EXHIBIT 10.5 - Xxxxxxx Employment Contract
EMPLOYMENT AGREEMENT
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This Employment Agreement (this "Agreement"), dated April 22, 2004, is between
PPOL, Inc., a California corporation (the "Company") and Xxxxx X. Xxxxxxx, an
individual residing in Montara, California ("Executive").
1. POSITION AND RESPONSIBILITIES
a. POSITION. Executive is employed by the Company to render services to
the Company in the position of President. Executive shall perform such duties
and responsibilities as are normally related to such position in accordance with
the standards of the industry and any additional duties now or hereafter
assigned to Executive by the Company. Executive shall abide by the rules,
regulations, and practices as adopted or modified from time to time in the
Company's sole discretion. Executive shall report directly to the Chairman and
CEO of the Company.
b. OTHER ACTIVITIES. Except upon the prior written consent of the
Company, Executive will not, during the term of this Agreement, (i) accept any
other employment, or (ii) engage, directly or indirectly, in any other business
activity (whether or not pursued for pecuniary advantage) that might interfere
with Executive's duties and responsibilities hereunder or create a conflict of
interest with the Company.
c. NO CONFLICT. Executive represents and warrants that Executive's
execution of this Agreement, Executive's employment with the Company, and the
performance of Executive's proposed duties under this Agreement shall not
violate any obligations Executive may have to any other employer, person or
entity, including any obligations with respect to proprietary or confidential
information of any other person or entity.
2. COMPENSATION AND BENEFITS
a. BASE SALARY. In consideration of the services to be rendered under
this Agreement, the Company shall pay Executive a salary at the rate of One
Hundred Fifty Six Thousand Dollars ($156,000.00) per year ("Base Salary"). The
Base Salary shall be paid in accordance with the Company's regularly established
payroll practice. At any time, Executive may present to the Company research
showing the the current average base salaries paid to the presidents of similar
sized companies in the San Francisco Bay Area that are in similar industries to
the Company. Executive's Base Salary will be reviewed based on the results of
the research and may be adjusted in the sole discretion of the Company to be
comparable to that of the presidents of such similar companies. In addition,
upon the Company being initially listed on The NASDAQ National Market (the
"NASDAQ Listing") and thereafter, the Base Salary shall be adjusted to the rate
of Two Hundred Fifty Six Thousand Dollars ($256,000.00) per year.
b. BONUSES. The Company shall pay the following bonuses to Executive:
(i) a bonus in an amount equal to five percent (5%) of the aggregate amount of
debt and equity capital actually raised by the Company from the date hereof
through August 31, 2004, payable within 30 days after the Company has received
the proceeds of such debt or equity (Executive may, at his discretion, allocat a
portion of such bonus to other employees of the Company designated by Executive,
in which case, the bonus payable to Executive hereunder shall be reduced by a
like amount); and (ii) a one-time bonus in the fixed amount of Seventy Five
Thousand Dollars ($75,000.00) at the time of the NASDAQ Listing.
c. STOCK OPTIONS. The Company shall recommend to the Board of Directors
that Executive be provided with an option to purchase 716,000 shares of the
Common Stock of the Company. This recommendation will be considered for approval
at the Company's next Board of Directors' meeting. The price per share of any
approved options will be determined at that meeting. Executive's entitlement to
any stock options that may be approved is conditioned upon Executive's signing
of the Stock Option Agreement and is subject to its terms and the terms of the
Stock Option Plan under which the options are granted, including vesting
requirements. The options shall be subject to vesting as follows:
Date Shares Vested
June 30, 2004 44,750
September 30, 2004 44,750
December 31, 2004 44,750
March 31, 2005 223,750
March 31, 2006 358,000
Within 30 days after March 31, 2006, the Board of directors shall consider, in
good faith, additional stock option grants to the Executive as part of the
Executive's continuing compensation.
In the event that there is a 50% or greater change in ownership of the Company,
then all of the Executive's stock options shall vest immediately upon the change
in ownership.
d. BENEFITS. Executive shall be eligible to participate in the benefits
made generally available by the Company to similarly-situated Executives, in
accordance with the benefit plans established by the Company, and as may be
amended from time to time in the Company's sole discretion. Such benefits shall
include, at a minimum, a health and medical insurance plan.
e. EXPENSES. The Company shall reimburse Executive for reasonable
business expenses incurred in the performance of Executive's duties hereunder in
accordance with the Company's expense reimbursement guidelines.
f. DIRECTORS AND OFFICERS INSURANCE. The Company shall obtain and
maintain directors' and officers' insurance coverage in amounts and on terms and
conditions determined by the Company in good faith to be sufficient and
reasonable, taking into account such factors as the cost and availability of
such insurance, industry standards, etc.
3. AT-WILL EMPLOYMENT; TERMINATION BY COMPANY
a. AT-WILL TERMINATION BY COMPANY. The employment of Executive shall be
"at-will" at all times. The Company may terminate Executive's employment with
the Company at any time, without any advance notice, for any reason or no reason
at all, notwithstanding anything to the contrary contained in or arising from
any statements, policies or practices of the Company relating to the employment,
discipline or termination of its employees. Upon and after such termination, all
obligations of the Company under this Agreement shall cease.
x. XXXXXXXXX. Except in situations where the employment of Executive is
terminated For Cause, By Death or By Disability (as defined in Section 4 below),
in the event that the Company terminates the employment of Executive at any
time, Executive will be eligible to receive an amount equal to four months of
the then-current Base Salary of the Executive payable in the form of salary
continuation. Such Severance shall be reduced by any remuneration paid to
Executive because of Executive's employment or self-employment during the
severance period, and Executive shall promptly report all such remuneration to
the Company in writing. Executive's eligibility for severance is conditioned on
Executive having first signed a release agreement releasing any and all claims
Executive may have against the Company and its directors, officers,
shareholders, employees and other agents and representatives, in form acceptable
to the Company. Executive shall not be entitled to any severance payments if
Executive's employment is terminated For Cause, By Death or By Disability (as
defined in Section 4 below) or if Executive's employment is terminated by
Executive (in accordance with Section 5 below).
4. OTHER TERMINATIONS BY COMPANY
a. TERMINATION FOR CAUSE. For purposes of this Agreement, "For Cause"
shall mean: (i) Executive commits a crime involving dishonesty, breach of trust,
or physical harm to any person; (ii) Executive willfully engages in conduct that
is in bad faith and materially injurious to the Company, including but not
limited to, misappropriation of trade secrets, fraud or embezzlement; (iii)
Executive commits a material breach of this Agreement, which breach is not cured
within twenty days after written notice to Executive from the Company; (iv)
Executive willfully refuses to implement or follow a lawful policy or directive
of the Company, which breach is not cured within twenty days after written
notice to Executive from the Company; (v) Executive engages in misfeasance or
malfeasance demonstrated by a pattern of failure to perform job duties
diligently and professionally; (vi) the failure of the Company to raise equity
capital of at least $4,000,000 by August 31, 2004; or (vii) the failure of the
Company to achieve the NASDAQ Listing by April 30, 2005. The Company may
terminate Executive's employment For Cause at any time, without any advance
notice. The Company shall pay to Executive all compensation to which Executive
is entitled up through the date of termination, subject to any other rights or
remedies of Employer under law; and thereafter all obligations of the Company
under this Agreement shall cease.
b. BY DEATH. Executive's employment shall terminate automatically upon
Executive's death. The Company shall pay to Executive's beneficiaries or estate,
as appropriate, any compensation then due and owing. Thereafter all obligations
of the Company under this Agreement shall cease. Nothing in this Section shall
affect any entitlement of Executive's heirs or devisees to the benefits of any
life insurance plan or other applicable benefits.
c. BY DISABILITY. If Executive becomes eligible for the Company's long
term disability benefits or if, in the sole opinion of the Company, Executive is
unable to carry out the responsibilities and functions of the position held by
Executive by reason of any physical or mental impairment for more than ninety
consecutive days or more than one hundred and twenty days in any twelve-month
period, then, to the extent permitted by law, the Company may terminate
Executive's employment. The Company shall pay to Executive all compensation to
which Executive is entitled up through the date of termination, and thereafter
all obligations of the Company under this Agreement shall cease. Nothing in this
Section shall affect Executive's rights under any disability plan in which
Executive is a participant.
5. TERMINATION BY EXECUTIVE
a. AT-WILL TERMINATION BY EXECUTIVE. Executive may terminate employment
with the Company at any time for any reason or no reason at all, upon four
weeks' advance written notice. During such notice period Executive shall
continue to diligently perform all of Executive's duties hereunder. The Company
shall have the option, in its sole discretion, to make Executive's termination
effective at any time prior to the end of such notice period as long as the
Company pays Executive all compensation to which Executive is entitled up
through the last day of the four week notice period. Thereafter all obligations
of the Company shall cease.
6. TERMINATION OBLIGATIONS
a. RETURN OF PROPERTY. Executive agrees that all property (including
without limitation all equipment, tangible proprietary information, documents,
records, notes, contracts and computer-generated materials) furnished to or
created or prepared by Executive incident to Executive's employment belongs to
the Company and shall be promptly returned to the Company upon termination of
Executive's employment.
b. RESIGNATION AND COOPERATION. Upon termination of Executive's
employment, Executive shall be deemed to have resigned from all offices and
directorships then held with the Company. Following any termination of
employment, Executive shall cooperate with the Company in the winding up of
pending work on behalf of the Company and the orderly transfer of work to other
employees. Executive shall also cooperate with the Company in the defense of any
action brought by any third party against the Company that relates to
Executive's employment by the Company.
7. INVENTIONS AND PROPRIETARY INFORMATION; PROHIBITION ON THIRD PARTY
INFORMATION
a. PROPRIETARY INFORMATION AGREEMENT. Executive agrees to sign and be
bound by the terms of the Proprietary Information and Inventions Agreement,
which is attached as Exhibit A ("Proprietary Information Agreement").
b. NON-SOLICITATION. Executive acknowledges that because of Executive's
position in the Company, Executive will have access to material intellectual
property and confidential information. During the term of Executive's employment
and for one year thereafter, in addition to Executive's other obligations
hereunder or under the Proprietary Information Agreement, Executive shall not,
for Executive or any third party, directly or indirectly (a) divert or attempt
to divert from the Company any business of any kind, including without
limitation the solicitation of or interference with any of its customers,
clients, members, business partners or suppliers, or (b) solicit or otherwise
induce any person employed by the Company to terminate his employment.
c. NON-DISCLOSURE OF THIRD PARTY INFORMATION. Executive represents and
warrants and covenants that Executive shall not disclose to the Company, or use,
or induce the Company to use, any proprietary information or trade secrets of
others at any time, including but not limited to any proprietary information or
trade secrets of any former employer, if any; and Executive acknowledges and
agrees that any violation of this provision shall be grounds for Executive's
immediate termination and could subject Executive to substantial civil
liabilities and criminal penalties. Executive further specifically and expressly
acknowledges that no officer or other employee or representative of the Company
has requested or instructed Executive to disclose or use any such third party
proprietary information or trade secrets.
8. ARBITRATION
Executive agrees to sign and be bound by the terms of the Arbitration Agreement,
which is attached as Exhibit B.(1)
9. AMENDMENTS; WAIVERS; REMEDIES
This Agreement may not be amended or waived except by a writing signed by
Executive and by a duly authorized representative of the Company other than
Executive. Failure to exercise any right under this Agreement shall not
constitute a waiver of such right. Any waiver of any breach of this Agreement
shall not operate as a waiver of any subsequent breaches. All rights or remedies
specified for a party herein shall be cumulative and in addition to all other
rights and remedies of the party hereunder or under applicable law.
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(1) SEE Section III.G of this binder for an example of an arbitration agreement.
10. ASSIGNMENT; BINDING EFFECT
a. ASSIGNMENT. The performance of Executive is personal hereunder, and
Executive agrees that Executive shall have no right to assign and shall not
assign or purport to assign any rights or obligations under this Agreement. This
Agreement may be assigned or transferred by the Company; and nothing in this
Agreement shall prevent the consolidation, merger or sale of the Company or a
sale of any or all or substantially all of its assets.
b. BINDING EFFECT. Subject to the foregoing restriction on assignment
by Executive, this Agreement shall inure to the benefit of and be binding upon
each of the parties; the affiliates, officers, directors, agents, successors and
assigns of the Company; and the heirs, devisees, spouses, legal representatives
and successors of Executive.
11. NOTICES
All notices or other communications required or permitted hereunder shall be
made in writing and shall be deemed to have been duly given if delivered: (a) by
hand; (b) by a nationally recognized overnight courier service; or (c) by United
States first class registered or certified mail, return receipt requested, to
the principal address of the other party, as set forth below. The date of notice
shall be deemed to be the earlier of (i) actual receipt of notice by any
permitted means, or (ii) five business days following dispatch by overnight
delivery service or the United States Mail. Executive shall be obligated to
notify the Company in writing of any change in Executive's address. Notice of
change of address shall be effective only when done in accordance with this
paragraph.
Company's Notice Address:
0 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxx, XX 00000
Executive's Notice Address:
Xxxxx X. Xxxxxxx
XX Xxx 000000
Xxxxxxx, XX 00000 USA_________________________________________
______________________________________________________________
12. SEVERABILITY
If any provision of this Agreement shall be held by a court or arbitrator to be
invalid, unenforceable, or void, such provision shall be enforced to the fullest
extent permitted by law, and the remainder of this Agreement shall remain in
full force and effect. In the event that the time period or scope of any
provision is declared by a court or arbitrator of competent jurisdiction to
exceed the maximum time period or scope that such court or arbitrator deems
enforceable, then such court or arbitrator shall reduce the time period or scope
to the maximum time period or scope permitted by law.
13. TAXES
All amounts paid under this Agreement (including without limitation Base Salary
and Severance) shall be paid less all applicable state and federal tax
withholdings and any other withholdings required by any applicable jurisdiction.
14. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the laws of
the State of California.
15. INTERPRETATION
This Agreement shall be construed as a whole, according to its fair meaning, and
not in favor of or against any party. Sections and section headings contained in
this Agreement are for reference purposes only, and shall not affect in any
manner the meaning or interpretation of this Agreement. Whenever the context
requires, references to the singular shall include the plural and the plural the
singular.
16. OBLIGATIONS SURVIVE TERMINATION OF EMPLOYMENT
Executive agrees that any and all of Executive's obligations under this
agreement, including but not limited to Exhibits B and C, shall survive the
termination of employment and the termination of this Agreement.
17. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original of this Agreement, but all of which together shall
constitute one and the same instrument.
18. AUTHORITY
Each party represents and warrants that such party has the right, power and
authority to enter into and execute this Agreement and to perform and discharge
all of the obligations hereunder; and that this Agreement constitutes the valid
and legally binding agreement and obligation of such party and is enforceable in
accordance with its terms.
19. ENTIRE AGREEMENT
This Agreement is intended to be the final, complete, and exclusive statement of
the terms of Executive's employment by the Company and may not be contradicted
by evidence of any prior or contemporaneous statements or agreements, except for
agreements specifically referenced herein (including the Executive Proprietary
Information and Inventions Agreement attached as Exhibit B, the Arbitration
Agreement attached as Exhibit C, and the Stock Plan and Stock Option Agreement
of the Company). To the extent that the practices, policies or procedures of the
Company, now or in the future, apply to Executive and are inconsistent with the
terms of this Agreement, the provisions of this Agreement shall control. Any
subsequent change in Executive's duties, position, or compensation will not
affect the validity or scope of this Agreement.
20. EXECUTIVE ACKNOWLEDGEMENT
EXECUTIVE ACKNOWLEDGES EXECUTIVE HAS HAD THE OPPORTUNITY TO CONSULT LEGAL
COUNSEL CONCERNING THIS AGREEMENT, THAT EXECUTIVE HAS READ AND UNDERSTANDS THE
AGREEMENT, THAT EXECUTIVE IS FULLY AWARE OF ITS LEGAL EFFECT, AND THAT EXECUTIVE
HAS ENTERED INTO IT FREELY BASED ON EXECUTIVE'S OWN JUDGMENT AND NOT ON ANY
REPRESENTATIONS OR PROMISES OTHER THAN THOSE CONTAINED IN THIS AGREEMENT.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
first written above.
PPOL, INC.: EXECUTIVE:
By: Xxxxx Xxxxxx By: /s/ Xxxxx Xxxxxxx
Title: CEO
