EXHIBIT 10.4
EMPLOYMENT AGREEMENT
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This Employment Agreement (the "Agreement") is made and entered into
effective as of the 30th day of September, 1997, by and between GeoCities, a
California corporation, whose address is 0000 Xxxx Xxxxxx, 0xx Xxxxx, Xxxxx
Xxxxxx, Xxxxxxxxxx 00000-0000 (the "Company"), and Xxxxxxx X. Xxxxxxx, whose
address is 000 Xxxxxxxxx Xxxxxx, Xxxxxx Xxxxxx, Xxx Xxxx 00000 ("Employee").
1. Employment.
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1.1 The Company hereby agrees to employ Employee, and Employee hereby
accepts such employment, on the terms and conditions set forth herein,
commencing September 30, 1997 (the "Effective Date"), and continuing
through September 30, 1998 (such period, the "Term"), unless terminated
earlier as provided in Section 4 below.
2. Duties of Employee.
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2.1 Employee shall serve as the Company's Vice President, Advertising
Sales. In this capacity, Employee shall perform such customary,
appropriate and reasonable duties as are usually performed by a Vice
President of Advertising Sales, including such duties as may be
reasonably delegated to him from time to time by the Board of Directors
of the Company (the "Board") and/or the Chief Executive Officer of the
Company. Employee shall report directly to the Company's Chief
Executive Officer and shall be based at the Company's East Coast
advertising office in the greater New York, New York Metropolitan Area.
Employee's duties will require him to travel regularly to the Company's
headquarters in Los Angeles.
2.2 Employee agrees to devote Employee's full time, attention, skill and
efforts to the performance of his duties for the Company during the
Term.
2.3 This Agreement shall not be interpreted to prohibit Employee from
making passive personal investments or managing the business affairs of
Employee's family if those activities are not in competition with those
of the Company and do not materially interfere with the services
required under this Agreement.
3. Compensation and Other Benefits.
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3.1 Base Salary. During the Term, the Company shall pay to Employee a base
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salary of Two Hundred Thousand Dollars ($200,000) (the "Base Salary"),
payable at the rate of Sixteen Thousand Six Hundred Sixty-Six and
67/100 Dollars ($16,666.67) per month, with payments to be made in
accordance with the Company's standard payment policy and subject to
such withholding as may be required by law.
3.2 Bonus. During the Term, the Company shall also pay to Employee a cash
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bonus in an amount equal to Twenty-Five Thousand Dollars ($25,000) (the
"Annual Bonus"), less withholdings required by law, payable on the last
business day of December, March, June and September during the Term.
Employee shall not be eligible to receive any unpaid Annual Bonus
amount if his employment hereunder is terminated pursuant to either
Section 4.1 or Section 4.2, or if he voluntarily quits.
3.3 Commission. Employee shall also be eligible to receive commissions
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based on Net Revenues generated by the Company during the Term of
Employee's employment under this Agreement and actually collected by
the Company in the time period described below. As used herein, "Net
Revenues" shall mean, subject to the last paragraph of this Section
3.3, the net revenues generated by the Company from all categories of
revenue during the Term as set forth on the Company's Statement of
Operations, less the sum of all interest income and other income from
passive investments, and shall be net of (i) all agency and third-party
commissions and (ii) all refunds paid by the Company. Employee shall be
entitled to receive:
(a) a commission equal to One and One-Half Percent (1 1/2%) of Net
Revenues generated by the Company between September 30, 1997, and
September 30, 1998, up to Ten Million Dollars ($10,000,000) in Net
Revenues; provided, that Employee remains employed by the Company
during the Term;
(b) a commission equal to Two Percent (2%) of Net Revenues in excess
of Ten Million Dollars ($10,000,000) and up to Twenty Million
Dollars ($20,000,000) generated by the Company during the same
period; provided, that Employee remains employed by the Company
during the Term; and
(c) a commission equal to Two and One-Half Percent (2 1/2%) of Net
Revenues in excess of Twenty Million Dollars ($20,000,000)
generated by the Company during the same period; provided, that
Employee remains employed by the Company during the Term.
Commissions under this Section 3.3 shall be payable on the last
business day of February, May, August and October 1998. Notwithstanding
anything to the contrary that may be contained elsewhere in this
Agreement, if Employee, at any time during the Term ceases to be
responsible for managing any category or categories of revenue which
constitute Net Revenues, then, as of the date on which Employee ceases
to be responsible for managing such category or categories, any
revenues generated by the Company within such category or categories
from such date going forward shall not constitute Net Revenues. Also
notwithstanding anything to the contrary that may be contained
elsewhere in this Agreement, no commissions shall be payable under this
Section 3.3 unless and until the Net Revenues which would result in
such commissions have been
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actually collected by the Company. Any revenues which would otherwise
qualify as Net Revenues which are not collected within 120 days
following September 30, 1998, shall not be considered to be Net
Revenues for purposes of this Agreement and no commissions shall be
payable with respect to such revenue. Employee shall not be eligible to
receive any unpaid commission if his employment hereunder is terminated
pursuant to either Section 4.1 or Section 4.3, or if he voluntarily
quits.
3.4 Vacation. Employee shall be entitled to a maximum of up to fifteen
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(15) days of paid vacation during each 12-month period during the Term.
Vacation shall accrue at a rate of 1.25 days per month, up the maximum
number of accrued vacation days allowable under the Company's standard
policy regarding the accrual of vacation.
3.5 Other Benefits. During the Term, Employee shall be entitled to
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receive all group life, health, medical, dental or disability
insurance or other employee, health and welfare benefits made
available generally to other officers of the Company, when and as
Employee becomes eligible therefor.
3.6 Business Expenses. The Company shall promptly reimburse Employee for
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all reasonable and necessary business expenses incurred by Employee in
connection with the business of the Company and the performance of his
duties under this Agreement, subject to Employee providing the Company
with reasonable documentation thereof.
3.7 Option Grants. Employee shall be considered, subject to the sole
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discretion of the Board, for stock option grants under the Company's
stock option plan(s) or any other available equity incentive plan of
the Company.
4. Termination.
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4.1 Termination for Cause.
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(a) The Company may terminate Employee's employment with the Company
pursuant to this Agreement "for cause" as follows: (1) if Employee
is convicted of (A) a felony or (B) other serious crime that
causes material harm to the Company; (2) for Employee's gross
negligence, or willful misconduct in the performance of his duties
for the Company; (3) for Employee's willful dishonesty towards or
fraud upon, or deliberate injury or attempted injury to, the
Company or (4) for a material breach by Employee of any other
agreement between the Company and Employee.
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(b) The Company may terminate this Agreement immediately for any of
the reasons stated in Section 4.1(a) by giving written notice to
Employee without prejudice to any other remedy to which the
Company may be entitled. The notice of termination shall specify
the grounds for termination. If Employee's employment hereunder
is terminated "for cause" pursuant to this Section 4.1., Employee
shall be entitled to receive hereunder his accrued but unpaid
Base Salary, and reimbursement for any expenses as set forth in
Section 3.5, through the date of termination only, and shall not
be entitled to receive any unpaid commission pursuant to Section
3.3 or any unpaid portion of the Annual Bonus pursuant to Section
3.2 or any other amount.
4.2 Termination Without Cause. Subject to Section 4.3, the Company may,
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in its sole discretion, terminate Employee's employment with the
Company pursuant to this Agreement for any reason (not including those
reasons set forth in Sections 4.1 and 5), or, for no reason (any such
termination shall be deemed to be "without cause"), by giving written
notice to Employee at least thirty (30) days in advance.
4.3 Severance Payments and Other Benefits Upon Termination Without Cause.
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(a) If the Company (i) terminates employee's employment hereunder
without cause or (ii) terminates Employee's employment hereunder
at the expiration of the Term, (A) the Company shall pay to
Employee a severance payment in an amount equal to six (6) months
of his Base Salary, payable in accordance with the Company's
standard payment policy, and subject to withholding as may be
required by law, and (B) the vesting of Employee's stock options
to purchase up to 70, 000 shares of the Company's Stock granted
on the date hereof (as adjusted for stock splits and reverse
stock splits) (the "70,000 Share Option") shall immediately be
accelerated such that Employees shall, in addition to any
previously vested option shares thereunder, become vested in the
number of option shares thereunder that Employee would have
vested in had he remained employed through the next annual
vesting date.
(b) If the Company or any successor in interest to the Company, or
assignee of the Company, within twelve (12) months following a
Change of Control (as defined below), terminates Employee's
employment hereunder without cause (i) the Company or such
successor or assignee shall pay to Employee a severance payment
in an amount equal to six (6) months of his Base Salary, payable
in accordance with the same schedule theretofore followed by the
Company, and subject to withholding as may be required by law,
and (ii) in addition to any option shares previously vested
thereunder (not including pursuant to Section 4.3(a)), the
vesting of Employee's 70,000 Share Option shall be accelerated
such that Employee shall become immediately vested in (A) the
number of option shares thereunder that Employee would have
vested in had he remained employed with the Company through the
end of the then-current month
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(assuming monthly vesting of the 70,000 Share Option), plus (B) the
number of option shares thereunder that Employee would have vested in
had he remained employed with the Company for the immediately
succeeding twelve (12) month period (assuming monthly vesting of the
70,000 Share Option).
4.4 Voluntary Termination by Employee. Employee shall have the right to
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voluntarily terminate his employment hereunder upon thirty (30) days
advance written notice.
5. Death or Disability.
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5.1 This Agreement shall terminate automatically upon the Employee's death.
If Employee's employment hereunder is terminated pursuant to this
Section 5.1, the Company shall pay to Employee's estate (i) all accrued
and unpaid Base Salary, prorated through the date of the Employee's
death and, (ii) all accrued and unpaid commissions pursuant to Section
3.3, prorated through the date of the Employee's death and (iii)
Employee's Annual Bonus, prorated through the date of Employee's death.
Employee's estate shall also be reimbursed for all business expenses
pursuant to Section 3.5 previously incurred by Employee.
5.2 In the event that Employee, because of an accident, disability or
physical or mental illness, is incapable of performing his duties
hereunder, the Company shall have the right to terminate Employee's
employment hereunder upon thirty (30) days prior written notice to
Employee. For purposes of this Section 5.2, Employee shall be deemed to
have become incapable of performing his duties hereunder if the Board,
in its good faith judgement, shall determine that Employee is, by
reason of any medically-diagnosed physical or mental impairment,
expected to result in death or to be of continuous duration of not less
than six (6) consecutive months, unable to perform his usual duties for
the Company. If Employee's employment hereunder is terminated pursuant
to this Section 5.2, the Company shall pay to Employee, all accrued and
unpaid Base Salary pursuant to Section 3.1 and commissions pursuant to
Section 3.3, prorated through the date of termination as set forth in
the written notice and Employee's Annual Bonus pursuant to Section 3.2,
prorated through the date of termination as set forth in the notice.
Employee shall also be reimbursed for all business expenses pursuant to
Section 3.5 previously incurred by Employee.
6. Assignment. Employee may not assign this Agreement or any rights or
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obligations hereunder. The Company may assign this Agreement to any of its
subsidiaries or affiliates or in connection with any Change of Control or
reincorporation of the Company.
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7. Miscellaneous.
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7.1 Entire Agreement. Agreement supersedes any and all other agreements,
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either oral or in writing, between the parties hereto with respect to
the employment of Employee by the Company, including, without
limitation, the offer letter dated August 21, 1997, between the Company
and Employee, and constitutes the entire agreement between the Company
and the Employee with respect to its subject matter.
7.2 Amendment. This Agreement may not be amended, supplemented, modified
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or extended, except by written agreement which expressly refers to this
Agreement and which is signed by of the parties hereto.
7.3 Governing Law. This Agreement is made in and shall be governed by the
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laws of California, without giving effect to its conflicts-of-law
principles.
7.4 Severability. In the event that any provision of this Agreement is
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determined to be illegal, invalid or void for any reason, the remaining
provisions hereof shall continue in full force and effect.
7.5 No Restrictions. Employee represents and warrants to the Company that
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there is no restriction or limitation, by reason of any agreement or
otherwise, upon Employee's right or ability to enter into this
Agreement and fulfill his obligations under this Agreement.
7.6 Notice. All notices and other communications required or permitted
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hereunder shall be in writing and shall be mailed by first-class mail,
postage prepaid, registered or certified, or delivered either by hand,
by messenger or by overnight courier service, and addressed to the
receiving party at the respective address set forth in the heading of
this Agreement, or at such other address as such party shall have
furnished to the other party in accordance with this Section 7.6 prior
to the giving of such notice or other communication.
7.7 Definition. For purposes of this Agreement, the term "Change of
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Control" shall mean a change in ownership or control of the Company effected
through any of the following transactions:
(i) a merger, consolidation or reorganization approved by the
Company's stockholders, unless securities representing more than fifty
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percent (50%) of the total combined voting power of the voting
securities of the successor corporation are immediately thereafter
beneficially owned, directly or indirectly and in substantially the
same proportion, by the persons who beneficially owned the Company's
outstanding voting securities immediately prior to such transaction
(ii) any stockholder-approved transfer or other disposition of
all or substantially all of the Company's assets, or
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(iii) the acquisition, directly or indirectly by any person or
related group of persons (other than the Company or a person that
directly or indirectly controls, is controlled by, or is under common
control with, the Company), of beneficial ownership (within the meaning
of Rule 13d-3 of the Securities Exchange Act of 1934) of securities
possessing more than fifty percent (50%) of the total combined voting
power of the Company's outstanding securities pursuant to a tender or
exchange offer made directly to the Company's stockholders which the
Board recommends such stockholders accept.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as
of the date first above written.
GEOCITIES
By:___________________________________
Xxxxx X. Xxxxxxx, President & Chief
Executive Officer
EMPLOYEE:
___________________________________
Xxxxxxx X. Xxxxxxx
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