1
EXHIBIT 10.5
EMPLOYMENT AGREEMENT
This Employment Agreement (hereinafter "Agreement") is entered into between
ActiveTouch, Inc. (hereinafter "Employer") and SUBRAH S. IYAR (hereinafter
"Employee"), effective August 14, 1998 ("Effective Date").
WHEREAS, Vanenburg Ventures B.V. ("VV") intends to exercise its Warrant to
purchase Series B preferred stock of Employer;
WHEREAS, in consideration of the additional investment that VV will be making
in Employer, VV desires that Employer's key employees enter into an employment
agreement with Employer;
Now therefore, in consideration of the foregoing, the parties agree as follows:
1. EMPLOYMENT, COMPLETE AGREEMENT AND MODIFICATION
Employer agrees to continue to employ Employee and Employee agrees to be
employed by Employer on the terms and conditions set forth herein. This
Agreement supersedes previous correspondence, promises, representations and
agreements, if any, either written or oral, provided however that the Employee
Proprietary Information and Inventions Agreement that Employee signed on March
12, 1998, remains in full force and effect to the extent that it does not
conflict with the provisions of this Agreement. No provision of this Agreement
may be modified except by a writing signed by both Employer and Employee.
2. DUTIES AND COMPENSATION
Employee's title is Chairman and CEO. Employee shall perform any and all duties
now and hereafter assigned by Employer for a salary as may be from time to time
fixed by Employer. Employee agrees to abide by Employer's rules, regulations
and practices, including those concerning work schedules, vacation and sick
leave, as they may be from time to time adopted or modified. Employee's title
shall only be changed by mutual agreement.
3. SALARY MAY BE CHANGED
Employee's salary is $15,000 per month. Employer and Employee understand and
agree that his salary may be adjusted from time to time consistent with local
market practice and the needs of the business.
4. TERM OF EMPLOYMENT
Employee agrees to work for Employer for a two (2) year term from the Effective
Date of this Agreement, subject to the conditions set forth in section 5 of
this Agreement.
1
2
5. TERMINATION OF EMPLOYMENT
(a) Employee's employment with Employer shall continue as long as it is
mutually agreeable between Employer and Employee; provided, however,
that if Employee is terminated by Employer prior to August 14, 2000, for
reasons other than "Cause", Employee will be paid a separation package
consisting of the base monthly salary, medical benefits and benefits
under a 401K plan that he would have received for the balance of the
term of this Agreement. The salary shall be paid on Employer's regularly
scheduled paydays and shall be subject to regular payroll deductions.
Employee shall not be entitled to any other separation benefits. As a
condition of receiving the separation package set forth in this section
5(a), Employee shall be required to execute a release, in a form
satisfactory to Employer, of any and all claims Employee may have
against Employer, its officers, directors, employees or agents, arising
out of or related to his employment with Employer.
(b) "Cause" includes but is not limited to failure to perform the job;
failure to achieve performance levels for Employer consistent with
Employer's goals, as determined by the Board of Directors; violation of
Employer policy; insubordination; failure of Employee to devote his full
time and energy to Employer's business; failure of Employee to protect
Employer's proprietary and confidential information; or, other conduct
which, in the judgment of the Board of Directors, in inconsistent with
the performance of the job a satisfactory level of competence.
6. OTHER COMPENSATION
Employee understands and agrees that any additional compensation to Employee
shall rest in the Employer's sole discretion and that Employee shall not earn
or accrue any right to additional compensation by virtue of his employment.
7. EMPLOYEE BENEFITS PLAN
Employer may adopt or continue in force benefits plans for the benefit of
employees. Employer may terminate any or all such plans at any time and choose
not to adopt additional plans. Employee's rights under any benefit plans now in
force or later adopted shall be governed solely by their terms.
8. DUTY TO DEVOTE FULL TIME AND TO AVOID CONFLICT OF INTEREST
Employee agrees that during the period of employment, he shall devote full time
efforts to his duties as an employee of Employer. During the period of
employment, Employee agrees not to (i) solely or jointly with others undertake
any business activity that competes with Employer's business, and (ii) directly
or indirectly, engage or participate in any other activities in conflict with
the best interests of Employer.
2
3
9. INFORMATION DISCLOSED REMAINS PROPERTY OF EMPLOYER
All ideas, concepts, information, and written material disclosed to Employee by
Employer, or acquired form a customer or prospective customer of Employer, are
and shall remain the sole and exclusive property and proprietary information of
Employer or such customers, and are disclosed in confidence by Employer or
permitted to be acquired from such customers in reliance on Employer's
agreement to maintain them in confidence and not to use or disclose them to any
other person except in furtherance of Employer's business.
10. INVENTIONS BELONG TO EMPLOYER
(a) Any and all inventions, discoveries, improvements or creations
(collectively, the "Invention Ideas") which Employee has conceived or
made, or may conceive or make during the period of employment in any way,
directly or indirectly, connected with Employer's business, shall be the
sole and exclusive property of Employer. The term "Inventions Ideas" means
any and all ideas, processes, trademarks, service makes, inventions,
technology, computer programs, original works of authorship, designs,
formulas, patents, discoveries, copyrights and all improvements, rights,
and claims related to the foregoing that are conceived, developed or
reduced to practice by Employee alone or with others, except to the extent
California Labor Code Section 2870 lawfully prohibits the assignment of
rights in such ideas, processes, inventions, etc. Employee agrees that all
patentable and copyrightable works created by Employee or under Employer's
direction, in connection with Employer's business are "works made for
hire" and Employee hereby assigns all proprietary rights, including patent
and copyright, in these works to Employer without further compensation.
(b) Employee further agrees to (i) disclose promptly to Employer all such
Invention Ideas which Employee has made or may make solely, jointly or
commonly with others, (ii) assign all such Invention Ideas to Employer,
and (iii) execute and sign any and all applications, assignments or other
instruments which Employer may deem necessary in order to enable it, at
its expense, to apply for, prosecute, and obtain patents, copyrights, or
other proprietary rights in the United States and foreign countries, or in
order to transfer to Employer all right, title and interest in said
Invention Ideas.
(c) This Agreement does not apply to inventions which qualify fully for
protection under Section 2870 of the California Labor Code ("Section
2870"). Currently, Section 2870 applies to inventions for which no
equipment, supplies, facility or trade secret information of Employer was
used and which was developed entirely in Employee's own time, and (i)
which does not relate, at the time of conception or reduction to practice
of the invention, to the business of Employer, or to Employer's actual or
demonstrably anticipated research or development, or (ii) which does not
result from any work performed by Employee for Employer. Notwithstanding
this section 10(c), during the term of Employee's employment, Employee
shall disclose in confidence to Employer any invention in order to permit
Employer to make a determination as compliance by Employee with the terms
and conditions of this Agreement. Employee
3
4
understands that he bears the full burden of proving to Employer that
the invention qualifies fully under Section 2870.
11. Confidentiality
(a) Definition. During the term of employment with Employer, Employee will
have access to and become acquainted with the various trade secrets and
other proprietary and confidential information owned by Employer and
used by Employer in its business. "Trade secrets and other proprietary
and confidential information" consist of, for example and not intending
to be exclusive, (i) software (source and object code), algorithms,
computer processing systems, techniques, methodologies, formulae,
processes, compilations of information, drawings, proposals, job notes,
reports, records, and specifications, and (ii) information concerning
any matters relating to the business of Employer, any of its customers,
customer contacts, licenses, the prices it obtains or has obtained for
the licensing of its software products and services, or any other
information concerning the business of the Employer and Employer's good
will.
(b) No Disclosure. Employee shall not disclose or use in any manner,
directly or indirectly, any such trade secrets and other proprietary
and confidential information either during the term of this Agreement
or at any time thereafter, except as required in the course of
employment with Employer.
(c) No Engaging in Unfair Competition. By signing this Agreement, Employee
acknowledges and agrees that the names, addresses and product
specifications of Employer's customers constitute "trade secrets and
other proprietary and confidential information" and that the sale or
unauthorized use or disclosure of this or any other trade secrets and
other proprietary and confidential information that Employee obtained
during the course of this Agreement would constitute unfair competition
with Employer. Employee promises not to engage in any unfair
competition with Employee either during the terms of Employee's
employment or at any time thereafter.
12. RETURN OF MATERIAL
Employee agrees that, upon Employer's request or termination of employment, he
shall turn over to Employer all documents, disks or other computer media, or
other material in his possession or under his control, that (i) may contain or
be derived from concepts, Invention Ideas, or trade secrets and other
proprietary and confidential information as set forth in paragraphs 9, 10 and
11 above, or (ii) are connected with or derived from Employee's services to
Employer.
13. INDUCING EMPLOYEES TO LEAVE EMPLOYER; EMPLOYMENT OF EMPLOYEES
Any attempt on the part of Employee to induce others to leave Employer's
employ, or any effort by Employee to interfere with Employer's relationship
with its other employees, could be harmful and damaging to Employer. Employee
agrees that during
4
5
the term of employment and for a period of one year thereafter, Employee will
not directly or indirectly (i) induce or attempt to induce any employee of
Employer to quit employment with Employer; (ii) otherwise interfere with or
disrupt Employer's relationship with its employers; or (iii) solicit or entice
away any Employee of Employer.
14. NONSOLICITATION OF BUSINESS
For a period of one year from the date of termination of employment, Employee
will not divert or attempt to divert from Employer any business Employer has
enjoyed or solicited from its customers during the two (2) years prior to
termination of his employment.
15. REMEDIES -- INJUNCTION
In the event of a breach or threatened breach by Employee of the provisions of
sections 8 through 14 of this Agreement, Employee agrees that Employer -- in
addition to and not in limitation of any other rights, remedies or damages
available to Employer at law or in equity -- shall be entitled to a permanent
injunction to prevent or restrain any such breach by Employee or by Employee's
partners, agents, representatives, servants, employees and/or any and all
persons directly or indirectly acting for or with Employee.
16. SEVERABILITY
If any of the provisions of this Agreement is held to be invalid or
unenforceable in whole or in part, those provisions to the extent enforceable
and all other provisions shall nevertheless continue to be valid and
enforceable as if the invalid or unenforceable parts had not been included in
this Agreement. If any provision relating to the time period or scope of a
restriction shall be declared by a court of competent jurisdiction to exceed
the maximum time period or scope such court deems reasonable and enforceable,
then the time period or scope or the restriction which is deemed reasonable and
enforceable by the court shall become and shall thereafter be the maximum time
period or the applicable scope of the restriction. To the extent that any
provision in this Agreement conflicts with one or more provisions of the
Employee Proprietary Information and Inventions Agreement dated March 12, 1998,
the latter shall prevail.
17. GOVERNING LAW
This Agreement shall be construed and enforced according to the laws of the
State of California. All legal actions arising under this Agreement shall be
instituted in, and both Employer and Employee consent to jurisdiction in
California.
18. AGREEMENT READ, UNDERSTOOD AND FAIR
Employee has carefully read and considered all provisions of this Agreement and
agrees that all restrictions set forth are fair and reasonably required for the
protection of the interests of Employer.
5
6
AGREED:
EMPLOYER:
ACTIVETOUCH, INC.
/s/ Xxxxx Xx Xxxx /s/ Xxx Xxx
---------------------------- ------------------------------
By: Xxxxx Xx Xxxx Xxx Xxx
Title: Director President & CTO
Date: 14 Aug 1998 8/14/98
EMPLOYEE:
/s/ Subrah S. Iyar
-----------------------------
By: Subrah S. Iyar
Date: Aug. 14, 1998
6
