGREEMENT
As a condition of my employment with MESSAGEMEDIA, INC., its subsidiaries,
affiliates, successors or assigns (together the "Company,") and in consideration
of my employment with the Company and my receipt of the compensation now and
hereafter paid to me by Company, I agree to the following:
1. CONFIDENTIAL INFORMATION
(a) COMPANY INFORMATION. At all times during the term of my
employment and thereafter, I will hold in strictest confidence, and will not
use, except for the benefit of the Company, nor disclose to any person, firm or
corporation without written authorization of the Board of Directors of the
Company, any Confidential Information of the Company. I understand that
"Confidential Information" means any Company proprietary information, technical
data, trade secrets or know-how, including, but not limited to, research,
product plans, products, services, customer lists and customers (including but
not limited to, customers of the Company on whom I called or with whom I became
acquainted during the term of my employment), markets, software, developments,
inventions, processes, formulas, technology, designs, drawings, engineering,
hardware configuration information, marketing, finances or other business
information disclosed to me by the Company either directly or indirectly in
writing, orally or by drawings or observation of parts or equipment. I further
understand that Confidential Information does not include any of the foregoing
items which has become publicly known and made generally available through no
wrongful act of mine or of others who were under confidentiality obligations as
to the item or items involved.
(b) FORMER EMPLOYER INFORMATION. I will not, during my
employment with the Company, improperly use or disclose any proprietary
information or trade secrets of any former or concurrent employer.
(c) THIRD PARTY INFORMATION. I recognize that the Company has
received and in the future will receive from third parties their confidential or
proprietary information subject to a duty on the Company's part to maintain the
confidentiality of such information and to use it only for certain limited
purposes. I agree to hold all such confidential or proprietary information in
the strictest confidence and not to disclose it to any person, firm or
corporation or to use it except as necessary in carrying out my work for the
Company consistent with the Company's agreement with such third party.
Appendix A-1
<PAGE> 6
2. INVENTIONS.
(a) INVENTIONS RETAINED AND LICENSED. I have attached hereto as
Exhibit A the List of Prior Inventions and Original Works of Authorship,
describing all inventions, original works of authorship, developments,
improvements, and trade secrets which were made by me prior to my employment
with the Company (collectively referred to as "Prior Inventions"), which belong
to me, which relate to the Company's proposed business, products or research and
development, and which are not assigned to the Company hereunder; or, if no such
list is attached, I represent that there are no such Prior Inventions. If in the
course of my employment with the Company, I incorporate into a Company product,
process or machine a Prior Invention owned by me or in which I have an interest,
the Company is hereby granted and shall have a nonexclusive, royalty-free,
irrevocable, perpetual, worldwide license, including the right to grant
sublicenses, to make, have made, modify, use and sell such Prior Invention as
part of or in connection with such product, process or machine.
(b) ASSIGNMENT OF INVENTIONS. I agree that I will make full
written disclosure to the Company, and hereby assign to the Company, all my
right, title, and interest in all inventions ("Inventions"), whether or not
patentable or registrable under copyright or similar laws, which I may
individually or jointly conceive or develop or reduce to practice, during the
period of time I am in the employ of the Company, except as provided in Section
2 (d) below. I further acknowledge that all original works of authorship which
are made by me (solely or jointly with others) within the scope of and during
the period of my employment with the Company and which are protectible by
copyright are "works made for hire," as that term is defined in the United
States Copyright Act.
(c) PATENT AND COPYRIGHT REGISTRATION. I agree to assist the
Company, or its designee, at the Company's expense, in every proper way to
secure the Company's rights in the Inventions and any copyrights, patents, or
other intellectual property rights relating thereto in any and all countries. I
further agree that my duties to assist the company in this regard shall continue
after the termination of this Agreement. If the Company is unable because of my
mental or physical incapacity or for any other reason to secure my signature to
apply for or to pursue any application for any United States or foreign patents
or copyright registrations covering Inventions or original works of authorship
assigned to the Company as above, then I hereby irrevocably designate and
appoint the Company and its duly authorized officers and agents as my agent and
attorney in fact, to act for and in my behalf and stead to execute and file any
such applications and to do all other lawfully permitted acts to further the
prosecution and issuance of letters patent or copyright registrations thereon
with the same legal force and effect as if executed by me.
(d) EXCEPTION TO ASSIGNMENTS. I understand that the provisions
of this Agreement requiring assignment of Inventions to the Company do not apply
to any Invention which qualifies fully under the provisions of California Labor
Code Section 2870. (A copy of California Labor Code Section 2870, Employment
Agreements; Assignment of Rights is attached hereto as Exhibit B.) I will advise
the Company promptly in writing of any Inventions that I believe meet the
criteria in California Labor Code Section 2870 and not otherwise disclosed on
Exhibit A.
Appendix A-2
<PAGE> 7
(e) REPRESENTATION AS TO INVENTIONS DURING EMPLOYMENT. I
understand that while performing work for the Company wherein I develop
Inventions, I am not authorized to steal, borrow or use what I know to be the
property of any other individual or entity without license or permission of the
author or owner. I hereby represent that any work I represent as authored or
invented by me is such, and will not pass off any other person's work as my own
for any purpose. I understand that doing so can result in immediate termination
of my employment.
3. CONFLICTING EMPLOYMENT. I agree that, during the term of my
employment with the Company, I will not accept any other employment, occupation,
consulting or other business activity directly related to the business in which
the Company is now involved or becomes involved during the term of my
employment, nor will I engage in any other activities that conflict with my
obligations to the Company, except with the written consent of the Company.
4. RETURNING COMPANY DOCUMENTS. I agree that, at the time of leaving the
employ of the Company, I will deliver to the Company (and will not keep in my
possession, recreate or deliver to anyone else) any and all devices, records,
data, notes, reports, proposals, lists, correspondence, specifications,
drawings, blueprints, sketches, materials, equipment, other documents or
property, or reproductions of any aforementioned items developed by me pursuant
to my employment with the Company or otherwise belonging to the Company, its
successors or assigns.
5. NOTIFICATION OF NEW EMPLOYER. In the event that I leave the employ of
the Company, I hereby grant consent to notification by the Company to my new
employer about my rights and obligations under this Agreement.
6. SOLICITATION OF EMPLOYEES. I agree that for a period of twelve (12)
months immediately following the termination of my relationship with the Company
for any reason, whether with or without cause, I shall not either directly or
indirectly solicit, induce, recruit or encourage any of the Company's employees
to leave their employment, or take away such employees, or attempt to solicit,
induce, recruit, encourage or take away employees of the Company, either for
myself or for any other person or entity.
7. CONFLICT OF INTEREST GUIDELINES. I agree to diligently adhere to the
Conflict of Interest Guidelines attached as Exhibit C hereto.
8. REPRESENTATIONS. I agree to execute any proper oath or verify any
proper document required to carry out the terms of this Agreement. I represent
that my performance of all the terms of this Agreement will not breach any
agreement to keep in confidence proprietary information acquired by me in
confidence or in trust prior to my employment by the Company. I have not entered
into, and I agree I will not enter into, any oral or written agreement in
conflict herewith.
Appendix A-3
<PAGE> 8
9. ARBITRATION. In the event of any dispute, controversy or claim
arising out of, connected with, or relating to this letter, or the breach,
validity, or enforceability of any provision of this letter, such dispute,
controversy or claim shall be resolved by final and binding arbitration by a
panel of three (3) arbitrators in accordance with and subject to the Rules of
Judicial Arbitration and Mediation Services, Inc. ("JAMS") then in effect.
Following notice of a Party's election to require arbitration, each Party will
within thirty (30) days, select one arbitrator from the JAMS list of commercial
arbitrators, and those two arbitrators will within thirty (30) days thereafter,
select a third arbitrator. If the two arbitrators are unable to agree on a third
arbitrator within thirty (30) days, JAMS will within thirty (30) days
thereafter, select such third arbitrator. In the event any Party fails to select
an arbitrator within the requisite period, JAMS is hereby given the right to
select the arbitrator on behalf of such Party. Arbitration shall take place at a
location within California chosen by the arbitrators. All expenses associated
with obtaining and utilizing the services of the JAMS and the arbitrators, shall
be shared equally by the Parties. JAMS and the arbitrators shall be made aware
of this provision and shall agree to request payment separately from each of the
Parties for said services, including all expenses directly related to the
arbitration, other than the expense of witnesses, which shall be borne by the
Party producing such witnesses.
Notwithstanding the foregoing, each Party shall bear its own respective
costs of preparing for and participating in the arbitration, including, without
limitation, attorneys' fees, expert and/or witness fees, and the Party's costs
of complying with discovery requests. Discovery as permitted by the Federal
Rules of Civil Procedure then in effect will be allowed in connection with
arbitration to the extent consistent with the purpose of arbitration and as
allowed by the arbitrators. Judgment upon the award rendered in any arbitration
may be entered in any court of competent jurisdiction, or application be made to
such court for a judicial acceptance of the award and an enforcement, as the law
of the state having jurisdiction may require or allow. The fact that arbitration
is or may be allowed will not impair the exercise of any termination rights
under this letter."
10. GENERAL PROVISIONS.
(a) GOVERNING LAW: CONSENT TO PERSONAL JURISDICTION. This
Agreement will be governed by the laws of the State of California. I hereby
expressly consent to the personal jurisdiction of the state and federal courts
located in California for any lawsuit filed there against me by the Company
arising from or relating to this Agreement.
(b) ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement and understanding between the Company and me relating to the subject
matter herein and merges all prior discussions between us. No modification of or
amendment to this Agreement, nor any waiver of any rights under this agreement,
will be effective unless in writing signed by the party to be charged. Any
subsequent change or changes in my duties, salary or compensation will not
affect the validity or scope of this Agreement.
Appendix A-4
<PAGE> 9
(c) SEVERABILITY. If one or more of the provisions in this
Agreement are deemed void by law, then the remaining provisions will continue in
full force and effect.
(d) SUCCESSORS AND ASSIGNS. This Agreement will be binding upon
my heirs, executors, administrators and other legal representatives and will be
for the benefit of the Company, its successors, and its assigns.
- ---------------------------------- ------------------------------------
Date Signature
------------------------------------
Print Name
Appendix A-5
<PAGE> 10
EXHIBIT A
LIST OF PRIOR INVENTIONS
AND ORIGINAL WORKS OF AUTHORSHIP
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
TITLE DATE IDENTIFYING NUMBER OR BRIEF DESCRIPTION
- --------------------------------------------------------------------------------
<S> <C> <C>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
_____ No inventions or improvements
_____ Additional Sheets Attached
- ---------------------------------- ------------------------------------
Date Signature
------------------------------------
Print Name
Exhibit A
<PAGE> 11
EXHIBIT B
CALIFORNIA LABOR CODE SECTION 2870
EMPLOYMENT AGREEMENTS; ASSIGNMENT OF RIGHTS
(a) Any provision in an employment agreement which provides that an
employee shall assign, or offer to assign, any of his or her rights in an
invention to his or her employer shall not apply to an invention that the
employee developed entirely on his or her own time without using the employer's
equipment, supplies, facilities, or trade secret information except for those
inventions that either:
(1) Relate at the time of conception or reduction to practice of
the invention to the employer's business, or actual or demonstrably anticipated
research or development of the employer.
(2) Result from any work performed by the employee for the
employer.
(b) To the extent a provision in an employment agreement purports to
require an employee to assign an invention otherwise excluded from being
required to be assigned under subdivision (a), the provision is against the
public policy of this state and is unenforceable.
Exhibit B
<PAGE> 12
EXHIBIT C
MESSAGEMEDIA, INC.
CONFLICT OF INTEREST GUIDELINES
It is the policy of MESSAGEMEDIA, INC. (the "Company") to conduct its
affairs in strict compliance with the letter and spirit of the law and to adhere
to the highest principles of business ethics. Accordingly, all officers,
employees and independent contractors must avoid activities which are in
conflict, or give the appearance of being in conflict, with these principles and
with the interests of the Company. The following sets forth examples of
potentially compromising situations which must be avoided but is not all
inclusive of the types of conduct which may be considered a violation of this
policy. Any violations of this policy must be reported to the President.
1. Revealing confidential information to outsiders or misusing
confidential information. Unauthorized divulging of information is a violation
of this policy whether or not for personal gain and whether or not harm to the
Company is intended. (The Confidential Information and Inventions Assignment
Agreement elaborates on this principle and is a binding agreement.)
2. Accepting or offering substantial gifts, excessive entertainment,
favors or payments which may be deemed to constitute undue influence or
otherwise be improper or embarrassing to the Company.
3. Initiating or approving personnel actions affecting reward or
punishment of employees or applicants where there is a family relationship or is
or appears to be a personal or social involvement.
4. Initiating or approving any form of personal or social harassment of
employees.
5. Investing or holding outside directorship in suppliers, customers, or
competing companies, including financial speculations, where such investment or
directorship might influence in any manner a decision or course of action of the
Company.
6. Borrowing from or lending to other employees, customers or suppliers.
7. Improperly using or disclosing to the Company any proprietary
information or trade secrets of any former or concurrent employer or other
person or entity with whom obligations of confidentiality exist.
8. Unlawfully discussing prices, costs, customers, sales or markets with
competing companies or their employees.
9. Making any unlawful agreement with distributors with respect to
prices.
10. Improperly using or authorizing the use of any inventions which are
the subject of valid patent claims of any other person or entity.
Each officer, employee and independent contractor must take appropriate
action to ensure compliance with these guidelines and to bring problem areas to
the attention of higher management for review. Violations of this Conflict of
Interest Policy may result in discharge without warning.
Appendix C
<PAGE> 13
APPENDIX B
MESSAGEMEDIA, INC.
VOICE-MAIL POLICY STATEMENT
1. The Company may maintain as part of its technology platform a
voice-mail system. This system is provided to assist in the conduct of business
within the Company.
2. Voice-mail and the data stored on it are and remain at all times the
property of the Company. As such, all voice-mail messages created, sent, and
received are and remain the property of the Company.
3. The Company reserves the right to retrieve and listen to any message
composed, sent, or received. Please note that even when a message is deleted, it
is still possible to recreate the message; therefore, ultimate privacy of
messages cannot be guaranteed to anyone.
4. Although voice-mail may accommodate the use of passwords for
security, the reliability of such for maintaining confidentiality cannot be
guaranteed. You must assume that any and all messages may be listened to by
someone other than the intended or designated recipient. Moreover, all passwords
must be made available to the Company. The reason for this is simple. Your
voice-mail may need to be accessed by the Company when you are absent.
5. Notwithstanding the Company's right to retrieve any voice-mail
message, all messages sent by voice-mail are considered to be confidential, and
as such are to be accessed only by the addressed recipient or by direction of
the addressed recipient. Any exception to this policy must be approved by the
Executive Committee.
6. Employees learning of any misuse of the voice-mail system or
violations of this policy shall notify General Counsel or Director of Human
Resources.
7. Voice-mail messages may not contain material that may reasonably be
considered offensive or disruptive to any employee. Offensive content would
include, but not be limited to, sexual comments, racial slurs, gender-specific
comments, or any comments that might offend someone on account of his or her
age, sex, sexual orientation, religious or political beliefs, national origin,
race or disability.
8. Any employee who violates this policy shall be subject to
disciplinary action, up to and including termination.
Appendix B
<PAGE> 14
APPENDIX C
MESSAGEMEDIA, INC.
E-MAIL POLICY STATEMENT
1. The Company maintains as part of its technology platform an e-mail
system. This system is provided to assist in the conduct of business both inside
and outside of the Company.
2. All computers and the data stored on them are and remain at all times
the property of the Company. As such, all e-mail messages composed, sent, and
received are and remain the property of the Company.
3. The Company reserves the right to retrieve and read any message
composed, sent, or received. Please note that even when a message is erased, it
is still possible to recreate the message; therefore, ultimate privacy of
messages cannot be guaranteed to anyone.
4. The Company reserves the right to retain any electronic message on
the system.
5. Although e-mail may accommodate the use of passwords for security,
the reliability of such for maintaining confidentiality cannot be guaranteed.
You must assume that any and all messages may be read by someone other than the
intended or designated recipient. Moreover, all passwords must be made available
to the Company. The reason for this is simple. Your e-mail may need to be
accessed by the Company when you are absent.
6. Notwithstanding the Company's right to retrieve and read any e-mail
message, all messages sent by e-mail are considered to be confidential, and as
such are to be read only by the addressed recipient or at the direction of the
addressed recipient. Any exception to this policy must be approved by the
Executive Committee.
7. Employees learning of any misuse of the e-mail system or violations
of this policy shall notify General Counsel or Director of Human Resources.
8. E-mail messages may not contain material that may reasonably be
considered offensive or disruptive to any employee. Offensive content would
include, but not be limited to, sexual comments or images, racial slurs,
gender-specific comments, or any comments that might offend someone on account
of his or her age, sex, sexual orientation, religious or political beliefs,
national origin, race or disability.
9. Any employee who violates this policy shall be subject to
disciplinary action, up to and including termination.
Appendix C
<PAGE> 15
APPENDIX D
MESSAGEMEDIA, INC.
WAIVER AND RELEASE OF CLAIMS
In exchange for the severance payments provided for in my offer letter agreement
(the "Agreement"), to which this form is attached, I hereby furnish
MESSAGEMEDIA, INC. (the "Company") with the following release and waiver.
I hereby release, and forever discharge the Company, its officers, directors,
agents, employees, stockholders, successors, assigns and affiliates, of and from
any and all claims, liabilities, demands, causes of action, costs, expenses,
attorneys' fees, damages, indemnities and obligations of every kind and nature,
in law, equity, or otherwise, known and unknown, suspected and unsuspected,
disclosed and undisclosed, arising at any time prior to and including my
employment termination date with respect to any claims relating to my employment
and the termination of my employment, including but not limited to, claims
pursuant to any federal, state or local law relating to employment, including,
but not limited to, discrimination claims, claims under the California Fair
Employment and Housing Act, and the Federal Age Discrimination in Employment Act
of 1967, as amended ("ADEA"), or claims for wrongful termination, breach of the
covenant of good faith, contract claims, tort claims, and wage or benefit
claims, including but not limited to, claims for salary, bonuses, commissions,
stock, stock options, vacation pay, fringe benefits, severance pay or any form
of compensation (other than the obligations under Section 6.3 of the Agreement).
I also acknowledge that I have read and understand Section 1542 of the
California Civil Code which reads as follows: "A general release does not extend
to claims which the creditor does not know or suspect to exist in his favor at
the time of executing the release, which if known by him must have materially
affected his settlement with the debtor." I hereby expressly waive and
relinquish all rights and benefits under that section and any law of any
jurisdiction of similar effect with respect to any claims I may have against the
Company.
I acknowledge that, among other rights, I am waiving and releasing any rights I
may have under ADEA, that this waiver and release is knowing and voluntary, and
that the consideration given for this waiver and release is in addition to
anything of value to which I was already entitled as an employee of the Company.
I further acknowledge that I have been advised, as required by the Older Workers
Benefit Protection Act, that: (a) the waiver and release granted herein does not
relate to claims which may arise after this agreement is executed; (b) I have
the right to consult with an attorney prior to executing this agreement
(although I may choose voluntarily not to do so); (c) I have twenty-one (21)
days from the date I receive this agreement, in which to consider this agreement
(although I may choose voluntarily to execute this agreement earlier); (d) I
have seven (7) days following the execution of this agreement to revoke my
consent to the agreement; and (e) this agreement shall not be effective until
the seven (7) day revocation period has expired.
Date: __________________ By:__________________________
ELIZABETH WALLACE
Appendix D
<PAGE> 1
EXHIBIT 10.46
June 18, 1999
Sue Morse
Dear Sue:
MessageMedia, Inc. ("MessageMedia" or the "Company") is pleased to offer you
employment on the terms and conditions stated in this letter. MessageMedia is
offering you the position of VP of Human Resources. Of course, MessageMedia may
change your position and duties from time to time as it deems necessary. If you
accept this offer, we would like you to begin work with MessageMedia on July 1,
1999.
Your initial rate of compensation will be $135,000 per year, less payroll
deductions and all required withholdings. You will be eligible for all fringe
benefits presently offered MessageMedia employees and offered in the future.
Details about such benefits are available for your review. MessageMedia may
modify your compensation and benefits as it deems necessary.
In addition to your base salary, you will be eligible to earn an annual
performance bonus with a target of 50% of your base salary, less payroll
deductions and all required withholdings, based upon performance targets to be
defined by the CEO and will be paid on a calendar basis. The Company further
agrees that you will be guaranteed a minimum bonus of $67,500 for the period
July 1st to December 30th 1999.
Subject to approval by the Compensation Committee of the Board of Directors you
will be eligible to receive an option to purchase 125,000 shares of the
Company's Common Stock (the "Option"), with an exercise price per share equal to
the closing fair market value of the Company's Common Stock on the date of this
letter ("Vesting Commencement Date). This Option will be issued in accordance
with the terms and conditions of the 1995 Stock Option Plan.
The Option shall vest in accordance with the Company's standard form of option
agreement under the 1995 Stock Option Plan, as amended, which provides that 25%
of the shares subject to the option shall vest and become exercisable on the
first anniversary of the Vesting Commencement Date, and an additional 1/48th of
the shares subject to the option at the end of each one-month period thereafter
shall vest and become exercisable provided in each case that the optionee
remains an employee and/or consultant of the Company.
Initial _____
<PAGE> 2
2
You will be entitled to four weeks of paid vacation during your first year of
service which shall begin accruing monthly upon commencement of employment. You
will be eligible to use your accrued vacation after your first thirty (30) days
of employment, and in accordance with the provisions of the Employee Handbook
thereafter.
Should you accept this offer, your employment with MessageMedia will not be for
a specified term and may be terminated with or without cause and with or without
notice by you or by the Company at any time, for any reason or no reason. Any
contrary representations or agreements which may have been made to you are
superseded by this offer. The "at will" nature of your employment described in
this offer letter shall constitute the entire agreement between you and
MessageMedia concerning the nature and duration of your employment. Though your
job duties, title, compensation and benefits may change over time and you may be
subject to incremental discipline that doesn't include a termination, none of
these events change our agreement that you are an "at will" employee. The "at
will" term of your employment with MessageMedia can only be changed in a writing
signed by you and the President of the Company.
One of the conditions of your employment with MessageMedia is the maintenance of
the confidentiality of MessageMedia's proprietary and confidential information.
You will be required to execute the Company's Confidential Information and
Inventions Assignment Agreement, attached hereto as Appendix A, the Company's
Voice-Mail Policy Statement, attached hereto as Appendix B, and the E-Mail
Policy Statement, attached hereto as Appendix C.
In your work for the Company, you will be expected not to use or disclose any
confidential information, including trade secrets, of any former employer or
other person to whom you have an obligation of confidentiality. You agree that
you will not bring onto Company premises any unpublished documents or property
belonging to any former employer or other person to whom you have an obligation
of confidentiality. In the performance of your duties for the Company, you will
be expected to use only that information which is generally known and used by
persons with training and experience comparable to your own, which is common
knowledge in the industry or otherwise legally in the public domain, or which is
otherwise provided or developed by the Company.
As an employee of MessageMedia, you will be required to comply with all Company
policies and procedures. In particular, you will be required to familiarize
yourself with, and to comply with, MessageMedia's policy prohibiting harassment
and discrimination, and the policy concerning drugs and alcohol. Violations of
these policies may lead to immediate termination of employment. As required by
law, this offer is subject to satisfactory proof of your right to work in the
United States.
Initial _____
<PAGE> 3
2
We are looking forward to having you join MessageMedia, Inc. If you wish to
accept this offer, please sign below and return the fully executed letter to us.
You should keep one copy of this letter for your own records.
Very truly yours,
MESSAGEMEDIA, INC.
- ----------------------------------- --------------------------------
Larry Jones Date
President & Chief Executive Officer
ACCEPTANCE:
I have read, understand, and accept the foregoing terms and conditions of
employment. I further understand my job duties, title, compensation and benefits
may change over time without a written modification of this agreement. Further
the "at will" term of my employment (i.e., my right and MessageMedia's right to
terminate our employment relationship at any time, with or without cause) is a
term of employment which cannot be altered or modified. I understand and agree
that any contrary representations or agreements which may have been made to me
are superseded by this offer and my acceptance of the same.
As further consideration for the offer of employment with MessageMedia that is
contained in this offer letter and accepted by me, I agree to be bound by the
following policies and procedures:
1. Appendix A - Confidential Information and Inventions Assignment Agreement.
2. Appendix B - Voice-Mail Policy Statement.
3. Appendix C - E-Mail Policy Statement.
4. Employee Manual, a copy of which has been provided to me.
- ----------------------- --------------------------------
Sue Morse Date
Initial _____
<PAGE> 4
APPENDIX A
MESSAGEMEDIA, INC.
CONFIDENTIAL INFORMATION AND INVENTIONS
ASSIGNMENT AGREEMENT
As a condition of my employment with MESSAGEMEDIA, INC., its subsidiaries,
affiliates, successors or assigns (together the "Company,") and in consideration
of my employment with the Company and my receipt of the compensation now and
hereafter paid to me by Company, I agree to the following:
1. CONFIDENTIAL INFORMATION
(a) COMPANY INFORMATION. At all times during the term of my employment
and thereafter, I will hold in strictest confidence, and will not use, except
for the benefit of the Company, nor disclose to any person, firm or corporation
without written authorization of the Board of Directors of the Company, any
Confidential Information of the Company. I understand that "Confidential
Information" means any Company proprietary information, technical data, trade
secrets or know-how, including, but not limited to, research, product plans,
products, services, customer lists and customers (including but not limited to,
customers of the Company on whom I called or with whom I became acquainted
during the term of my employment), markets, software, developments, inventions,
processes, formulas, technology, designs, drawings, engineering, hardware
configuration information, marketing, finances or other business information
disclosed to me by the Company either directly or indirectly in writing, orally
or by drawings or observation of parts or equipment. I further understand that
Confidential Information does not include any of the foregoing items which has
become publicly known and made generally available through no wrongful act of
mine or of others who were under confidentiality obligations as to the item or
items involved.
(b) FORMER EMPLOYER INFORMATION. I will not, during my employment with
the Company, improperly use or disclose any proprietary information or trade
secrets of any former or concurrent employer.
(c) THIRD PARTY INFORMATION. I recognize that the Company has received
and in the future will receive from third parties their confidential or
proprietary information subject to a duty on the Company's part to maintain the
confidentiality of such information and to use it only for certain limited
purposes. I agree to hold all such confidential or proprietary information in
the strictest confidence and not to disclose it to any person, firm or
corporation or to use it except as necessary in carrying out my work for the
Company consistent with the Company's agreement with such third party.
Appendix A-1
Initial _____
<PAGE> 5
2. INVENTIONS.
(a) INVENTIONS RETAINED AND LICENSED. I have attached hereto as
Exhibit A the List of Prior Inventions and Original Works of Authorship,
describing all inventions, original works of authorship, developments,
improvements, and trade secrets which were made by me prior to my employment
with the Company (collectively referred to as "Prior Inventions"), which belong
to me, which relate to the Company's proposed business, products or research and
development, and which are not assigned to the Company hereunder; or, if no such
list is attached, I represent that there are no such Prior Inventions. If in the
course of my employment with the Company, I incorporate into a Company product,
process or machine a Prior Invention owned by me or in which I have an interest,
the Company is hereby granted and shall have a nonexclusive, royalty-free,
irrevocable, perpetual, worldwide license, including the right to grant
sublicenses, to make, have made, modify, use and sell such Prior Invention as
part of or in connection with such product, process or machine.
(b) ASSIGNMENT OF INVENTIONS. I agree that I will make full written
disclosure to the Company, and hereby assign to the Company, all my right,
title, and interest in all inventions ("Inventions"), whether or not patentable
or registrable under copyright or similar laws, which I may individually or
jointly conceive or develop or reduce to practice, during the period of time I
am in the employ of the Company, except as provided in Section 2 (d) below. I
further acknowledge that all original works of authorship which are made by me
(solely or jointly with others) within the scope of and during the period of my
employment with the Company and which are protectible by copyright are "works
made for hire," as that term is defined in the United States Copyright Act.
(c) PATENT AND COPYRIGHT REGISTRATION. I agree to assist the Company,
or its designee, at the Company's expense, in every proper way to secure the
Company's rights in the Inventions and any copyrights, patents, or other
intellectual property rights relating thereto in any and all countries. I
further agree that my duties to assist the company in this regard shall continue
after the termination of this Agreement. If the Company is unable because of my
mental or physical incapacity or for any other reason to secure my signature to
apply for or to pursue any application for any United States or foreign patents
or copyright registrations covering Inventions or original works of authorship
assigned to the Company as above, then I hereby irrevocably designate and
appoint the Company and its duly authorized officers and agents as my agent and
attorney in fact, to act for and in my behalf and stead to execute and file any
such applications and to do all other lawfully permitted acts to further the
prosecution and issuance of letters patent or copyright registrations thereon
with the same legal force and effect as if executed by me.
(d) EXCEPTION TO ASSIGNMENTS. I understand that the provisions of this
Agreement requiring assignment of Inventions to the Company do not apply to any
Invention which qualifies fully under the provisions of California Labor Code
Section 2870. (A copy of California Labor Code Section 2870, Employment
Agreements; Assignment of Rights is attached hereto as Exhibit B.) I will advise
the Company promptly in writing of any Inventions that I believe meet the
criteria in California Labor Code Section 2870 and not otherwise disclosed on
Exhibit A.
Appendix A-2
Initial _____
<PAGE> 6
(e) REPRESENTATION AS TO INVENTIONS DURING EMPLOYMENT. I understand
that while performing work for the Company wherein I develop Inventions, I am
not authorized to steal, borrow or use what I know to be the property of any
other individual or entity without license or permission of the author or owner.
I hereby represent that any work I represent as authored or invented by me is
such, and will not pass off any other person's work as my own for any purpose. I
understand that doing so can result in immediate termination of my employment.
3. CONFLICTING EMPLOYMENT. I agree that, during the term of my employment
with the Company, I will not accept any other employment, occupation, consulting
or other business activity directly related to the business in which the Company
is now involved or becomes involved during the term of my employment, nor will I
engage in any other activities that conflict with my obligations to the Company,
except with the written consent of the Company.
4. RETURNING COMPANY DOCUMENTS. I agree that, at the time of leaving the
employ of the Company, I will deliver to the Company (and will not keep in my
possession, recreate or deliver to anyone else) any and all devices, records,
data, notes, reports, proposals, lists, correspondence, specifications,
drawings, blueprints, sketches, materials, equipment, other documents or
property, or reproductions of any aforementioned items developed by me pursuant
to my employment with the Company or otherwise belonging to the Company, its
successors or assigns.
5. NOTIFICATION OF NEW EMPLOYER. In the event that I leave the employ of
the Company, I hereby grant consent to notification by the Company to my new
employer about my rights and obligations under this Agreement.
6. SOLICITATION OF EMPLOYEES. I agree that for a period of twelve (12)
months immediately following the termination of my relationship with the Company
for any reason, whether with or without cause, I shall not either directly or
indirectly solicit, induce, recruit or encourage any of the Company's employees
to leave their employment, or take away such employees, or attempt to solicit,
induce, recruit, encourage or take away employees of the Company, either for
myself or for any other person or entity.
7. CONFLICT OF INTEREST GUIDELINES. I agree to diligently adhere to the
Conflict of Interest Guidelines attached as Exhibit C hereto.
8. REPRESENTATIONS. I agree to execute any proper oath or verify any proper
document required to carry out the terms of this Agreement. I represent that my
performance of all the terms of this Agreement will not breach any agreement to
keep in confidence proprietary information acquired by me in confidence or in
trust prior to my employment by the Company. I have not entered into, and I
agree I will not enter into, any oral or written agreement in conflict herewith.
Appendix A-3
Initial _____
<PAGE> 7
9. ARBITRATION. In the event of any dispute, controversy or claim arising
out of, connected with, or relating to this letter, or the breach, validity, or
enforceability of any provision of this letter, such dispute, controversy or
claim shall be resolved by final and binding arbitration by a panel of three (3)
arbitrators in accordance with and subject to the Rules of Judicial Arbitration
and Mediation Services, Inc. ("JAMS") then in effect. Following notice of a
Party's election to require arbitration, each Party will within thirty (30)
days, select one arbitrator from the JAMS list of commercial arbitrators, and
those two arbitrators will within thirty (30) days thereafter, select a third
arbitrator. If the two arbitrators are unable to agree on a third arbitrator
within thirty (30) days, JAMS will within thirty (30) days thereafter, select
such third arbitrator. In the event any Party fails to select an arbitrator
within the requisite period, JAMS is hereby given the right to select the
arbitrator on behalf of such Party. Arbitration shall take place at a location
within California chosen by the arbitrators. All expenses associated with
obtaining and utilizing the services of the JAMS and the arbitrators, shall be
shared equally by the Parties. JAMS and the arbitrators shall be made aware of
this provision and shall agree to request payment separately from each of the
Parties for said services, including all expenses directly related to the
arbitration, other than the expense of witnesses, which shall be borne by the
Party producing such witnesses.
Notwithstanding the foregoing, each Party shall bear its own respective
costs of preparing for and participating in the arbitration, including, without
limitation, attorneys' fees, expert and/or witness fees, and the Party's costs
of complying with discovery requests. Discovery as permitted by the Federal
Rules of Civil Procedure then in effect will be allowed in connection with
arbitration to the extent consistent with the purpose of arbitration and as
allowed by the arbitrators. Judgment upon the award rendered in any arbitration
may be entered in any court of competent jurisdiction, or application be made to
such court for a judicial acceptance of the award and an enforcement, as the law
of the state having jurisdiction may require or allow. The fact that arbitration
is or may be allowed will not impair the exercise of any termination rights
under this letter."
10. GENERAL PROVISIONS.
(a) GOVERNING LAW: CONSENT TO PERSONAL JURISDICTION. This Agreement
will be governed by the laws of the State of California. I hereby expressly
consent to the personal jurisdiction of the state and federal courts located in
California for any lawsuit filed there against me by the Company arising from or
relating to this Agreement.
(b) ENTIRE AGREEMENT. This Agreement sets forth the entire agreement
and understanding between the Company and me relating to the subject matter
herein and merges all prior discussions between us. No modification of or
amendment to this Agreement, nor any waiver of any rights under this agreement,
will be effective unless in writing signed by the party to be charged. Any
subsequent change or changes in my duties, salary or compensation will not
affect the validity or scope of this Agreement.
Appendix A-4
Initial _____
<PAGE> 8
(c) SEVERABILITY. If one or more of the provisions in this Agreement
are deemed void by law, then the remaining provisions will continue in full
force and effect.
(d) SUCCESSORS AND ASSIGNS. This Agreement will be binding upon my
heirs, executors, administrators and other legal representatives and will be for
the benefit of the Company, its successors, and its assigns.
- ---------------------------- -------------------------------
Date Signature
-------------------------------
Print Name
Appendix A-5
Initial _____
<PAGE> 9
EXHIBIT A
LIST OF PRIOR INVENTIONS
AND ORIGINAL WORKS OF AUTHORSHIP
<TABLE>
<CAPTION>
- -------------------------- ---------------- -----------------------------------------
TITLE DATE IDENTIFYING NUMBER OR BRIEF DESCRIPTION
- -------------------------- ---------------- -----------------------------------------
<S> <C> <C>
- -------------------------- ---------------- -----------------------------------------
- -------------------------- ---------------- -----------------------------------------
- -------------------------- ---------------- -----------------------------------------
- -------------------------- ---------------- -----------------------------------------
- -------------------------- ---------------- -----------------------------------------
- -------------------------- ---------------- -----------------------------------------
</TABLE>
No inventions or improvements
- --------
Additional Sheets Attached
- --------
- ------------------------------ ---------------------------------
Date Signature
---------------------------------
Print Name
Exhibit A
Initial _____
<PAGE> 10
EXHIBIT B
CALIFORNIA LABOR CODE SECTION 2870
EMPLOYMENT AGREEMENTS; ASSIGNMENT OF RIGHTS
(a) Any provision in an employment agreement which provides that an
employee shall assign, or offer to assign, any of his or her rights in an
invention to his or her employer shall not apply to an invention that the
employee developed entirely on his or her own time without using the employer's
equipment, supplies, facilities, or trade secret information except for those
inventions that either:
(1) Relate at the time of conception or reduction to practice of the
invention to the employer's business, or actual or demonstrably anticipated
research or development of the employer.
(2) Result from any work performed by the employee for the employer.
(b) To the extent a provision in an employment agreement purports to
require an employee to assign an invention otherwise excluded from being
required to be assigned under subdivision (a), the provision is against the
public policy of this state and is unenforceable.
Exhibit B
Initial _____
<PAGE> 11
EXHIBIT C
MESSAGEMEDIA, INC.
CONFLICT OF INTEREST GUIDELINES
It is the policy of MESSAGEMEDIA, INC. (the "Company") to conduct its
affairs in strict compliance with the letter and spirit of the law and to adhere
to the highest principles of business ethics. Accordingly, all officers,
employees and independent contractors must avoid activities which are in
conflict, or give the appearance of being in conflict, with these principles and
with the interests of the Company. The following sets forth examples of
potentially compromising situations which must be avoided but is not all
inclusive of the types of conduct which may be considered a violation of this
policy. Any violations of this policy must be reported to the President.
1. Revealing confidential information to outsiders or misusing confidential
information. Unauthorized divulging of information is a violation of this policy
whether or not for personal gain and whether or not harm to the Company is
intended. (The Confidential Information and Inventions Assignment Agreement
elaborates on this principle and is a binding agreement.)
2. Accepting or offering substantial gifts, excessive entertainment, favors
or payments which may be deemed to constitute undue influence or otherwise be
improper or embarrassing to the Company.
3. Initiating or approving personnel actions affecting reward or punishment
of employees or applicants where there is a family relationship or is or appears
to be a personal or social involvement.
4. Initiating or approving any form of personal or social harassment of
employees.
5. Investing or holding outside directorship in suppliers, customers, or
competing companies, including financial speculations, where such investment or
directorship might influence in any manner a decision or course of action of the
Company.
6. Borrowing from or lending to other employees, customers or suppliers.
7. Improperly using or disclosing to the Company any proprietary
information or trade secrets of any former or concurrent employer or other
person or entity with whom obligations of confidentiality exist.
8. Unlawfully discussing prices, costs, customers, sales or markets with
competing companies or their employees.
9. Making any unlawful agreement with distributors with respect to prices.
10. Improperly using or authorizing the use of any inventions which are the
subject of valid patent claims of any other person or entity.
Each officer, employee and independent contractor must take appropriate
action to ensure compliance with these guidelines and to bring problem areas to
the attention of higher management for review. Violations of this Conflict of
Interest Policy may result in discharge without warning.
Appendix B
Initial _____
<PAGE> 12
APPENDIX B
MESSAGEMEDIA, INC.
VOICE-MAIL POLICY STATEMENT
1. The Company may maintain as part of its technology platform a voice-mail
system. This system is provided to assist in the conduct of business within the
Company.
2. Voice-mail and the data stored on it are and remain at all times the
property of the Company. As such, all voice-mail messages created, sent, and
received are and remain the property of the Company.
3. The Company reserves the right to retrieve and listen to any message
composed, sent, or received. Please note that even when a message is deleted, it
is still possible to recreate the message; therefore, ultimate privacy of
messages cannot be guaranteed to anyone.
4. Although voice-mail may accommodate the use of passwords for security,
the reliability of such for maintaining confidentiality cannot be guaranteed.
You must assume that any and all messages may be listened to by someone other
than the intended or designated recipient. Moreover, all passwords must be made
available to the Company. The reason for this is simple. Your voice-mail may
need to be accessed by the Company when you are absent.
5. Notwithstanding the Company's right to retrieve any voice-mail message,
all messages sent by voice-mail are considered to be confidential, and as such
are to be accessed only by the addressed recipient or by direction of the
addressed recipient. Any exception to this policy must be approved by the
Executive Committee.
6. Employees learning of any misuse of the voice-mail system or violations
of this policy shall notify General Counsel or Director of Human Resources.
7. Voice-mail messages may not contain material that may reasonably be
considered offensive or disruptive to any employee. Offensive content would
include, but not be limited to, sexual comments, racial slurs, gender-specific
comments, or any comments that might offend someone on account of his or her
age, sex, sexual orientation, religious or political beliefs, national origin,
race or disability.
8. Any employee who violates this policy shall be subject to disciplinary
action, up to and including termination.
Appendix B
Initial _____
<PAGE> 13
APPENDIX C
MESSAGEMEDIA, INC.
E-MAIL POLICY STATEMENT
1. The Company maintains as part of its technology platform an e-mail
system. This system is provided to assist in the conduct of business both inside
and outside of the Company.
2. All computers and the data stored on them are and remain at all times
the property of the Company. As such, all e-mail messages composed, sent, and
received are and remain the property of the Company.
3. The Company reserves the right to retrieve and read any message
composed, sent, or received. Please note that even when a message is erased, it
is still possible to recreate the message; therefore, ultimate privacy of
messages cannot be guaranteed to anyone.
4. The Company reserves the right to retain any electronic message on the
system.
5. Although e-mail may accommodate the use of passwords for security, the
reliability of such for maintaining confidentiality cannot be guaranteed. You
must assume that any and all messages may be read by someone other than the
intended or designated recipient. Moreover, all passwords must be made available
to the Company. The reason for this is simple. Your e-mail may need to be
accessed by the Company when you are absent.
6. Notwithstanding the Company's right to retrieve and read any e-mail
message, all messages sent by e-mail are considered to be confidential, and as
such are to be read only by the addressed recipient or at the direction of the
addressed recipient. Any exception to this policy must be approved by the
Executive Committee.
7. Employees learning of any misuse of the e-mail system or violations of
this policy shall notify General Counsel or Director of Human Resources.
8. E-mail messages may not contain material that may reasonably be
considered offensive or disruptive to any employee. Offensive content would
include, but not be limited to, sexual comments or images, racial slurs,
gender-specific comments, or any comments that might offend someone on account
of his or her age, sex, sexual orientation, religious or political beliefs,
national origin, race or disability.
9. Any employee who violates this policy shall be subject to disciplinary
action, up to and including termination.
Appendix C
Initial _____
<PAGE> 1
EXHIBIT 10.47
MESSAGEMEDIA, INCORPORATED
April 20, 1999
Bert Klein
Dear Bert:
This letter sets forth the terms and conditions of our agreement (the
"Agreement") regarding your employment with MESSAGEMEDIA, INCORPORATED (the
"Company"). This Agreement is made and entered into as of the last day either
party executes this Agreement. You and the Company hereby agree as follows:
1. NEW POSITION. The Company has accepted your resignation as Chief
Financial Officer and Vice-President Finance and Administration of the Company
as of April 9, 1999. You and the Company agree that you shall remain an employee
of the Company, pursuant to the provisions of paragraph 4 herein, with the title
of Vice-President of Corporate Planning. Your base salary shall remain $160,000
per year, subject to standard deductions and withholdings, and you shall
continue to receive standard Company benefits. You agree that you will report to
the President and Chief Executive Officer.
2. RELOCATION PAYMENT. The Company agrees that, as part of the Agreement
and in consideration thereof, it will pay you forty-two thousand dollars
($42,000), subject to standard deductions and withholdings. You acknowledge that
the Company has already provided you with this payment and there are no
obligations for repayment to the company upon your termination from the company.
3. BONUS PAYMENT. The Company agrees that you will be paid a guaranteed
bonus from October 6, 1998 to January 15, 2000 of $50,000 with $40,000 paid on
your anniversary date of October 6, 1999 and $10,000 on January 15, 2000. If
your employment with the company is terminated in advance of January 15, 2000
then $40,000 of the guaranteed bonus will be paid.
4. TERM OF EMPLOYMENT. The Company agrees that your employment with the
Company shall terminate upon the earlier of (i) January 15, 2000, or (ii) the
date in which either party terminates this Agreement in accordance with the
provisions of paragraph 7 hereof (the "Term").
5. STOCK OPTIONS.
(a) The Company agrees that, pursuant to the terms of the
agreements underlying your outstanding stock options to purchase Common Stock of
the Company (the "Options"), the term and vesting of such Options will continue
for the duration of the Term. You agree and understand that the Options will
cease vesting in accordance with their terms upon the completion of the Term.
<PAGE> 2
Bert Klein
April 20, 1999
Page 2
(b) The Company further agrees that it will grant you an option
to purchase 33,333 shares of Common Stock of the Company (the "Supplemental
Option") under the Company's 1995 Stock Option Plan. The exercise price per
share shall be $5.563, the fair market value of the shares on the date of grant.
The Supplemental Option shall vest in full and be fully exercisable on the last
day of the Term; provided, however, that you execute the release and waiver of
claims attached hereto as Exhibit A. Additionally, the Company agrees to extend
the exercise period under your Supplemental Option such that it may be exercised
as to any vested shares until January 15, 2001 in accordance with the applicable
stock option agreements and the Company's 1995 Stock Option Plan. You expressly
acknowledge that, by virtue of receiving an extension of the exercise period,
the Supplemental Option will not be treated as an incentive stock option, but
instead, will be treated for tax purposes as if they were non-qualified stock
options.
6. OTHER COMPENSATION AND BENEFITS. Except as expressly provided herein,
you acknowledge that you will not receive (nor are you entitled to) any
additional compensation, severance, stock options, stock or other benefits from
the Company, notwithstanding any prior agreements to the contrary at the
conclusion of the Term.
7. TERMINATION OF EMPLOYMENT DURING THE TERM. In the event that you
materially breach any provision of this Agreement or any continuing obligations
under the Proprietary Information and Inventions Agreement, the Company, at its
election, may terminate your employment with the Company and its obligations to
make any further payments or provide any further benefits to you under this
Agreement, effective upon written notice to you. You acknowledge that your
options will cease vesting and terminate in accordance with the applicable terms
of the Stock Option Agreements upon the termination of your employment with the
Company under this paragraph 7. Likewise, you may elect to terminate this
Agreement at any time and for any reason, effective upon your delivery of
written notice to the Company. This contract will only be terminated by the
company if there is a material breach of this agreement. In the event of a
breach, the company will provide a 60 day written notice in advance of the
companies intent to terminate the contract. The written notice will include a
description of the reason for termination. During the 60 day period you will be
given an opportunity to respond and resolve any reasons for breach in order to
come back into compliance with the agreement. It is understood that your
accepting employment as a consultant with another organization during the term
of this contract does not constitute breach of this agreement. Reduction in
force and reorganizational changes also do not constitute reason to terminate
the agreement.
8. RETURN OF COMPANY PROPERTY. You agree that on or before the end of the
Term, you will return to the Company all Company documents (and all copies
thereof) and other Company property which you have had in your possession at any
time, including, but not limited to, Company files, notes, drawings, records,
business plans and forecasts, financial information, specifications,
computer-recorded information, tangible property (including, but not limited to,
computers), credit cards, entry cards, identification badges and keys; and, any
materials of any kind which contain or embody any proprietary or confidential
information of the Company (and all reproductions thereof). If the Company
believes that any property is missing
<PAGE> 3
Bert Klein
April 20, 1999
Page 3
you will be notified in writing and given the opportunity to respond or return
the property within 21 days of your receipt of notification.
9. PROPRIETARY INFORMATION Obligations. You acknowledge your continuing
obligations under your Proprietary Information and Inventions Agreement during
and after your employment with the Company not to use or disclose any
confidential or proprietary information of the Company without prior written
authorization from a duly authorized representative of the Company. A copy of
your Proprietary Information and Inventions Agreement is attached hereto as
Exhibit B.
10. CONFIDENTIALITY. The provisions of this Agreement shall be held in
strictest confidence by you and the Company and shall not be publicized or
disclosed in any manner whatsoever; provided, however, that: (a) you may
disclose this Agreement to your immediate family; (b) the parties may disclose
this Agreement in confidence to their respective attorneys, accountants,
auditors, tax preparers, and financial advisors; (c) the Company may disclose
this Agreement as necessary to fulfill standard or legally required corporate
reporting or disclosure requirements; and (d) the parties may disclose this
Agreement insofar as such disclosure may be necessary to enforce its terms or as
otherwise required by law.
11. RELEASE. Except as otherwise set forth in this Agreement, you hereby
release, acquit and forever discharge the Company, its parents and subsidiaries,
and its and their respective officers, directors, agents, servants, employees,
attorneys, insurers, shareholders, successors, assigns and affiliates, of and
from any and all claims, liabilities, demands, causes of action, costs,
expenses, attorneys fees, damages, indemnities and obligations of every kind and
nature, in law, equity, or otherwise, known and unknown, suspected and
unsuspected, disclosed and undisclosed, arising out of or in any way related to
agreements, events, acts or conduct at any time prior to and including the
execution date of this Agreement, including but not limited to: all such claims
and demands directly or indirectly arising out of or in any way connected with
your employment with the Company; claims or demands related to salary, bonuses,
commissions, stock, stock options, or any other ownership interests in the
Company, vacation pay, fringe benefits, expense reimbursements, severance pay,
or any other form of compensation; claims pursuant to any federal, state or
local law, statute, or cause of action including, but not limited to, the
federal Civil Rights Act of 1964, as amended; the federal Americans with
Disabilities Act of 1990; the federal Age Discrimination in Employment Act of
1967, as amended ("ADEA"); the California Fair Employment and Housing Act, as
amended; tort law; contract law; wrongful discharge; discrimination; harassment;
fraud; defamation; emotional distress; and breach of the implied covenant of
good faith and fair dealing.
You acknowledge that you are knowingly and voluntarily waiving and
releasing any rights you may have under the ADEA, as amended. You also
acknowledge that the consideration given for the waiver and release in the
preceding paragraph hereof is in addition to anything of value to which you were
already entitled. You further acknowledge that you have been advised by this
writing, as required by the ADEA, that: (a) your waiver and release does not
apply to any rights or claims that may arise after the execution date of this
Agreement; (b) you have been advised hereby that you have the right to consult
with an attorney prior to executing this Agreement; (c)
<PAGE> 4
Bert Klein
April 20, 1999
Page 4
you have forty-five (45) days to consider this Agreement (although you may
choose to voluntarily execute this Agreement earlier); (d) you have seven (7)
days following the execution of this Agreement by the parties to revoke the
Agreement; and (e) this Agreement shall not be effective until the date upon
which the revocation period has expired, which shall be the eighth day after
this Agreement is executed by you, provided that the Company has also executed
this Agreement by that date ("Effective Date").
12. SECTION 1542 WAIVER. You understand that this Agreement includes a
release of all known and unknown claims. You acknowledge that you have read and
understand Section 1542 of the California Civil Code which reads as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."
You hereby expressly waive and relinquish all rights and benefits under
that section and any law of any jurisdiction of similar effect with respect to
your release of any claims you may have against the Company.
13. MISCELLANEOUS. This Agreement, including Exhibits A and B,
constitutes the complete, final and exclusive embodiment of the entire agreement
between you and the Company with regard to this subject matter. It is entered
into without reliance on any promise or representation, written or oral, other
than those expressly contained herein, and it supersedes any other such
promises, warranties or representations. This Agreement may not be modified or
amended except in writing signed by both you and a duly authorized officer of
the Company. This Agreement shall bind the heirs, personal representatives,
successors and assigns of both you and the Company, and inure to the benefit of
both you and the Company, their heirs, successors and assigns. If any provision
of this Agreement is determined to be invalid or unenforceable, in whole or in
part, this determination will not affect any other provision of this Agreement
and the provision in question shall be modified by the court so as to be
rendered enforceable. This Agreement shall be deemed to have been entered into
and shall be construed and enforced in accordance with the laws of the State of
California as applied to contracts made and to be performed entirely within
California.
<PAGE> 5
Bert Klein
April 20, 1999
Page 5
If this Agreement is acceptable to you, please sign below and return the
original to me.
Sincerely,
MESSAGEMEDIA, INCORPORATED
Larry Jones Date: __________________________
President and Chief Executive Officer
<PAGE> 6
Bert Klein
April 20, 1999
Page 6
HAVING READ AND REVIEWED THE FOREGOING, I HEREBY AGREE TO AND ACCEPT THE TERMS
AND CONDITIONS OF THIS AGREEMENT AS STATED ABOVE:
Date: ____________________ ____________________________________
BERT KLEIN
Attachments:
Exhibit A - Release and Waiver of Claims
Exhibit B - Proprietary Information and Inventions Agreement
<PAGE> 7
EXHIBIT A
RELEASE AND WAIVER OF CLAIMS
In exchange for payment to me of amounts pursuant to Section 3 and the
options of section 5 (and for the other benefits provided therein) of the letter
agreement (the "Agreement"), to which this form is attached, I hereby furnish
MESSAGEMEDIA, INCORPORATED (the "Company") with the following release and
waiver.
I hereby release, and forever discharge the Company, its officers,
directors, agents, employees, stockholders, successors, assigns and affiliates,
of and from any and all claims, liabilities, demands, causes of action, costs,
expenses, attorneys' fees, damages, indemnities and obligations of every kind
and nature, in law, equity, or otherwise, known and unknown, suspected and
unsuspected, disclosed and undisclosed, arising at any time prior to and
including my employment termination date with respect to any claims relating to
my employment and the termination of my employment, including but not limited
to, claims pursuant to any federal, state or local law relating to employment
including, but not limited to, discrimination claims, claims under the
California Fair Employment and Housing Act, and the Federal Age Discrimination
in Employment Act of 1967, as amended ("ADEA"), or claims for wrongful
termination, breach of the covenant of good faith, contract claims, tort claims,
and wage or benefit claims, including but not limited to, claims for salary,
bonuses, commissions, stock, stock options, vacation pay, fringe benefits,
severance pay or any form of compensation.
I also acknowledge that I have read and understand Section 1542 of the
California Civil Code which reads as follows: "A general release does not extend
to claims which the creditor does not know or suspect to exist in his favor at
the time of executing the release, which if known by him must have materially
affected his settlement with the debtor." I hereby expressly waive and
relinquish all rights and benefits under that section and any law of any
jurisdiction of similar effect with respect to any claims I may have against the
Company.
I acknowledge that, among other rights, I am waiving and releasing any
rights I may have under ADEA, that this waiver and release is knowing and
voluntary, and that the consideration given for this waiver and release is in
addition to anything of value to which I was already entitled as an employee of
the Company. I further acknowledge that if I am over 40 I have been advised, as
required by the Older Workers Benefit Protection Act, that: (a) the waiver and
release granted herein does not relate to claims which may arise after this
agreement is executed; (b) I have the right to consult with an attorney prior to
executing this agreement (although I may choose voluntarily not to do so); (c) I
have twenty-one (21) days from the date I receive this agreement, in which to
consider this agreement (although I may choose voluntarily to execute this
agreement earlier); (d) I have seven (7) days following the execution of this
agreement to revoke my consent to the agreement; and (e) this agreement shall
not be effective until the seven (7) day revocation period has expired.
Date: __________________ By:_________________________________
BERT KLEIN
<PAGE> 8
EXHIBIT B
PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
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