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EXHIBIT 10.5
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is entered into as of January
24, 1997, by and between On'Village Communications, Inc., a California
corporation (the "Company"), and Xxxx Xxxxxx ("Employee") with reference to the
following facts:
A. Employee is one of the founders of the Company and has served as a
Vice President of the Company since November 1995.
B. The Company currently is contemplating an initial public offering of
its securities (the "Company's IPO").
C. The Company has requested that Employee enter into an agreement to
serve on the terms and conditions set forth herein as the Company's Senior Vice
President of Marketing in the event the Company's IPO is consummated, and
Employee is willing to serve in such capacity on the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereby agree as follows:
1. Term. The Company hereby employs Employee, and Employee hereby accepts
employment, on the terms and conditions hereinafter set forth. The term of
Employee's employment under this Agreement shall commence on the date of the
closing of the Company's IPO and shall expire on the end of the 37th month after
such date but may be extended from time to time by mutual agreement between
Company and Employee. The term of Employee's employment under this Agreement
also may be sooner terminated as hereinafter provided, in which case Employee
shall be entitled to such compensation, reimbursable expenses and benefits as
are set forth in the relevant sections of this Agreement. All references herein
to the "term" of this Agreement shall mean the original terms as such term may
have been shortened pursuant to this Agreement, except where the context
otherwise requires.
2. Duties. Employee agrees to serve the Company as its Senior Vice
President of Marketing. Employee's duties will be those of similar officers for
a company similar to the Company and such other duties as are specified by the
Board of Directors of the Company. During the term of this Agreement, Employee
will devote substantially full time to, and use his best efforts to advance, the
business and welfare of Company. Notwithstanding the foregoing, Employee shall
be permitted to serve as a director of one or more other companies, provided
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that such companies do not compete in any manner with the business of the
Company as now or hereafter conducted.
3. Salary and Benefits.
(a) Salary. For the first 13 months of this Agreement, Company shall
pay Employee a salary at the annual rate of $92,500 per year payable biweekly
and subject to payroll deductions as may be necessary or customary in respect of
Company's salaried employees in general. For each successive 12-month period of
this Agreement, Employee's salary shall be increased as deemed appropriate by
the Board of Directors of the Company, but in no event shall such increases be
less than increases in the cost of living for such period.
(b) Vacations. Employee shall be entitled to four weeks paid vacation
per calendar year during the term of this Agreement. Any unused pro-rata portion
of his annual paid vacation shall be paid to Employee upon termination of his
employment for any reason. Employee shall not be entitled to any carryover of
unused vacation from year to year.
(c) Annual Bonus, Incentive, Savings and Retirement Plans. Employee
shall be entitled to bonuses after the 13th month as deemed appropriate by the
Board of Directors of the Company. Employee shall also be entitled to
participate in all annual bonus, incentive, stock option, savings and retirement
plans, practices, policies and programs applicable generally to other senior
executives of the Company.
(d) Welfare Benefit Plans. Employee shall be eligible for
participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company to the extent
applicable generally to other senior executives of the Company, including but
not limited to directors' and officers' liability insurance.
(e) Expenses. Employee shall be entitled to receive prompt
reimbursement for all reasonable employment expenses incurred by him in
accordance with the policies, practices and procedures as in effect generally
with respect to other senior executives of the Company.
(f) Fringe Benefits. Employee shall be entitled to fringe benefits in
accordance with the plans, practices, programs and policies as in effect
generally with respect to other senior executives of the Company.
4. Death or Disability of Employee. If Employee dies or becomes disabled
prior to the expiration of this Agreement, Employee's employment under this
Agreement shall automatically terminate upon death or disability, as the case
may be. "Disability" shall mean any physical or mental illness that
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renders Employee unable to perform his agreed-upon services under this Agreement
for 180 consecutive days or an aggregate of 240 days, whether or not
consecutive, during any consecutive 12-month period. In the event of Employee's
death or disability, the amounts due him pursuant to this Agreement through the
date of his death or disability, as the case may be, shall be paid to him, in
the case of his disability, or, in the case of his death, to whomever he has
previously designated or, in the event no such designation is made, to his
estate, or to the beneficiaries of his estate.
Company shall also maintain a long-term disability policy covering
Employee.
5. Termination for Cause. By majority vote of the Board (with Employee
abstaining) and with ten days' prior written notice, Employee's employment under
this Agreement may be terminated by Company for "good cause." The term "good
cause" is defined as any one or more of the following occurrences:
(a) Employee's continuing repeated willful failure or refusal to
perform his duties as required by this Agreement or other material breach of
this Agreement, provided, that termination of Employee's employment pursuant to
this subparagraph (a) shall not constitute valid termination for cause unless
Employee shall have first received written notice from the Board of Directors of
Company stating with specificity the nature of such failure or refusal and
affording Employee at least 30 days to correct the act or omission complained
of;
(b) Gross negligence, material violation by Employee of any duty of
loyalty to Company or any other material misconduct on the part of Employee,
provided that termination of Employee's employment pursuant to this subpara-
graph (b) shall not constitute valid termination for cause unless Employee shall
have first received written notice from the Board of Directors of Company
stating with specificity the nature of such failure or refusal and affording
Employee at least 30 days to fully correct the act or omission complained of and
to indemnify the Company for any damage caused to it by such act or omission.
(c) Employee's conviction by, or entry of a plea of guilty or nolo
contendere in, a court of competent and final jurisdiction for any crime
involving moral turpitude or punishable by imprisonment in the jurisdiction
involved; or
(d) Employee's commission of an act of fraud, whether prior to or
subsequent to the date hereof, upon the Company.
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In the event of termination for "good cause," Employee's salary hereunder
and unexercised stock options shall terminate as of the last day of the month in
which proper notice of his termination was given to Employee.
6. Other Termination. If Employee is terminated for any reason other than
good cause, he shall be entitled to severance pay equal to the lesser of (x) a
lump sum amount equal to one year's salary based on his then-current annual
salary (excluding any bonuses or fringe benefits) or (y) the remaining salary
due under the term of this Agreement plus a continuation of the disability and
health insurance policies provided for in this Agreement.
7. Confidential Information. Employee shall hold in a fiduciary capacity
for the benefit of the Company all secret or confidential information, knowledge
or data relating to the Company or any of its affiliated companies, and their
respective businesses, which shall have been obtained by the Employee during his
employment by the Company or any of its affiliated companies and which shall not
be or become public knowledge (other than by acts by the Employee or his
representatives in violation of this Agreement). After termination of the
Employee's employment with the Company, he shall not, without the prior written
consent of the Company, or as may otherwise be required by law or legal process,
communicate or divulge any such information, knowledge or data to anyone other
than the Company and those designated by it in writing. Employee acknowledges
that such actions could cause irreparable harm to the Company and that the
Company may obtain an injunction or other equitable relief to enforce this
provision. Furthermore, upon termination of this Agreement, Employee will
promptly deliver to the Company all books, memoranda, records and written data
in original form of every kind relating to the business and affairs of the
Company that may then be in his personal possession.
8. Non-Compete. Employee hereby agrees that for a period commencing on
the date hereof and ending one year following the termination or expiration of
Employee's employment with the Company (the "Restricted Period"), except on
behalf of the Company and its affiliates in accordance with this Agreement,
Employee shall not, directly or indirectly, as employee, agent, consultant,
stockholder, director, partner or in any other individual or representative
capacity, own, operate, manage, control, engage in , invest in or participate in
any manner in, act as a consultant or advisor to, render services for (alone or
in association with any person, firm, corporation or entity), or otherwise
assist any person or entity that engages in or owns, invests in, operates,
manages or controls any venture or enterprise that directly or indirectly
competes with the business of the Company as then conducted (the "Business")
provided, however, that nothing
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contained herein shall be construed to prevent Employee from investing in the
stock of any competing corporation listed on a national securities exchange or
traded in the over-the-counter market, but only if Employee is not involved in
the business of said corporation and if Employee and Employee's affiliates
collectively do not own more than an aggregate of 5% of the stock of such
corporation. Nothing in the foregoing is intended to preclude Employee from
becoming involved in Internet or on-line services or businesses that do not
compete with the business of the Company as then conducted.
9. Non-Solicitation. Without limiting the generality of the provisions of
Section 8 above, Employee hereby agrees that during the Restricted Period,
except on behalf of the Company and its affiliates in accordance with this
Agreement, Employee will not interfere with or disrupt or attempt to disrupt the
Company's business relationship with its customers or suppliers or solicit any
of the employees of the Company to leave the employment of the Company.
10. Inventions. All processes, technologies and inventions relating to the
Business (collectively, "Inventions"), including new contributions, improvement,
ideas, discoveries, trademarks and trade names, conceived, developed, invented,
made or found by Employee, alone or with others, during his employment by the
Company, whether or not patentable and whether or not conceived, developed,
invented, made or found on the Company's time or with the use of the Company's
facilities or materials, shall be the property of the Company and shall be
promptly and fully disclosed by Employee to the Company. Employee shall perform
all necessary acts (including, without limitation, executing and delivering any
confirmatory assignments, documents or instruments requested by the Company) to
vest title to any such Inventions in the Company and to enable the Company, at
its expense, to secure and maintain domestic and/or foreign patents or any other
rights for such Inventions.
11. Arbitration of Disputes. Either party to this Agreement may require
the arbitration of any dispute arising under or in connection with any matter
related to this Agreement or any related agreement. Such party may initiate or
require the other party to submit to arbitration. If legal action has already
commenced, the party seeking arbitration must so notify the other party in
writing of such demand within twenty (20) days after the first service of
process on such party. The arbitration shall be in conformity with and subject
to the applicable rules and procedures of the American Arbitration Association
or, at the election of the demanding party, any other form of "alternative
dispute resolution" procedure generally recognized in the State of California;
e.g., a reference pursuant to California Code of Civil Procedure ("Code")
Section 638 and/or reliance upon Section
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1280 et. seq. of the Code. Any arbitration shall incorporate Section 1283.05 of
the Code with respect to discovery matters. All parties agree to be (1) subject
to the jurisdiction and venue of the arbitration in the county in which the
principal office of Company is located or any other county in the State of
California that may be mutually agreeable to the parties, (2) bound by the
decision of the arbitrator as the final decision with respect to the dispute and
(3) subject to the jurisdiction of the Superior Court of the State of California
for the purpose of confirmation and enforcement of any award.
NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY
DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE FOREGOING ARBITRATION OF
DISPUTES PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW
AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED
IN A COURT OR JURY TRIAL. BY INITIALING IN THE SPACE BELOW YOU ARE GIVING UP
YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS SUCH RIGHTS ARE
SPECIFICALLY INCLUDED IN THE ARBITRATION OF DISPUTES PROVISION. IF YOU REFUSE TO
SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION YOU MAY BE COMPELLED TO
ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR
AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY. YOU HAVE READ AND
UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT OF THE MATTERS
INCLUDED IN THE ARBITRATION OF DISPUTES PROVISION TO NEUTRAL ARBITRATION.
EMPLOYEE: THE COMPANY:
ON'VILLAGE COMMUNICATIONS,
INC.
/s/ XXXX XXXXXX By: /s/ XXXXXX XXXXXX
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Xxxx Xxxxxx Xxxxxx Xxxxxx
President and
Chief Operating Officer
12. Miscellaneous.
12.1 Modification and Waiver of Breach. No waiver or modification of
this Agreement shall be binding unless it is in writing signed by the parties
hereto. No waiver of a breach hereof shall be deemed to constitute a waiver of a
future breach, whether of a similar or dissimilar nature.
12.2 Notices. All notices and other communications required or
permitted under this Agreement shall be in writing, served personally on, or
mailed by certified or registered United States mail to, the party to be charged
with
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receipt thereof. Notices and other communications served by mail shall be deemed
given hereunder 72 hours after deposit of such notice or communication in the
United States Post Office as certified or registered mail with postage prepaid
and duly addressed to whom such notice or communication is to be given, in the
case of (a) Company, 000 Xxxxx Xx Xxxxxxx Xxxxxxxxx, Xxxxx 000, Xxx Xxxxxxx,
Xxxxxxxxxx 00000, Attention: President, or (b) Employee, to the address set
forth below his name on the signature page hereof. Any such party may change
said party's address for purposes of this Section by giving to the party
intended to be bound thereby, in the manner provided herein, a written notice of
such change.
12.3 Counterparts. This instrument may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same Agreement.
12.4 Construction of Agreement. This Agreement shall be construed in
accordance with, and governed by, the internal laws of the State of California.
12.5 Legal Fees. If any legal action, arbitration or other proceeding
is brought for the enforcement of this Agreement, or because of any alleged
dispute, breach, default or misrepresentation in connection with this Agreement,
the successful or prevailing party shall be entitled to recover reasonable
attorneys' fees and other costs it incurred in that action or proceeding, in
addition to any other relief to which it may be entitled.
12.6 Savings Clause. If any provision of this Agreement or the
application thereof is held invalid, the invalidity shall not affect other
provisions or applications of the Agreement which can be given effect without
the invalid provisions or applications and to this end the provisions of this
Agreement are declared to be severable.
12.7 Complete Agreement. This instrument constitutes and contains the
entire agreement and understanding concerning the Employee's employment and the
other subject matters addressed herein between the parties, and supersedes and
replaces all prior negotiations and all agreements proposed or otherwise,
whether written or oral, concerning the subject matters hereof. This is an
integrated document.
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12.8 Effectiveness of this Agreement. This Agreement shall not be
binding upon the parties and shall be void and of no effect in the event the
closing of the Company's IPO has not occurred on or before October 1, 1997.
IN WITNESS WHEREOF, the undersigned have executed this Agreement on the day
and year first above written.
EMPLOYEE: THE COMPANY:
ON'VILLAGE COMMUNICATIONS,
INC.
/s/ XXXX XXXXXX By: /s/ XXXXXX XXXXXX
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Xxxx Xxxxxx Xxxxxx Xxxxxx
President and
Chief Operating Officer
Address: 00 X. Xxxx Xxxxx
X.X. Xxx 000
Xxxxxx, Xxxx 00000
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