Document:

Exhibit
10.2

 

Stock
option plan

2002

 

 

UNANIMOUS
WRITTEN CONSENT

OF THE BOARD OF DIRECTORS

OF

 

BIDZ.COM,
INC.

A California Corporation

 

The undersigned, being the sole director of BIDZ.COM, INC., a
California corporation (the “Company”), hereby consents to the adoption of the
following resolutions:

 

ADOPTION OF 2002 SPECIAL
STOCK OPTION PLAN

 

WHEREAS,
the Board of Directors believes that it is in the beat interests of the Company
to adopt the 2002 Special Stock Option Plan for Directors, Executive Officers,
Employees and Key Consultants of Bidz.com, Inc., a copy of which is attached to
these resolutions as Exhibit A, in order to create additional incentives for
the employees of Bidz.com, Inc. and to reward them for their hard and valuable
work for the Company.

 

NOW, THEREFORE, BE IT RESOLVED,
that, subject to shareholder ratification, the 2002 Special Stock Option Plan
for Directors, Executive Officers, Employees and Key Consultants of Bidz.com,
Inc. is hereby adopted effective December 15, 2002 (the “Plan”). A copy of the
Plan is attached to these resolutions as Exhibit A. The Plan authorizes the
grant of up to 1,500,000 stock options to purchase 1,500,000 shares of the
Common Stock of the Company on such terms and conditions as are determined,
approved and duly adopted by the Company’s Board of Directors when they are
granted.

 

RESOLVED FURTHER, that the executive officers of the Company are
hereby authorized and directed to execute all documents and to take all action
which they deem necessary or appropriate in order to cause the Company to adopt
the Plan.

 

GRANT OF STOCK OPTIONS

 

WHEREAS, the Board of Directors
has decided to grant 1,332,000 stock options to purchase 1,332,000 shares of
the Common Stock of the Company under the 2002 Special Stock Option Plan for
the Directors, Executive Officers, Employees and Key Consultants of Bidz.com,
Inc. (the “Plan”) among 127 employees of Bidz.com, Inc.

 

NOW, THEREFORE, BE IT RESOLVED,
that the executive officers of the Company are hereby authorized and directed
to execute all documents and take all action which they deem necessary or
appropriate in order to grant a total of 1,332,000 stock options (the “Options”)
to purchase 1,332,000 shares of the Company’s Common Stock in the respective
amounts and to the respective employees of the Company as listed in Exhibit B
of these resolutions, pursuant to the form of Stock Option Agreement attached
to these resolutions as Exhibit C. Each Option will confer upon the grantee the
right to purchase the number of shares of the Company’s Common Stock equal to
the number of Options granted for an exercise price of $3.75 per share at any
time from December 15, 2002 until December 

 

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15, 2007.  All Options will be vested on the date of
grant and will expire on December 15, 2007. The other terms and conditions of
the Options will be governed by the Stock Option Agreements.

 

The foregoing action is hereby taken by the Board of Directors by
unanimous written consent without a meeting pursuant to Section 307(b) of the
California General Corporation Law.

 

IN WITNESS WHEREOF, this
Unanimous Written Consent has been executed as of the 1st day of
December, 2002.

 

 

	
  /s/ David Zinberg

  	
   

  
	
  David Zinberg, Chairman of the Board of

  
	
  Directors

  

 

2

 

EXHIBIT A

to

CORPORATE
RESOLUTION

OF BIDZ.COM, INC.

 

DECEMBER
15, 2002

 

2002
SPECIAL STOCK OPTION PLAN FOR

DIRECTORS, EXECUTIVE OFFICERS, EMPLOYEES

AND KEY CONSULTANTS OF BIDZ.COM, INC.

 

 

Bidz.com,
Inc.

Special 2002 Stock Option Plan

for Directors, Executive Officers, and Employees of
and Key Consultants to Bidz.com, Inc.

 

1.             Purpose.   The
purpose of this Stock Option Plan is to promote the interests of Bidz.com, Inc.
(“Company”) and its shareholders by enabling it to offer stock options to
better attract, retain, and reward directors, executive officers, and employees
of and key consultants to the Company and any other future subsidiaries that
may qualify under the terms of this Plan. The goal is to strengthen the
mutuality of interests between those persons and the shareholders of the
Company by providing those persons with a proprietary interest in pursuing the Company’s
long-term growth and financial success.

 

2.             Definitions.
  For purposes of this Plan, the following
terms shall have the meanings set forth below.

 

(a)            “Board”
means the Board of Directors of Bidz.com, Inc.

 

(b)            “Code”
means the Internal Revenue Code of 1986, as amended. Reference to any specific
section of the Code shall be deemed to be a reference to any successor
provision of the Code.

 

(c)            “Committee”
means the administrative committee of this Plan that is provided in Section 1
below.

 

(d)            “Common
Stock” means the common stock of the Company or any security issued in
substitution, exchange, or in lieu thereof.

 

(e)            “Company”
means Bidz.com, Inc., a California corporation, or any successor corporation.
Except where the context indicates otherwise, the term “Company” shall include
its Parent and Subsidiaries.

 

(f)             “Director”
means any person who serves as a member of the Board of Directors of Bidz.com,
Inc. “Outside Director” means any person who serves as a member of the Board of
Directors of Bidz.com, Inc. and is not a full-time employee of Bidz.com, Inc.
or its subsidiaries.

 

(g)            “Disabled”
means permanent and total disability, as defined in Code Section 22(e)(3).

 

(h)           “Employee”
means any person who is employed by Bidz.com, Inc. or any
Subsidiary or Parent of the Company on a full or part-time basis, so that they
have income taxes withheld and are eligible to participate in employee
benefits programs.  Such person shall not
cease to be an Employee in the case of (i) any leave of absence approved by the
Company or (ii) transfers between locations of the Company or between the
Company, its Parent, any Subsidiary, or any successor. Neither service as a
Director nor payment of a director’s fee by the Company shall be sufficient to
constitute “employment” by the Company.

 

1

 

(i)            “Exchange
Act” means the Securities Exchange Act of 1934.

 

(j)            “Fair
Market Value” per share means, on any given date:

 

(1)             The
last sale price of the Common Stock on the National Association of Securities
Dealers Automated Quotation National Market System (“NMS”) or in case no such
reported sale takes place, the average of the closing bid and ask prices on
such date; or

 

(2)             If
not quoted on the NMS, the average of the closing bid and ask prices of the
Common Stock on the National Association of Securities Dealers Automated Quotation
System (“NASDAQ”) or any comparable system; or

 

(3)             If
not quoted on any system, the fair market value indicated by the last appraisal
of the Company by a professional appraiser or certified public accounting firm;
or

 

(4)             If
not quoted on any system or valued by appraisal, the fair market value
determined by the Company’s Board of Directors in good faith.

 

(k)           “Insider”
means a person who is subject to the provisions of Section 16 of the Exchange
Act.

 

(l)            “Key
Consultant” means a person who is engaged by Bidz.com, Inc. or its Subsidiaries
as a non-employee to perform tasks on a contractual basis over a sufficient
period of time that he or she satisfies the eligibility criteria set forth by
the Securities and Exchange Commission for a non-employee to participate in a
registered stock option plan.

 

(m)          “Officer”
is an employee of Bidz.com, Inc. or its Subsidiaries who is granted the
authority to commit the corporation to binding agreements and to function as
one of the executives of Bidz.com, Inc. or its Subsidiaries.

 

(n)           “Option”
means a stock option granted under this Plan and evidenced by an executed Stock
Option Agreement between the Company and the Optionee.

 

(o)           “Parent”
shall mean any corporation (other than the Company) in an unbroken chain of
corporations ending with the Company if each of the corporations (other than
the Company) owns stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in the chain, as determined in accordance with the rules of Section 424(e) of
the Code.

 

(p)           “Participant”
means a person who has been granted an Option.

 

(q)           “Plan”
means this Bidz.com, Inc. Special 2002 Stock Option Plan for Directors,
Executive Officers, and Employees of and Key Consultants to Bidz.com, Inc. and
its Subsidiaries, as it may be amended from time to time.

 

(r)            “Securities
Act” means the Securities Act of 1933, as amended.

 

2

 

(s)           “Severance”
means, with respect to a Participant, the termination of the Participant’s
provision of services to the Company as an employee and officer and director
and consultant, as the case may be, whether by reason of death, disability, or
any other reason. A Participant who is on a leave of absence that exceeds
ninety (90) days will be considered to have incurred a Severance on the
ninety-first (91st) day of the leave of absence, unless the Participant’s
rights to reemployment or reappointment are guaranteed by statute or contract.

 

(t)            “Subsidiary”
means any corporation or entity in which the Company, directly or indirectly,
controls fifty percent (50%) or more of the total voting power of all classes
of its stock having voting power, as determined in accordance with the rules of
Code Section 424(f).

 

(u)           “Ten
Percent Shareholder” means any person who owns (after taking into account the
constructive ownership rules of Section 424(d) of the Code) more than ten
percent (10%) of the stock of the Company.

 

3.             Administration.

 

(a)            This
Plan shall be administered by a Committee appointed by the Board. The Board may
remove members from, or add members to, the Committee at any time.

 

(b)            The
Committee shall be composed of the members of the Compensation Committee of the
Company’s Board of Directors and any other members that the Board of Directors
sees fit to appoint.

 

(c)            The
Committee may conduct its meetings in person or by telephone.  A majority of the members of the Committee
shall constitute a quorum, and any action shall constitute action of the
Committee if it is authorized by:

 

(i)            A
majority of the members present at any meeting; or

 

(ii)           The
unanimous consent of all of the members in writing without a meeting.

 

(d)            The
Committee is authorized to interpret this Plan and to adopt rules and procedures
relating to the administration of this Plan. All actions of the Committee in
connection with the interpretation and administration of this Plan shall be
binding upon all parties.

 

(e)            The
Committee may designate persons other than members of the Committee to carry
out its responsibilities under such conditions and limitations as it may prescribe,
except that the Committee may not delegate its authority with regard to the
granting of Options to Insiders.

 

(f)             Subject
to the limitations of Section 12 below, the Committee is expressly authorized
to make such modifications to this Plan as are necessary to effectuate the
intent of this Plan as a result of any changes in the tax, accounting, or
securities laws treatment of Participants and the Plan.

 

3

 

4.             Duration
of Plan.

 

(a)            This
Plan shall be effective as of December 15, 2002, the date of its adoption by
the Board.

 

(b)           This
Plan shall terminate on December 15, 2012, except with respect to Options then
outstanding.

 

5.             Number of Shares.

 

(a)            The
aggregate number of shares of Common Stock which may be issued pursuant to this
Plan shall be one million five hundred thousand (1,500,000) shares of Common Stock.  This aggregate number may be adjusted from
time to time as set forth in Section 13 of this Plan.

 

(b)            Upon
the expiration or termination of an outstanding Option which shall not have
been exercised in full, any shares of Common Stock remaining unissued shall
again become available for the granting of additional Options.

 

6.             Eligibility.   Persons eligible for Options under this
Plan shall be limited to the directors, executive officers, and employees of
and key consultants to Bidz.com. Inc. and its Subsidiaries.

 

7.            Form
of Options.   Options may be granted
under this Plan on such terms and in such form as the Committee may approve,
which conditions shall not be inconsistent with the provisions of this plan. An
Option shall be exercisable at such time or times and be subject to such terms
and conditions as may be set forth in the Option. The Committee may modify an
existing Option, including the right to:

 

(i)            Accelerate
the right to exercise it;

 

(ii)           Extend
or renew it; or

 

(iii)          Cancel
it and issue a new Option.

 

No modification may be
made to an Option that would impair the rights of the Participant holding the
Option without his or her consent.

 

8.             Issuance of Options.

 

Stock Options will be
granted from time to time in the future on the terms and conditions recommended
by the Committee and approved by the Company’s Board of Directors. Each Option
shall be evidenced by a written stock option agreement, in form satisfactory to
the Committee, executed by the Company and the person to whom such Option is
granted.

 

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9.              Vesting Requirement
and Performance Threshold.

 

The vesting requirements, performance thresholds and other terms and
conditions of Options which may be granted under this Plan from time to time,
if any, will be determined and approved by the Committee and the Board of
Directors.

 

10.           Non-transferability of Options.

 

(a)             During
the lifetime of the Participant, each Option is exercisable only by the
Participant.

 

(b)            No
Option under this Plan shall be assignable or transferable, except by will or
the laws of descent and distribution.

 

11.         Adjustments.

 

(a)             In
the event of any change in the capitalization of the Company affecting its
Common Stock (e.g., a stock split, reverse stock split, stock dividend,
combination, recapitalization, or reclassification), the Committee shall
authorize such adjustments as it may deem appropriate with respect to:

 

(i)            The
aggregate number of shares of Common Stock for which Options may be granted
under this Plan;

 

(ii)           The
number of shares of Common Stock covered by each outstanding Option; and

 

(iii)          The
exercise price per share in respect of each outstanding Option.

 

(b)            The
Committee may also make such adjustments in the event of a spin-off or other
distribution (other than normal cash dividends) of Company assets to
shareholders.

 

12.            Amendment and Termination.   The
Board may at any time amend or terminate this Plan.

 

13.            Tax Withholding.

 

(a)           The
Company shall have the right to take such actions as may be necessary to
satisfy its tax withholding obligations relating to the operation of this Plan.

 

(b)           If
Common Stock is used to satisfy the Company’s tax withholding obligations, the
stock shall be valued based on its Fair Market Value when the tax withholding
is required to be made.

 

14.            No Additional Rights.

 

(a)           The
existence of this Plan and the Options granted hereunder shall not affect or
restrict in any way the power of the Company to undertake any corporate action
otherwise permitted under applicable law.

 

5

 

(b)             Neither
the adoption of this Plan nor the granting of any Option shall confer upon any
Participant the right to continue performing services for the Company, nor
shall it interfere in any way with the right of the Company to terminate the
services of any Participant at any time, with or without cause.

 

(c)             No
Participant shall have any rights as a shareholder with respect to any shares
covered by an Option until the date a certificate for such shares has been
issued to the Participant following the exercise of the Option.

 

15.            Securities Law Restrictions.

 

(a)             No
shares of Common Stock shall be issued under this Plan unless the Committee
shall be satisfied that the issuance will be in compliance with applicable
federal and state securities laws.

 

(b)             The
Committee may require certain investment or other representations and
undertakings by the Participant (or other person acquiring the right to
exercise the Option by reason of the death of the Participant) in order to
comply with applicable law.

 

(c)           Certificates
for shares of Common Stock delivered under this Plan may be subject to such
restrictions as the Committee may deem advisable. The Committee may cause a
legend to be placed on the certificates to refer to these restrictions.

 

16.            Employment or Consulting Relationship.   Nothing
in the Plan or any Option granted hereunder shall interfere with or limit in
any way the right of the Company or any of its Parents or Subsidiaries to
terminate any Participant’s employment or consulting at any time, nor confer
upon any Participant any right to continue in the employ of, or consult with,
the Company or any of its Parents or Subsidiaries.

 

17.            Market Standoff.   Each
Participant, if so requested by the Company or any representative of the
underwriters in connection with any registration of the offering of any securities
of the Company under the Securities Act, shall not sell or otherwise transfer
any shares of Common Stock acquired upon exercise of Options during a specified
period following the effective date of a registration statement of the Company
filed under the Securities Act not to exceed six months; provided, however,
that such restriction shall apply only to the first registration statement of
the Company to become effective under the Securities Act after the date of
adoption of the Plan which includes securities to be sold on behalf of the
Company to the public in an underwritten public offering under the Securities
Act. Company may impose stop-transfer instructions with respect to securities
subject to the foregoing restriction until the end of such six month period.

 

18.          Shareholder’s Agreement.   Each Participant who acquires Common
Stock through the exercise of Options, if so requested by the Company, shall
execute a Shareholder’s Agreement which provides for the disposition of the
Common Stock in the event the Participant seeks to dispose of his Common Stock
or incurs a Severance.

 

19.          Indemnification.   To the maximum extent permitted by law,
the Company shall indemnify each member of the Board and of the Committee, as
well as any other Employee of or Key Consultant to the Company with duties
under this Plan, against expenses (including any amount paid in settlement)
reasonably incurred by him or her in connection with any claims

 

6

 

against him or her by
reason of the performance of his or her duties under this Plan, unless the
losses are due to the individual’s gross negligence or lack of good faith.

 

20.          Governing Law.  This Plan and all actions taken thereunder shall be governed by and
construed in accordance with the laws of the State of California. The venue for
any legal proceeding under this Plan will be in the appropriate forum in the
County of Los Angeles, State of California.

 

 

	
  Date: December 15, 2002

  	
  Bidz.com,
  Inc.

  
	
   

  	
  a California Corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ David
  Zinberg

  	
   

  
	
   

  	
   

  	
  David Zinberg, Chief Executive
  Officer,

  President and Chairman of the Board of

  Directors

  

 

7Exhibit 10.3

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (this “Agreement”) is made
as of the 1st day of November 2002, by and between BIDZ.com, Inc., a
California corporation (the “Company”), and David Zinberg, an individual (“Employee”),
and is made with respect to the following facts:

 

R E C I T A L S

 

A.                                   The Company and the Employee wish to
ensure that the Company will receive the benefit of Employee’s loyalty and
service.

 

B.                                     In order to help ensure that the Company
receives the benefit of Employee’s loyalty and service, the parties desire to
enter into this formal Employment Agreement to provide Employee with
appropriate compensation arrangements and to assure Employee of employment
stability.

 

C.                                     The parties have entered into this
Agreement for the purpose of setting forth the terms of employment of the
Employee by the Company.

 

NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, THE PARTIES HERETO AGREE
AS FOLLOWS:

 

1.                                       Employment of Employee and
Duties. The Company
hereby hires Employee and Employee hereby accepts employment upon the terms and
conditions described in this Agreement. The Employee shall continue to be the
Chief Executive Officer and President of the Company with all of the duties,
privileges and authorities usually attendant upon such offices, including but
not limited to responsibility for the day-to-day management and oversight of
the Company and its subsidiaries. Subject to (a) the general supervision
of the Board of Directors of the Company, and (b) the Employee’s duty to
report to the Board of Directors periodically, as specified by it from
time-to-time, Employee shall have all of the authority and discretion in the
conduct of the Company’s business and affairs that can lawfully be delegated by
the Board of Directors.

 

2.                                       Time and Effort. Employee agrees to devote his full working time and
attention to the management of the Company’s business affairs, the
implementation of its strategic plan, as determined by the Board of Directors,
and the fulfillment of his duties and responsibilities as the Company’s primary
representative.  Expenditure of a
reasonable amount of time for personal matters and business and charitable
activities shall not be deemed to be a breach of this Agreement, provided that those
activities do not materially interfere with the services required to be
rendered to the Company under this Agreement.

 

3.                                       The Company’s Authority.  Employee
agrees to comply with the Company’s rules and regulations as adopted by
the Company’s Board of Directors regarding performance of his duties, and to
carry out and perform those orders, directions and policies established by the
Company with respect to his engagement. 
Employee shall promptly notify the Company’s Board of Directors of any
objection he has to the Board’s directives and the reasons for such objection.

 

1

 

4.                                       Term of Agreement.  This Agreement
shall commence to be effective on the date first above written (the “Commencement
Date”), and shall continue until October 31, 2007, unless terminated
sooner as provided in Section 12 hereof. Thereafter, this Agreement shall
be automatically renewed annually unless terminated by either party upon at
least sixty (60) days prior written notice from the anniversary of the
Commencement Date.

 

5.                                       Compensation.  During the
term of this Agreement, the Company shall pay the following compensation to
Employee:

 

5.1                                 Annual Compensation.  Employee shall
be paid a fixed salary of $240,000 per year, payable in two installments per
month on the 15th and last day of each month, commencing on November 15,
2002 for the first period after the Commencement Date of this Agreement.

 

5.2                                 Additional Compensation.  In addition to
the compensation set forth in Sections 5.1 and 5.3 of this Agreement, Employee
may be paid a bonus or bonuses during each year, and may be granted stock
options under the Company’s stock option plan for officers, directors,
employees, and consultants of the Company, as determined at the sole discretion
of the Company’s Board of Directors based on the Board’s evaluation of the
Employee’s definable efforts, accomplishments and similar contributions.

 

5.3                                 Stock Incentives. The Employee may receive stock options to purchase
shares of the Company’s Common Stock pursuant to the Company’s then current
Stock Option Plan for Directors, Executive Officers, Employees, and Consultants
of BIDZ.com, Inc. (the “Plan”), as authorized by resolutions duly adopted
by the Company’s Board of Directors (collectively, the “Resolutions”). The
terms and conditions of the options will be governed by the Plan and the
Resolutions.

 

6.                                       Fringe Benefits.  Employee shall
be entitled to all fringe benefits which the Company or its subsidiaries may
make available from time-to-time for persons with comparable positions and
responsibilities. Without limitation, such benefits shall include participation
in any life and disability insurance programs, profit incentive plans, pension
or retirement plans, and bonus plans as are maintained or adopted from
time-to-time by the Company. The Company shall also provide Employee with
medical group insurance coverage or equivalent coverage for Employee and his
dependents.  The medical insurance
coverage shall begin on the Commencement Date and shall continue throughout the
term of this Agreement.

 

7.                                       Office and Staff.  In order to
enable Employee to discharge his obligations and duties pursuant to this
Agreement, the Company agrees that it shall provide suitable office space for
Employee in the Los Angeles Metropolitan Area, together with all necessary and
appropriate supporting staff and secretarial assistance, equipment, stationery,
books and supplies.  Employee agrees that
the supporting staff presently in place is suitable for the purposes of this
Agreement.  The Company agrees to provide
at its expense parking for one vehicle by the Employee at the Company’s
executive offices.

 

8.                                       Reimbursement of Expenses. The Company shall reimburse Employee for all
reasonable travel, mobile telephone, promotional and entertainment expenses
Incurred in connection with the performance of Employee’s duties hereunder.
Employee’s reimbursable expenses shall be paid promptly by the Company upon
presentment by Employee of an itemized list of invoices describing such expenses.
All compensation provided in

 

2

 

Sections
5, 6, 7, 8 and 9 of this Agreement shall be subject to customary withholding
tax and other employment taxes, to the extent required by law.

 

9.                                       Automobile. Notwithstanding anything else herein to the contrary,
the Company shall pay to the Employee an amount on the last day of each month
during the term of this Agreement, as total reimbursement to the Employee on a
nonaccountable basis of all expenses incurred by the Employee for the use of
his automobile for Company business purposes, including but not limited to
depreciation, repairs, maintenance, gasoline and insurance, equal to the amount
established by a resolution duly adopted by the Company’s Board of Directors
from time to time, but not less than $1,000 per month. The reimbursement will
be $1,000 per month in the absence of such a resolution.  Employee shall not be entitled to any other
reimbursement for the use of his automobile for business purposes.

 

10.                                 Vacation. Employee shall be entitled to three weeks of paid
vacation per year or pro rata portion of each year of service by Employee under
this Agreement.  The Employee shall be
entitled to the holidays provided in the Company’s established corporate policy
for employees with comparable duties and responsibilities.

 

11.                                 Definition of “Cause”.  For the purposes of this Agreement, “termination for
cause” means termination of Employee’s employment by Employer due to (a) Employee’s
conviction of, or the entry of a pleading of guilty or nolo contendre by
Employee to, a felony or crime involving moral turpitude, or (b) Employee’s
failure to comply with any material provision of this Employment Agreement that
results in material damage to the Company, or (c) an act of fraud
committed by Employee against the Company, or (d) a willful act by
Employee as a result of which he receives a material improper personal benefit
at the expense of the Company, or (e) a breach of Employee’s fiduciary
duty to the Company, to the Board of Directors or to the Company’s shareholders
or (f) Employee’s imparting confidential information relating to the Company to
a third party, other than in the course of carrying out the Employee’s duties,
which has resulted in material damage to the Company, provided, that the
circumstances described in subparagraph (b) above are not as a result of
Employee’s death, disability or retirement; and provided further, that the
Employee has been given the written notice specified in this Section and
has failed to cure any defect in performance as specified in such notice.  The Company shall give Employee written notice
specifying the conduct alleged to have constituted such cause and provide
Employee the opportunity to cure such conduct, if curable, within 30 days
following receipt of such notice.

 

12.                                 Termination.  This Agreement
may be terminated in the following manner and not otherwise:

 

12.1                            Mutual Agreement.  This Agreement
may be terminated by the mutual written agreement of the Company and Employee
to terminate.

 

12.2                            Termination by Employee
for Breach.
Employee may at his option and in his sole discretion terminate this Agreement
for the material breach by the Company of the terms of this Agreement (other
than where Employee has first materially breached this Agreement causing
material damage to the Company).  In the
event of such termination, Employee shall give the Company 30 day’s prior
written notice.

 

12.3                            Termination by the Company
for Cause.  The Company may at its option terminate this
Agreement for cause as defined in and only in accordance with Section 11
of this Agreement. In the event of termination by the Company for cause as
defined in Section 11

 

3

 

and
notwithstanding anything else herein to the contrary, the Company shall pay the
Employee any remaining base salary, at the rate then in effect under Section 5.1,
through the effective date of such termination, plus any benefits under other
plans or programs in which the Employee is vested at the time of his
termination, and the Employee shall receive all of the benefits provided in Section 13(iii) of
this Agreement, regardless of the terms and conditions of the Company’s Stock
Option Plan or any existing stock option agreements or any amendments thereto
governing the options described in Sections 5.3 or 13(iii) of this
Agreement.

 

12.4                              Termination Upon Death.  This Agreement
shall terminate upon the death of the Employee.

 

12.5                              Termination Upon the
Disability of the Employee.  This Agreement shall terminate upon the
disability of the Employee. As used in the previous sentence, the term “disability”
shall mean the complete physical and/or mental disability to discharge Employee’s
duties and responsibilities for a continuous period of not less than six months
during any consecutive twelve (12) month period. Any physical or mental
disability which does not prevent Employee from discharging his duties and
responsibilities in accordance with usual standards of conduct as determined by
the Company in its reasonable opinion shall not constitute a disability under
this Agreement.

 

12.6                              Survival of Covenants.  Notwithstanding
anything contained in this Agreement to the contrary and provided that this
Agreement is not terminated pursuant to Section 13 herein, the covenants
of Employee contained in Section 15, Section 16 and Section 17
of this Agreement shall survive the term of this Agreement (as specified in Section 4
hereof) or Employee’s termination of his employment relationship with the
Company, in each case as specified further in such covenants.

 

13.                                 Improper Termination.  If this
Agreement is terminated by Employee for any reason pursuant to Section 12.2
of this Agreement or by the Company except in accordance with Section 12.1
or 12.3 or except if this Agreement is terminated pursuant to Section 12.4
or 12.5 herein, then (i) the Company shall immediately pay to the Employee
a lump sum payment equal to the sum of the Employee’s entire remaining annual
compensation and accrued but unpaid bonus (if any, with respect to bonus)
payable through the end of the term of this Agreement pursuant to Sections 5.1
and 5.2 herein, respectively, (ii) Employee shall be entitled to all of
the benefits under Sections 6 and 9 of this Agreement, as amended, through the
end of the term of this Agreement (provided, that to the extent that the
Company cannot provide Employee with equivalent benefits at the cost then being
paid by the Company, then the Company shall pay to Employee for such period the
premiums then payable by the Company with respect to the provision of such
benefits), and (iii) all unvested stock options owned by Employee will
immediately vest, Employee shall be entitled to exercise all vested stock
options which he owns for the entire remaining exercise period of the stock
options as set forth in Section 5.3 of this Agreement, no such stock
options shall terminate prior to said expiration dates, and no “severance”
shall be deemed to have occurred under the Company’s Stock Option Plan or under
existing Stock Option Agreements covering said stock options.  It is specifically agreed that in such event
Employee shall have no duty to mitigate his damages by seeking comparable,
inferior or different employment.

 

14.                                 Indemnification of
Employee.  Upon the execution of this Agreement, the
Company and the Employee agree to enter into an agreement, a copy of which is
attached as Exhibit A, to indemnify the Employee for, among other things,
certain expenses (including attorneys’ fees), judgments, fines, and settlement
amounts incurred by the Employee in any

 

4

 

action
or proceeding, including any action by or in the right of the Company, arising
out of the Employee’s services as a director or officer of the Company, any
subsidiary of the Company or any other Company or enterprise to which the
Employee provides services at the request of the Company.

 

15.                                 Noncompetition by Employee.  Employee
agrees that during the term of this Agreement, Employee will not directly or
indirectly, whether (a) as employee, agent, consultant, employer,
principal, partner, officer or director; (b) holder of five percent or
more of any class of equity securities or five percent or more of the aggregate
principal amount of any class of equity securities or five percent or more of
the aggregate principal amount of any class of debt, notes or bonds of a
company with publicly traded equity securities; or (c) in any other
individual or representative capacity whatsoever, in each case for his own
account or the account of any other person or entity, engage in any business or
trade competing with the business or trade of the Company anywhere in the world
in which the Company is then carrying on such trade or business.

 

16.                                 Confidential Information;
Nondisclosure Covenant.

 

16.1.                          Confidential Information. As used herein the term “Confidential Information”
shall mean all customer and contract lists, records, financial data, trade
secrets, business and marketing plans and studies, manuals for employee and
personnel policies, manufacturing and/or production manuals, computer programs
and software, strategic plans, formulas, manufacturing and production processes
and techniques (including without limitation types of machinery and equipment
used together with improvements and modifications thereon), tools, applications
for patents, designs, models, patterns, drawings, tracings, sketches,
blueprints, and all other similar information developed and/or used by Company
in the course of its business and which is not known by or readily available to
the general public.

 

16.2                              Nondisclosure Covenant.  Employee
acknowledges that, in the course of performing services for and on behalf of
the Company, Employee has had and will continue to have access to Confidential
Information. Employee hereby covenants to maintain in strictest confidence all
Confidential Information in trust for the Company, its successors and assigns.
During the period of Employee’s employment with the Company and at all times
following Employee’s termination of employment for any reason, including
without limitation Employee’s voluntary resignation or involuntary termination
with or without cause, Employee agrees to not misappropriate, or disclose or
make available to anyone outside the Company’s organization, any Confidential
Information without the prior written consent of the Company, which consent may
be withheld by the Company for any reason or no reason at all.

 

16.3                              Return of Property.  Upon Employee’s
termination of his employment with the Company for any reason, including
without limitation Employee’s voluntary resignation or involuntary termination
with or without cause, Employee hereby agrees to promptly return to Company’s
possession all copies of any writings, computer discs or equipment, drawings or
any other information relating to Confidential Information which are in
Employee’s possession or control.  Employee further agrees that, upon the request
of the Company at any time during Employee’s period of employment with the
Company, Employee shall promptly return to the Company all such copies of
writings, computer discs or equipment, drawings or any other information
relating to Confidential Information which are in
Employee’s possession or control.

 

16.4.                           Rights to Inventions and Trade Secrets. Employee hereby assigns to the Company all right,
title and interest in and to any ideas, inventions, original works or

 

5

 

authorship,
developments, improvements or trade secrets which Employee solely or jointly
has conceived or reduced to practice, or will conceive or reduce to practice,
or cause to be conceived or reduced to practice during his employment with the
Company. All original works of authorship which are made by Employee (solely or
jointly with others) within the scope of Employee’s services hereunder and
which are protectable by copyright are “works made for hire,” as that term is
defined in the United States Copyright Act.

 

17.                                 Noninterference and
Nonsolicitation Covenants.  In further reflection of the Company’s important
interests in its proprietary information on trade and employee relationships,
Employee agrees that, (a) during the 24 month period following the
termination of Employee’s employment with the Company “for cause” or as a
result of his voluntary resignation before the end of the term of this
Agreement under circumstances where the Company is not in breach of this
Agreement and has not caused an improper termination under Section 13, of
this Agreement, Employee will not directly or indirectly, for or on behalf of
any person, firm, corporation or other entity, interfere with any contractual
or other business relationships that the Company has with any of its customers,
clients, service providers or materials suppliers as of the date of Employee’s
termination of employment, and (b) during the 24 month period following
the termination of Employee’s employment with the Company “for cause” or as a
result of his voluntary resignation before the end of the term of this
Agreement under circumstances where the Company is not in breach of this
Agreement and has not caused an improper termination under Section 13 of
this Agreement, Employee will not directly or indirectly solicit or induce any
employee of the Company to terminate his/her employment relationship with
Company.

 

18.                                 Assignability of Benefits.  Except to the
extent that this provision may be contrary to law, no assignment, pledge,
collateralization or attachment of any of the benefits under this Agreement
shall be valid or recognized by the Company. Payment provided for by this
Agreement shall not be subject to seizure for payment of any debts or judgments
against the Employee, nor shall the Employee have any right to transfer,
modify, anticipate or encumber any rights or benefits hereunder; provided that
any stock issued by the Company to the Employee pursuant to this Agreement
shall not be subject to Section 18 of this Agreement.

 

19.                                 Notice. Except as otherwise specifically provided, any
notices to be given hereunder shall be deemed given upon personal delivery, air
courier or mailing thereof, if mailed by certified mail, return receipt
requested, to the following addresses (or to such other address or addresses as
shall be specified in any notice given):

 

In case of the Company:

 

BIDZ.com, Inc.

3562 Eastham Drive

Culver City, California 90232

Attention: Chairman of the Board of Directors

 

Telephone No.: (310) 280-7373

Facsimile No.: (310) 280-7377

 

In case of the Employee:

 

David Zinberg

The address listed below Mr. Zinberg’s

signature to this Agreement.

 

6

 

20.                                 Attorneys’ Fees.  In the event
that any of the parties must resort to legal action in order to enforce the
provisions of this Agreement or to defend such suit, the prevailing party shall
be entitled to receive reimbursement from the nonprevailing party for all
reasonable attorneys’ fees and all other costs incurred in commencing or
defending such suit.

 

21.                                 Recourse.  Employee’s
recourse for any liability, claims, damages, losses, expenses, judgments or
settlements shall be limited to the assets of the Company. Employee shall have
no recourse against any individual officer, director, or employee of the
Company.

 

22.                                 Entire Agreement.  This Agreement
embodies the entire understanding among the parties and merges all prior
discussions or communications among them, and no party shall be bound by any
definitions, conditions, warranties, or representations other than as expressly
stated in this Agreement or as subsequently set forth in a writing signed by
the duly authorized representatives of all of the parties hereto.

 

23.                                 No Oral Change; Amendment.  This Agreement
may only be changed or modified and any provision hereof may only be waived by
a writing signed by the party against whom enforcement of any waiver, change or
modification is sought.  This Agreement
may be amended only in writing by mutual consent of the parties.

 

24.                                 Severability.  In the event
that any provision of this Agreement shall be void or unenforceable for any
reason whatsoever, then such provision shall be stricken and of no force and
effect.  The remaining provisions of this
Agreement shall, however, continue in full force and effect, and to the extent
required, shall be modified to preserve their validity.

 

25.                                 Applicable Law.  This Agreement
shall be construed as a whole and in accordance with its fair meaning, This
Agreement shall be interpreted in accordance with the laws of the State of Los
Angeles, and venue for any action or proceedings brought with respect to this
Agreement shall be in the County of Los Angeles in the State of California.

 

26.                                 Successors and Assigns.  Each covenant
and condition of this Agreement shall inure to the benefit of and be binding
upon the parties hereto, their respective heirs, personal representatives,
assigns and successors in interest.  Without limiting the generality of the
foregoing sentence, this Agreement shall be binding upon any successor to the
Company whether by merger, reorganization or otherwise.

 

27.                                 Injunctive Remedy.  In the case of
any breach or threatened breach by Employee of any of his covenants or
obligations under Sections 15, 16 and/or 17, the parties hereto agree that
damages may not be an adequate remedy for the Company and that, in the event of
any such breach or threatened breach, the Company may, either with or without
pursuing any potential damage remedies, immediately obtain and enforce an
injunction prohibiting Employee from committing or continuing to commit such
breach or threatened breach.

 

7

 

28.                                 Counterparts.  This Agreement
may be executed in two counterparts, each of which may be deemed an original,
but both of which together shall constitute one and the same agreement.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.

 

	
  COMPANY:

  	
  BIDZ.COM,
  INC., a
  California corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David Zihberg

  
	
   

  	
   

  	
  David Zihberg, President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Attest:

  
	
   

  	
   

  
	
   

  	
  /s/ Lawrence Kong

  
	
   

  	
  Lawrence Kong,
  Chief Financial Officer

  
	
   

  	
   

  
	
  EMPLOYEE:

  	
  /s/ David
  Zinberg

  
	
   

  	
  David Zinberg

  
	
   

  	
   

  
	
   

  	
  26740 Via Linda

  
	
   

  	
  Street Address

  
	
   

  	
   

  
	
   

  	
  Malibu, CA 90265

  
	
   

  	
  City, State and
  Zip Code

  
	
   

  	
   

  
	
   

  	
  310.457-5706

  
	
   

  	
  Telephone Number

  
	
   

  	
   

  
	
   

  	
  310.280.7378

  
	
   

  	
  Facsimile Number

  

 

8

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