1
EXHIBIT 10.7
July 15, 1996
▇▇. ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Dear ▇▇▇▇▇▇▇▇:
First Virtual Holdings Incorporated, a Delaware corporation, (the
Company) is pleased to offer you employment with the Company as Technical
Advisor, Office of the Chairman. This letter will confirm the agreement
between us for your employment on the following terms and conditions.
1. TERM OF EMPLOYMENT.
The term of this agreement shall commence on the date hereof and continue for a
period of two(2) years ("initial term"), and, thereafter, at the sole option of
the Company, may be renewed for up to an additional one (1) year period of time
("first renewal term"), unless terminated earlier as herein provided. If the
Company elects to renew this agreement beyond the initial two year term, it
shall notify you in writing no later than sixty (60) days prior to the end of
the initial term.
2. EXCLUSIVE EMPLOYMENT; LOCATION.
A. The Company hereby employs you, and you accept such employment, to
provide services to the Company, as directed by the CEO and Chairman. You
shall perform your services at the Company's offices in San Diego, CA or as
directed by the Company. You agree to work full time for the Company. You
agree that during the term of this agreement you will not render engineering or
consulting services to anyone other than the Company without the prior written
consent of the Company, and that you will devote your full business time,
attention, and best efforts to the Company.
B. Notwithstanding anything contained herein to the contrary and in
reliance upon your continuing disclosure of any such activity, a first
disclosure of which is found in Exhibit D, you shall be permitted to continue
to work on existing consulting arrangements through your solely owned
consulting company, Dover Beach Consulting and make use of the Company's
hardware and software for this purpose; provided, however, that such consulting
does not increase in size or scope beyond what you have disclosed to the
Company in Exhibit D so as to interfere with your obligations as stated in
paragraph 2.A above. The Company agrees that it shall have no ownership
interest in such projects.
C. Further, you agree that neither Dover Beach Consulting on your behalf
nor you personally will execute any non disclosure agreements associated with
the projects mentioned in section 2.B nor with any other company or individual
without first getting the written consent of the Company to said non
disclosure.
2
▇▇. ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
July 19, 1996
Page 2
3. TERMINATION FOR CAUSE
A. Notwithstanding the provisions of paragraph 2A above, the Company
shall have the right at any time to terminate your employment, for Cause, upon
written notice to you. For purposes of this agreement, "Cause" shall be
defined as: (i) your material breach of this agreement, provided that such
breach has not been cured within thirty (30) days after your receipt of written
notice from the Company describing in reasonable detail the circumstances of
such material breach; (ii) your dishonesty in performing your duties hereunder;
(iii) your use of drugs or alcohol to an extent which interferes with the
performance of your duties hereunder which occurs more than once in any six
month period; (iv) your repeated failure to devote proper time and attention to
the business of the Company; (v) your material or repeated failure to carry out
the directions, instructions, policies, rules, regulations or decisions of the
Board of Directors or Officers of the Company; (vi) your conviction for a
felony or other crime involving moral turpitude or pursuant to which you are
imprisoned, or (vii) your voluntary resignation from the Company prior to the
end of the initial term or renewal term, as applicable. For purposes of this
agreement, the words "repeated failure" shall mean two or more such failures
having occurred in any six month period, provided that the second failure has
occurred more than two (2) days after the Company has delivered to you written
notice of the first, describing it in reasonable detail.
B. Notwithstanding any provision herein to the contrary, in the event of
a termination of your employment for any reason, you shall be entitled to all
salary earned as of the date of termination, but the Company shall not be
liable to you for any compensation or severance pay for any period commencing
after the date of termination.
C. Notwithstanding any other term or provision of this agreement, your
employment shall automatically terminate in the event of your death or
disability. As used herein "disability" shall be understood as the term as used
in any Company provided group disability insurance or your inability to perform
the services required by this Agreement as determined by a physician reasonably
acceptable to the Company, which inability continues for more than sixty (60)
consecutive days, or for more than ninety (90) days in any twelve month period.
If there is a conflict between these two interpretations, the one most favoring
your continued employment will be used.
4. COMPENSATION.
A. Salary. In consideration thereof, the Company agrees to pay you a
salary at the rate of Two Hundred Thousand Dollars ($200,000) per annum
payable two times each month, with an effective date for such salary of
July 1, 1996.
B. Renewal and Review of Salary. In the event this Agreement is renewed,
the Company will, yearly hereafter, review your performance and may, in its
sole discretion, elect to increase your salary at such times.
-2-
3
▇▇. ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
July 19, 1996
Page 3
C. Stock Options. The Company granted you on April 11, 1996
Non-Qualified Options to purchase one hundred thousand (100,000) shares of
Common Stock in the Company at $6.30 per share of Common Stock. The options
shall vest on June 30, 1998 provided you are still an employee of the Company
on that date. The parties agree that as of the date of this Agreement you own
248,875 shares of Common Stock of the Company, and have been granted a total of
104,550 Non-Qualified options to purchase Common Stock (which includes the
100,000 grant previously mentioned in this section), of which 2,275 have
vested as of June 30, 1996.
D. Insurance. You shall be eligible to participate in group life, health
or accident insurance plans that the Company may, or may not, adopt, in its
sole discretion, which covers any other employee of the Company.
E. Expense Reimbursement. The Company shall, subject to receipt of
appropriate documentation and further subject to any policies adopted by the
Company regarding such expenses, reimburse you for those ordinary and necessary
business expenses incurred in connection with the performance of your duties
hereunder, provided that you have obtained the Company's prior approval before
incurring business expenses for which you will desire reimbursement in excess
of $3,000 in any thirty (30) day period.
F. Vacation. You shall be eligible for four (4) weeks of paid vacation
per annum, with no more than two (2) weeks taken consecutively. Vacation days
not used during any year shall accrue and carry over to the following year, but
such accrued vacation shall not carry over again to the subsequent year if not
used in said year. The scheduling of your vacations shall be determined by our
mutual agreement so as not to materially interfere with the performance of your
responsibilities to the Company. You shall not be entitled to any payment with
respect to accrued vacation days not used, except upon termination of your
employment for any reason other than "Cause" (as defined above), in which event
you shall be paid for up to two (2) weeks of accrued vacation time not used.
5. OBLIGATIONS UPON TERMINATION.
A. After termination of your employment with the Company for any reason
or no reason, you agree that for a period of one (1) year after your
termination, you shall be available to the Company for up to fifteen (15) hours
per week, to perform consulting services for the Company upon its request. You
shall be paid monthly at the rate of $1500 per hour for any such consulting
services performed by you. In the event you breach your obligations hereunder
the Company shall be entitled to offset against any amounts owed to you by the
Company the cost of a replacement consultant, provided, however, that the
amount offset shall be not greater than what you would have received pursuant
to this subparagraph 5.A.
B. You hereby acknowledge and agree that the Company shall in all events
be considered to be the owner of all Information relating to the business and
operations of the Company, irrespective of your having produced any such
Information. Upon a termination of your employment for any reason, you or your
estate, as the case may be, shall, at the request of the Company deliver
forthwith to the Company all Information. For purposes of this Agreement,
"Information" shall be defined to mean the following, which is not intended to
limit the foregoing: memoranda, notes, design notes, schematics, records,
reports, materials and other documents (including all copies thereof), as well
as computer data, disks and files, relating to (i) any and all matters on which
you worked while employed by the Company, or
-3-
4
▇▇. ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
July 19, 1996
Page 4
(ii) the business or accounts of the Company and any other Company
property, which are then in the possession or control of you or your estate.
Notwithstanding the foregoing, upon a termination of your employment you shall
be entitled to take with you any printed materials that are in the public
domain, provided that the Company shall have the right to inspect and/or
duplicate all such materials prior to their leaving the Company's premises.
6. ASSIGNMENT OF INVENTIONS AND AGREEMENT TO COMPANY POLICIES
You agree to execute a Confidential Information and Invention
Assignment Agreement, which obligates you to protect the Company's proprietary
and confidential information against disclosure, assign to the Company, subject
to applicable limitation of State law any inventions created by you in the
course of your employment in the form attached as Appendix "A", and accept the
Company's Voice-mail Policy and E-mail Policy attached as Appendix "B".
7. NON-COMPETITION
A. You agree that during the term of this agreement and for a period of
two (2) years after the termination of your employment for any reason
whatsoever or for no reason, you shall not:
1 . directly or indirectly engage, participate or invest in or
assist, as owner, part owner, stockholder, partner, director, officer,
trustee, employee, agent or consultant, or in any other capacity, any
business other than the Company that provides or enables (i) systems
for the authorization and implementation of payments through Internet
in connection with transactions between buyers and sellers of goods,
services or information (hereinafter the "Virtual PIN"), or (ii) a
link between Internet E-mail addresses to telephone numbers using
▇▇▇.▇▇▇ or similar techniques connecting the Virtual PIN with the
telephone (either of the foregoing, a "Competing Business"); provided
however that the prohibition in Section 7.A. I (ii) shall only apply
for a period of three (3) months after the termination of your
employment for any reason or for no reason whatsoever; nor,
2. directly or indirectly contact or solicit any current or
former employee of the Company or any person or entity with whom the
Company has had a business relationship for purposes of entering into
a Competing Business or any activity directly and materially contrary
to the best interests of the Company; provided however, that the
Company shall provide written notice of a violation of this section
and allow you a reasonable opportunity to cure such default by way of
explanation or cessation of such activity prior to undertaking any
action.
3. The restrictions contained in this paragraph shall apply
worldwide, but shall not prohibit you from purchasing or holding
passive investments in limited partnerships or no more than five
percent (5%) of the stock or other securities of any corporation
(regardless of its business) which has securities listed upon any
recognized securities exchange or traded on a recognized market in the
United States.
-4-
5
▇▇. ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
July 19, 1996
Page 5
B. You expressly agree and acknowledge that the restrictions in this
paragraph shall be deemed and construed as a series of separate covenants, one
for each state in the United States and each province in Canada, and one for
each country in the world outside the United States and Canada. In the event
that any court of competent jurisdiction shall determine that any one or more
of such covenants are invalid, unenforceable or unreasonable, such
determination shall not affect the validity, enforceability or reasonableness
of any other such covenant, and the remaining covenants shall continue in full
force and effect.
C. You agree that the Paragraph 9. "Arbitration and Equitable Relief" as
found in Appendix A will apply to any dispute arising from or related to this
Agreement.
8. REGISTRATION RIGHTS.
A. The Company agrees that, in the event of a public offering of its
common stock after its Initial Public Offering and subject to any Registration
Rights Agreement then in effect, you may include in the registration statement
pro rata any stock of the Company owned by you, subject to such conditions and
restrictions as the underwriter of any such offering may reasonably impose on
you and other individuals wishing to sell shares in such offering.
B. All costs incurred in connection with such registration shall be borne
by the Company, other than (i) costs of separate counsel, if any, retained by
you in connection with such registration, and (ii) commissions, selling
expenses or other similar charges applicable to the stock sold by you pursuant
to such registration. You further agree to execute and deliver any
indemnification, holdback or other agreements required by such underwriter.
9. Prior Agreements: Satisfaction.
You represent and warrant that no prior contract or agreement to which
you are a party or any prior performance of any such agreement will interfere
in any manner, or conflicts with, with the terms of and complete performance of
this agreement. Further the parties agree that each has performed all its
obligations as found in any prior agreements between the parties and this
Agreement is the sole understanding between them.
10. MISCELLANEOUS.
A. This agreement contains the entire agreement between us and supersedes
all prior oral and written understandings between us with respect to the
subject matter hereof. This agreement cannot be modified except by a written
agreement signed by both the Company and you.
B. No waiver by either party hereto of any breach by the other party
of any term of this agreement shall be effective unless in writing nor shall
any such waiver be construed as a waiver of any other breach (whether prior
or subsequent) of the same or any other term of this agreement.
-5-
6
▇▇. ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
July 19, 1996
Page 6
C. This agreement and your rights hereunder are personal to you, and
neither this agreement nor any right or interest herein or arising hereunder
shall be subject to voluntary or involuntary assignment or transfer by you;
provided, however, that this agreement shall inure to the benefit of you and
your heirs, legatees, estate or legal representatives. All rights and
obligations of the Company under this agreement shall be binding upon and shall
inure to the benefit of the successors and assigns of the Company.
D. You agree that the Company may purchase insurance on your life with
the Company as the sole beneficiary and you agree to cooperate in the Company's
effort to secure said life insurance. At the Company's sole option, upon your
termination of employment for any reason or no reason, you may be given the
opportunity to purchase said life insurance from the Company at a price to be
determined by the Company.
11. If the foregoing is acceptable to you, please sign on the line
provided below and return one copy to me at your earliest convenience. When so
countersigned, this letter shall serve as a binding agreement between us
and shall be construed in accordance with the laws of the State of California
applicable to agreements made and performed therein.
Sincerely,
First Virtual Holdings Incorporated:
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇
------------------------------
▇▇▇ ▇. ▇▇▇▇▇
Chairman and CEO
Accepted:
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-6-
7
▇▇. ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
July 19, 1996
Page 7
EXHIBIT D TO EMPLOYMENT AGREEMENT
FOR ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇ WITH
FIRST VIRTUAL HOLDINGS INCORPORATED
1. Consulting with Fax Box Corporation.
2. Internet related consulting w/AT&T, two days each month.
/s/ ▇▇▇ ▇. ▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------- -------------------------
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-7-
