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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (date of earliest event reported): April 23, 1999
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HomeCom Communications, Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-29204 58-2153309
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(State or Other Jurisdiction of (Commission file Number) (I.R.S. Employer
Incorporation or Organization Identification No.)
3535 Piedmont Road, Atlanta, Georgia 30305
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (404) 237-4646
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On April 23, 1999, HomeCom Communications, Inc., a Delaware corporation
(the "Company") acquired all of the outstanding shares of Ganymede Corporation
("Ganymede") for total consideration of $1,132,338.50, consisting of 185,342
shares of common stock and $100,000 cash. In addition, the Company entered into
employment with the three principals of Ganymede, calling for them to continue
in their current roles for the acquired company.
The acquisition will be accounted for as a purchase. The purchase price
will be allocated to assets acquired and liabilities assumed based on their
estimated fair values. Results of operations for Ganymede will be included with
those of the Company for periods subsequent to the date of acquisition. The
Company will file a Registration Statement on Form S-3 with respect to the
resale of a portion of the shares of HomeCom Communications, Inc. Common Stock
issued in the acquisition.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Business Acquired
Pursuant to the instructions to Item 7 of Form 8-K, the financial
information required by Item 7(a) will be filed by Amendment within 60
days of the date of this filing.
(b) Pro Forma Financial Information
Pursuant to the instructions to Item 7 of Form 8-K, the financial
information required by Item 7(b) will be filed by Amendment within 60
days of the date of this filing.
(c) Exhibits
<TABLE>
<CAPTION>
<S> <C>
10.55 Stock Purchase Agreement by and among HomeCom
Communications, Inc. and Richard L. Chu, Joseph G.
Rickard, John R. Winans, Mario D'Agostino, Karen Moore,
and John Kokinis, dated as of April 23, 1999.
10.56 Employment Agreement between Ganymede Corporation and
Richard L. Chu, dated as of April 23, 1999.
10.57 Employment Agreement between Ganymede Corporation and
John Winans, dated as of April 23, 1999.
10.58 Employment Agreement between Ganymede Corporation and
Joseph G. Rickard, dated as of April 23, 1999.
10.59 Escrow Agreement by and among HomeCom Communications,
Inc. and Richard L. Chu, Joseph G. Rickard, John R.
Winans, Mario D'Agostino, Karen Moore, and John Kokinis,
dated as of April 23, 1999.
10.60 Pledge and Security Agreement by and between HomeCom
Communications, Inc. and Richard L. Chu, Joseph G.
Rickard, John R. Winans, Mario D'Agostino, Karen Moore,
and John Kokinis, dated as of April 23, 1999.
</TABLE>
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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 hereunto duly authorized.
HOMECOM COMMUNICATIONS, INC.
(Registrant)
Date: May 10, 1999 By: /s/ Harvey Sax
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Harvey Sax, President and
Chief Executive Officer
(Principal Executive Officer)
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Exhibit Index
<TABLE>
<CAPTION>
Exhibit Description
<S> <C>
10.55 Stock Purchase Agreement by and among HomeCom Communications,
Inc. and Richard L. Chu, Joseph G. Rickard, John R. Winans,
Mario D'Agostino, Karen Moore, and John Kokinas, dated as of
April 23, 1999.
10.56 Employment Agreement between Ganymede Corporation and Richard
L. Chu, dated as of April 23, 1999.
10.57 Employment Agreement between Ganymede Corporation and John
Winans, dated as of April 23, 1999.
10.58 Employment Agreement between Ganymede Corporation and Joseph
G. Rickard, dated as of April 23, 1999.
10.59 Escrow Agreement by and among HomeCom Communications, Inc. and
Richard L. Chu, Joseph G. Rickard, John R. Winans, Mario
D'Agostino, Karen Moore, and John Kokinis, dated as of April
23, 1999.
10.60 Pledge and Security Agreement by and between HomeCom Communications,
Inc. and Richard L. Chu, Joseph G. Rickard, John R. Winans,
Mario D'Agostino, Karen Moore, and John Kokinis, dated as of
April 23, 1999.
</TABLE>
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EXHIBIT 10.55
STOCK PURCHASE AGREEMENT
BY AND AMONG
HOMECOM COMMUNICATIONS, INC.
AND
RICHARD L. CHU, JOSEPH G. RICKARD, JOHN R. WINANS,
MARIO D'AGOSTINO, KAREN MOORE AND JOHN KOKINAS
AS OF APRIL 23, 1999
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TABLE OF CONTENTS
ARTICLE I. PAYMENTS AT CLOSING ______
ARTICLE II. REPRESENTATIONS, WARRANTIES AND
COVENANTS OF SELLER ______
ARTICLE III. REPRESENTATIONS, WARRANTIES AND
COVENANTS OF BUYER ______
ARTICLE IV. COVENANTS OF SELLER ______
ARTICLE V. COVENANTS OF BUYER ______
ARTICLE VI. CLOSING ______
ARTICLE VII. POST-CLOSING OBLIGATIONS ______
ARTICLE VIII. INDEMNIFICATION; DUE DILIGENCE; CONFIDENTIALITY ______
ARTICLE IX. MISCELLANEOUS ______
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SCHEDULE OF SCHEDULES AND EXHIBITS
SCHEDULE 1.2
SCHEDULE 2.1
SCHEDULE 2.3
SCHEDULE 2.4
SCHEDULE 2.6
SCHEDULE 2.8
SCHEDULE 2.8(a)
SCHEDULE 2.8(b)
SCHEDULE 2.9
SCHEDULE 2.10
SCHEDULE 2.12
SCHEDULE 2.13
SCHEDULE 2.16
SCHEDULE 2.17
SCHEDULE 2.18
SCHEDULE 2.19
SCHEDULE 2.20(a)
SCHEDULE 2.20(b)
SCHEDULE 2.20(c)
SCHEDULE 2.21
SCHEDULE 2.22
SCHEDULE 2.24
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SCHEDULE 2.27
SCHEDULE 3.3
SCHEDULE 6.1(a)(viii)
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SCHEDULE OF SCHEDULES AND EXHIBITS (CONT.)
EXHIBIT "A" - ESCROW AGREEMENT AND STOCK PLEDGE AGREEMENT
EXHIBIT "B" - EMPLOYMENT AGREEMENTS
EXHIBIT "C" - NON-COMPETITION AGREEMENTS
EXHIBIT "D" - SELLERS OPINION OF COUNSEL
EXHIBIT "E" - BUYER OPINION OF COUNSEL
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STOCK PURCHASE AGREEMENT
This Agreement (the "Agreement") is made and entered into as of this
23rd day of April, 1999, by and among HOMECOM COMMUNICATIONS, INC., a Delaware
corporation (the "Buyer"), Richard L. Chu, Joseph G. Rickard, John R. Winans,
Mario D'Agostino, Karen Moore, and John Kokinas (collectively, the "Sellers" and
individually a "Seller").
W I T N E S S E T H
A. Sellers own all of the issued and outstanding capital stock,
(the "Shares") of Ganymede Corporation (the "Company").
B. Sellers desire to sell and Buyer desires to acquire the
Company through the purchase by the Buyer of all of the outstanding shares of
the Company no par value voting Common Stock.
NOW THEREFORE, in consideration of the premises, the mutual covenants
and agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
ARTICLE I
PAYMENTS AT CLOSINGS
1.1 Payment of Purchase Price and Loan Payments. a) In accordance
with the terms and conditions hereof and at the Closing hereinafter specified,
Buyer agrees to purchase from Sellers and Sellers agree to sell to Buyer all of
the Shares upon surrender to Buyer of the certificates representing the shares
for a total purchase price of $ 998,038.50 payable as provided in Paragraph 1.2
(the "Purchase Price").
b) In addition to payment of the Purchase Price at Closing (as
defined herein in Section 1.6), Buyer assumes and agrees to pay indebtedness
owing by the Company to Richard L. Chu and Mario D'Agostino in the amount of
$134,300 (of which $34,300 shall be payable in Common Stock and $100,000 shall
be payable in
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cash) payable as provided in Paragraph 1.2 ("Loan Payments").
1.2 Payment of Purchase Price and Loan Payments. The Purchase
Price and $34,300 of the Loan Payment shall each be paid to the Sellers and to
Chu, respectively, in common stock of Buyer, par value $.0001 per share, (the
"Buyer Common Stock") as shown on Schedule 1.2. The per share value of the Buyer
Common Stock delivered to Seller in payment of the Purchase Price and $34,300 of
the Loan Payments shall each be $5.57 (the "Per Share Valuation"). The remaining
$100,000 of the Loan Payment shall be shall be paid in cash by the Buyer at
Closing. However, if more than 500,000 shares of Buyer Common Stock shall be
required to be issued by the Buyer at the Closing, Buyer has the unilateral
right to terminate this transaction without any penalties or payments of any
kind.
The Buyer Common Stock delivered to Sellers at the Closing shall be
solely the property of Sellers and Sellers shall have full disposition and
voting powers with respect thereto, subject to the limitations described herein.
1.3 a) Registration of Buyer Common Stock. 95,748 shares of Buyer
Common Stock to be paid to Sellers at the Closing shall be registered with the
United States Securities and Exchange Commission ("SEC") pursuant to a
registration statement ("Registration Statement") filed by the Buyer within
sixty (60) days after the Closing ("Registered Shares"). The 95,748 shares of
the Buyer Common Stock to be paid to the Sellers (Unregistered Shares) need not
be registered by the Buyer at Closing but shall be subject to piggyback
registration rights of the Sellers under Section 1.3(b) below.
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(b) Piggyback Registration of Shares.
(i) If the Buyer proposes to register any of its
securities under the Securities Act of 1933, as amended (the "1933 Act") for
sale by it for cash (other than in connection with the registration of
securities issuable pursuant to an employee stock option, stock purchase or
similar plan or pursuant to a merger, exchange offer or transaction of the type
specified in Rule 145 of the 1933 Act, the Buyer shall give the Sellers notice
of such proposed registration at least fifteen (15) days prior to the filing of
the registration statement. At the written request of a Seller delivered to the
Buyer within ten (10) days after delivery of the notice from the Buyer, the
Buyer shall use its best reasonable efforts to effect the registration
("Piggyback Registration") under the 1933 Act of the Unregistered Shares of the
Buyer Common Stock provided that the Buyer may, without the consent of the
Sellers, withdraw such registration statement prior to its becoming effective if
the Buyer has abandoned its proposal to register its securities and following
the effectiveness of any such registration statement, and upon notice to the
Sellers, may suspend the rights of the Sellers to make sales pursuant to such
registration statement if the Board of Directors determines in good faith that
it is in the best interests of the Buyer (a) not to disclose the existence of
facts surrounding any proposed or pending acquisition, disposition, strategic
alliance or financing transaction involving the Buyer; or (b) for any reasonable
purpose relating to the business of the Buyer, to suspend the registration
rights set forth herein. If an offering in connection with which the Sellers are
entitled to registration under this Section is an underwritten offering, and
each Seller whose securities are included in such Registration Statement, shall,
unless otherwise agreed to by the Buyer, offer and sell such securities in an
underwritten offering using the same underwriter or underwriters in, subject to
provisions of this agreement, on the same terms and conditions as other shares
of common stock included in such underwritten offering.
(ii) The Buyer may require, as a condition to
including any shares of the Buyer Common Stock to be offered by a Seller in any
registration statement filed pursuant to
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this Section 1.3(b), that the Buyer shall have received an agreement from such
Seller to be bound by the terms of this section, including an undertaking
reasonably satisfactory to it from such Seller, to indemnify and hold the Buyer,
its directors and officers and each other person, if any, who controls the Buyer
within the meaning of Section 15 of the 1933 Act, against any losses, claims,
damages or liabilities, joint or several, to which the Buyer or any such
director or officer or controlling person may become subject under the 1933 Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
or proceedings, whether commenced or threatened, in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement or an
omission or alleged omission from such registration statement, any preliminary
prospectus, final prospectus, or summary prospectus contained therein, or any
amendment or supplement thereto, if such statement or alleged statement or
omission or alleged omission was made in reliance upon and in conformity with
written information about such Seller as a shareholder of the Buyer furnished to
the Buyer through an instrument duly executed by such Seller specifically
stating that it is for use in the preparation of such registration statement,
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement; provided, however, that such indemnity agreement found in this
section shall in no event exceed the gross proceeds from the offering received
by such Seller.
(iii) If the registration referred to in Section
1.3(b)(i) is to be an underwritten public offering for the account of the Buyer
and the managing underwriter advises the Buyer in writing that in their
reasonable good faith opinion, marketing or other factors dictate that a
limitation on the number of shares of common stock which may be included in the
Registration Statement is necessary to facilitate and not adversely affect the
proposed offering, then the Buyer shall include in such registration: (i) first,
all securities of the Buyer proposes to sell for its own account, (ii) second,
up to the full number of securities proposed to be registered for the account of
holders of securities entitled to inclusion of their securities in such
registration statement by reason of demand registration rights and (iii) third,
the securities requested to be
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registered by the Sellers and other holders of securities entitled to
participate in the registration, drawn from them pro rata based upon the number
each has been requested to be included in such registration
1.4 Restriction on Sale of Buyer Common Stock.
(a) The Sellers agree not to sell more than one half of the
Registered Shares (the "First Gated Shares") during the ninety (90) day period
following Closing.
(b) As to the remaining Registered Shares (the "Second Gated
Shares"), Seller hereby covenants and agrees to sell no such shares until after
ninety (90) days following the Closing.
(c) The Unregistered Shares may be sold by Seller in accordance
with SEC Rule 144 promulgated under the Securities Act of 1933, as amended (the
"1933 Act") and applicable law.
1.5 Escrow. 17,918 shares in the form of unregistered Shares (the
"Escrowed Shares"), shall be placed in escrow (the "Escrow") at Closing in
accordance with the term of an escrow agreement and related Pledge and Security
Agreement (collectively, the "Escrow Agreement") substantially in the form
attached hereto as Exhibit "A." The Escrow Agreement shall provide that Escrowed
Shares shall be released and returned to Buyer (on behalf of the Sellers) from
the Escrow in payment or partial payment of the Indemnity Amount (as defined in
Paragraph 8.4) due from Seller to Buyer under the indemnities provided in
Paragraph 8.1 of this Agreement. Escrowed Shares released to Buyer shall have a
value equal to the Indemnity Amount and shall be valued at one hundred (100%)
percent of weighted (by trading volume) averages per share trading price for the
last ten (10) trading days immediately preceding the date that the Escrowed
Shares are released to the Buyer in payment of the Indemnity amount. The term of
the Escrow shall be the longer of the one year immediately following the Closing
Date or the time required to finally determine, by final, non-appealable court
order or agreement of the parties, all indemnity claims timely asserted by
Buyer. Upon the expiration of the Escrow, all Shares remaining therein shall be
delivered by escrow agent to Seller free and clear of all liens, claims and
encumbrances.
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1.6 Closing. The closing of the transactions provided for in this
Agreement (the "Closing") shall take place at the offices of the attorneys for
Buyer in Atlanta, Georgia, or other mutually agreeable place, on a mutually
agreed date within five (5) business days following the parties date that all
conditions to their respective obligations hereunder (other than those requiring
an exchange of a certificate, opinion, or other documents at the Closing or the
taking of other action at, or concurrently with, the Closing) have been
fulfilled. In the event that at the Closing no conditions to the obligations of
the parties hereto exist which have not been satisfied or waived, the parties
shall deliver to each other at Closing the certificates, opinions, and other
documents required to be delivered at Closing under Article VI. The date upon
which the Closing takes place shall be referred to as the "Closing Date."
ARTICLE II
REPRESENTATIONS, WARRANTIES
AND COVENANTS OF SELLER
Each Seller hereby (i) severally represents, warrants and covenants to
Buyer as to himself or herself, (ii) jointly and severally represents, warrants
and covenants to Buyer as to the Company, and (iii) jointly and severally
represents, warrants and covenants to Buyer to the best of their knowledge with
respect to the other Sellers as set forth in this Article II. Such
representations, warrants and covenants shall be true as of the date of this
Agreement and as of the Closing Date.
2.1 Status of Shares. With respect to the Shares:
(a) The Shares have been duly authorized, validly issued,
and are fully paid and nonassessable;
(b) The Shares represent all of the issued capital stock
in each of the companies comprising the Company;
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(c) Seller owns both beneficially and of record, and has
good and marketable title to, the Shares, free and clear of any mortgage,
pledge, lien, encumbrance, security interest, restriction, charge or claim of
any kind (collectively, the "Liens") and the Shares are not subject to any
restrictions or limitations prohibiting or restricting transfer, other than
restrictions on transferability imposed generally on securities by federal or
state securities laws or other restrictions terminated or waived prior to the
Closing, none of which will prevent the transactions contemplated hereby;
(d) The certificates representing the Shares will at the
Closing be genuine and, together with any supporting papers, will at such time
be in such form as to enable Company to reflect on its stock transfer books
immediately the transfer to Buyer of the shares of stock represented thereby.
2.2 Authorization; Etc. Each Seller has full power and authority
to enter into this Agreement and to carry out the transactions contemplated
hereby. Each Seller has taken all action required by law, or otherwise to
authorize the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Seller and constitutes the valid and binding
obligation of Seller enforceable in accordance with its terms.
2.3 Corporate Existence, Organization and Qualification of
Company. Schedule 2.3 sets forth the number of authorized shares of capital
stock, the number of outstanding shares of capital stock, the par value of such
capital stock and the state of incorporation of the Company. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the state of its incorporation, the Company to the extent required by
applicable state law has no state or local franchise taxes (not including taxes
based on income, gross receipts or assets), fees or penalties due and unpaid,
and it has full corporate power and authority to carry on the business as now
conducted by it. The Company is duly qualified or licensed and in good standing
as a foreign corporation duly authorized to do business in each of the
jurisdictions
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indicated on Schedule 2.3 and there are no other jurisdictions in which the
failure to so qualify or be licensed would have a materially adverse effect on
the Company. Except as set forth in Schedule 2.3, the Company has no outstanding
securities convertible into or exchangeable or exercisable for any shares of its
capital stock, nor does it have outstanding any rights to subscribe for or to
purchase, or any options for the purchase of, or any agreements providing for
the issuance (contingent or otherwise) of, or any calls, commitments, or claims
of any character relating to, any shares of its capital stock or any securities
convertible into or exchangeable or exercisable for any shares of its capital
stock.
2.4 Company Subsidiaries. Except as set forth in Schedule 2.4, the
Company has no subsidiaries.
2.5 Partnerships. The Company does not own an interest, directly
or indirectly, in any general limited partnership or limited liability company.
2.6 No Violation. Except as set forth in Schedule 2.6, neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby:
(a) Violate any provision of the charter or Bylaws of the
Company;
(b) Violate, are in conflict with, constitute a default
(or an event which, with or without due notice or lapse of time, or both, would
constitute a default) under, or require the consent or approval of any other
person under, or cause or permit the acceleration of the maturity of, or excuse
performance by any person of its obligations under or by any such person to
terminate, any debt, obligation, contract, commitment or other agreement (i) to
which Seller or the Company is a party or by which either is bound, and (ii)
which is material to the business, financial condition or operations of Seller
or the Company;
(c) Result in the creation or imposition of any Lien upon
any property or assets of Seller or the Company under any debt, obligation,
contract, commitment or other agreement to which either is a party or by which
either is bound and which is material to the business, financial condition or
operations of the Company; or
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(d) Violate any material statute or law or any judgment,
decree or order or material regulation or rule of any court or governmental
authority or arbitration tribunal binding upon Seller or the Company, or violate
or result in the revocation, cancellation, suspension or adverse modification of
any material franchise, license, permit or other governmental authorization or
approval of the Company.
2.7 Financial Statements.
The Sellers have delivered to the Buyer a complete and correct
copy of the audited financial statements for the Company dated as of December
31, 1998 and results of operations and cash flows for the year then ended (the
"Financial Statements"). Such Financial Statements have been prepared in
accordance with generally accepted accounting principles consistently applied.
2.8 Labor and Employment Contract Plans. Except as disclosed in
Schedule 2.8, the Company is not a party to any (a) employment agreements,
consulting agreements or similar arrangements which will survive the Closing,
(b) profit-sharing, bonus, incentive compensation, deferred compensation, stock
option or stock purchase plans, or other arrangements, agreements or plans
providing for employee benefits (including but not limited to vacation, sick
leave, medical, hospitalization, life insurance and other insurance plans, or
related benefits) (collectively, the "Plans") under which employees of the
Company will continue to be eligible after Closing or which Plans are qualified
under ERISA (as hereinafter defined) or (c) all collective bargaining or union
contracts. Schedule 2.8 contains an accurate and complete list as of December
31, 1998, of the names and current salary or payment rates (expressed on an
annual basis) of all persons (including independent commission agents) employed
by or under contract with Company whose current rate of pay which, including any
bonus or indirect compensation, if annualized, will result in such person
earning in excess of $50,000 per year. There is no pending or, to Seller's or
the Company's knowledge, threatened labor dispute, strike, work stoppage, or
union campaign against the Company or threatening to affect in any materially
adverse way the
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Company's business or assets. The Company has complied in all material respects
with all of its obligations under the arrangements, agreements and plans listed
in Schedule 2.8 and with all applicable laws relating to the employment of
labor, including without limitation all provisions thereof relating to wages,
hours, equal opportunity, collective bargaining and the payment of social
security and other similar taxes. There are no violations of such obligations or
laws which are material to the Company.
2.9 ERISA. There are no "Pension Plans" within the meaning of the
Employee Retirement Income Security Act of 1974, as amended, and the regulations
thereunder ("ERISA"), which apply to the Company which: (a) have not been
operated in compliance with ERISA and IRC ss. 401 or ss. 501; (b) have, on a
plan termination basis, any unfunded liabilities or any liabilities to the
Pension Benefit Guaranty Corporation; or (c) have had any prohibited
transactions under IRC ss. 4975 or ERISA ss. 406, any accumulated funding
deficiencies (as defined in ERISA ss. 2302 or IRC ss. 412), reportable events
(as defined in ERISA ss. 4043) or plan termination (as defined in Title 17 of
ERISA or IRC ss. 411). The Company maintains no plans outside the United States.
Except as set forth in Schedule 2.9, the Company does not maintain nor
contribute to any employee welfare benefit plan, as such term is defined in
ERISA, whether insured or otherwise, and each such welfare plan is in material
compliance with the provisions of ERISA. The Company has never been obligated to
contribute to any "multiemployer plan" or "multiple employer plan" (as such
terms are defined in ERISA ss. 4001). Except as set forth in Schedule 2.9, no
filing, application or other matter with respect to any of such plans is pending
with the Internal Revenue Service, Pension Benefit Guaranty Corporation, United
States Department of Labor or other governmental body, none of such plans has
been terminated since September 1, 1974, neither the Pension Benefit Guaranty
Corporation, nor any other person has taken any action to terminate any of such
plans (and to the best of Seller's and the Company's knowledge, there exists no
basis for any such action) and no trustee has been appointed by any court or
governmental body to administer any thereof.
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2.10 Litigation.
(a) Schedule 2.10 accurately identifies all actions or
proceedings pending as of the date hereof against the Company before any court,
governmental body or arbitration tribunal other than proceedings disclosed on
other schedules to this Agreement. Except as disclosed in Schedule 2.10, neither
Seller nor the Company has received prior to the date hereof written notice of
the commencement or pendency of any governmental investigation of the Company.
(b) To the best of the knowledge of the Sellers, there
is, as of the date hereof, no action or proceeding pending, or to the knowledge
of the Sellers threatened, which questions the validity or legality of this
Agreement or any action taken or to be taken pursuant hereto or the consummation
of the transactions contemplated hereby or which, if adversely determined, would
materially and adversely affect the business, financial condition or operations
of the Company.
(c) Sellers shall give Buyer prompt written notice of the
commencement of any action, proceeding or investigation the Company after the
date hereof that would be required to be described on Schedule 2.10 had such
action, proceeding or investigation been open on the date hereof.
2.11 Court Orders and Decrees. The Company is not in violation of
any term of any material judgment, decree, injunction or order of any court,
governmental agency or arbitration tribunal outstanding against it or by which
it is bound. There is no such outstanding judgment, decree, injunction, or order
which could reasonably be expected to have a material adverse effect upon the
financial condition, operations or business of the Company.
2.12 Compliance with Instruments, Laws, Etc. Except as disclosed on
Schedule 2.12, to the best of the knowledge of Seller, the Company is not in
violation of and has not received any notice of violation which would have a
material adverse effect on the Company, of (a) any provision of its charter or
Bylaws, or any agreement pertaining to indebtedness, (b) any material
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provision of any other obligation, contract, commitment, or other agreement or
(c) any material federal or state law, regulation, rule or administrative order.
2.13 Title to Properties; Encumbrances. Except as disclosed on
Schedule 2.13, Company has good title to all of the properties and assets (real,
personal, and mixed, tangible and intangible) reflected on the Financial
Statements or acquired since December 31, 1998, in each case free and clear of
all Liens except (a) materialman's, mechanics', carriers', workers',
repairman's, and other similar liens arising or incurred in the ordinary course
of business or statutory landlord's liens under leases to which it is a party,
provided that either the underlying obligation is not in default or such
obligation or Lien is being contested in good faith and adequate reserves have
been established for the payment or discharge of such Lien to the extent
required by generally accepted accounting principles; (b) Liens disclosed in the
1998 Financial Statements; and (c) Liens for taxes not yet delinquent or the
validity or amount of which are being contested in good faith; provided that
adequate reserves have been established for the payment of such taxes to the
extent required by generally accepted accounting principles. The rights,
properties and assets of the Company include all the rights, properties and
assets necessary for the Company to conduct its business in all material
respects in the same manner as currently conducted.
2.14 Inventory. The Company has no inventory.
2.15 Office Facilities. The computer equipment and other office
equipment utilized by the Company are in good operating condition, subject to
normal wear and tear, are suitable for the purpose for which they are used and
are adequate and sufficient for all of the current operations of the Company.
2.16 Status of Licenses.
(a) The Company has all state and federal licenses that are
necessary for its business and operations. All such Licenses are valid and in
full force and effect and shall remain valid and in full force and effect for
the benefit of Buyer at and following the Closing.
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Alternatively, a Seller's personal Licenses to transact the business and
operations of the Company shall be made available and shall be usable by Buyer
and/or the Company to continue the business of the Company without interruption
at and after the Closing, and such Licenses shall remain in full force and
effect and usable by Buyer and/or the Company so long as such Seller remains
employed by Buyer and/or Company. All of the state and federal Licenses of the
Company as utilized by the Company in its business and operations are set forth
on Schedule 2.16. Except as disclosed thereon as of the Closing Date, the
Licenses identified on Schedule 2.16 are in full force and effect and have not
been suspended, modified in any material adverse respect, canceled or revoked,
the Company has operated and will continue to operate in compliance with all
material terms thereof or any renewals thereof.
(b) Except as identified on Schedule 2.16, all other
material permits, concessions, grants, franchises and other governmental
authorizations and approvals necessary for the conduct of the business of the
Company as currently conducted have been duly obtained and are in full force and
effect, have not been suspended, modified in any materially adverse respect,
canceled or revoked, and the Company has operated and until Closing will
continue to operate in compliance with all material terms thereof or any
applicable renewals thereof.
(c) Except as described in Schedule 2.16, neither Seller
nor Company has notice of, and to the best of Seller's knowledge, there is not
pending as of the date hereof, any application, petition, objection or other
pleading with the governmental body having jurisdiction or authority over any
part of the business or operations of the Company, which question the validity
of or contests any License or which, if accepted or granted, would result in the
revocation, cancellation, suspension or any materially adverse modification of
any license, permit, concession, grant, franchise or other License of the
Company.
(d) Sellers shall give Buyer prompt written notice of the
filing of any material application, petition, objection or other pleading after
the date hereof that would be required to be described on Schedule 2.16 had such
action occurred prior to the date hereof.
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2.17 Status of Leases and Agreements.
(a) Schedule 2.17 identifies completely and accurately
each lease and other agreement for the use of property to which Company is a
party; and
(b) Except as disclosed in Schedule 2.17, all leases and
other agreements for the use of property to the Company or by which it is bound,
are in full force and effect and the Company has not received any notice of
termination or cancellation of any such lease or other agreement. There is no
breach by the Company of any such lease and other agreement which could result
in the termination or cancellation thereof, or the imposition of damages against
Company.
2.18 Customer Agreements. Except as provided in Schedule 2.18,
Seller knows of any current customers of the Company providing revenues to the
Company in excess of $50,000 which intends to discontinue the use of any service
provided by Company, including if the transactions contemplated hereby are
consummated.
2.19 Bank Accounts. Schedule 2.19 identifies all accounts and
safety deposit boxes with banks or other financial institutions maintained by or
on behalf of the Company, together with the authorized signatories to such
accounts.
2.20 Patents, Trade Names, Trademarks, Licenses, Etc.
(a) Schedule 2.20 describes all material patents, trade
names, trademarks and licenses used by the Company in its business. The Company
owns or is licensed or otherwise has the right to use any patents, trademarks,
trade names, copyrights, technology, know-how and processes which are material
to the conduct of its business as currently conducted.
(b) Schedule 2.20 accurately identifies all significant
computer software for financial reporting, engineering functions and studies and
inventory control, or used by Company which Company will continue to have the
right to use after the Closing.
(c) Except as disclosed in Schedule 2.20, the
consummation of the transactions contemplated hereby will not alter or impair in
any material respect any intellectual
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<PAGE> 20
property rights of the Company. No claims have been asserted against the Company
by any person contesting the use by the Company of the patents, trademarks,
trade names, copyrights, technology, know-how or processes or challenging or
questioning the validity or enforceability of any such license or other right to
use of such patent, trademark, trade name, copyright, technology, know-how or
processes, and to the best of Seller's knowledge, there is no valid basis for
any such claim and the use of such patents, trademarks, trade names, copyrights,
technology, know-how or processes by the Company does not infringe on the rights
of any person.
2.21 No Undisclosed Liability. Except as disclosed in Schedule 2.21
or in the Financial Statements, and as of the Closing Date, the Company has no
liabilities, whether absolute, accrued, contingent or otherwise, whatsoever
which are required under generally accepted accounting principles to be
disclosed or reserved against in the Financial Statements or which, while the
facts regarding such liabilities may not have been known at the time when the
Financial Statements were prepared, had such facts been known at or prior to the
Closing Date, would have been regarded under generally accepted accounting
principles to have been fully disclosed or reserved against them.
2.22 Taxes and Tax Returns.
(a) Except as set forth in Schedule 2.22, all federal,
state, local, and foreign tax reports and returns with respect to taxable
periods ending after December 31, 1995, required to be filed by or on behalf of
the Company have been duly filed on a timely basis other than any such reports
and returns for which there is no material monetary penalty for failure to file,
and all taxes, including, without limitation, income, gross receipts, ad
valorem, value added, turnover, sales, use, personal property (tangible and
intangible), stamp leasing, lease, user, leasing, excise, franchise, transfer,
fuel, excess profits, occupational (including without limitation, deposits
required by law to be made with respect to withholding taxes for employees) and
interest equalization, and other charges of federal, state, local at foreign
taxing authorities, including all interest and penalties or late charges on the
foregoing (the "Taxes") attributable to the periods
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<PAGE> 21
covered by such reports and returns which Seller and the Company believe in good
faith to be due have been duly paid. Seller believes in good faith that all such
reports and returns, insofar as they relate to the Company, have been prepared
in accordance with all laws and regulations pertaining thereto.
(b) The reserves for taxes maintained by the Company, all
of which constitute current liabilities, will be adequate under generally
accepted accounting principles to cover the liability of such entities for all
Taxes for all periods ending on or prior to the Closing Date.
(c) There are no tax Liens upon any property or assets of
the Company other than Liens for Taxes not yet delinquent or the validity or
amount of which are being contested in good faith and for the payment of which
adequate reserves have been established to the extent required by generally
accepted accounting principles.
(d) Schedule 2.22 sets forth the latest taxable period
ending after December 31, 1995, for which the federal income tax returns of the
Company or any affiliated group which includes Company have been examined by the
Internal Revenue Service and the income taxes due as a result of such
examination have been finally determined. Schedule 2.22 sets forth all proposed
adjustments which have been raised in writing by the Internal Revenue Service in
any examination in respect of the Company which, by application of similar
principles, reasonably could be expected to result in a proposed deficiency for
any other tax period of the Company not so examined. Except to the extent set
forth in Schedule 2.22:
(i) all deficiencies and assessments resulting
from examination of federal, state and local tax returns and reports of
the Company with respect to taxable periods ending after December 31,
1995, have been paid;
(ii) there are no outstanding agreements or
waivers extending the statutory period of limitation applicable to any
federal, state, local, or foreign to, return or report of the Company
for any period; and
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(iii) there are no agreements by the Sellers or
the Company for the extension of the time for the assessment of any
Taxes.
(e) The Sellers and the Company do not currently have,
nor at any time after December 31, 1995, have had, in effect a tax sharing or
similar tax allocation agreement among and between each other, other than:
(i) an election to allocate consolidated federal
income tax liability pursuant to Reg. Sec. 1.1552l(a)(1) and Reg. Sec.
1.1502-33(d)(2)(ii);
(ii) an allocation of federal, state and local
income and franchise taxes for financial statement purposes; and
(iii) any election as to a tax sharing or similar
tax allocation method which is deemed to be made under any federal,
state or local tax laws as a result of the filing of a combined or
consolidated tax return.
(f) True copies of all federal income tax returns of the
Company for all tax periods ending after December 31, 1995, have been heretofore
delivered to Buyer.
2.23 Insurance. The Company is covered as of the date hereof under
insurance policies. The Company will continue to cover the Company under such
insurance policies in accordance with Seller's normal business practice from the
date hereof through the Closing Date.
2.24 Contracts.
(a) Schedule 2.24 lists all agreements, contracts and
commitments of the Company or by which the Company is bound which (i) create
indebtedness for money borrowed or any Liens, (ii) (x) involve or may involve
payments by or to the Company of more than $50,000, and (y) cannot be terminated
by the Company without penalty upon notice of 60 days or less, or (iii) are
material to the business, financial condition or operations of the Company as a
whole or which impose material restrictions or obligations (other than the
payment of money) on the Company in any case. To the best of Seller's knowledge,
there are no oral agreements, contracts or commitments of the Company or by
which the Company is bound.
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(b) Each of the agreements, contracts and commitments listed
on Schedule 2.24 is valid and in full force and affect and (i) there is no
material default thereunder or claim of default and (ii) there has not occurred
any event which, with the passage of time or the giving of notice (or both),
would constitute a default thereunder, in any case either on the part of the
Company or, to the best of Seller's and the Company's knowledge, on the part of
any other party thereto.
(c) Except as set forth on Schedule 2.24, there is no
agreement, contract or commitment which limits the right of the Company to
engage in any business or compete with any person.
(d) Seller has delivered or made available to Buyer
complete and correct copies of all written agreements, contracts and commitments
identified on any Schedule to this Agreement, together with all written
amendments thereto and waivers and consents with respect thereto.
2.25 Full Disclosure. Except as disclosed in this Agreement, Seller
and the Company know of no fact existing which Seller or the Company has not
disclosed to Buyer which has or will have a material adverse effect on the
consummation of the transactions contemplated hereby or on the financial
condition, operations or business of the Company.
2.26 Changes. Since December 31, 1998, the Company has conducted
its business only in the ordinary and usual course consistent with reasonable
business practice and it has done none of the acts described in subparagraph
4.1(b).
2.27 Certain Transactions. Except as disclosed in Schedule 2.27,
none of the officers, directors, or employees of the Company is presently a
party to any transaction with the Company (other than for services as employees,
officers, and directors), including any contract, agreement, or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
or sales commission or fees to or from any officer, director, or such employee
or, to the knowledge of the Seller, any
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corporation, partnership, trust, or other entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director,
trustee, or partner.
2.28 Legends. The Sellers understand that the certificates representing
the Buyer Common Stock have not been registered under the 1933 Act and that the
stock certificates representing the Buyer Common Stock shall bear a restrictive
legend in substantially the following form (and a stop transfer order may be
placed against transfer of such stock certificates): THE SECURITIES REPRESENTED
BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED
FOR INVESTMENTS AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED OR APPLICABLE STATE SECURITIES LAWS, OR
AN OPINION OF COUNSEL, IN A FORM ACCEPTABLE TO THE COMPANY THAT REGISTRATION
IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS
SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
2.29 Disclosure. The Sellers have received from the Buyer all
information which the Sellers have requested in connection with the transactions
contemplated by this Agreement and have been afforded an opportunity to ask
questions of and receive answers from the officers and directors of the Buyer.
ARTICLE III
REPRESENTATIONS, WARRANTIES
AND COVENANTS OF BUYER
Buyer represents, warrants and covenants to the Company and each Seller
as set forth in this Article III. Such representations, warrants and covenants
shall be true as of the date of this Agreement and as of the Closing Date.
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3.1 Organization and Standing of Buyer. Buyer is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware and has full corporate power and authority to carry on its
business and operations as currently conducted.
3.2 Authorization, Etc. Buyer has full corporate power and
authority to enter into this Agreement and to carry out the transactions
contemplated hereby. Buyer has taken all action required by law, its Certificate
of Incorporation, its Bylaws or otherwise to authorize the execution and
delivery of this Agreement and the consummation of transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by duly
authorized officers of Buyer and constitutes the valid and binding obligation of
Buyer enforceable in accordance with its terms.
3.3 No Violation. Except as set forth in Schedule 3.3, neither the
execution and delivery of this Agreement nor the consideration of the
transactions contemplated hereby will:
(a) Violate any provision of the Certificate of
Incorporation or Bylaws of Buyer;
(b) Violate, be in conflict with, constitute a default
(or event which, with or without due notice or of time, or both, would
constitute a default) under, or require the consent or approval of any other
person under, or cause or permit the acceleration of the maturity of, any debt,
obligation, contract, commitment or other agreement (i) to which Buyer is a
party, and (ii) which is material to the business or financial condition of
Buyer;
(c) Result in the creation or imposition of any Lien upon
any property or assets of Buyer under any debt, obligation, contract, commitment
other agreement to which Buyer is a party or by which Buyer is bound; or
(d) Violate any statute or law or any judgment, decree,
order, regulation or rule of any court or governmental authority or arbitration
tribunal binding upon Buyer.
3.4 Investment Intent. Buyer is acquiring the Shares for its own
account and not with a view to, or for resale in connection with, the
distribution thereof.
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3.5 Qualified Transferee. Buyer is financially and legally
qualified, and has the requisite financial, technical and business capabilities,
and assuming the accuracy of Seller's representations, warranties, and covenants
contained herein, to operate the business of Company after the Closing.
3.6 Litigation. There is on the date hereof no action or
proceeding pending or, to Buyer's knowledge, threatened against or involving
Buyer before any court, governmental agency or arbitration tribunal, which, if
adversely determined, would materially and adversely affect the business,
financial condition or operations of the Buyer or the ability of the Buyer to
consummate the transactions provided for herein. The Buyer is not in violation
of any term of any judgment, decree, injunction or order outstanding against it
or them, which violation would have a material and adverse effect on the
business, financial condition or operations of the Buyer or the ability of Buyer
to consummate the transactions provided for herein.
3.7 Compliance with Instruments, Laws, Etc. To the best of the
knowledge of Buyer, Buyer is not in violation of and has not received any notice
of violation which would have a material adverse effect on (a) any provision of
its charter or Bylaws, or any agreement pertaining to indebtedness, (b) any
material provision of any other obligation, contract, commitment, or other
agreement, or (c) any material federal or state law, regulation, rule or
administrative order.
3.8 SEC Documents. Since January 1, 1998, Buyer has filed all
reports, schedules, forms, statements, and other documents required to be filed
by it with the SEC pursuant to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act") (all of the foregoing filed
prior to the date hereof and all exhibits included therein and financial
statements and schedules thereto and documents incorporated by reference
therein, being hereinafter referred to as the "SEC Documents"). No information
included in the SEC Documents when filed contained any untrue statements of a
material fact or omits to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they are being
made, not misleading.
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3.9 Capital Stock. As of the Closing, the authorized capital stock
of the Company consists of 15,000,000 shares of Common Stock, of which as of
the date hereof, 6,395, 571 were issued and outstanding and 1 million shares of
preferred stock of which 125 shares of Series B Preferred Stock were issued and
outstanding and no debentures or notes were issued and outstanding
3.10 HomeCom Stock. The shares of the Buyer Common Stock to be
issued to the Sellers will be, when issued, duly authorized, validly issued,
fully paid and non-assessable, and not subject to or in violation of any
preemptive or similar rights.
3.11 Financial Statements. The financial statements contained in
the Buyer's Quarterly Report on Form 10-Q for the quarter ended September 30,
1998 and on Form 10-K for the year ended 1997 (the HomeCom SEC Documents) are
complete and accurate in all material respects and fairly present at the time of
their filing, in conformity with GAAP, applied on a consistent basis, the
financial position of the Buyer on the date thereof and the results of
operations of the Buyer on the date thereof and the results of operations of the
Buyer for the period then ended.
3.12 No Material Adverse Change. Except as set forth on Schedule
3.12 or as pursuant to the periodic reports filed by the Buyer with the SEC
pursuant to the Securities and Exchange Act of 1934, as amended, there has not
been any material adverse change or any event, occurrence, development, or state
of circumstances or facts which could reasonably be expected to result in a
material adverse change since the date of the the Buyer SEC Documents.
3.13 Registration of the Buyer Stock. The Buyer currently meets
each of the requirements for registrants under Form S-3. The Buyer has filed
timely with the SEC all required reports and disclosures.
3.14 Disclosure. The Buyer has received from the Company all
information which the Buyer has requested in connection with the transactions
contemplated by this Agreement and has been afforded an opportunity to ask
questions of and receive answers from the officers and directors of the Company.
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3.15 Clients; Billings. The Buyer knows of no reason (other than
possible general economic or industry changes or conditions) why the billings of
its top twenty clients (in annual billings) should not in the reasonably
foreseeable future following the Closing remain constant or increase, subject in
each case to turnover typical of the industry.
ARTICLE IV
COVENANTS OF SELLER
4.1 Conduct of Business Pending Closing. From the date hereof and
until Closing, Seller warrants and covenants that, pending and as a condition
precedent to Closing, except otherwise consented to in writing by Buyer or as
contemplated by this Agreement:
(a) Sellers shall cause the Company:
(i) to conduct its business only in the ordinary
and usual course consistent with past business practice;
(ii) to use its best efforts to promote the
business of the Company and retain its customers, managers, employees,
licensors and contractors; and
(iii) except for transactions in the ordinary and
usual course of business consistent with past business practice, and
without being required to make any unusual expenditures or suffer any
unusual losses, to use its best reasonable efforts:
(w) to keep the organization of its
business intact, to preserve and maintain its assets, and to
preserve the good will of its suppliers, customers and others
having business relations with it;
(x) to preserve the relationships and
goodwill between it and its employees and keep Buyer advised
of any changes in personnel that would affect the long-term
operations of the Company;
(y) to continue to carry its existing
insurance, subject to variations in amounts required by the
ordinary operations of its business and any increases mutually
agreed upon by Seller and Buyer; and
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(z) to comply with and perform the
leases and other agreements to which it is a party or by which
it is bound.
(b) Sellers shall not permit the Company to:
(i) incur any indebtedness, obligation or
liability which would be characterized as a long term liability under
generally accepted accounting principles;
(ii) merge or consolidate with, or purchase
substantially all of the assets of, or otherwise acquire, any business
of any corporation, partnership, association or other business
organization or division thereof;
(iii) vary significantly its business methods and
practices with its present and prospective customers and subscribers,
including but not limited to the price and terms upon which it offers
its service except to the extent consistent with the ordinary and usual
course of business;
(iv) except for transactions in the ordinary and
usual course of business consistent with past business practice.
(y) grant any increase in salaries
payable or to become payable or grant any bonus to any
officer, employee, agent, or representative, or
(z) increase benefits payable to any
officer, employee, agent, or representative under any Plan of
the Company or by which the Company will be bound after
Closing or create, become bound by or modify any such Plan.
(v) enter into, become bound by or modify, or
unless required by law, engage in any negotiations with respect to, any
collective bargaining or union agreement or commitment;
(vi) enter into any employment or consulting
agreement or other such agreement not terminable by its terms without
penalty or payment on 30 days' or less notice after the Closing with
any person;
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(vii) declare, set aside, or pay any dividend or
make any distribution in respect of its equity securities;
(viii) purchase, redeem, or otherwise acquire any
of its equity securities or reclassify, split up or otherwise dispose
of any of such equity securities;
(ix) issue, sell or otherwise dispose of any of
its equity securities, or create, sell or otherwise dispose of (except
to terminate) any options, rights, conversion rights or other
agreements or commitments of any kind relating to the issuance, sale or
disposition of any of its equity securities except such sales or
dispositions exclusively among the Company and its Shareholders;
(x) change its accounting method or treatment of
any material item;
(xi) pay any obligation or liability, fixed or
contingent, other than current liabilities or the current portion of
long-term liabilities;
(xii) enter into or become bound by any agreement
or commitment having a term in excess of one year or obligating it to
pay more than $5,000 in the aggregate under any such agreement or
commitment;
(xiii) enter into or become bound by any new or
renewed lease agreements or commitments requiring payment by the
Company in excess of $5,000 in aggregate;
(xiv) except in the ordinary and usual course of
business consistent with past business practice, waive or compromise
any material right or claim;
(xv) except in the ordinary and usual course of
business consistent with past business practice, cancel, without full
payment, any note, loan, or other obligation owing to it;
(xvi) except in the ordinary and usual course of
business consistent with past business practice, directly or indirectly
modify, amend, cancel, or terminate any of
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<PAGE> 31
the material leases, contracts or agreements to which it is a party,
including but not limited to the partnership or joint venture
commitments;
(xvii) amend, modify, or otherwise alter in any way
the Articles of Incorporation or By-laws of the Company; or
(xviii) enter into any agreement obligating it to do
any of the foregoing prohibited acts.
4.2 [INTENTIONALLY DELETED]
4.3 Access and Information. Upon reasonable notice, Seller will
allow Buyer, its counsel, accountants, lenders, capital providers and other
agents and representatives, (i) to have full access, during normal business
hours, throughout the period prior to Closing to the employees, agents,
representatives, affiliates, files, customers, suppliers, lenders, contracts,
properties, books and records of the Company, (ii) to discuss its affairs,
finances and accounts with its officers and accountants, and (iii) to be
furnished all such information concerning the business and affairs of the
Company as Buyer or its representatives may reasonably request.
4.4 Post-Closing Availability. Sellers hereby agrees that, from
time to time after Closing at Buyer's request and without further consideration,
Sellers will execute and deliver such other instruments of conveyance,
assignment and transfer and take such other action as Buyer may reasonably
require to more effectively convey, transfer to and vest in Buyer, and to put
Buyer in possession of, the Shares purchased hereunder and otherwise to effect
the consummation of the transactions contemplated hereby.
4.5 Employment Agreements. Messrs. Chu, Rickard and Winans shall
enter into employment agreements with Buyer and Company (the "Employment
Agreement"). Each Employment Agreement shall be substantially in the form
attached hereto as Exhibit "B."
4.6 Non-Competition Agreement. Messrs. Chu, Rickard, and Winans
shall each enter into a Non-Competition Agreement with Buyer (the
"Non-Competition Agreement") substantially in the form attached hereto as
Exhibit "C."
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4.7 Best Reasonable Efforts. Sellers shall use their best
reasonable efforts to consummate the transactions contemplated by this Agreement
and to obtain as quickly as practicable the approvals and consents necessary for
such consummation.
4.8 Notice to Customers. Subject to Paragraph 8.6, Seller shall,
upon the request of Buyer after Closing, cooperate with and assist Buyer in
informing customers of the Company of the change in control of Company.
4.9 Disclosure as to Representations and Warranties. Sellers shall
promptly inform Buyer in writing if at any time Sellers or the Company shall
become aware of any fact which would cause any representation or warranty of
Sellers contained in this Agreement or in any certificate delivered pursuant
hereto to not be true and complete as and as of such time.
4.10 Compliance with Securities Laws. Sellers agree to comply with
all applicable state and federal securities laws and regulations.
ARTICLE V
COVENANTS OF BUYER
5.1 Notice to Customers. Subject to Paragraph 8.6, Buyer shall
cooperate with the Sellers in informing customers of the Company of the change
in control of the Company.
5.2 Access and Information. Upon reasonable notice, Buyer will
allow the Sellers, their counsel, accountants, lenders, capital providers and
other agents and representatives, (i) to have full access, during normal
business hours, throughout the period prior to Closing to the employees, agents,
representatives, affiliates, files, customers, suppliers, lenders, contracts,
properties, books and records of the Company, (ii) to discuss its affairs,
finances and accounts with its officers and accountants, and (iii) to be
furnished all such information concerning the business and affairs of the
Company as Seller and its representatives may reasonably request.
5.3 Best Reasonable Efforts. Buyer shall use its best reasonable
efforts to consummate the transactions contemplated by this Agreement and to
obtain as quickly as practicable the approvals and consents necessary for such
consummation.
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5.4 Disclosure as to Seller's Representations and Warranties.
Buyer shall promptly inform Seller in writing if at any time Buyer shall become
aware of any fact which would cause any representation or warranty of Seller
contained in this Agreement to not be true and complete at and as of such time.
5.5 Registration. The Buyer shall as soon as practicable after the
Closing (but no later than sixty (60) days thereafter) prepare and file, at its
expense, with the SEC under the 1933 Act a registration statement on Form S-3,
if available, or such other available form permitting comparable public sale of
(i.e., in ordinary brokerage transactions) 89,590 shares of the Buyer Common
Stock (the "Registration Statement") with respect to 89,590 shares of the Buyer
Common Stock issued in (or as a result of) this Agreement and shall use best
reasonable efforts to have the Registration Statement declared effective by the
SEC no later than ninety (90) days from the Closing and keep such Registration
Statement and use its best reasonable efforts to keep such registration
statement effective until the earlier to occur of, (i) two years after the
effective date of the Registration Statement or, (ii) the date that at least
60,000 shares of Buyer Common Stock has been sold by the Sellers (the "Effective
Period"). The Buyer shall also take at its expense any action reasonably
required to be taken under state "Blue Sky" or other securities laws with
respect to the 89,590 shares of the Buyer Common Stock issued in (or as a result
of) this Agreement.
5.6 Registration Covenants. As to any shares of the Buyer Common
Stock registered pursuant to Section 1.3 above, the Buyer covenants:
(a) It will not at any time file or make any amendment or
supplement to the Registration Statement or to any prospectus or preliminary
prospectus of which the Sellers have not been previously advised;
(b) It will advise the Sellers promptly in writing of the
occurrence and time of occurrence of each of the following events: (i) the
issuance by the SEC of an order declaring the Registration Statement effective,
(ii) any request by the SEC for an amendment of the
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Registration Statement as originally filed or as amended or as effective or for
any amendment or supplement of the final prospectus or preliminary prospectus
contained therein, or for any additional information with respect to the
Registration Statement or the prospectus, (iii) any event of which the Buyer has
knowledge during the period of the effectiveness of the Registration Statement
which requires that the final prospectus included in the Registration Statement
be amended or supplemented in order to make the statements therein, in the
circumstances under which such prospectus is delivered to a purchaser of the
shares, not misleading, (iv) the refusal to qualify or the suspension of the
qualification of shares of the Buyer Common Stock for offering or sale in any
jurisdiction or of the institution of any proceedings for such purpose or (v)
the issuance by the SEC of any stop order suspending the effectiveness of the
Registration Statement or any order suspending or preventing the use of such
final prospectus or any preliminary prospectus, or the initiation of any
proceedings for that purpose.
(c) It will amend or supplement the Registration Statement, at any
time during the period of its effectiveness, in order to make the statements
therein in the circumstances under which such prospectus would then be delivered
to a purchaser of shares of the Buyer Common Stock not misleading or as
otherwise may be required by the 1933 Act and the rules and regulations
promulgated under it.
(d) It will furnish the Sellers with copies of the final
prospectus in such quantities as they may from time to time reasonably request.
(e) It shall bear all expenses of the Registration Statement, and
all amendments and supplements, provided for in Paragraph 5.5 above (including,
but not limited to, legal fees, accounting fees, printing costs and registration
and Blue Sky fees and expenses). The Sellers shall bear the fees and
disbursements of their counsel and agree to pay their pro rata share of all
underwriting fees and discounts if applicable to the extent an underwriter is
utilized.
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5.7 Rule 144. With a view to making available to the Sellers the
benefits of certain rules and regulations of the SEC which may permit the sale
of the shares of the Buyer Common Stock to the public without registration, the
Buyer agrees that one year following the Closing and for so long as any of the
Sellers own any shares of the Buyer Common Stock issued in (or as a result of)
the Agreement, and so long as the same is necessary, the Buyer shall use its
best reasonable efforts to: (i) make and keep available public information, as
those terms are contemplated by Rule 144 under the Securities Act ("Rule 144");
(ii) timely file with the SEC all reports and other documents required to be
filed under the Securities Act and the Exchange Act; (iii) furnish to the
Sellers forthwith upon request a written statement by the Buyer as to its
compliance with the reporting requirements of the Securities Act and the
Exchange Act, and a copy of the most recent annual or quarterly report of the
Buyer; and (iv) comply with all rules and regulations of the SEC applicable in
connection with the use of Rule 144 and take such other actions and furnish the
Sellers with such information as the Sellers may reasonably request in order to
avail themselves of Rule 144. In furtherance thereof, the Buyer will request to
its counsel that such counsel provide an appropriate legal opinion acceptable to
such counsel to its transfer agent with respect to the availability of Rule 144
for the public sale of shares of the Buyer Common Stock issued in (or as a
result of) the agreement if: (i) the transfer agent requires such an opinion,
(ii) in such counsel's opinion, the terms and conditions of Rule 144 have been
satisfied, and (iii) such counsel has been provided with the applicable Form
144, a copy of the Seller's Stock Certificate and an affidavit certifying as to
any relevant factual matters satisfactory to it in substance and scope.
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ARTICLE VI
CLOSING
6.1 Conditions Precedent to Closing.
(a) Buyer's obligation to purchase the Shares shall be
subject to satisfaction of all of the conditions set forth in this subparagraph
6.1(a) (unless expressly waived in writing by it at, or any time prior to,
Closing):
(i) The representations and warranties of
Sellers contained in this Agreement or in any certificate delivered
pursuant hereto by or on behalf of Sellers shall have been true and
complete when made and shall also be true and complete at and as of the
time of Closing (except for changes permitted under Section 4.1 of
Article IV).
(ii) Seller shall have caused all covenants,
agreements and conditions required by this Agreement to be performed or
complied with by them prior to or at Closing to be so performed or
complied with.
(iii) Sellers shall have delivered to Buyer a
certificate, signed by each of the Sellers and dated as of the Closing
Date, certifying as to the fulfillment of the conditions set forth in
clauses (i) and (ii) of this subparagraph 6.1(a).
(iv) No action or proceeding shall have been
instituted and remain pending by or before any court or other
governmental body or arbitration tribunal seeking, and there shall not
be in effect any injunction, order or decree of a court of competent
jurisdiction the effect of which is, (x) to restrain or prohibit or to
recover damages in respect of the transactions contemplated by this
Agreement, (y) to revoke or suspend any material license, permit, order
or approval, or (z) to question the validity or legality of this
Agreement or any action taken or to be taken pursuant hereto or the
consummation of the transactions contemplated hereby, and there shall
be no such action or proceeding pending which, if adversely determined,
would materially and adversely
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affect, or injunction, order or decree in effect which materially and
adversely affects, the business, financial condition and operations of
Company.
(v) Buyer shall have completed its due diligence
investigation of the Company to it's satisfaction.
(vi) Except for the lease described on Schedule
2.6, all lessors under leases and parties to agreements of the Company,
other than such leases and agreements which do not require consent for
the consummation of the transactions contemplated by this Agreement,
shall have consented to the consummation of the transactions
contemplated hereby. At Closing, Seller shall deliver to Buyer copies
of all consents referred to in the preceding sentence.
(vii) Sellers shall each have furnished Buyer with
an opinion of counsel as to the status of the Seller and the Company
and the transactions contemplated by this Agreement substantially in
the form of Exhibit "D" in final form as shall be deemed acceptable by
Buyer.
(viii) Except as provided in Schedule 6.1(a)(viii),
since December 31, 1998, there shall not have been any material adverse
change in the business, financial condition or operations of Company.
(ix) All corporate proceedings in connection with
the transactions contemplated by this Agreement, and all documents and
instruments incident thereto, shall be reasonably satisfactory in all
material respects in substance and form to Buyer.
(x) The Employment Agreements shall have been
executed by the Sellers, Messrs. Chu, Rickard and Winans, respectively.
(xi) The Non-Competition Agreement shall have
been executed by each of Messrs. Chu, Rickard, and Winans,
respectively.
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(xii) Stock certificates representing the Shares
shall have been duly endorsed for transfer to Buyer, or accompanied by
a proper and duly executed instrument of assignment to Buyer, and shall
have all necessary stock transfer stamps attached.
(xiii) Resignations shall have been executed by all
of the officers and directors.
(xiv) The originals (to the extent reasonably
available to Seller) or duplicates of all of the minute books, stock
books and all other corporate and business records or documents of the
Company shall have been delivered or made available to Buyer;
(xv) Either an affidavit that Seller is not a
foreign person (as provided in I.R.C. ss.1445(b)(2)) or an affidavit of
the Company that complies with I.R.C. ss.1445(b)(3) shall have been
properly executed.
(xvi) All books and records of the Company shall
have been delivered or made available to Buyer at Seller's corporate
headquarters.
(xvii) At Closing, Seller shall present its
management internal accounting of the balance sheets and working
capital of the Company as of the month end just prior to the Closing
Date (the "Closing Date Balance Sheet") and management's representation
affirming such balance sheet. The Closing Date Balance Sheet shall
fairly represent the net worth and working capital of the Company as of
the date specified and the net worth and working capital of Company and
shall not be less than as reflected on the Financial Statements and
shall be otherwise acceptable to the Buyer.
(xviii) Seller shall have executed the Escrow
Agreement and shall have pledged the Escrowed Shares pursuant thereto.
(xix) Seller shall have and shall have caused the
Company to terminate the Shareholder Agreement dated as of March 20,
1996, as amended.
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(xx) Silicon Valley Bank shall have canceled all
warrants to acquire Common Stock of the Company, including that certain
Warrant dated November 17, 1998.
(xxi) The Sellers shall have caused the Company to
terminate the 1997 Stock Option Plan and any related plans prior to the
Closing (the "Plans").
(xxii) All obligations by the Company to pay
promissory notes and accrued and unpaid salaries payable to the Sellers
(including, but not limited to, those described in the Schedules) have
been canceled and have been fully satisfied prior to Closing.
(xxiii) Those persons who have been issued options
pursuant to the Plans have agreed to cancel all of their existing stock
options to receive shares of the Company's common stock or any other
securities of any kind.
(b) Seller's obligation to close the purchase and sale of
the Shares shall be subject to satisfaction of all of the conditions set forth
in this subparagraph 6.1(b) (unless expressly waived in writing by it at, or any
time prior to, Closing):
(i) The representations and warranties of Buyer
contained in this Agreement or in any certificate delivered pursuant
hereto by or on behalf of Buyer shall have been true and complete when
made and shall also be true and complete at and as of the time of
Closing.
(ii) Buyer shall have caused all covenants,
agreements and conditions required by this Agreement to be performed or
complied with by it prior to or at Closing to be so performed or
complied with.
(iii) Buyer shall have delivered to Seller a
certificate, signed by its chairman, president or a vice president, and
dated as of the Closing Date, certifying as to the fulfillment of the
conditions sat forth in clauses (i) and (ii) of this subparagraph
6.1(b).
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(iv) There shall not be in effect any injunction,
order or decree of a court of competent jurisdiction that prohibits or
delays consummation of the sale of the Shares by Seller and no action
or proceeding alleging that the consummation of the sale of the Shares
by Seller violates or will violate any federal or state law, rule or
regulation shall have been instituted by or before any court or
governmental body to restrain or prohibit Seller from selling, or to
recover damages from Seller in respect of the sale of the Shares,
unless Buyer elects to fully indemnity and defend Seller in respect
thereof.
(v) Buyer shall have furnished Seller with an
opinion of counsel as to the status of Buyer and the transactions
contemplated by this Agreement substantially in the form of Exhibit
"E."
(vi) All corporate proceedings in connection with
the transactions contemplated by this Agreement and all documents and
instruments incident thereto, shall be reasonably satisfactory in all
material respects in substance and form to Seller.
(vii) There has not been any material adverse
change in the business, financial condition or operations of the Buyer.
(viii) The Buyer shall have delivered to the
Sellers the Buyer Common Stock in payment of the Purchase Price
(excluding the Escrowed Shares which have been pledged pursuant to the
Escrow Agreement).
6.2 Termination. In the event that the Closing shall not have
occurred by 5:00 p.m., Eastern Standard Time, on April 29, 1999, the Buyer may
elect at its option to terminate without penalty or payment its obligations to
purchase the Shares and all such other obligations as provided in this
Agreement.
6.3 Casualty Losses. It is understood that Seller assumes all risk
of destruction, loss, or damage due to fire or other casualty or event to the
Company until the consummation of the Closing. If there is any destruction,
loss, or damage prior to the date of Closing, the Sellers shall restore the
facilities affected by destruction, loss, or damage prior to Closing or, if the
Seller is
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unable to restore such facilities prior to Closing, the Sellers shall reimburse
the Buyer for the amount required to repair such facilities or, at the Buyer's
option, set aside in a special fund of the Company, all insurance and other
proceeds received by the Seller and the Company in respect of such destruction,
loss, or damage.
ARTICLE VII
POST-CLOSING OBLIGATIONS
7.1 Consolidated Financial Statements. Buyer shall prepare
consolidated financial statements of the Company and Buyer as required by SEC
rules and regulations.
7.2 Cooperation. Following the Closing Date, Seller shall
cooperate in the execution of any documents, and the taking of any actions which
are reasonable and necessary to effectuate the transaction contemplated by this
Agreement and the achievement of its intended objectives.
7.3 Closing Balance Sheet. Seller and Buyer shall have thirty (30)
days following Closing to review the Closing Date Balance Sheet and agree to
adjustments to same, if and as appropriate. If Buyer and Seller cannot agree,
then their respective accountants shall name a third independent accountant to
review and finally determine any disputed adjustments. Seller and Company
represent and warrant that the Closing Date Balance Sheet, as finally
determined, shall reflect a net worth and working capital of Company which is
not less than reflected in the Financial Statements.
7.4 HomeCom Stock Option Plan. Following the Closing, Buyer agrees
to make available to the then employees of the Company (based upon the
reasonable recommendations of senior management of the Company) up to 150,000
shares of its common stock pursuant to the Buyer's Employee Stock Option Plan
(the "Plan"). Such issuances shall in each case be approved by Buyer's
Compensation Committee in their sole discretion.
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ARTICLE VIII
INDEMNIFICATION; DUE DILIGENCE; CONFIDENTIALITY
8.1 Indemnification by Seller. The Sellers hereby indemnify and
agree to hold the Buyer and the Company harmless on an after-tax basis from,
against, and in respect of (and shall on demand reimburse any such entity for):
(a) Any and all loss, liability, or damage suffered or
incurred by Buyer or Company by reason of any untrue representation, breach of
warranty or nonfulfillment of any covenant or agreement by Seller contained in
this Agreement or in any certificate delivered to Buyer pursuant hereto;
(b) Any and all taxes payable by Buyer or Company or any
entity with which any of the foregoing are consolidated attributable to the
business and operations of Company for periods prior to the Closing; and
(c) Any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs and expenses including without
limitation, reasonable legal fees and expenses, incident to any of the foregoing
or incurred in attempting to oppose the imposition thereof or in connection with
any investigation thereof, or in enforcing this indemnity, provided, however,
that no claim arising out of a breach of any representation or warranty made by
Seller in this Agreement shall be asserted by Buyer against the Sellers under
this Paragraph 8.1 unless written notice of such claim setting forth in
reasonable detail the nature thereof shall have been given to the Sellers prior
to the termination, if any, of the survival period relating to such claim as
provided in Paragraph 8.3.
(d) In connection with any registration in which the
Sellers are participating, the Sellers agree to hold harmless and defend the
Buyer, each of its directors and officers who sign the registration statement,
each person, if any, who controls the Buyer within the meaning of the 1934 Act
or the 1940 Act (collectively and together "Indemnified Party"), against any
actions, suits, proceedings, claims, demands, assessments, judgements, costs and
expenses
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insofar as the foregoing occurs in reliance upon written information provided by
the Sellers to the Buyer. Such indemnity shall include the cost of defending
such action and shall survive the transfer of the Buyer Common Stock by the
Sellers.
8.2 Indemnification by Buyer. Buyer hereby indemnifies and agrees
to hold each Seller harmless on an after-tax basis from, against and in respect
of (and shall on demand reimburse for):
(a) Any and all loss, liability, or damage suffered or
incurred by a Seller by reason of any untrue representation, breach of warranty
or nonfulfillment of any covenant or Agreement of Buyer contained in this
Agreement or in any certificate delivered to Sellers pursuant hereto; and
(b) Any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs and expenses, including, without
limitation, reasonable legal fees and expenses, incident to any of the foregoing
and incurred in attempting to oppose the imposition thereof or in connection
with any investigation thereof, or in enforcing this indemnity; provided,
however, that no claim arising out of a breach of any representation or warranty
made by Buyer in this Agreement shall be asserted by Seller against Buyer under
this Paragraph 8.2 unless written notice of such claim setting forth in
reasonable detail the nature thereof shall have been given to Buyer prior to the
termination, if any, of the survival period relating to such claim as provided
in Paragraph 8.3.
(c) Any losses, claims, damages or liabilities to which a
Seller may become subject under the Securities Act or otherwise insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, the prospectus or any
amendment or supplement to either of them, or arise out of or based upon the
omission or alleged omission to state a material fact required to be stated in
such Registration Statement or prospectus or necessary to make the statements,
in light of the circumstances under which they
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were made, not misleading, as long as such statements were not made by the
Sellers and the Buyer will reimburse the Sellers for any legal or other expenses
for one legal counsel incurred by the Sellers incurred by the Sellers in
connection with investigating or defending any such loss, claim, damage or
liability.
8.3 Survival of Representations and Warranties. Each
representation and warranty, covenant and agreement made by either party hereto
in this Agreement or in any document, certificate, or other instrument delivered
pursuant to this Agreement shall survive the Closing and until the second
anniversary of the Closing Date, but only if a claim initiated by a party hereto
with respect thereto is made in a notice given to the party against whom such
claim is made on or before such date.
8.4 Limitations on Indemnification. Neither party will be liable
under this Agreement for losses, damages or liabilities ("Losses") resulting
from the inaccuracy or breach of any representation or warranty until such
Losses exceed in the aggregate $10,000 and, in that event, the damaged party
shall be entitled to recovery only to the extent the aggregate amount of such
Losses exceeds $10,000. In addition, except as provided in the following
sentence, the individual liability of each person included within the definition
of Seller shall be limited to an amount equal to the value of the Shares of
Buyer Common Stock received by such Seller at Closing. The limitations imposed
by this Paragraph 8.4 shall not apply to any intentional misrepresentation or
intentional breach of any warranty or covenant herein. The indemnification
obligations hereunder by either party shall be limited to the Purchase Price.
The amount of Losses an indemnified party is liable for shall be called the
"Indemnity Amount."
8.5 Third Party Claims. In order for the Sellers or the Buyer, as
the case may be ( the "Indemnified Party"), to be entitled to any
indemnification provided for under this Agreement in respect of, arising out of
or involving a claim made by any person, firm, governmental authority or
corporation against the Indemnified Party (a "Third Party Claim"), such
Indemnified Party must notify the indemnifying party in writing of the Third
Party Claim within a reasonable time
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after receipt by such Indemnified Party of written notice of the Third Party
Claim unless the indemnifying party shall have previously received knowledge
thereof, but the failure to so notify the indemnifying party shall not relieve
it of any liability that it may have to any Indemnified Party except to the
extent the indemnifying party demonstrates that it is prejudiced thereby.
Thereafter, the Indemnified Party shall deliver to the indemnifying party,
within a reasonable time after the Indemnified Party's receipt thereof, copies
of all notices and documents (including court papers) received by the
Indemnified Party relating to the Third Party Claim.
(a) If a Third Party Claim is made against an Indemnified
Party, the indemnifying party will be entitled to participate in the defense
thereof, and if it so chooses, to assume the defense thereof with counsel
selected by the indemnifying party. Should the indemnifying party so elect to
assume the defense of a Third Party Claim, the indemnifying party will not be
liable to the Indemnified Party for any legal expenses subsequently incurred by
the Indemnified Party in connection with the defense thereof, other than
reasonable costs of investigation. If the indemnifying party elects to so assume
the defense of a Third Party Claim, the Indemnified Party (i) will cooperate in
all reasonable respects with the indemnifying party in connection with such
defense, (ii) will not admit any liability with respect to, or settle,
compromise, or discharge, any Third Party Claim without the indemnifying party's
prior written consent, and (iii) will agree to any settlement, compromise, or
discharge of a Third Party Claim which the indemnifying party may recommend if
(y) the sole relief provided against the Indemnified Party is monetary damages
which are paid by the indemnifying party and the Indemnified Party is completely
released in connection with such Third Party Claim, and (z) such settlement,
compromise or discharge involves no finding or admission of any violation of law
or of the rights of any person or of any breach of any agreement by the
Indemnified Party;
(b) In the event the indemnifying party shall assume the
defense of any Third Party Claim, the Indemnified Party shall be entitled to
participate in (but not control) such defense with its own counsel at its own
expense. If the indemnifying party does not assume the
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defense of any such Third Party Claim within a reasonable time under the
circumstances, the Indemnified Party may defend the same in such manner as it
may deem appropriate, including, but not limited to settling such claim or
litigation after giving notice of same to the indemnifying party on such terms
as the Indemnified Party may deem appropriate, and the indemnifying party will
promptly reimburse the Indemnified Party in accordance with the provisions of
this Paragraph 8.5; and
(c) Notwithstanding the foregoing, if an Indemnified
party determines in good faith that there is reasonable probability that an
action may materially and adversely affect it or its affiliates other than as a
result of monetary damages, such Indemnified Party may, by notice to the
indemnifying party, assume the exclusive right to defend, compromise, or settle
such action, but the indemnifying party shall be entitled to participate therein
(with control remaining with the Indemnified Party) and shall not be bound by
any determination of an action so defended or any compromise or settlement
thereof effected without its consent (which shall not be unreasonably withheld).
8.6 Confidentiality.
(a) For a period of three years from the date of this
Agreement, Seller's will hold in confidence and use its reasonable efforts to
have all of the Company's employees, agents, representatives, lenders and
capital providers hold in confidence all of the books, records, financial
information, customer lists, business plans, operating plans, or other knowledge
or information of a confidential or proprietary nature (the "Confidential
Information") with respect to Buyer and, if the Closing does occur, with respect
to Company and will not disclose, publish, use (except as required in connection
with the transaction contemplated by this Agreement) or permit others to
disclose, publish or use the same, provided, however, that the foregoing
restriction shall not apply to any Confidential Information which (i) becomes
generally available to the public in any manner or form through no fault of
Seller, its employees, agents, or representatives, (ii) is independently
developed by Seller without benefit of the above-described
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information, or rightfully received from another source on a nonconfidential
basis, (iii) is released for disclosure with Buyer's consent, (iv) is required
to be provided, published or used by law, or by a court or a governmental agency
(Seller agrees to give Buyer prior notice of any such required disclosure so as
to afford Buyer at its expense the opportunity to seek an appropriate protective
order), (v) is necessary in connection with a bona fide dispute between Buyer
and Seller in order to seek an appropriate protective order; or (vi) is
necessary in connection with a bona fide dispute in order to establish rights
under this Agreement. In the event the Closing does not occur, the Seller shall
promptly return to Buyer all Confidential Information and non-public documents
obtained from the Buyer and any copies of such documents made for or by Buyer.
(b) The Buyer has held and will continue to hold such
Confidential Information as it receives from the Sellers or the Company in
confidence and will not prior to the Closing furnish such information to its
affiliates, employees, agents, representatives, lenders or funding sources for
any use other than in evaluating and implementing the transactions contemplated
in this Agreement. In the event the Closing does not occur, Buyer shall promptly
return to Seller all Confidential Information and non-public documents obtained
from the Sellers or the Company and any copies of such documents made for or by
Buyer. For a period of three years from the date of termination of this
Agreement if the Closing does not occur, Buyer will hold in confidence and use
its reasonable efforts to have all its affiliates, employees, agents,
representatives, lenders and funding sources who had access to Confidential
Information with respect to Seller and Company to hold such information in
confidence and not disclose, publish, use or permit others to use the same,
provided, however, that the foregoing restrictions shall not apply to any
portion of the foregoing which (i) becomes generally available to the public in
any manner or form through no fault of Buyer, its employees, agents or
representatives, (ii) is independently developed by Buyer without benefit of the
above-described information, or rightfully received from another source on a
nonconfidential basis, (iii) is released for disclosure with Seller's consent,
or (iv) is required by a court or a governmental agency (and Buyer agrees
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to give Seller prior notice of any such required disclosure so as to afford
Seller at its expense, the opportunity to seek an appropriate protective order)
or is otherwise required by law or is necessary in order to establish rights
under this Agreement.
8.7 Specific Performance. In the event of any breach or threatened
breach by either party of the provisions of Paragraph 8.6 of this Agreement, the
other party shall be entitled in respect thereof to an injunction or other
appropriate order (without the necessity of setting any bond in connection
therewith or demonstrating that any harm will result from this breach thereof)
restraining such party from violating such provisions or requiring such party to
perform its obligations hereunder. In the event that any court with competent
jurisdiction determines such provisions to be too broad to enforce as written,
such court is authorized by the parties to construe and enforce such provisions
only to the broadest extent permitted by law.
ARTICLE IX
MISCELLANEOUS
9.1 Termination.
(a) In the event that the Closing Date has not occurred
by June 30, 1999, 1999, this agreement shall be terminated and declared null and
void.
(b) If either Buyer or Seller fails to close the
transaction without having reasonable cause, then the breaking party shall be
required to pay to the other party, within ten (10) days of such breach, a fee
of $15,000 (the "Break-Up Fee") as liquidated damages.
9.2 Notices. All notices or other communications hereunder shall
be in writing and shall be deemed to have been duly given (i) on the date
delivered personally or by confirmed facsimile as set forth below; (ii) two (2)
days after being sent by Express Mail or such other similar service (i.e.,
Federal Express) and addressed as set forth below; or (iii) four (4) days after
being mailed by certified or registered mail, return receipt requested, postage
prepaid, and addressed as set forth below, as follows:
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If to Seller: Ganymede Corp.
175 West Jackson Boulevard, Suite 930
Chicago, IL 60604
Attn: Richard L. Chu
Facsimile: (312) 663-4503
With a copy to: Abramson & Fox
One East Wacker Drive
Chicago, IL 60601
Attn: Joseph C. Grayson
Facsimile: (312) 644-0798
If to Buyer: HomeCom Communications, Inc.
Fourteen Piedmont Center, Suite 100
3535 Piedmont Road
Atlanta, Georgia 30305
Attn: Harvey Sax, Sheela Kosaraju
Facsimile: (404) 237-3060
With a copy to: Sims Moss Kline & Davis LLP
400 Northpark Town Center, Suite 310
1000 Abernathy Road, N.E.
Atlanta, Georgia 30328
Attn: Raymond L. Moss, Esq.
Facsimile: (770) 481-7210
or to such other address as a party shall have designated to the other by like
notice.
9.3 Entire Agreement; Amendments. This Agreement (i) constitutes
the entire agreement of the parties hereto and supersedes all prior agreements,
understandings, representations or warranties, both written and oral, between
the parties with respect to the subject matter hereof, (including, but not
limited to, that certain letter of intent dated January 29, 1999, between the
parties hereto) and (ii) may be amended or modified only by a written instrument
executed by the Buyer and the Sellers.
9.4 Expenses. Except as otherwise expressly herein provided, each
party to this Agreement shall pay its own expenses (including, without
limitation, the fees and expenses of its
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agents, representatives, counsel and accountants) incidental to the preparation
and carrying out of this Agreement.
9.5 Transfer Taxes. Any and all taxes levied by any federal,
state, or local government or authority which become payable by reason of the
sale and purchase of the Shares at Closing (excluding any taxes based on income)
shall be borne by the Sellers.
9.6 Brokers. Other than the Prospect Group, Inc., who represents
the Sellers, each party represents to the other that it has not used the
services of a broker and that no broker or finder shall be entitled to any
compensation in connection with the transaction contemplated by this Agreement
by reason of such party's actions. Seller agrees to indemnify Buyer against any
claim by any third person, including, but not limited to, the Prospect Group,
Inc. for any commission, brokerage fee, finder's fee or other payment alleged to
be due as a result of this transaction based upon any alleged agreement or
understanding between such third person and Seller or Company, whether expressed
or implied from the actions of Seller or its agents. Buyer agrees to indemnify
Seller against any claim by any third person for any commission, brokerage fee,
finder's fee or other payment alleged to be due as a result of this transaction
based upon any alleged agreement or understanding between such third person or
Buyer, whether expressed or implied from the actions of Buyer or its agents.
9.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.8 Parties in Interest. This Agreement shall inure to the benefit
of and be binding upon Buyer and Sellers and their respective successors and
assigns. Nothing in this Agreement,
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express or implied, is intended to confer upon any other person any rights or
remedies under or by reason of this Agreement.
9.9 Knowledge. Whenever any provision of this Agreement makes any
statement "to the knowledge" of any entity, other than a living person, or that
any such entity "knows" some fact or by similar formulation, such entity will be
deemed to have such knowledge or know such fact if, and only if, a responsible
officer of such entity has such knowledge or knows such fact.
9.10 Applicable Law. This Agreement and the rights and obligations
of the parties hereunder shall be construed and enforced in accordance with and
governed by the laws of the State of Georgia. Any dispute or controversy between
the parties arising in connection with this agreement or the subject matter
contemplated by this agreement shall be resolved by arbitration before a
three-member panel of the American Arbitration Association in accordance with
the commercial arbitration rules of said forum and the Federal Arbitration Act,
9 U.S.C. 1 et seq., with the resulting award being final and conclusive. Said
arbitrators shall be empowered to award all forms of relief and damages claimed,
including, but not limited to, attorney's fees, expenses of litigation and
arbitration, exemplary damages, and prejudgment interest. Notwithstanding the
foregoing, either party may at any time and at its option, whether or not an
arbitration action is then pending, initiate a civil action for temporary and
permanent injunctive and other equitable relief against the other. The parties
further agree that any arbitration action between them shall be heard in
Atlanta, Georgia, and expressly consent to the jurisdiction.
9.11 Waiver. No provision in this Agreement shall be deemed waived
by course of conduct, including the act of Closing under Article VI, unless such
waiver is in writing signed by all parties and stating specifically that it was
intended to modify this Agreement.
46
<PAGE> 52
9.12 Schedule and Exhibits. The schedules and exhibits attached
hereto shall be deemed to be incorporated by reference to this Agreement as if
fully set forth herein.
9.13 Announcements. Except to the extent required by law, prior to
Closing neither party shall make any public announcement or other disclosure
with respect hereto or the transactions contemplated hereby or disclose the
terms hereof to any third party without the consent of the other, which consent
shall not be unreasonably withheld.
9.14 Independent Advisors. Each of Buyer and Seller has retained
its own legal counsel and tax advisors in connection with the foregoing
transaction at its sole cost and expense. Each party has relied exclusively upon
the legal and tax advice given by its respective advisors.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above written.
BUYER:
HOMECOM COMMUNICATIONS, INC.
By: /s/ Harvey Sax
---------------------------------------
Name: Harvey Sax
Title: President and CEO
SELLER:
/s/ Richard L. Chu
------------------------------------------
Richard L. Chu
/s/ Joseph G. Rickard
------------------------------------------
Joseph G. Rickard
[SIGNATURES CONTINUE ON NEXT PAGE]
47
<PAGE> 53
/s/ John R. Winans
------------------------------------------
John R. Winans
/s/ Mario D'Agostino
------------------------------------------
Mario D'Agostino
/s/ Karen Moore
------------------------------------------
Karen Moore
/s/ John Kokinas
------------------------------------------
John Kokinas
48
<PAGE> 54
SCHEDULE 1.2
<PAGE> 55
SCHEDULE 2.1
Ganymede Shareholders' Agreement dated March 30, 1996.
<PAGE> 56
SCHEDULE 2.3
Authorized shares of the Corporation: 10,000,000 fully paid and non-assessable
shares of no par value common stock.
Outstanding shares of the Corporation: 1,000,000 fully paid and non-assessable
shares of no par value common stock.
The state of incorporation of the Corporation: State of Illinois.
Warrant issued to Silicon Valley Bank to acquire 3,750 shares of common stock of
the Corporation.
Ganymede 1997 Stock Option Plan pursuant to which options on 43,000 shares of
Ganymede common stock have been issued.
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<PAGE> 57
SCHEDULE 2.4
None.
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<PAGE> 58
SCHEDULE 2.6
The sale of a majority of the shares of Ganymede constitutes an "assignment" and
"transfer" under the Ganymede office lease described on schedule 2.17 and
requires the consent of the landlord.
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<PAGE> 59
SCHEDULE 2.8
The following is a list of Seller's present employees and consultants, their
position, and compensation:
1. Richard L. Chu
Chairman
$75,000.00/Yr. + 5% commission
2. Joseph Rickard
President
$78,750.00/Yr. + 5% commission
3. John Winans
Vice President/CTO
$37,500.00/Yr. Part Time
4. David Burkett
Production Manager
$53,000.00/Yr.
5. Harry Carmichael
Systems Engineer
$64,184.40/Yr.
6. Vivek Raj Kunwar
Software Engineer
$41,000.00/Yr.
Foreign Statuson student visa - practical training
7. Juan J. Nieves
Web Developer
$30,000.00/Yr.
8. Simon Leanos
Web Developer
$30,000.00/Yr.
9. Antonio DeCastro
Web Developer
$35,000.00/Yr.
10. Pete P. Fleming
Systems Operator
$52,000.00/Yr.
<PAGE> 60
11. Christine R. List
Office Manager
$24,000.00/Yr.
12. Jeremiah F. Rothschild
UIC Technology Intern
$10.00/Hr.
13. Peter Manfu Lu
Consultant/Contractor
$45.00/Hr.
14. Jerald D. Kavanaugh
Consultant/Contractor
$55.00/Hr.
15. Christopher Monaghan
Consultant/Contractor
$65.00/Hr.
16. Sven T. Davies
Contractor
$55.00/Hr.
17. Karen Moore
Contractor
$25.00/Hr.
18. Lawrence S. Berlin
Consultant
$30.00/Hr.
19. S. Joshua Stein
Contractor
$55.00/Hr.
20. Martin Sorenson
Contractor
$50.00/Hr.
<PAGE> 61
SCHEDULE 2.8(A)
Ganymede Corporation 1997 Stock Option Plan.
Employee' Salary Deferral Plan (as described in footnote 6 to the Financial
Statements).
Employee Handbook contains provisions for incentive compensation.
<PAGE> 62
SCHEDULE 2.8(B)
Consulting Agreements with:
1. Christopher Managhan
2. Interactive Business Systems
Peter Lu
3. Martin Sorenson
4. Sven Davies
5. Alfonso M. DiBenedetto
6. Jerry Kavanaugh
<PAGE> 63
SCHEDULE 2.9
None.
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<PAGE> 64
SCHEDULE 2.10
None.
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<PAGE> 65
SCHEDULE 2.12
None.
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<PAGE> 66
SCHEDULE 2.13
Security interest granted to Silicon Valley Bank/Silicon Valley Financial
Services on assets of corporation as set forth on attached Uniform Commercial
Code financing statement.
$114,300 Promissory Note, secured by accounts receivable issued by the Company
to Richard Chu on December 31, 1998.
$10,000 loan from Richard Chu secured by accounts receivable issued by the
Company to Richard Chu on March 15, 1999.
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<PAGE> 67
SCHEDULE 2.16
Seller licenses and permits: City of Chicago General Business License.
Seller registrations:
Internal Revenue Service
Ill. Dept. of Revenue Business Registration
Ill. Dept. of Revenue Sales Tax Registration
Ill. Dept. of Employment Security.
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<PAGE> 68
SCHEDULE 2.17
The only real property leased by Seller is Suite 930 at 175 W. Jackson Blvd. in
Chicago, Illinois. Seller leases its premises in Chicago for monthly rent of
$2,970 plus maintenance costs. The lease expires on July 21, 2000.
Seller leases computer equipment (6 PCs) from a company controlled by a
stockholder on a month-to-month basis.
Seller also leases:
1. Siemens telephone systems from Colonial Pacific Leasing for
monthly payment of $323.23. The lease expires on July 21,
2000.
2. Livingston Portmaster PM-3A-2T Access Server w/20 modems from
Livingston Capital for monthly payment of $345.00. The lease
expires on July 31, 2000.
3. A Sony laptop computer from Sanwa Leasing Corporation for
monthly payment $118.27. The lease expires in November, 2000.
4. 2 Compaq laptops from Compaq Capital for monthly payment of
$236.51, but it was never billed. It is an 18-month lease.
The leases are cured by the leased equipment.
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<PAGE> 69
SCHEDULE 2.18
In addition to terminations in the ordinary course of business, the Company has
terminated server co-location service to Internet Television Network and web
hosting and email services to RUNANDGAN!, Inc., effective April 1, 1999 due to
both clients poor payment history. Their monthly fees were $360.00 and $275.00,
respectively.
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<PAGE> 70
SCHEDULE 2.19
Bank Accounts:
Success National Bank
630 Waukegan Road
Deerfield, IL 60015
Account #: 3010000513
Certificate of Deposit: $55,378.66
Maturity Date: September 5, 1999
Account #: 1201000368
Certificate of Deposit: $15,883.70
Maturity Date: September 5, 1999
Account #: 0200307444
Checking
Authorized signatories: Richard Chu, Joseph Rickard & John Winans
Silicon Valley Financial Services
3003 Tasman Drive
Santa Clara, CA 95054
Client ID: 1000006468
Accounts Receivable Purchase Program: Up to $150,000.00
Authorized signatories: Richard Chu, Joseph Rickard & John Winans
<PAGE> 71
SCHEDULE 2.20(A)
Trade name: Ganymede
shrink wrap and other licenses for commercially available software
JXTerm licensed to Nortel
<PAGE> 72
SCHEDULE 2.20(B)
SOFTWARE INVENTORY:
1 QuickBooks Pro Version 5.0
1 Timeslips Version 8 6310595
1 Act 3.0
1 Solaris
1 Adobe Photoshop 3.0
1. Adobe Illustrator 4.1
1 Macromedia Director V6
1 Visio 3.0
1 Visio 5.0 Upgrade
1 Quickbooks Pro 3.1
1 MS Visual Interdev
1 1 NT Server Resource Kit
2 NT Server 4.0
1 NT WS 4.0
3 Win 95
1 MS Visual J++
1 SQL Server 6.5
1 Adobe PageMaker 6.5
1 NT WS 3.51
1 HomeSite 3.0
2 Read Audio Server 2.0 (bsdi)
1 WinFax Pro 4.0
1 Visual Cafe Pro 1.0
1 Conversions Plus 4.0
1 WebTrends Pro Suite 2100015-EGE-1510326
1 CodeBase 6.3 Intel Upgrade
1 Quark WinXpress V3.22
1 Macromedia IBM Multi Studio V2
1 Netscape SuiteSpot V2
<PAGE> 73
SCHEDULE 2.20(C)
Application to United States Patent and Trademark Office to register the name
"Ganymede" as a service mark was rejected by the examiner and the application
was abandoned.
<PAGE> 74
SCHEDULE 2.21
None
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<PAGE> 75
SCHEDULE 2.22
Mario D'Agostino, Richard Chu and Joseph Rickard have filed extensions for their
1998 tax returns.
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<PAGE> 76
SCHEDULE 2.24
Seller contracts:
$114,300 Promissory Note, secured by accounts receivable issued by the Company
to Richard Chu on December 31, 1998.
Two Promissory Notes from the Company to Mario D'Agostino: one for $20,000.00,
dated November 30, 1998, and one for $15,000.00, dated March 2, 1999.
Real estate leases. See SCHEDULE 2.17
Personal property lease. See SCHEDULE 2.17
A drawdown on a Line of Credit provided by Success National Bank of $70,000.00
secured by a time deposit in the bank of an approximately equal amount.
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<PAGE> 77
SCHEDULE 2.27
Seller leases computer equipment (6 PCs) from a company controlled by a
stockholder on a month-to-month basis.
Related party transactions as set forth in the Financial Statements for the year
ended December 31, 1998.
$114,300 Promissory Note, secured by accounts receivable issued by the Company
to Richard Chu on December 31, 1998.
Two Promissory Notes from the Company to Mario D'Agostino: one for $20,000.00,
dated November 30, 1998, and one for $15,000.00, dated March 2, 1999.
$10,000 loan from Richard Chu secured by accounts receivable issued by the
Company to Richard Chu on March 15, 1999.
<PAGE> 78
SCHEDULE 3.3
None.
<PAGE> 79
SCHEDULE 6.1(A)(VIII)
None.
<PAGE> 80
EXHIBIT "A"
ESCROW AGREEMENT
<PAGE> 81
EXHIBIT "B"
EMPLOYMENT AGREEMENTS
<PAGE> 82
EXHIBIT "C"
NON-COMPETITION AGREEMENTS
<PAGE> 83
EXHIBIT "D"
SELLER OPINION OF COUNSEL
<PAGE> 84
EXHIBIT "E"
BUYER OPINION OF COUNSEL
<PAGE> 1
EXHIBIT 10.56
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of the 23rd day
of April, 1999 (the "Effective Date"), between GANYMEDE CORPORATION (the
"GANYMEDE"), an Illinois corporation and Richard L. Chu, a resident of Evanston,
Cook County, Illinois (the "Employee").
W I T N E S S E T H:
WHEREAS, pursuant to the terms of that certain Stock Purchase Agreement
and related documents and agreements of event date herewith (the "Purchase
Agreement") by and between the Employee, among others, and GANYMEDE, HomeCom has
acquired all of the issued and outstanding shares of the capital stock of
Ganymede; and
WHEREAS, the Employee has been a senior executive officer of GANYMEDE;
and
WHEREAS, after giving effect to the Purchase Agreement, GANYMEDE shall
become a wholly-owned subsidiary of HomeCom; and
WHEREAS, GANYMEDE desires to retain the services of and employ the
Employee to continue in his role as a senior executive officer of GANYMEDE, and
the Employee desires to provide such services upon the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, the parties hereto, each intending to be legally bound hereby,
agree as follows:
1. Employment. GANYMEDE hereby employs the Employee as their employee
in the capacity of Senior Executive Officer, and the Employee hereby accepts
such employment. During the term of employment under this Agreement (the
"Employment Term"), Employee shall at all times serve as a member of the Board
of Directors of GANYMEDE. During such time, a Member of the Board of Directors
of the GANYMEDE shall pay for Director's liability insurance and indemnify
Employee from all liability that he may incur as a member of the Board of
Directors. During the Employment Term, the Employee shall perform such duties as
shall reasonably be required of an employee of GANYMEDE which are outlined on
Exhibit "A" attached hereto and incorporated herein by reference for all
purposes. Employee agrees not to take any action which would impair or undermine
the terms and conditions of the Purchase Agreement.
2. Performance. The Employee agrees to devote his entire business
efforts to the performance of his duties hereunder; provided, however, that the
Employee may engage in passive securities investment activities for his own
account so long as they do not interfere with the performance of his duties
hereunder. Employee agrees to devote his or her full time and energy to
Ganymede's business and shall not during the term of employment work or perform
services in any advisory or other capacity for any other individual or entity
without disclosing to
<PAGE> 2
HomeCom the relationship. If HomeCom objects to disclosed relationship, Employee
will refrain from continuing that relationship.
3. Term of Employment. Unless otherwise terminated in accordance with
the terms hereof, the initial term of this Agreement (the "Employment Term")
shall be three (3) years commencing on the Effective Date. Notwithstanding
anything contained herein to the contrary, Employer may terminate this Agreement
at any time by written notice as further described in Section 13.
4. Basic Compensation. The basic minimum annual salary (the "Salary")
of the Employee for his employment services hereunder shall be one hundred
thousand dollars ($100,000) per year, commencing on the Effective Date
throughout the Employment Term. The Salary shall be payable in equal
semi-monthly installments. Employee's salary shall be prorated on a daily basis
for the years or months, as the case may be, in which he commences or terminates
his employment relationship hereunder. In each year of the Employment Term,
Ganymede shall annually review the Employee to determine his eligibility to
receive an annual Salary raise together with performance bonuses based upon the
performance of Ganymede, unless Ganymede is integrated into HomeCom; then the
bonus will be based upon the performance of HomeCom. These reviews shall be
conducted during the previous annual period, subject to the sole determination
of the Compensation Committee of HomeCom's Board of Directors, in its sole
discretion. In addition to salary, Ganymede shall pay Employee commissions equal
to 5% of the gross revenues, excluding revenue received from the sale of
hardware, actually received from Rotary International payable on a monthly
basis, subject to applicable chargebacks.
5. Benefits. As an employee of Ganymede, Employee shall be entitled to
participate in all profit sharing plans, supplemental compensation arrangements,
stock option incentive plans, medical, dental and life insurance programs or any
other fringe benefits offered by Ganymede to its senior management employees
(the "Benefits"). The Salary received by the Employee hereunder shall be in
addition to the foregoing Benefits.
6. Expense Account and Vacations. Ganymede agrees to reimburse the
Employee for all expenses reasonably incurred by him on behalf of Ganymede in
accordance with the prevailing practice and policy of Ganymede, which prevailing
practice and policy shall be disseminated to the Employee by Ganymede
contemporaneous with the execution of this Agreement. In addition, the Employee
shall be entitled to that number of days of paid vacation and paid sick leave as
is consistent with the prevailing practice and policy of Ganymede for other
senior management employees in the same or similar position as that held by the
Employee hereunder.
7. Customer Non-Solicitation. Employee agrees that for a period of one
(1) year immediately following termination of Employee's employment with
Ganymede, HomeCom, or its subsidiaries or affiliates for any reason, including,
without limitation, voluntary resignation from employment by Employee
("Non-Solicitation Period"), Employee shall not, on Employee's own behalf or on
behalf of any person, firm, partnership, association, corporation or business
2
<PAGE> 3
organization, entity or enterprise, solicit, contact, call upon, communicate
with or attempt to communicate with any customer or immediate prospect of
Ganymede, HomeCom, or its subsidiaries or affiliates, or any representative of
any customer or immediate prospect of Ganymede, HomeCom, or its subsidiaries or
affiliates with whom the Employee had Material Contact ("Material Contact") with
a view to sale or providing any product or service competitive or potentially
competitive with any product or service sold or provided or under development by
Ganymede, HomeCom, or its subsidiaries or affiliates during the time of one (1)
year immediately preceding cessation of Employee's employment with Ganymede,
provided that the restrictions set forth in this paragraph shall apply only to
customers or prospects of Ganymede, or representatives of customers or prospects
of Ganymede, HomeCom, or its subsidiaries or affiliates, with which Employee had
substantial contact during such one (1) year period. The actions prohibited by
this paragraph shall not be engaged in by Employee directly or indirectly,
whether as director, officer, manager, salesperson, agent, technical support,
sales or service representative, developer, or otherwise. As used herein,
"Material Contact" means contact between Employee and each customer or immediate
prospect (A) with whom Employee dealt; (B) whose dealings with Ganymede,
HomeCom, or its subsidiaries or affiliates were coordinated or supervised by
Employee; (C) about whom Employee obtained Confidential Information in the
ordinary course of business as a result of Employee's association with Ganymede,
HomeCom, or its subsidiaries or affiliates; or (D) who receives services
provided by Ganymede, HomeCom, or its subsidiaries or affiliates, the sale or
provision of which results or resulted in compensation, commissions or earnings
for Employee, in each of cases (A) through (D) within two years prior to the
date of Employee's termination of employment. This section does not preclude the
Employee to engage in social contact or interaction with any of these entities
or parties, as long as the Employee is interacting with the intention not to
solicit competing business.
8. Non-Competition. Employee agrees that during the term of Employee's
employment and during the Non-Solicitation Period, Employee shall not, on
Employee's own behalf or on behalf of any person, firm, partnership,
association, corporation or business organization, entity or enterprise, engage
in any business involving, web development consulting to the financial services
industry. Employee also agrees that during the term of the Non-Solicitation
Period, Employee shall not, in any place in which Ganymede, HomeCom, or its
subsidiaries or affiliates does business, on Employee's own behalf of on behalf
of any person, firm, partnership, association, corporation or business
organization, entity or enterprise, engage in any business involving web
development consulting to the financial services industry.
The actions prohibited by this paragraph shall not be engaged in by
Employee directly or indirectly, whether as officer, director, manager,
salesperson, agent, technical support, sales or service representative,
developer, or otherwise. Employee acknowledges that Ganymede provides products
and services to customers throughout the United States given the global scope of
the internet and that a more limited territorial restriction on the
non-competition provisions of this paragraph would not adequately protect the
legitimate interests of Ganymede. Notwithstanding anything contained herein to
the contrary, nothing shall prevent the Employee from having a financial
interest in a publicly-traded competitor of Ganymede if that interest is in the
form of ownership of less than five (5%) percent of the outstanding stock of
such company.
3
<PAGE> 4
9. Employee Non-Solicitation. During the Non-Solicitation Period,
Employee agrees that Employee shall not call upon, solicit, recruit, or assist
others in calling upon, recruiting or soliciting any person who is an employee
of Ganymede, HomeCom, or its subsidiaries or affiliates, who is or was an
employee of Ganymede, HomeCom, or its subsidiaries or affiliates within 12
months of such solicitation or recruitment for the purpose of having such person
terminate his employment with Ganymede, HomeCom, or its subsidiaries or
affiliates or work in any other corporation, association, entity, or business.
10. Equitable Relief. The parties to this Agreement acknowledge that a
breach by Employee of any of the terms or conditions of this Agreement will
result in irrevocable harm to Ganymede and that the remedies at law for such
breach may not adequately compensate Ganymede for damages suffered. Accordingly,
Employee agrees that in the event of such breach, Ganymede, HomeCom, or its
subsidiaries or affiliates shall be entitled to injunctive relief or such other
equitable remedy as a court of competent jurisdiction may provide. Nothing
contained herein will be construed to limit Ganymede's right to any remedies at
law or equity, including the recovery of damages for breach of this Agreement.
11. Confidential Information.
(a) Ganymede, HomeCom, or its subsidiaries or affiliates may disclose
to Employee certain Trade Secrets and Confidential Information (defined below).
Employee acknowledges and agrees that the Trade Secrets and Confidential
Information are the sole and exclusive property of Ganymede, HomeCom, or its
subsidiaries or affiliates (or a third party providing such information to
Ganymede, HomeCom, or its subsidiaries or affiliates) and that Ganymede,
HomeCom, or its subsidiaries or affiliates or such third party owns all
worldwide rights therein under patent, copyright, trade secret, confidential
information, or other property right. Employee acknowledges and agrees that the
disclosure of the Trade Secrets and Confidential Information to Employee does
not confer upon Employee any license, interest or rights of any kind in or to
the Trade Secrets or Confidential Information. Employee may use the Trade
Secrets and Confidential Information solely for the benefit of Ganymede,
HomeCom, or its subsidiaries or affiliates while Employee is employed or
retained by Ganymede. Except in the performance of services for Ganymede,
Employee will hold in confidence and not reproduce, distribute, transmit,
reverse engineer, decompile, disassemble, or transfer, directly or indirectly,
in any form, by any means, or for any purpose, the Trade Secrets or Confidential
Information or any portion thereof. Employee agrees to return to Ganymede, upon
request by Ganymede, the Trade Secrets and Confidential Information and all
materials relating thereto.
(b) Employee's obligations under this Agreement with regard to the
Trade Secrets shall remain in effect for as long as such information shall
remain a trade secret under applicable law. Employee acknowledges that its
obligations with regard to the Confidential Information shall remain in effect
while Employee is employed or retained by Ganymede and for two (2) years
thereafter. As used herein, "Trade Secrets" means the trade secrets of Ganymede
and its subsidiaries and affiliates as defined in the Georgia Trade Secrets Act.
As used herein, "Confidential Information" means information of Ganymede, other
than Trade Secrets, HomeCom and its subsidiaries and affiliates, its licensors,
vendors, suppliers, customers or prospective licensors, vendors, suppliers or
customers, that is of value to its owner and is treated
4
<PAGE> 5
as confidential, including, but not limited to, technical or non-technical data,
formulas, patterns, compilations, programs, devices, methods, techniques,
drawings, processes, financial data, financial plans, product plans, or a list
of actual or potential customers or suppliers, future business plans, licensing
strategies, advertising campaigns, information regarding executives and
employees, and the terms and conditions of this Agreement.
(c) Employee acknowledges that existing or prospective customers of
HomeCom may be companies which are publicly traded and subject to various rules
and regulations of the Securities and Exchange Commission. Employee acknowledges
that HomeCom has a policy that no one associated with HomeCom may trade in
securities of any customer of HomeCom or HomeCom itself based on material,
nonpublic information concerning the customer. Additionally, HomeCom expressly
forbids the unauthorized disclosure of any nonpublic information acquired by
anyone associated with HomeCom relating to a customer of HomeCom. Employee shall
notify HomeCom prior to trading the securities of any customer or Securities of
HomeCom.
(d) Nothing contained herein shall be deemed to waive any of Ganymede's
rights or remedies under any applicable trade secrets acts, including, but not
limited to, the Georgia Trade Secrets Act.
(e) Upon termination of employment for any reason, Employee shall
return immediately to Ganymede all documents, property, and other records of
Ganymede, and all copies thereof, within Employee's possession, custody or
control, including but not limited to any materials containing any Trade Secrets
or Confidential Information (as defined below) or any portion thereof.
12. Ownership. For purposes of this Agreement, "Work Product" shall
mean the data, materials, documentation, computer programs, inventions (whether
or not patentable), and all works of authorship, including all worldwide rights
therein under patent, copyright, trade secret, confidential information, or
other property right, created or developed in whole or in part by Employee,
whether prior to the date of this Agreement or in the future while employed by
Ganymede (i) relate to the present or documented planned business, research,
developments, tests, products, work or activities of HomeCom or its subsidiaries
or affiliates or (ii) result from or are suggested by any work Employee may do
for HomeCom or its subsidiaries or affiliates. All Work Product shall be
considered work made for hire by the Employee and owned by Ganymede. If any of
the Work Product may not, by operation of the law, be considered work made for
hire by Employee for Ganymede, or if ownership of all right, title, and interest
of the intellectual property rights therein shall not otherwise vest exclusively
in Ganymede, Employee hereby assigns to Ganymede, and upon the future creation
thereof automatically assigns to Ganymede, without further consideration, the
ownership of all Work Product. Ganymede shall have the right to obtain and hold
in its own name copyrights, registrations, and any other protection available in
the Work Product. Employee agrees to perform, during or Employee's employment,
such further acts as may be necessary or desirable to transfer, perfect, and
defend Ganymede's ownership of the Work Product that are reasonably requested by
Ganymede. All data, materials, documentation, computer programs, inventions
(whether or not patentable), and all works of authorship, including all
worldwide rights therein under patent, copyright, or other
5
<PAGE> 6
property right, created or developed in whole or in part by Employee outside his
scope of employment by Ganymede, belongs exclusively to Employee.
13. Termination of Employment.
(a) The Employment Term will terminate upon the Employee's
termination or upon the effective date specified in a letter of resignation from
Employee to the Board of Directors of Ganymede. This agreement shall only be
renewed upon the mutual agreement of the Parties.
(b) The Employment Term may also be terminated by Ganymede
immediately upon prior written notice to the Employee upon the occurrence of any
of the following:
(i) the commission by the Employee of any act involving
moral turpitude detrimental to the interests of
Ganymede or Ganymede; or
(ii) violation of Title VII of the Civil Rights Act of
1964 or any other Federal or State Civil Rights
statutes or regulations; or
(iii) the conviction of the Employee of a felony.
(c) The Employment Term may also be terminated by Ganymede upon
thirty (30) days prior written notice to the Employee upon the occurrence of any
of the following:
(i) the willful damage directly caused by the Employee to
Ganymede; or
(ii) Employee's gross negligence in connection with the
performance of his duties, including but not limited
to insubordination, inability to perform mutually
agreed to delegated tasks, inability to meet mutually
agreed to established deadlines.
(d) Upon termination of the Employee's employment under
subsections 13(a), (b), or (c) above, the parties hereto will be relieved of any
further obligations hereunder from and after the effective date of such
termination, except for any obligations set forth in Sections 7, 8, 9, and 10,
14. Upon termination of the Employee's employment for any reason, the Employee
agrees to resign, at the time of termination, from all positions with Ganymede,
HomeCom or its subsidiaries or affiliates, including but not limited to, any
Officer and Director positions with HomeCom or Ganymede.
6
<PAGE> 7
14. Effect of Termination. An Employee may terminate their
employment with Buyer within the three year period listed herein without penalty
if the cause of the termination is a health related problem, mental or physical,
that results in Employee's inability to perform, either physically or mentally,
the duties associated with Employee's title and position with Ganymede, as
delineated by Ganymede. Employee must provide Ganymede written, signed evidence
from Employee's doctor describing the health related problem and describing how
the problem will result in Employee's inability to fulfill his/her duties of
employment with Ganymede. An Employee may terminate his employment with HomeCom
within the three year period listed herein without penalty if the cause of the
termination is due to 1) change in control of HomeCom, 2) Employee is required
to relocate to a city outside of Chicago 3) There is a material change in job
duties. Notwithstanding the above, if Employee terminates his employment with
Ganymede for any other reason or if termination is based on cause as defined
above in Section 13, within the three year period listed herein, the terminating
Employee shall be required to return a total of twenty percent (20%) of Ganymede
stock acquired by terminating Employee diminished on a pro rata basis based on
the time served by the employee within the three (3) year period pursuant to
this transaction, distributed as follows:
|_| Ten percent (10%) of the stock or the equivalent market value
of ten percent (10%) of the shares (valued at the date of
Closing) in cash shall be returned to Ganymede; and
|_| Ten percent (10%) of the stock or the equivalent market value
of ten percent (10%) of the shares (valued at the date of
Closing) in cash shall be distributed evenly to the remaining
Partners who remain employed by Ganymede. For the purposes of
this agreement, the term "Partners" refers to Richard L. Chu,
John R. Winans, and Joe Rickard, collectively. If, at the time
of termination, none of the Partners remain employed with
Ganymede, this ten percent (10%) shall revert back to HomeCom.
|_| When the termination date is fixed, the twenty percent (20%)
will be calculated, and the amount will be reduced based on
subcontracting a pro rata percentage of time served by the
Employee. Employee will only be penalized for the remaining
time not fulfilled for the three (3) year period.
15. Death of the Employee. If the Employee dies during the
Employment Term, (a) this Agreement shall terminate, and (b) Ganymede will pay
to the Employee's estate the Employee's Salary for thirty (30) days after the
death occurs. Ganymede and HomeCom benefit plans in which Employee was a
participant prior to his death shall vest in full upon his death and be
exercisable by Employee's estate, subject to the terms of such benefit plans.
16. Compliance with Securities Laws. Employee agrees to comply
with all applicable state and federal securities laws, rules, and regulations,
as may be in effect from time to time.
17. Governing Law. The terms of this Agreement shall be governed
by the laws of the State of Illinois. Venue shall lie in the Circuit Court of
Cook County, Illinois, or the United States District Court for the Northern
District of Illinois, in Chicago, Illinois. The parties hereto acknowledge that
such Court has the jurisdiction to interpret and enforce the provisions of this
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Agreement and the parties waive any and all objections which they may have as to
personal jurisdiction or venue in any of the above Courts.
18. Assignability. The Employee may not assign his interest in or
delegate his duties under this Agreement without prior approval.
19. Binding Effect. This Agreement shall be binding upon and inure
to the benefit of Ganymede, its successors and assigns.
20. Notices. All notices, demands and requests which may be given
or which are required to be given by either party to the other, and any exercise
of a right of termination provided by this Agreement, shall be in writing and
shall be deemed effective when either: (a) personally delivered to the intended
recipient; (2) sent by certified or registered mail, return receipt requested,
addressed to the intended recipient at the address specified below; (3)
delivered in person to the address set forth below for the party to which the
notice was given; (4) deposited into the custody of a nationally recognized
overnight delivery service such as Federal Express Corporation, Emery or
Purolator, addressed to such party at the address specified below; or (5) sent
by facsimile, telegram or telex, provided that receipt for such facsimile,
telegram or telex is verified by the sender and followed by a notice sent in
accordance with one of the other provisions set forth above. Notices shall be
effective on the date of delivery or receipt, of, if delivery is not accepted,
on the earlier of the date that delivery is refused or three (3) days after the
date the notice is mailed. For purposes of this Paragraph, the addresses of the
parties for all notices are as follows (unless changes by similar notice in
writing are given by the particular person whose address is to be changed):
If to the Employee, to 1104 Greenwood Street, Evanston,
Illinois 60201;
With a copy to: Abramson & Fox
One East Wacker Drive
Chicago, IL 60601
Attn: Joseph C. Grayson, Esq.
If to Ganymede, to Fourteen Piedmont Center, Suite 100, 3535
Piedmont Road, Atlanta, GA 30305.
21. Entire Agreement; Modification. This Agreement constitutes the
entire agreement of the parties hereto with respect to the subject matter hereof
and may not be modified or amended in any way except in writing by the parties
hereto.
22. Waiver. No waiver by Ganymede of any breach by the Employee of
this Agreement shall be construed to be a waiver as to succeeding breaches.
23. Severability. In any provision or part of any provision of
this Agreement is held invalid or unenforceable by a court of competent
jurisdiction, such holding shall not affect the enforceability of any other
provisions or parts thereof, and all other provisions and parts thereof shall
continue in full force and effect.
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24. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
or as of the date and year first above written.
COMPANY:
GANYMEDE CORPORATION
By: /s/ Harvey Sax
------------------------------
Name: Harvey Sax
Title:
EMPLOYEE:
/s/ Richard L. Chu
----------------------------------
Richard L. Chu
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<PAGE> 10
Exhibit A
Employment Agreement
of Richard L. Chu
----------------
Employee shall:
1. supervise the integration of Ganymede into HomeCom and implement
necessary transition of administration, management and operation
functions;
2. promote and sell the products and services of Ganymede and HomeCom in
international business development, and in that connection will:
(a) facilitate meetings with key prospects for Ganymede and HomeCom
products and services
(b) promote the brand name and goodwill of Ganymede and HomeCom
(c) negotiate and establish distribution, strategic alliance and other
business relationships for Ganymede and HomeCom
(d) accompany sales representatives of Ganymede and/or HomeCom when
necessary or desirable to assist sales to significant accounts
(e) advise Ganymede and HomeCom in establishing pricing policies and in
developing annual and quarterly sales forecasts and budgets;
3. retain primary responsibility for servicing and maintaining the Rotary
International account;
4. accompany sales representatives of Ganymede or HomeCom when necessary
or desirable to assist sales to significant accounts;
5. other services as requested by Ganymede or HomeCom.
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<PAGE> 1
EXHIBIT 10.57
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of the 23rd day
of April, 1999 (the "Effective Date"), between GANYMEDE CORPORATION (the
"GANYMEDE"), an Illinois corporation and John Winans, a resident of Glen Ellyn,
DuPage County, Illinois (the "Employee").
W I T N E S S E T H:
WHEREAS, pursuant to the terms of that certain Stock Purchase Agreement
and related documents and agreements of event date herewith (the "Purchase
Agreement") by and between the Employee, among others, and GANYMEDE, HomeCom has
acquired all of the issued and outstanding shares of the capital stock of
Ganymede; and
WHEREAS, the Employee has been a senior executive officer of GANYMEDE;
and
WHEREAS, after giving effect to the Purchase Agreement, GANYMEDE shall
become a wholly-owned subsidiary of HomeCom; and
WHEREAS, GANYMEDE desires to retain the services of and employ the
Employee to continue in his role as a senior executive officer of GANYMEDE, and
the Employee desires to provide such services upon the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, the parties hereto, each intending to be legally bound hereby,
agree as follows:
1. Employment. GANYMEDE hereby employs the Employee as their employee
in the capacity of Senior Executive Officer of GANYMEDE, and the Employee hereby
accepts such employment. During the Employment Term, the Employee shall perform
such duties as shall reasonably be required of an employee of GANYMEDE which are
outlined on Exhibit "A" attached hereto and incorporated herein by reference for
all purposes.
2. Performance. The Employee agrees to devote his business efforts to
the performance of his duties hereunder; provided, however, that the Employee
may continue to teach within academic settings and engage in passive securities
investment activities for his own account so long as they do not interfere with
the performance of his duties hereunder. Employee agrees to devote his full
professional time and energy to Ganymede's business and shall not during the
term of employment work or perform services in any advisory or other capacity
for any other individual or entity without disclosing to HomeCom the
relationship. If HomeCom objects to the disclosed relationship, with the
exception of academic teaching, Employee will refrain from continuing that
relationship.
3. Term of Employment. Unless otherwise terminated in accordance with
the terms hereof, the initial term of this Agreement (the "Employment Term")
shall be two (2) years
<PAGE> 2
commencing on the Effective Date. Notwithstanding anything contained herein to
the contrary, Employer may terminate this Agreement at any time by written
notice as further described in Section 13. In the event that HomeCom is
purchased by another entity, Employee has the option to terminate employment and
the contract without penalty.
4. Basic Compensation. The basic minimum annual salary (the "Salary")
of the Employee for his employment services hereunder shall be one hundred
thousand dollars ($100,000) per year, commencing on the Effective Date
throughout the Employment Term. The Salary shall be payable in equal
semi-monthly installments. Employee's salary shall be prorated on a daily basis
based upon the number of hours actually worked in a forty (40) hour work week,
which compensation shall in no event exceed a maximum of forty (40) hours per
week. In each year of the Employment Term, Ganymede shall annually review the
Employee to determine his eligibility to receive an annual Salary raise together
with performance bonuses based upon the performance of Ganymede, unless Ganymede
is integrated into HomeCom; then the bonus will be based upon the performance of
HomeCom. These reviews shall be conducted during the previous annual period,
subject to the sole determination of the Compensation Committee of HomeCom's
Board of Directors, in its sole discretion.
5. Benefits. As an employee of Ganymede, Employee shall be entitled to
participate in all profit sharing plans, supplemental compensation arrangements,
stock option incentive plans, medical, dental and life insurance programs or any
other fringe benefits offered by Ganymede/HomeCom to its senior management
employees (the "Benefits"). The Salary received by the Employee hereunder shall
be in addition to the foregoing Benefits.
6. Expense Account and Vacations. Ganymede agrees to reimburse the
Employee for all expenses reasonably incurred by him on behalf of Ganymede in
accordance with the prevailing practice and policy of Ganymede, which prevailing
practice and policy shall be disseminated to the Employee by Ganymede
contemporaneous with the execution of this Agreement. These dues will be paid
for the duration of Employee's employment. In addition, the Employee shall be
entitled to that number of days of paid vacation and paid sick leave as is
consistent with the prevailing practice and policy of Ganymede for other senior
management employees in the same or similar position as that held by the
Employee hereunder.
7. Customer Non-Solicitation. Employee agrees that for a period of one
(1) year immediately following termination of Employee's employment with
Ganymede, HomeCom or its subsidiaries or affiliates for any reason, including,
without limitation, voluntary resignation from employment by Employee
("Non-Solicitation Period"), Employee shall not, on Employee's own behalf or on
behalf of any person, firm, partnership, association, corporation or business
organization, entity or enterprise, solicit, contact, call upon, communicate
with or attempt to communicate with any customer or immediate prospect of
Ganymede, HomeCom or its subsidiaries or affiliates, or any representative of
any customer or immediate prospect of Ganymede, HomeCom or its subsidiaries or
affiliates with whom the Employee had Material Contact ("Material Contact") with
a view to sale or providing any product or service competitive or potentially
competitive with any product or service sold or provided or under development by
Ganymede during the time of two (2) years immediately preceding cessation of
Employee's employment with Ganymede, provided that the restrictions set forth in
this paragraph shall apply
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<PAGE> 3
only to customers or prospects of Ganymede, HomeCom or its subsidiaries or
affiliates, or representatives of customers or prospects of Ganymede, HomeCom or
its subsidiaries or affiliates, with which Employee had substantial contact
during such two (2) year period. The actions prohibited by this paragraph shall
not be engaged in by Employee directly or indirectly, whether as director,
officer, manager, salesperson, agent, technical support, sales or service
representative, developer, or otherwise. As used herein, "Material Contact"
means contact between Employee and each customer or immediate prospect (A) with
whom Employee dealt; (B) whose dealings with Ganymede, HomeCom or its
subsidiaries or affiliates were coordinated or supervised by Employee; (C) about
whom Employee obtained Confidential Information in the ordinary course of
business as a result of Employee's association with Ganymede, HomeCom or its
subsidiaries or affiliates; or (D) who receives services provided by Ganymede,
HomeCom or its subsidiaries or affiliates, the sale or provision of which
results or resulted in compensation, commissions or earnings for Employee, in
each of cases (A) through (D) within two years prior to the date of Employee's
termination of employment. This section does not preclude the Employee to engage
in social contact or interaction with any of these entities or parties, as long
as the Employee is interacting with the intention not to solicit competing
business.
8. Non-Competition. Employee agrees that during the term of Employee's
employment Employee and during the Non-Solicitation Period shall not, on
Employee's own behalf or on behalf of any person, firm, partnership,
association, corporation or business organization, entity or enterprise, engage
in any business involving, web development consulting to the financial services
industry. Employee also agrees that during the term of the Non-Solicitation
Period, Employee shall not, in any place in which Ganymede, HomeCom or its
subsidiaries or affiliates does business, on Employee's own behalf of on behalf
of any person, firm, partnership, association, corporation or business
organization, entity or enterprise, engage in any business involving web
development consulting to the financial services industry.
The actions prohibited by this paragraph shall not be engaged in by
Employee directly or indirectly, whether as officer, director, manager,
salesperson, agent, technical support, sales or service representative,
developer, or otherwise. Employee acknowledges that Ganymede provides products
and services to customers throughout the United States given the global scope of
the internet and that a more limited territorial restriction on the
non-competition provisions of this paragraph would not adequately protect the
legitimate interests of Ganymede, HomeCom or its subsidiaries or affiliates.
Notwithstanding anything contained herein to the contrary, nothing shall prevent
the Employee from having a financial interest in a publicly-traded competitor of
Ganymede, HomeCom or its subsidiaries or affiliates if that interest is in the
form of ownership of less than five (5%) percent of the outstanding stock of
such company.
9. Employee Non-Solicitation. During the Non-Solicitation Period,
Employee agrees that Employee shall not call upon, solicit, recruit, or assist
others in calling upon, recruiting or soliciting any person who is an employee
of Ganymede, HomeCom or its subsidiaries or affiliates, who is or was an
employee of Ganymede, HomeCom or its subsidiaries or affiliates within 12 months
of such solicitation or recruitment for the purpose of having such person
terminate his employment with Ganymede, HomeCom or its subsidiaries or
affiliates or work in any other corporation, association, entity, or business.
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<PAGE> 4
10. Equitable Relief. The parties to this Agreement acknowledge that a
breach by Employee of any of the terms or conditions of this Agreement will
result in irrevocable harm to Ganymede and that the remedies at law for such
breach may not adequately compensate Ganymede for damages suffered. Accordingly,
Employee agrees that in the event of such breach, Ganymede, HomeCom or its
subsidiaries or affiliates shall be entitled to injunctive relief or such other
equitable remedy as a court of competent jurisdiction may provide. Nothing
contained herein will be construed to limit Ganymede's right to any remedies at
law or equity, including the recovery of damages for breach of this Agreement.
11. Confidential Information.
(a) Ganymede, HomeCom or its subsidiaries or affiliates may disclose to
Employee certain Trade Secrets and Confidential Information (defined below).
Employee acknowledges and agrees that the Trade Secrets and Confidential
Information are the sole and exclusive property of Ganymede, HomeCom or its
subsidiaries or affiliates (or a third party providing such information to
Ganymede, HomeCom or its subsidiaries or affiliates) and that Ganymede, HomeCom
or its subsidiaries or affiliates or such third party owns all worldwide rights
therein under patent, copyright, trade secret, confidential information, or
other property right. Employee acknowledges and agrees that the disclosure of
the Trade Secrets and Confidential Information to Employee does not confer upon
Employee any license, interest or rights of any kind in or to the Trade Secrets
or Confidential Information. Employee may use the Trade Secrets and Confidential
Information solely for the benefit of Ganymede, HomeCom or its subsidiaries or
affiliates while Employee is employed or retained by Ganymede. Except in the
performance of services for Ganymede, Employee will hold in confidence and not
reproduce, distribute, transmit, reverse engineer, decompile, disassemble, or
transfer, directly or indirectly, in any form, by any means, or for any purpose,
the Trade Secrets or Confidential Information or any portion thereof. Employee
agrees to return to Ganymede, upon request by Ganymede, the Trade Secrets and
Confidential Information and all materials relating thereto.
(b) Employee's obligations under this Agreement with regard to the
Trade Secrets shall remain in effect for as long as such information shall
remain a trade secret under applicable law. Employee acknowledges that its
obligations with regard to the Confidential Information shall remain in effect
while Employee is employed or retained by Ganymede and for two (2) years
thereafter. As used herein, "Trade Secrets" means the trade secrets of Ganymede
and its subsidiaries and affiliates as defined in the Georgia Trade Secrets Act.
As used herein, "Confidential Information" means information of Ganymede, other
than Trade Secrets, HomeCom and its subsidiaries and affiliates, its licensors,
vendors, suppliers, customers or prospective licensors, vendors, suppliers or
customers, that is of value to its owner and is treated as confidential,
including, but not limited to, technical or non-technical data, formulas,
patterns, compilations, programs, devices, methods, techniques, drawings,
processes, financial data, financial plans, product plans, or a list of actual
or potential customers or suppliers, future business plans, licensing
strategies, advertising campaigns, information regarding executives and
employees, and the terms and conditions of this Agreement.
(c ) Employee acknowledges that existing or prospective customers of
Ganymede may be companies which are publicly traded and subject to various rules
and regulations of the
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<PAGE> 5
Securities and Exchange Commission. Employee acknowledges that HomeCom has a
policy that no one associated with HomeCom may trade in securities of any
customer of HomeCom or Ganymede itself based on material, nonpublic information
concerning the customer. Additionally, HomeCom expressly forbids the
unauthorized disclosure of any nonpublic information acquired by anyone
associated with HomeCom relating to a customer of HomeCom. Employee shall notify
HomeCom prior to trading the securities of any customer or Securities of
HomeCom.
(d) Nothing contained herein shall be deemed to waive any of Ganymede's
rights or remedies under any applicable trade secrets acts, including, but not
limited to, the Georgia Trade Secrets Act.
(e) Upon termination of employment for any reason, Employee shall
return immediately to Ganymede all documents, property, and other records of
Ganymede, and all copies thereof, within Employee's possession, custody or
control, including but not limited to any materials containing any Trade Secrets
or Confidential Information (as defined below) or any portion thereof.
12. Ownership. For purposes of this Agreement, "Ganymede Work Product"
shall mean the data, materials, documentation, computer programs, inventions
(whether or not patentable), and all works of authorship, including all
worldwide rights therein under patent, copyright, trade secret, confidential
information, or other property right, created or developed in whole or in part
by Employee, as a result of Employee's duties while employed with Ganymede as of
January 18, 1995, and that (i) relate to the present or documented planned
business, research, developments, tests, products, work or activities of
Ganymede, HomeCom or its subsidiaries or affiliates or (ii) result from or are
suggested by any work Employee may do for Ganymede. All Ganymede Work Product
shall be considered work made for hire by the Employee and owned by Ganymede. If
any of the Ganymede Work Product may not, by operation of the law, be considered
work made for hire by Employee for Ganymede, or if ownership of all right,
title, and interest of the intellectual property rights therein shall not
otherwise vest exclusively in Ganymede, Employee hereby assigns to Ganymede, and
upon the future creation thereof automatically assigns to Ganymede, without
further consideration, the ownership of all Ganymede Work Product. Ganymede
shall have the right to obtain and hold in its own name copyrights,
registrations, and any other protection available in the Ganymede Work Product.
Employee agrees to perform, during Employee's employment, such further acts as
may be necessary or desirable to transfer, protect, and defend Ganymede's
ownership of the Ganymede Work Product that are reasonably requested by
Ganymede. All data, materials, documentation, computer programs, inventions
(whether or not patentable), and all works of authorship, including all
worldwide rights therein under patent, copyright, or other property right,
created or developed in whole or in part by Employee outside his scope of
employment by Ganymede, belongs exclusively to Employee.
13. Termination of Employment.
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<PAGE> 6
(a) The Employment Term will terminate upon the Employee's termination
or upon the effective date specified in a letter of resignation from Employee to
the Board of Directors of Ganymede. This agreement shall only be renewed upon
the mutual agreement of the Parties.
(b) The Employment Term may also be terminated by Ganymede immediately
upon prior written notice to the Employee upon the occurrence of any of the
following:
(i) the commission by the Employee of any act involving moral
turpitude detrimental to the interests of Ganymede or
Ganymede; or
(ii) violation of Title VII of the Civil Rights Act of 1964 or
any other Federal or State Civil Rights statutes or
regulations; or
(iii) the conviction of the Employee of a felony.
(c) The Employment Term may also be terminated by Ganymede upon thirty
(30) days prior written notice to the Employee upon the occurrence of any of the
following:
(i) the willful damage directly caused by the Employee to
Ganymede; or
(ii) Employee's gross negligence in connection with the
performance of his duties, including but not limited to
insubordination, inability to perform mutually agreed to
delegated tasks, inability to meet mutually agreed to
established deadlines.
(d) Upon termination of the Employee's employment under subsections
13(a), (b), or (c) above, the parties hereto will be relieved of any further
obligations hereunder from and after the effective date of such termination,
except for any obligations set forth in Sections 7, 8, 9, and 10, 14. Upon
termination of the Employee's employment for any reason, the Employee agrees to
resign, at the time of termination, from all positions with Ganymede, HomeCom or
its subsidiaries or affiliates, including but not limited to, any Officer and
Director positions with HomeCom or Ganymede.
14. Effect of Termination. An Employee may terminate their employment
with Buyer within the two (2) year period listed herein without penalty if the
cause of the termination is a health related problem, mental or physical, that
results in Employee's inability to perform, either physically or mentally, the
duties associated with Employee's title and position with Ganymede, as
delineated by Ganymede. Employee must provide Ganymede written, signed evidence
from Employee's doctor describing the health related problem and describing how
the problem will result in Employee's inability to fulfill his/her duties of
employment with
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<PAGE> 7
Ganymede. An Employee may terminate his employment with Ganymede within the
two year period listed herein without penalty if the cause of the termination
is due to 1) change of Ganymede/HomeCom control, 2) Employee is required to
relocate to a city outside the Chicago land area, or 3) There is a material
change of job duties. Notwithstanding the above, if Employee terminates his
employment with Ganymede for any other reason than for cause as defined above
in Section 13, within the two year period listed herein, the terminating
Employee shall be required to return a total of twenty percent (20%) of
Ganymede stock acquired by terminating Employee diminished on a pro rata basis
based on the time served by the employee within the two (2) year period
pursuant to this transaction, distributed as follows:
|_| Ten percent (10%) of the stock or the equivalent market value of ten
percent (10%) of the shares (valued at the date of closing) in cash shall
be returned to Ganymede; and
|_| Ten percent (10%) of the stock or the equivalent market value of ten
percent (10%) of the shares (valued at the date of closing) in cash shall
be distributed evenly to the remaining Partners who remain employed by
Ganymede. For the purposes of this agreement, the term "Partners" refers to
Richard L. Chu, John R. Winans, and Joe Rickard, collectively. If, at the
time of termination, none of the Partners remain employed with Ganymede,
this ten percent (10%) shall revert back to HomeCom.
|_| When the termination date is fixed, the twenty percent (20%) will be
calculated, and the amount will be reduced based on subtracting a pro rata
percentage of time served by the Employee. Employee will only be penalized
for the remaining time not fulfilled for the two (2) year period.
15. Death of the Employee. If the Employee dies during the Employment
Term, (a) this Agreement shall terminate, and (b) Ganymede will pay to the
Employee's estate the Employee's Salary for thirty (30) days after the death
occurs. Ganymede and HomeCom benefit plans in which Employee was a participant
prior to his death shall vest in full upon his death and be exercisable by
Employee's estate, subject to the terms of such benefit plans.
16. Compliance with Securities Laws. Employee agrees to comply with all
applicable state and federal securities laws, rules, and regulations, as may be
in effect from time to time.
17. Governing Law. The terms of this Agreement shall be governed by the
laws of the State of Illinois. Venue shall lie in the Circuit Court of Cook
County, Illinois, or the United States District Court for the Northern District
of Illinois, in Chicago, Illinois. The parties hereto acknowledge that such
Court has the jurisdiction to interpret and enforce the provisions of this
Agreement and the parties waive any and all objections which they may have as to
personal jurisdiction or venue in any of the above Courts.
18. Assignability. The Employee may not assign his interest in or
delegate his duties under this Agreement without prior approval.
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<PAGE> 8
19. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of Ganymede.
20. Notices. All notices, demands and requests which may be given or
which are required to be given by either party to the other, and any exercise of
a right of termination provided by this Agreement, shall be in writing and shall
be deemed effective when either: (a) personally delivered to the intended
recipient; (2) sent by certified or registered mail, return receipt requested,
addressed to the intended recipient at the address specified below; (3)
delivered in person to the address set forth below for the party to which the
notice was given; Notices shall be effective on the date of delivery or receipt,
of, if delivery is not accepted, on the earlier of the date that delivery is
refused or three (3) days after the date the notice is mailed. For purposes of
this Paragraph, the addresses of the parties for all notices are as follows
(unless changes by similar notice in writing are given by the particular person
whose address is to be changed):
If to the Employee, to 860 Hill, Glen Ellen, Illinois 60137;
If to Ganymede, to Fourteen Piedmont Center, Suite 100, 3535
Piedmont Road, Atlanta, GA 30305.
21. Entire Agreement; Modification. This Agreement constitutes the
entire agreement of the parties hereto with respect to the subject matter hereof
and may not be modified or amended in any way except in writing by the parties
hereto.
22. Waiver. No waiver by Ganymede of any breach by the Employee of this
Agreement shall be construed to be a waiver as to succeeding breaches.
23. Severability. In any provision or part of any provision of this
Agreement is held invalid or unenforceable by a court of competent jurisdiction,
such holding shall not affect the enforceability of any other provisions or
parts thereof, and all other provisions and parts thereof shall continue in full
force and effect.
24. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original but all of which together shall constitute
one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
or as of the date and year first above written.
COMPANY:
GANYMEDE CORPORATION
By: /s/ Harvey Sax
-----------------------------------
Name: Harvey Sax
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Title:
--------------------------------
EMPLOYEE:
/s/ John R. Winans
-----------------------------------
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<PAGE> 10
Exhibit A
Employment Agreement
of John Winans
----------------
Employee shall:
1. Supervise the technical aspects of migrating the Ganymede data center
operations to HomeCom and/or transfer to a third party as decided by
Ganymede and HomeCom.
2. Assist in the recruiting of technical professionals qualified in the
analysis, design, and/or development of software for the financial
industry.
3. Recommend and/or specify technologies and products suitable for use in
products developed by Ganymede and/or HomeCom.
4. Advise and assist development teams on the technical aspects of interfacing
a brokerage intranet application to common exchange communication
interfaces.
5. Other services as requested by Ganymede or HomeCom.
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<PAGE> 1
EXHIBIT 10.58
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of the 23rd day
of April, 1999 (the "Effective Date"), between GANYMEDE CORPORATION (the
"GANYMEDE"), an Illinois corporation and Joseph G. Rickard, a resident of
Wilmette, Cook County, Illinois (the "Employee").
W I T N E S S E T H:
WHEREAS, pursuant to the terms of that certain Stock Purchase Agreement
and related documents and agreements of event date herewith (the "Purchase
Agreement") by and between the Employee, among others, and GANYMEDE, HomeCom has
acquired all of the issued and outstanding shares of the capital stock of
Ganymede; and
WHEREAS, the Employee has been a senior executive officer of GANYMEDE;
and
WHEREAS, after giving effect to the Purchase Agreement, GANYMEDE shall
become a wholly-owned subsidiary of HomeCom; and
WHEREAS, GANYMEDE desires to retain the services of and employ the
Employee to continue in his role as a senior executive officer of GANYMEDE, and
the Employee desires to provide such services upon the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, the parties hereto, each intending to be legally bound hereby,
agree as follows:
1. Employment. GANYMEDE hereby employs the Employee as their employee
in the capacity of Senior Executive Officer, and the Employee hereby accepts
such employment. During the term of employment under this Agreement (the
"Employment Term"), Employee shall at all times serve as a member of the Board
of Directors of GANYMEDE. During such time, a Member of the Board of Directors
of the GANYMEDE shall pay for Director's liability insurance and indemnify
Employee from all liability that he may incur as a member of the Board of
Directors. During the Employment Term, the Employee shall perform such duties as
shall reasonably be required of an employee of GANYMEDE which are outlined on
Exhibit "A" attached hereto and incorporated herein by reference for all
purposes. Employee agrees not to take any action which would impair or undermine
the terms and conditions of the Purchase Agreement.
2. Performance. The Employee agrees to devote his entire business
efforts to the performance of his duties hereunder; provided, however, that the
Employee may engage in passive securities investment activities for his own
account so long as they do not interfere with the performance of his duties
hereunder. Employee agrees to devote his full time and energy to Ganymede's
business and shall not during the term of employment work or perform services in
any advisory or other capacity for any other individual or entity without
disclosing to HomeCom
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the relationship. If HomeCom objects to disclosed relationship, Employee will
refrain from continuing that relationship.
3. Term of Employment. Unless otherwise terminated in accordance with
the terms hereof, the initial term of this Agreement (the "Employment Term")
shall be three (3) years commencing on the Effective Date. Notwithstanding
anything contained herein to the contrary, Employer may terminate this Agreement
at any time by written notice as further described in Section 13.
4. Basic Compensation. The basic minimum annual salary (the "Salary")
of the Employee for his employment services hereunder shall be the greater of:
(i) one hundred thousand dollars ($100,000) per year payable semi-monthly or
(ii) ten percent (10%) of gross revenues actually received from Employee's sale
of Ganymede or HomeCom services, excluding hardware sales, commencing on the
Effective Date throughout the Employment Term, ("Commission Amount") calculated
in accordance with the HomeCom FAST Sales Commission Plan, as in effect from
time to time. Employee's salary shall be prorated on a daily basis for the years
or months, as the case may be, in which he commences or terminates his
employment relationship hereunder. In each year of the Employment Term, Ganymede
shall annually review the Employee to determine his eligibility to receive an
annual Salary raise together with performance bonuses based upon the performance
of Ganymede, unless Ganymede is integrated into HomeCom; then the bonus will be
based upon the performance of HomeCom. These reviews shall be conducted during
the previous annual period, subject to the sole determination of the
Compensation Committee of HomeCom's Board of Directors, in its sole discretion.
5. Benefits. As an employee of Ganymede, Employee shall be entitled to
participate in all profit sharing plans, supplemental compensation arrangements,
stock option incentive plans, medical, dental and life insurance programs or any
other fringe benefits offered by Ganymede to its senior management employees
(the "Benefits"). The Salary received by the Employee hereunder shall be in
addition to the foregoing Benefits.
6. Expense Account and Vacations. Ganymede agrees to reimburse the
Employee for all expenses reasonably incurred by him on behalf of Ganymede in
accordance with the prevailing practice and policy of Ganymede, which prevailing
practice and policy shall be disseminated to the Employee by Ganymede
contemporaneous with the execution of this Agreement. As part of this agreement,
Company agrees to pay for Employee's annual Chicago Yacht Club dues for use of
its conference facilities, as part of client development, not to exceed
$6,000.00 per year. These dues will be paid for the duration of Employee's
employment. In addition, the Employee shall be entitled to that number of days
of paid vacation and paid sick leave as is consistent with the prevailing
practice and policy of Ganymede for other senior management employees in the
same or similar position as that held by the Employee hereunder.
7. Customer Non-Solicitation. Employee agrees that for a period of one
(1) year immediately following termination of Employee's employment with
Ganymede, HomeCom, or its subsidiaries or affiliates for any reason, including,
without limitation, voluntary resignation from employment by Employee
("Non-Solicitation Period"), Employee shall not, on Employee's own behalf or on
behalf of any person, firm, partnership, association, corporation or business
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organization, entity or enterprise, solicit, contact, call upon, communicate
with or attempt to communicate with any customer or immediate prospect of
Ganymede, HomeCom, or its subsidiaries or affiliates, or any representative of
any customer or immediate prospect of Ganymede, HomeCom, or its subsidiaries or
affiliates with whom the Employee had Material Contact ("Material Contact") with
a view to sale or providing any product or service competitive or potentially
competitive with any product or service sold or provided or under development by
Ganymede, HomeCom, or its subsidiaries or affiliates during the time of one (1)
year immediately preceding cessation of Employee's employment with Ganymede,
provided that the restrictions set forth in this paragraph shall apply only to
customers or prospects of Ganymede, or representatives of customers or prospects
of Ganymede, HomeCom, or its subsidiaries or affiliates, with which Employee had
substantial contact during such one (1) year period. The actions prohibited by
this paragraph shall not be engaged in by Employee directly or indirectly,
whether as director, officer, manager, salesperson, agent, technical support,
sales or service representative, developer, or otherwise. As used herein,
"Material Contact" means contact between Employee and each customer or immediate
prospect (A) with whom Employee dealt; (B) whose dealings with Ganymede,
HomeCom, or its subsidiaries or affiliates were coordinated or supervised by
Employee; (C) about whom Employee obtained Confidential Information in the
ordinary course of business as a result of Employee's association with Ganymede,
HomeCom, or its subsidiaries or affiliates; or (D) who receives services
provided by Ganymede, HomeCom, or its subsidiaries or affiliates, the sale or
provision of which results or resulted in compensation, commissions or earnings
for Employee, in each of cases (A) through (D) within two years prior to the
date of Employee's termination of employment. This section does not preclude the
Employee to engage in social contact or interaction with any of these entities
or parties, as long as the Employee is interacting with the intention not to
solicit competing business.
8. Non-Competition. Employee agrees that during the term of Employee's
employment and during the Non-Solicitation Period, Employee shall not, on
Employee's own behalf or on behalf of any person, firm, partnership,
association, corporation or business organization, entity or enterprise, engage
in any business involving, Web Development Consulting to the Financial Services
Industry. Employee also agrees that during the term of the Non-Solicitation
Period, Employee shall not, in any place in which Ganymede, HomeCom, or its
subsidiaries or affiliates does business, on Employee's own behalf of on behalf
of any person, firm, partnership, association, corporation or business
organization, entity or enterprise, engage in any business involving Web
Development Consulting to the Financial Services Industry.
The actions prohibited by this paragraph shall not be engaged in by
Employee directly or indirectly, whether as officer, director, manager,
salesperson, agent, technical support, sales or service representative,
developer, or otherwise. Employee acknowledges that Ganymede provides products
and services to customers throughout the United States given the global scope of
the internet and that a more limited territorial restriction on the
non-competition provisions of this paragraph would not adequately protect the
legitimate interests of Ganymede. Notwithstanding anything contained herein to
the contrary, nothing shall prevent the Employee from having a financial
interest in a publicly-traded competitor of Ganymede if that interest is in the
form of ownership of less than five (5%) percent of the outstanding stock of
such company.
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9. Employee Non-Solicitation. During the Non-Solicitation Period,
Employee agrees that Employee shall not call upon, solicit, recruit, or assist
others in calling upon, recruiting or soliciting any person who is an employee
of Ganymede, HomeCom, or its subsidiaries or affiliates, who is or was an
employee of Ganymede, HomeCom, or its subsidiaries or affiliates within 12
months of such solicitation or recruitment for the purpose of having such person
terminate his employment with Ganymede, HomeCom, or its subsidiaries or
affiliates or work in any other corporation, association, entity, or business.
10. Equitable Relief. The parties to this Agreement acknowledge that a
breach by Employee of any of the terms or conditions of this Agreement will
result in irrevocable harm to Ganymede and that the remedies at law for such
breach may not adequately compensate Ganymede for damages suffered. Accordingly,
Employee agrees that in the event of such breach, Ganymede, HomeCom, or its
subsidiaries or affiliates shall be entitled to injunctive relief or such other
equitable remedy as a court of competent jurisdiction may provide. Nothing
contained herein will be construed to limit Ganymede's right to any remedies at
law or equity, including the recovery of damages for breach of this Agreement.
11. Confidential Information.
(a) Ganymede, HomeCom, or its subsidiaries or affiliates may disclose
to Employee certain Trade Secrets and Confidential Information (defined below).
Employee acknowledges and agrees that the Trade Secrets and Confidential
Information are the sole and exclusive property of Ganymede, HomeCom, or its
subsidiaries or affiliates (or a third party providing such information to
Ganymede, HomeCom, or its subsidiaries or affiliates) and that Ganymede,
HomeCom, or its subsidiaries or affiliates or such third party owns all
worldwide rights therein under patent, copyright, trade secret, confidential
information, or other property right. Employee acknowledges and agrees that the
disclosure of the Trade Secrets and Confidential Information to Employee does
not confer upon Employee any license, interest or rights of any kind in or to
the Trade Secrets or Confidential Information. Employee may use the Trade
Secrets and Confidential Information solely for the benefit of Ganymede,
HomeCom, or its subsidiaries or affiliates while Employee is employed or
retained by Ganymede. Except in the performance of services for Ganymede,
Employee will hold in confidence and not reproduce, distribute, transmit,
reverse engineer, decompile, disassemble, or transfer, directly or indirectly,
in any form, by any means, or for any purpose, the Trade Secrets or Confidential
Information or any portion thereof. Employee agrees to return to Ganymede, upon
request by Ganymede, the Trade Secrets and Confidential Information and all
materials relating thereto.
(b) Employee's obligations under this Agreement with regard to the
Trade Secrets shall remain in effect for as long as such information shall
remain a trade secret under applicable law. Employee acknowledges that its
obligations with regard to the Confidential Information shall remain in effect
while Employee is employed or retained by Ganymede and for two (2) years
thereafter. As used herein, "Trade Secrets" means the trade secrets of Ganymede
and its subsidiaries and affiliates as defined in the Georgia Trade Secrets Act.
As used herein, "Confidential Information" means information of Ganymede, other
than Trade Secrets, HomeCom and its subsidiaries and affiliates, its licensors,
vendors, suppliers, customers or prospective licensors, vendors, suppliers or
customers, that is of value to its owner and is treated
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as confidential, including, but not limited to, technical or non-technical data,
formulas, patterns, compilations, programs, devices, methods, techniques,
drawings, processes, financial data, financial plans, product plans, or a list
of actual or potential customers or suppliers, future business plans, licensing
strategies, advertising campaigns, information regarding executives and
employees, and the terms and conditions of this Agreement.
(c ) Employee acknowledges that existing or prospective customers of
HomeCom may be companies which are publicly traded and subject to various rules
and regulations of the Securities and Exchange Commission. Employee acknowledges
that HomeCom has a policy that no one associated with HomeCom may trade in
securities of any customer of HomeCom or HomeCom itself based on material,
nonpublic information concerning the customer. Additionally, HomeCom expressly
forbids the unauthorized disclosure of any nonpublic information acquired by
anyone associated with HomeCom relating to a customer of HomeCom. Employee shall
notify HomeCom prior to trading the securities of any customer or Securities of
HomeCom.
(d) Nothing contained herein shall be deemed to waive any of Ganymede's
rights or remedies under any applicable trade secrets acts, including, but not
limited to, the Georgia Trade Secrets Act.
(e) Upon termination of employment for any reason, Employee shall
return immediately to Ganymede all documents, property, and other records of
Ganymede, and all copies thereof, within Employee's possession, custody or
control, including but not limited to any materials containing any Trade Secrets
or Confidential Information (as defined below) or any portion thereof.
12. Ownership. For purposes of this Agreement, "Work Product" shall
mean the data, materials, documentation, computer programs, inventions (whether
or not patentable), and all works of authorship, including all worldwide rights
therein under patent, copyright, trade secret, confidential information, or
other property right, created or developed in whole or in part by Employee,
whether prior to the date of this Agreement or in the future while employed by
Ganymede (i) relate to the present or documented planned business, research,
developments, tests, products, work or activities of HomeCom or its subsidiaries
or affiliates or (ii) result from or are suggested by any work Employee may do
for HomeCom or its subsidiaries or affiliates. All Work Product shall be
considered work made for hire by the Employee and owned by Ganymede. If any of
the Work Product may not, by operation of the law, be considered work made for
hire by Employee for Ganymede, or if ownership of all right, title, and interest
of the intellectual property rights therein shall not otherwise vest exclusively
in Ganymede, Employee hereby assigns to Ganymede, and upon the future creation
thereof automatically assigns to Ganymede, without further consideration, the
ownership of all Work Product. Ganymede shall have the right to obtain and hold
in its own name copyrights, registrations, and any other protection available in
the Work Product. Employee agrees to perform, during or Employee's employment,
such further acts as may be necessary or desirable to transfer, perfect, and
defend Ganymede's ownership of the Work Product that are reasonably requested by
Ganymede. All data, materials, documentation, computer programs, inventions
(whether or not patentable), and all works of authorship, including all
worldwide rights therein under patent, copyright, or other
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property right, created or developed in whole or in part by Employee outside his
scope of employment by Ganymede, belongs exclusively to Employee.
13. Termination of Employment.
(a) The Employment Term will terminate upon the Employee's termination
or upon the effective date specified in a letter of resignation from Employee to
the Board of Directors of Ganymede. This agreement shall only be renewed upon
the mutual agreement of the Parties.
(b) The Employment Term may also be terminated by Ganymede immediately
upon prior written notice to the Employee upon the occurrence of any of the
following:
(i) the commission by the Employee of any act involving moral
turpitude detrimental to the interests of Ganymede or
Ganymede; or
(ii) violation of Title VII of the Civil Rights Act of 1964 or any
other Federal or State Civil Rights statutes or
regulations; or
(iii) the conviction of the Employee of a felony.
(c) The Employment Term may also be terminated by Ganymede upon thirty
(30) days prior written notice to the Employee upon the occurrence of any of the
following:
(i) the willful damage directly caused by the Employee to
Ganymede; or
(ii) Employee's gross negligence in connection with the
performance of his duties, including but not limited to
insubordination, inability to perform mutually agreed to
delegated tasks, inability to meet mutually agreed to
established deadlines.
(d) Upon termination of the Employee's employment under subsections
13(a), (b), or (c) above, the parties hereto will be relieved of any further
obligations hereunder from and after the effective date of such termination,
except for any obligations set forth in Sections 7, 8, 9, and 10, 14. Upon
termination of the Employee's employment for any reason, the Employee agrees to
resign, at the time of termination, from all positions with Ganymede, HomeCom or
its subsidiaries or affiliates, including but not limited to, any Officer and
Director positions with HomeCom or Ganymede.
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14. Effect of Termination. An Employee may terminate their employment
with Buyer within the three year period listed herein without penalty if the
cause of the termination is a health related problem, mental or physical, that
results in Employee's inability to perform, either physically or mentally, the
duties associated with Employee's title and position with Ganymede, as
delineated by Ganymede. Employee must provide Ganymede written, signed evidence
from Employee's doctor describing the health related problem and describing how
the problem will result in Employee's inability to fulfill his/her duties of
employment with Ganymede. An Employee may terminate his employment with HomeCom
within the three year period listed herein without penalty if the cause of the
termination is due to 1) change in control of HomeCom, 2) Employee is required
to relocate to a city outside of Chicago, Boston, San Francisco, New York or
London, 3) There is a material change in job duties. Notwithstanding the above,
if Employee terminates his employment with Ganymede for any other reason or if
termination is based on cause as defined above in Section 13, within the three
year period listed herein, the terminating Employee shall be required to return
a total of twenty percent (20%) of Ganymede stock acquired by terminating
Employee diminished on a pro rata basis based on the time served by the employee
within the three (3) year period pursuant to this transaction, distributed as
follows:
|_| Ten percent (10%) of the stock or the equivalent market value of ten
percent (10%) of the shares (valued at the date of Closing) in cash
shall be returned to Ganymede; and
|_| Ten percent (10%) of the stock or the equivalent market value of ten
percent (10%) of the shares (valued at the date of Closing) in cash shall
be distributed evenly to the remaining Partners who remain employed by
Ganymede. For the purposes of this agreement, the term "Partners" refers to
Richard L. Chu, John R. Winans, and Joe Rickard, collectively. If, at the
time of termination, none of the Partners remain employed with Ganymede,
this ten percent (10%) shall revert back to HomeCom.
When the termination date is fixed, the twenty percent (20%) will be
calculated, and the amount will be reduced based on subcontracting a pro rata
percentage of time served by the Employee. Employee will only be penalized for
the remaining time not fulfilled for the three (3) year period.
15. Death of the Employee. If the Employee dies during the Employment
Term, (a) this Agreement shall terminate, and (b) Ganymede will pay to the
Employee's estate the Employee's Salary for thirty (30) days after the death
occurs. Ganymede and HomeCom benefit plans in which Employee was a participant
prior to his death shall vest in full upon his death and be exercisable by
Employee's estate, subject to the terms of such benefit plans.
16. Compliance with Securities Laws. Employee agrees to comply with all
applicable state and federal securities laws, rules, and regulations, as may be
in effect from time to time.
17. Governing Law. The terms of this Agreement shall be governed by the
laws of the State of Illinois. Venue shall lie in the Circuit Court of Cook
County, Illinois, or the United States District Court for the Northern District
of Illinois, in Chicago, Illinois. The parties hereto
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acknowledge that such Court has the jurisdiction to interpret and enforce the
provisions of this Agreement and the parties waive any and all objections which
they may have as to personal jurisdiction or venue in any of the above Courts.
18. Assignability. The Employee may not assign his interest in or
delegate his duties under this Agreement without prior approval.
19. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of Ganymede, its successors and assigns.
20. Notices. All notices, demands and requests which may be given or
which are required to be given by either party to the other, and any exercise of
a right of termination provided by this Agreement, shall be in writing and shall
be deemed effective when either: (a) personally delivered to the intended
recipient; (2) sent by certified or registered mail, return receipt requested,
addressed to the intended recipient at the address specified below; (3)
delivered in person to the address set forth below for the party to which the
notice was given; (4) deposited into the custody of a nationally recognized
overnight delivery service such as Federal Express Corporation, Emery or
Purolator, addressed to such party at the address specified below; or (5) sent
by facsimile, telegram or telex, provided that receipt for such facsimile,
telegram or telex is verified by the sender and followed by a notice sent in
accordance with one of the other provisions set forth above. Notices shall be
effective on the date of delivery or receipt, of, if delivery is not accepted,
on the earlier of the date that delivery is refused or three (3) days after the
date the notice is mailed. For purposes of this Paragraph, the addresses of the
parties for all notices are as follows (unless changes by similar notice in
writing are given by the particular person whose address is to be changed):
If to the Employee, to 208 Golf Terrace, Wilmett, Illinois
60091;
If to Ganymede, to Fourteen Piedmont Center, Suite 100, 3535
Piedmont Road, Atlanta, GA 30305.
21. Entire Agreement; Modification. This Agreement constitutes the
entire agreement of the parties hereto with respect to the subject matter hereof
and may not be modified or amended in any way except in writing by the parties
hereto.
22. Waiver. No waiver by Ganymede of any breach by the Employee of this
Agreement shall be construed to be a waiver as to succeeding breaches.
23. Severability. In any provision or part of any provision of this
Agreement is held invalid or unenforceable by a court of competent jurisdiction,
such holding shall not affect the enforceability of any other provisions or
parts thereof, and all other provisions and parts thereof shall continue in full
force and effect.
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24. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original but all of which together shall constitute
one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
or as of the date and year first above written.
COMPANY:
GANYMEDE CORPORATION
By: /s/ Harvey Sax
----------------------------
Name: Harvey Sax
Title:
EMPLOYEE:
/s/ Joseph G. Rickard
-------------------------------
Joseph G. Rickard
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Exhibit A
Employment Agreement
of Joseph G. Rickard
----------------
Employee shall:
1. Manage existing Ganymede client relationships during the transition to
HomeCom.
2. Communicate change in service level the HomeCom merger offers clients and
identify short-term and long-term opportunities within the existing client
base.
3. Revisit prospective large clients that could not execute projects through
Ganymede given human resource issues. This includes firms which made
Microsoft Certification a requirement.
4. Coordinate exit of non-financial hosting clients which will be moved to
HostAmerica or to a third party host out of our control.
5. Assist in updating of all directories with the change in name and
ownership. This list includes Chicago Software Association, Insurance
Technology, Wall Street Technology, Boardwatch, Crain's, Trader's Resource
Guide, Futures Magazine, etc.
6. Assume primary relationship management for major Chicago accounts in
financial services, as necessary.
7. Other services requested by HomeCom or Ganymede.
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EXHIBIT 10.59
ESCROW AGREEMENT
THIS AGREEMENT (the "Escrow Agreement") is made as of April 23, 1999,
by and among (i) Richard L. Chu, Joseph G. Rickard, John R. Winans, Mario
D'Agostino, Karen Moore, and John Kokinis (collectively, the "Pledgor" and
individually a "Pledgor"); (ii) HOMECOM COMMUNICATIONS, INC., a Delaware
Corporation (hereinafter referred to as the "Pledgee"); and (iii) SIMS MOSS
KLINE & DAVIS LLP, a Georgia limited liability partnership (hereinafter referred
to as "Escrow Agent").
WHEREAS, Pledgors have certain obligations to indemnify Pledgee (the
"Obligations") under that certain Stock Purchase Agreement of even date herewith
between Pledgor and Pledgee (the "Agreement");
WHEREAS, to secure the Obligations, Pledgor has executed a Pledge and
Security Agreement of even date herewith in favor of Pledgee (the "Pledge");
WHEREAS, the Pledge provides for 17,918 shares of common stock of the
Pledgor (the "Pledged Shares") to be held in escrow for the benefit of the
Pledgee until the full payment, satisfaction or lapse of the Obligations; and
WHEREAS, the Pledgee and Pledgor agree that the Pledged Shares shall be
deposited with Escrow Agent subject to the terms and conditions of this Escrow
Agreement;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt, sufficiency and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:
1. The Pledgor shall deliver the Pledged Shares to the Escrow Agent as
required by the Pledge. The Escrow Agent shall hold the Pledged Shares until
released to the Parent (on behalf of the Pledgee) or to the Pledgee in
accordance with the Pledge. It is agreed that the Escrow Agent shall act as a
depository of the Pledged Shares only and shall not be required to take notice
of any default or breach of warranty, representation, covenant or agreement of
any party contained in the Agreement or Pledge, as amended, or any other
agreement between Pledgor and Pledgee. Escrow Agent shall have no responsibility
or duty to obtain, collect or enforce any obligations of Pledgor, nor shall
Escrow Agent have any responsibility or duty to determine any "Indemnity Amount"
or other Obligation due from any Pledgor to the Pledgee, the proper application
of any payment or when or if the Obligations have been paid or satisfied in full
or have lapsed.
2. The Escrow Agent shall hold the Pledged Shares until they are
released and delivered to the Pledgee or the Pledgor, as the case may be, as
provided in Section 9 of the Pledge.
3. Pledgee agrees to reimburse Escrow Agent for its reasonable expenses
incurred in the
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performance of its services hereunder.
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4. The acceptance by the Escrow Agent of its duties hereunder is
subject to the following terms and conditions, which Pledgor and Pledgee agree
shall govern and control with respect to the Escrow Agent's rights, duties,
liabilities and immunities:
(a) The Escrow Agent shall be entitled to rely and act upon
any notice, request, waiver, consent, receipt or other paper or document
furnished to it, not only as to its due execution and the validity and
effectiveness of its provisions but also as to the truth and accuracy of any
information contained therein. The Escrow Agent is also relieved from the
necessity of satisfying itself as to the authority of any person executing this
Agreement or as to the authenticity of any signature to this Agreement.
(b) The Escrow Agent shall not be liable for any error of
judgment, or for any act done or step taken or omitted by it in good faith, or
for any bona fide mistake of fact or law, or for anything which it may do or
refrain from doing in connection herewith, except for its own gross negligence
or willful misconduct.
(c) The Escrow Agent shall have no duties except those which
are specifically set forth herein. No waiver, modification, amendment,
termination or rescission of this Escrow Agreement shall be effective or binding
upon the Escrow Agent unless Escrow Agent shall have specifically consented
thereto in writing.
(d) Pledgors acknowledge, understand and agree that (i) Escrow
Agent is Pledgee's counsel and, as such, Escrow Agent has not and will not
exercise any independent professional judgment on Pledgor's behalf, and (ii)
notwithstanding its role as Escrow Agent hereunder, Escrow Agent may, in the
event of a dispute between Pledgor and Pledgee, act as Pledgors' counsel and
represent Pledgor in any dispute or litigation, provided Escrow Agent first
resigns and delivers any and all Pledged Shares to a successor or substitute
Escrow Agent or deposits all disputed funds into court in connection with an
action for declaratory judgment or interpleader.
(e) Escrow Agent shall have no liability or responsibility to
Pledgor or Pledgee for any losses, claims, damages, liabilities, costs or
expenses provided that such losses are not the result of Escrow Agent's own
gross negligence or willful misconduct. Pledgor and Pledgee hereby, jointly and
severally, agree to indemnify, defend and hold harmless Escrow Agent against any
and all losses, claims, damages, liabilities, costs and expenses (including
court costs and reasonable attorneys' fees) which may be imposed upon or
incurred by Escrow Agent in connection with the subject matter of this Escrow
Agreement and Escrow Agent's performance of its obligations hereunder, provided
that such losses are not the result of Escrow Agent's own gross negligence or
willful misconduct.
(f) Escrow Agent's sole responsibility shall be to receive the
Pledged Shares, hold the Pledged Shares and release the Pledged Shares in
accordance with the Pledge. Should any dispute arise among Pledgor and Pledgee
as to the proper disposition of the Pledged Shares, then Pledgor and Pledgee
agree that Escrow Agent may file a declaratory judgment action or an
interpleader action
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to obtain a resolution of such dispute. Such a declaratory judgment action
or interpleader action may be filed in the U.S. District Court for the
Northern District of Georgia, Atlanta Division, or the Superior Court of
Fulton County, Georgia, at the sole and absolute discretion of Escrow Agent.
Pledgor and Pledgee, by signing this Agreement, expressly consent and agree to
the jurisdiction and venue of such courts and waive and renounce any right to
object to the personal jurisdiction or venue of such court and further waive
and renounce any right to removal based on diversity of citizenship or transfer
to another venue based on forum, non-convenience or any other basis.
5. This Escrow Agreement may be amended, modified or canceled only by
the written consent of all parties hereto. The Escrow Agent (and any successor
Escrow Agent) may resign by notifying Pledgee and Pledgor in writing and, until
a successor Escrow Agent is appointed by Pledgee and Pledgor and accepts such
appointment, the Escrow Agent's only duty hereunder shall be to hold any
then-remaining Pledged Shares in accordance with the original provisions of this
Escrow Agreement. The appointment of Sims Moss Kline & Davis LLP as escrow agent
is to accommodate an expeditious closing of the Agreement. At the request of
either Pledgors and Pledgee at any time, Sims Moss Kline & Davis LLP will resign
and transfer the Pledged Shares and other funds on deposit with it to an
independent third party escrowee reasonably acceptable to Pledgee and Pledgors.
Any new escrow agent shall be required to become a party to this Agreement.
6. Any notices or other communications required or permitted hereunder
shall be in writing and delivered by facsimile transmission and by regular mail,
postage prepaid, as follows:
If to Pledgors to: Ganymede Corp.
175 West Jackson Boulevard, Suite 930
Chicago, IL 60604
Attn: Richard L. Chu
Facsimile: (312) 663-4503
With a copy to: Abramson & Fox
One East Wacker Drive
Chicago, IL 60601
Attn: Joseph C. Grayson
Facsimile: (312) 644-0798
If to Pledgee: HomeCom Communications, Inc.
Fourteen Piedmont Center, Suite 100
3535 Piedmont Road
Atlanta, Georgia 30305
Attn: Harvey Sax, Sheela Kosaraju
Facsimile: (404) 237-3060
With a copy to: Sims Moss Kline & Davis LLP
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400 Northpark Town Center, Suite 310
1000 Abernathy Road, N.E.
Atlanta, Georgia 30328
Attn: Raymond L. Moss, Esq.
Facsimile: (770) 481-7210
If to Escrow Agent: Sims Moss Kline & Davis LLP
400 Northpark Town Center, Suite 310
1000 Abernathy Road, N.E.
Atlanta, Georgia 30328
Attn: Raymond L. Moss, Esq.
Facsimile: (770) 481-7210
or at any such other address as shall be furnished in writing by any such party
to the other parties hereto. Such notices or other communications so given shall
be deemed effectively given when actually received. All notices given to any
party hereto shall be copied to all other parties hereto.
7. This Escrow Agreement shall be governed by the laws of the State of
Georgia. Whenever possible each provision of this Escrow Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited or invalid under such
law, such provision shall be deemed severed herefrom and ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
8. This Escrow Agreement may be executed in multiple counterparts, each
of which shall constitute an original, but all of which taken together shall
constitute one and the same instrument.
9. Anything contained in this Agreement to the contrary
notwithstanding, if with respect to any claim of an Event of Default, the Escrow
Agent receives notice from any Pledgor of its objection to the claim or the
claimed Indemnity Amount within ten (10) days of the date Pledgors receive
notice of the indemnification claim, the Escrow Agent shall hold the Pledged
Securities and/or proceeds, as the case may be, and disburse only in accordance
with the written agreement of Pledgor and Pledgee, a final order of court or as
provided in Section 4(f) herein.
10. The terms and conditions of the attached Pledge and Security
Agreement are incorporated in and a part of this agreement. Capitalized terms
used in this agreement and not otherwise defined shall have the meanings
ascribed to them in the Agreement.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the parties hereto have duly caused this Escrow
Agreement to be duly executed as of the date first above written.
PLEDGOR:
/s/ Richard L. Chu
----------------------------------
Richard L. Chu
/s/ Joseph G. Rickard
----------------------------------
Joseph G. Rickard
/s/ John R. Winans
----------------------------------
John R. Winans
/s/ Mario D'Agostino
----------------------------------
Mario D'Agostino
/s/ Karen Moore
----------------------------------
Karen Moore
/s/ John Kokinis
----------------------------------
John Kokinis
PLEDGEE:
HOMECOM COMMUNICATIONS, INC.
By: /s/ Harvey Sax
-------------------------------
Name: Harvey Sax
Title: President and CEO
6
<PAGE> 1
EXHIBIT 10.60
PLEDGE AND SECURITY AGREEMENT
This Pledge (the "Pledge") is by and between Richard L. Chu, Joseph G.
Rickard, John R. Winans, Mario D'Agostino, Karen Moore, and John Kokinis
(collectively, the "Pledgors" and individually a "Pledgor") and HOMECOM
COMMUNICATIONS, INC., a Delaware Corporation (hereinafter referred to as the
"Pledgee").
The Pledgors and Pledgee have executed a Stock Purchase Agreement of
even date herewith (the "Agreement"). The Pledgor undertakes certain obligations
to indemnify the Pledgee in Section 8.1 of the Merger Agreement. Capitalized
terms used in this agreement and not otherwise defined shall have the meanings
ascribed to them in the Agreement.
As an inducement to the Pledgee to enter into the Merger Agreement, and
in consideration thereof, the Pledgor has agreed to secure the due and punctual
payment and performance of all of their obligations under the Agreement to
indemnify the Pledgee (the "Obligations"). Accordingly, the Pledgor hereby
agrees with the Pledgee as follows:
SECTION 1. Pledge. As collateral security for payment in full of the
Obligations, the Pledgor hereby (i) transfers, sets over and delivers unto Sims
Moss Kline & Davis LLP, Attorneys at Law, as Escrow Agent for Pledgor and
Pledgee, pursuant to an Escrow Agreement, dated of even date herewith between
the Pledgor, the Pledgee and the Escrow Agent, stock certificates numbered
______________ representing 17,910 shares of the common stock of the Pledgee
(the "Pledged Securities") and (ii) pledges, hypothecates and grants to the
Pledgee a security interest in the Pledged Securities. Upon delivery of the
Pledged Securities to the Escrow Agent, such Pledged Securities shall be
accompanied by duly executed stock powers in blank and by such other instruments
or documents as the Pledgee or its counsel may reasonably request.
SECTION 2. Obligations Secured. This Pledge is made, and the security
interest created hereby is granted to the Pledgee, to secure the full payment
and performance of the Obligations.
SECTION 3. Representations and Warranties. Each Pledgor hereby
represents and warrants as to himself or herself that, except for the security
interest granted to the Pledgee, the Pledgor is the legal and equitable owner of
the Pledged Securities, that to the best of his or her knowledge there are no
liens, charges, encumbrances and security interests of any kind and nature
arising by through or under Pledgor, the Pledgor will make no voluntary
assignment, pledge, mortgage, hypothecation or transfer of the Pledged
Securities, the Pledgor has good right and legal authority to pledge the Pledged
Securities in the manner hereby done or contemplated and will defend its title
thereto against the claims of all persons and the pledge of the Pledged
Securities is effective to vest in the Pledgee the rights of the Pledgee in the
Pledged Securities as set forth herein.
SECTION 4. Voting Rights; Dividends, Etc.
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(a) So long as the Pledged Securities are held by the Escrow
Agent, the Pledgor shall be entitled to exercise any and all voting rights and
power consensual rights and powers accruing to an owner of the Pledged
Securities or any part thereof for any purpose not inconsistent with the terms
of this Pledge or any agreement giving rise to any of the Obligations: At the
option of the Pledgors, in lieu of the Escrow Agent delivering Pledged
Securities to Pledgee, Pledgors may deposit cash equal to the value of the
Pledged Securities to be so delivered as determined in accordance with Section
5. The Escrow Agent shall promptly upon receipt of the cash deposit release the
applicable number of Pledge Securities to Pledgors and deliver the cash or cash
equivalents to Pledgee.
(b) Any and all dividends or other distributions on account of
the Pledged Securities including but not limited to regular dividends,
liquidating dividends, other distributions in property, return of capital or
other distributions of money or property made on or in respect of Pledged
Securities, whether resulting from a subdivision, combination or
reclassification of outstanding capital stock of any corporation, the capital
stock of which is pledged hereunder or received in exchange for Pledged
Securities or any part thereof or as a result of any merger, consolidation,
acquisition or other exchange of assets or on the liquidation, whether voluntary
or involuntary, of any issuer of the Pledged Securities, or otherwise, shall be
and become part of the Pledged Securities pledged hereunder and, if received by
the Pledgor, shall forthwith be delivered to the Pledgee to be held as
collateral subject to the terms of this Pledge.
(c) The Pledgee shall execute and deliver to the Pledgor, or
cause to be executed and delivered to the Pledgor, as appropriate, all such
proxies, powers of attorney, dividend orders and other instruments as the
Pledgor may reasonably request for the purpose of enabling the Pledgor to
exercise the voting and/or consensual rights and powers which Pledgor is
entitled to exercise pursuant to paragraph.
(d) Upon the delivery of the Pledged Securities to Pledgee in
accordance with Section 10, all rights of the Pledgor to exercise the voting
and/or consensual rights and powers which Pledgor is entitled to exercise
pursuant to paragraph (a)(i) above and/or to receive the dividends which Pledgor
is authorized to receive and retain pursuant to paragraph (a)(ii) above shall
cease, and all such rights thereupon shall become vested in the Pledgee, which
shall have the sole and exclusive right and authority to exercise such voting
and/or consensual rights and powers which the Pledgor shall otherwise be
entitled to exercise pursuant to paragraph (a)(i) above and/or to receive and
retain the dividends which the Pledgor shall otherwise be authorized to retain
pursuant to paragraph (a)(ii) above. Any and all money and other property paid
over to or received by the Pledgee pursuant to the provisions of this paragraph
(b) shall be retained by the Pledgee as additional collateral hereunder and
shall be applied in accordance with the provisions of Section 9 hereof.
SECTION 5. Remedies. If (i) an Event of Default shall have occurred and
be continuing, and (ii) all or any portion of the Pledged Securities have been
released and delivered to the Pledgee (on behalf of the Pledgee), then the
Pledgee may elect to hold such Pledged Securities as treasury stock or cancel
them in full and final satisfaction of that portion of the Obligations
represented by the value of such Pledged Securities determined as follows: one
hundred (100%) percent of the weighted
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(by trading volume) averages per share trading price of Parent common stock for
the last ten (10) trading days immediately preceding the date the Pledged
Securities are actually released and delivered to the Parent. Pledgor hereby
waives (to the extent permitted by law) all rights of redemption, stay and/or
appraisal which the Pledgor now has or may at any time in the future have under
any rule of law or statute now existing or hereafter enacted. The Pledgee and
Pledgor agree that the exercise of any such remedy by the Parent shall be
conclusively deemed to conform to commercially reasonable standards under the
Uniform Commercial Code as in effect in the State of Georgia.
SECTION 6. Pledgee Appointed Attorney-in-Fact. The Pledgor hereby
constitutes and appoints the Pledgee the attorney-in-fact of the Pledgor for the
purpose of carrying out the provisions of Section 5 of this Pledge, which
appointment is irrevocable and coupled with an interest. Without limiting the
generality of the foregoing, the Pledgee shall have the right to execute any
stock power or endorse any stock certificate with respect to any Pledged
Securities released and delivered to it and to ask for, demand, sue for,
collect, receive, and give acquittance for any and all moneys due or to become
due under and by virtue of any of the Pledged Securities, to endorse checks,
drafts, orders and other instruments for the payment of money payable to the
Pledgor, representing any interest or dividend or other distribution payable in
respect of the Pledged Securities or any part thereof or on account thereof and
to give full discharge for the same, to settle, compromise, prosecute, or defend
any action, claim or proceeding with respect thereto, and to sell, assign,
endorse, pledge, transfer and make any agreement respecting, or otherwise
dealing with, the same.
SECTION 7. Event of Default Defined. For purposes of this Pledge, an
"Event of Default" shall exist hereunder upon the failure of Pledgor to pay or
perform any Obligation within ten (10) days of the receipt of written demand
from any Pledgee unless a Pledgor has objected to the claim of an Event of
Default or the Indemnity Amount within ten (10) days of its receipt of such
notice.
SECTION 8. Application of the Value of Pledged Securities. The value of
Pledged Securities determined in accordance with Section 5 or cash deposit shall
be applied by the Pledgee as follows:
First: to the payment of all costs and expenses incurred by
the Pledgee in connection herewith, including but not limited to, all court
costs and the fees and disbursements of counsel for the Pledgee in connection
herewith, and to the repayment of all advances made by the Pledgee hereunder for
the account of the Pledgor, and the payment of all costs and expenses paid or
incurred by the Pledgee in connection with the exercise of any right or remedy
hereunder; and
Second: to the payment in full of all other Obligations.
Any amounts remaining after such application shall be promptly remitted to the
Pledgor, its successors, legal representatives or assigns, or as otherwise
provided by law.
SECTION 9. Escrow Agreement. The Escrow Agent shall hold the Pledged
Securities pursuant to the terms of the Escrow Agreement. Upon the full payment,
satisfaction or lapse of the
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Obligations, the Pledged Securities shall be promptly released by the Escrow
Agent to the Pledgor, in the manner provided in the Escrow Agreement. Upon the
occurrence of an Event of Default under this Pledge, the Pledgee shall notify
the Escrow Agent and the Pledgor in writing of the occurrence of the Event of
Default and the "Indemnity Amount" which is due under the Agreement. Upon
receipt of notice from the Pledgor that an Event of Default has occurred, the
Escrow Agent shall promptly give Pledgor and Pledgee ten (10) days advanced
written notice of the proposed release of the Pledged Securities, stating the
basis therefor. Should any Pledgor give the Escrow Agent written notice that he
or she disputes the occurrence of an Event of Default or the amount claimed due,
the Escrow Agent may either hold the Pledged Securities until a final judgment
of a court of competent jurisdiction is entered directing the Escrow Agent as to
the proper disposition of the Pledged Securities or the Escrow Agent may file an
interpleader action or a declaratory judgment action against the Pledgee and the
Pledgor seeking a determination of the proper disposition of the Pledged
Securities. If the Escrow Agent receives no written notice from a Pledgor of a
dispute as to the existence of an Event of Default, then Pledged Securities
having a value (determined by the Escrow Agent in accordance with Section 5
hereof) equal to the "Indemnity Amount" stated in the notice received from the
Pledgee, shall be released by the Escrow Agent to the Pledgee (on behalf of the
Pledgee) but shall remain subject to the terms and conditions of this Pledge.
SECTION 10. Notice. All notices or other communications which are
required or permitted hereunder or under the Escrow Agreement shall be in
writing and sufficient for purposes of this Pledge if delivered by hand, by
facsimile transmission, by registered or certified mail, postage prepaid, or by
courier or overnight carrier, to the persons at the addresses set forth below
(or at such other address as may be provided hereunder), and shall be deemed to
have been delivered as of the date so delivered:
If to Pledgor to: Ganymede Corp.
175 West Jackson Boulevard, Suite 930
Chicago, IL 60604
Attn: Richard L. Chu
Facsimile: (312) 663-4503
With a copy to: Abramson & Fox
One East Wacker Drive
Chicago, IL 60601
Attn: Joseph C. Grayson
Facsimile: (312) 644-0798
If to Pledgee: HomeCom Communications, Inc.
Fourteen Piedmont Center, Suite 100
3535 Piedmont Road
Atlanta, Georgia 30305
Attn: Harvey Sax, Sheela Kosaraju
Facsimile: (404) 237-3060
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With a copy to: Sims Moss Kline & Davis LLP
400 Northpark Town Center, Suite 310
1000 Abernathy Road, N.E.
Atlanta, Georgia 30328
Attn: Raymond L. Moss, Esq.
Facsimile: (770) 481-7210
SECTION 11. Further Assurances. The Pledgor agrees that it will join
with the Pledgee in executing and will file or record such notices, financing
statements or other documents as may be reasonably necessary to the perfection
of the security interest of the Pledgee hereunder, and as the Pledgee or its
counsel may reasonably request, such instruments to be in form and substance
satisfactory to the Pledgee and its counsel, and that Pledgor will do such
further acts and things and execute and deliver to the Pledgee such additional
conveyances, assignments, agreements and instruments as the Pledgee may at any
time reasonably request in connection with the administration and enforcement of
this Pledge or relative to the Pledged Securities or any part thereof or in
order to assure and confirm unto the Pledgee its rights, powers and remedies
hereunder.
SECTION 12. No Waiver. No failure on the part of the Pledgee to
exercise, and no delay on its part in exercising any right, power or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power, or remedy preclude any other or the further
exercise thereof or the exercise of any other right, power or remedy. All
remedies hereunder are cumulative and are not exclusive of any other remedies
provided by law.
SECTION 13. Governing Law; Amendments. This Pledge has been executed
and delivered in the State of Georgia and shall in all respects be construed in
accordance with and governed by the laws of said State. This Pledge may not be
amended or modified nor may any of the Pledged Securities be released or the
security interest granted hereby extended, except in writing signed by the
parties hereto.
SECTION 14. Binding Agreement; Notices. This Pledge, and the terms,
covenants and conditions hereof, shall be binding upon and inure to the benefit
of the Pledgee and to all holders of the indebtedness secured hereby and to the
Pledgor and its successors, legal representatives and assigns. Pledgee shall not
be permitted to transfer, assign or negotiate its rights or remedies hereunder
without the prior written consent of the Pledgor. No notice to or demand on the
Pledgor shall entitle the Pledgor to any other or further notice or demand in
the same, similar or other circumstances. Any notice shall be conclusively
deemed to have been received and shall be effective on the day on which
delivered to the Pledgee or the Pledgor at the respective addresses set forth in
Section 10.
SECTION 15. Headings. Section headings used herein are for convenience
only and are not to affect the construction of or be taken into consideration in
interpreting this Pledge.
SECTION 16. Counterparts. This Pledge may be executed in any number of
counterparts,
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each of which shall be deemed to be an original and all of which when taken
together shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Pledge to be
executed as of this 23rd day of April, 1999.
PLEDGOR:
/s/ Richard L. Chu
--------------------------------------
Richard L. Chu
/s/ Joseph G. Rickard
--------------------------------------
Joseph G. Rickard
/s/ John R. Winans
--------------------------------------
John R. Winans
/s/ Mario D'Agostino
--------------------------------------
Mario D'Agostino
/s/ Karen Moore
--------------------------------------
Karen Moore
/s/ John Kokinis
--------------------------------------
John Kokinis
PLEDGEE:
HOMECOM COMMUNICATIONS, INC.
By: /s/ Harvey Sax
----------------------------------
Name: Harvey Sax
Title: President and CEO
6
