EXHIBIT 10.5
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") entered into as of this 4th
day of August 1999, between BGS (Southwest Florida), Inc. (the "Company") and
Xxxxx Xxxxx (the "Executive").
WHEREAS, the Company desires to employ the Executive and to ensure the
continued availability to the Company of the Executive's services, and the
Executive is willing to accept such employment and render such services, all
upon and subject to the terms and conditions contained in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants set forth in this Agreement, and intending to be legally bound, the
Company and the Executive agree as follows:
1. TERM OF EMPLOYMENT.
(a) TERM. The Company hereby employs the Executive, and the
Executive hereby accepts employment with the Company for a period
commencing on the date of this Agreement and ending three years from
the date of this Agreement.
(b) CONTINUING EFFECT. Notwithstanding any termination of this
Agreement except for termination under Section 5(c), at the end of the
Term or otherwise, the provisions of Sections 6 and 7 shall remain in
full force and effect and the provisions of Section 7 shall be binding
upon the legal representatives, successors and assigns of the
Executive.
2. DUTIES.
(a) GENERAL DUTIES. The Executive shall serve as the Chief
Operations officer and Vice-president of the Company, with duties and
responsibilities that are customary for such
1
executives. The Executive will also perform services for such
subsidiaries as may be necessary. The Executive will use his best
efforts to perform his duties and discharge his responsibilities
pursuant to this Agreement competently, carefully and faithfully. In
determining whether or not the Executive has used his best efforts
hereunder, the Executive's and the Company's delegation of authority
and all surrounding circumstances shall be taken into account and the
best efforts of the Executive shall not be judged solely on the
Company's earnings or other results of the Executive's performance.
(b) DEVOTION OF TIME. Subject to the last sentence of this
Section 2(b), the Executive shall devote all of his time, attention and
energies during normal business hours (exclusive of periods of sickness
and disability and of such normal holiday and vacation periods as have
been established by the Company) to the affairs of the Company. (c)
LOCATION OF OFFICE: Except for usual and customary business travel, the
Executive's principal business office shall be in Naples, Florida. In
no event shall the Company relocate its principal offices to any area
outside a 15 mile radius of its current location without the
Executive's express written consent.
3. COMPENSATION AND EXPENSES.
(a) SALARY. For the services of the Executive to be rendered
under this Agreement, the Company shall pay the Executive an annual
salary of $55,000 (the "Base Salary"). The Base Salary shall also be
increased each year by an amount equal to the greater of (i) 3% in
excess of the prior year's Base Salary, or (ii) the cost of living
increase based upon the Consumer Price Index calculated upon the
commencement of each year of the Agreement using the prior month as the
measuring month published by the Bureau of Labor Statistics (or similar
successor index). The Consumer Price Index increase calculation shall
be calculated as
2
follows:
Commencing with the one year anniversary of the commencement of the
term and the beginning of each year thereafter during the term of this
Agreement, the Executive's annual salary shall be adjusted in
accordance with the Consumer Price Index, all Urban Consumers issued by
the Bureau of Labor Statistics of the U.S. Department of Labor using
the years 1982-84 as a base of 100 (the "Index"). At the commencement
of the second year, and of each year thereafter, the Executive's
adjusted Base Salary shall be multiplied each year by a fraction, the
numerator of which shall be the published Index number for the month
preceding the commencement of the new year, I.E. July 2000, and the
denominator of which shall be the published Index number for the month
of July 1999. The resulting increase to the Executive's Base Salary
shall be added to the prior year's Base Salary and become a part
thereof for the current year. In the event that the Index herein
referred to ceases to be published during the term of this Agreement,
or if a substantial change is made in the method of establishing such
Index, then the determination of the adjustment in the Executive's
compensation shall be made with the use of such conversion factor,
formula or table as may be published by the Bureau of Labor Statistics,
or if none is available, the parties shall accept comparable statistics
on the cost of living in the United States as shall then be computed
and published by an agency of the United States, or if not by a
respected financial periodical selected by the Company.
(c) INCENTIVE BONUS. The Executive shall be receive an
incentive bonus
3
based upon the number of impressions per calendar month on the
xxXXxxx.xxx websites calculated as follows:
NUMBER OF IMPRESSIONS PER MONTH AMOUNT OF BONUS
At 1,000,000 an additional $1,625/Month
At 2,000,000 an additional $1,408/Month
At 3,000,000 an additional $845/Month
At 4,000,000 and above an additional $929/Month
(d) DISCRETIONARY BONUS. The Executive shall be eligible to
receive an annual bonus in an amount to be determined by a majority of
the Compensation Committee based on any criteria or factors the
Compensation Committee deems appropriate.
4. BENEFITS.
(a) VACATION. For each 12-month period during the Term, the
Executive will be entitled to four weeks of vacation without loss of
compensation or other benefits to which he is entitled under this
Agreement, to be taken at such times as the Executive may select and
the affairs of the Company may permit.
(b) EMPLOYEE BENEFIT PROGRAMS. The Executive is entitled to
participate in any pension, 401(k), insurance or other employee benefit
plan that is maintained by the Company for its executive officers,
including programs of life and medical insurance and reimbursement of
membership fees in civic, social and professional organizations.
(c) AUTOMOBILE. The Company shall pay for the current or
equivalent automobile lease and insurance payments and reimburse the
Executive for all related business expenses
4
upon receipt of written documentation thereof. At the end of the
Executive's current automobile lease, the Executive shall receive
reimbursement of (i) an automobile lease or payment of up to $700 per
month, and (ii) the cost of insurance for such automobile.
(d) INSURANCE. The Company shall obtain a life insurance
policy on Executive in the amount of 3 times the Base Salary and pay
all premiums on such policy. The Executive or his assigns shall be the
beneficiaries of such policy.
5. TERMINATION.
(a) TERMINATION FOR CAUSE. The Company may terminate the
Executive's employment pursuant to the terms of this Agreement at any
time for cause by giving written notice of termination. Such
termination will become effective upon the giving of such notice. Upon
any such termination for cause, the Executive shall have no right to
compensation, bonus or reimbursement under Section 3, or to participate
in any employee benefit programs under Section 4, except as provided by
law, for any period subsequent to the effective date of termination.
For purposes of this Section 5(a), "cause" shall mean: (i) the
Executive is convicted of a felony which is related to the Executive's
employment or the business of the Company; (ii) the Executive, in
carrying out his duties hereunder, has been found in a civil action to
have committed gross negligence or intentional misconduct resulting in
either case in material harm to the Company; or (iii) the Executive has
been found in a civil action to have materially breached any provision
of Section 6 or Section 7 and to have caused material harm to the
Company. The term "found in a civil action" shall not apply until all
appeals permissible under the applicable rules of procedure or statutes
have been determined and no further appeals are permissible.
5
(b) SPECIAL TERMINATION. In the event that (i) the Executive,
with or without change in title or formal corporate action, shall no
longer exercise all of the duties and responsibilities and shall no
longer possess substantially all the authority set forth in Section 2;
or (ii) the Company materially breaches this Agreement or the
performance of its duties and obligations hereunder; or (iii) any
entity or person not now an executive officer or director (or spouse)
of the Company or owner of more than 5% of its outstanding stock
becomes either individually or as part of a group the beneficial owner
of 30% or more of the Company's common stock, in any such event the
Executive, by written notice to the Company, may elect to deem the
Executive's employment hereunder to have been terminated by the Company
without cause, in which event the Executive shall be entitled at the
time of termination to compensation equal to an amount of three years
Base Salary under this Agreement and benefits payable pursuant to
Section 4 herein for such three year period and all of Executive's
remaining unvested options, if any, shall vest immediately upon such
termination. In such event, the Executive, by written notice to the
Company, may elect to refuse all further obligations of the Company
under Sections 3 and 4 and to release the Company with respect thereto,
in which event the Company shall release the Executive from the
provisions of Section 6.
6. NON-COMPETITION AGREEMENT.
(a) COMPETITION WITH THE COMPANY. Until termination of his
employment and for a period of 12 months commencing on the date of
termination, the Executive, directly or indirectly, in association with
or as a stockholder, director, officer, consultant, employee, partner,
joint venturer, member or otherwise of or through any person, firm,
corporation,
6
partnership, association or other entity, will not compete with the
Company or any of its affiliates in the offer, sale or marketing of
products or services that are competitive with the products or services
offered by the Company, within any metropolitan area in the United
States or elsewhere in which the Company is then engaged in the offer
and sale of competitive products or services; provided, however, the
foregoing shall not prevent Executive from accepting employment with an
enterprise engaged in two or more lines of business, one of which is
the same or similar to the Company's business (the "Prohibited
Business") if Executive's employment is totally unrelated to the
Prohibited Business; provided, further, the foregoing shall not
prohibit Executive from owning up to 5% of the securities of any
publicly-traded enterprise provided Executive is not an employee,
director, officer, consultant to such enterprise or otherwise
reimbursed for services rendered to such enterprise.
(b) SOLICITATION OF CUSTOMERS. During the periods in which the
provisions of Section 6(a) shall be in effect, the Executive, directly
or indirectly, will not seek Prohibited Business from any Customer (as
defined below) on behalf of any enterprise or business other than the
Company, refer Prohibited Business from any Customer to any enterprise
or business other than the Company or receive commissions based on
sales or otherwise relating to the Prohibited Business from any
Customer, or any enterprise or business other than the Company. For
purposes of this Section 6(b), the term "Customer" means any person,
firm, corporation, partnership, association or other entity to which
the Company or any of its affiliates sold or provided goods or services
during the 24-month period prior to the time at which any determination
is required to be made as to whether any such person, firm,
corporation, partnership, association or other entity is a Customer.
Notwithstanding the above a Customer shall not include those
individuals and entities listed on Schedule 6(b) with whom the
Executive
7
had a relationship with prior to entering into this agreement.
(c) NO PAYMENT. The Executive acknowledges and agrees that no
separate or additional payment will be required to be made to him in
consideration of his undertakings in this Section 6.
7. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION.
(a) CONFIDENTIAL INFORMATION. Confidential Information
includes, but is not limited to, trade secrets as defined by the common
law and statute in Florida or any future Florida statute, processes,
policies, procedures, techniques, designs, drawings, know-how,
show-how, technical information, specifications, computer software and
source code, information and data relating to the development,
research, testing, manufacturing, costs, marketing and uses of the
Products (as defined herein), the Company's budgets and strategic
plans, and the identity and special needs of customers for the
Products, databases, data, all technology relating to the Company's
businesses, systems, methods of operation, customer lists, customer
information, solicitation leads, marketing and advertising materials,
methods and manuals and forms, all of which pertain to the activities
or operations of the Company, names, home addresses and all telephone
numbers and e-mail addresses of the Company's employees and former
employees. Confidential Information also includes, without limitation,
Confidential Information received from the Company's subsidiaries and
affiliates. For purposes of this Agreement, the following will not
constitute Confidential Information (i) information which is or
subsequently becomes generally available to the public through no act
of the Executive, (ii) information set forth in the written records of
the Executive prior to disclosure to the Executive by or on behalf of
the Company, and (iii) information which is lawfully obtained by the
Executive in writing from a third party (excluding any affiliates of
the Executive) who did not acquire such confidential
8
information or trade secret, directly or indirectly, from Executive or
the Company. As used herein, the term "Products" shall include all
Internet search engines marketed by it, together with all services
provided by the Company during the term of Executive's employment.
(b) LEGITIMATE BUSINESS INTERESTS. The Executive recognizes
that the Company has legitimate business interests to protect and as a
consequence, the Executive agrees to the restrictions contained in this
Agreement because they further the Company's legitimate business
interests. These legitimate business interests include, but are not
limited to (i) trade secrets as defined in Section 7(b), (ii) valuable
confidential business or professional information that otherwise does
not qualify as trade secrets including all Confidential Information;
(iii) substantial relationships with specific prospective or existing
customers or clients; (iv) customer or client goodwill associated with
the Company's business; and (v) specialized training relating to the
Company's technology, methods and procedures.
(c) CONFIDENTIALITY. For a period of three years following
termination of the Executive's employment, the Confidential Information
shall be held by the Executive in the strictest confidence and shall
not, without the prior written consent of the Company, be disclosed to
any person other than in connection with Executive's employment by the
Company. The Executive further acknowledges that such Confidential
Information as is acquired and used by the Company or its affiliates is
a special, valuable and unique asset. The Executive shall exercise all
due and diligent precautions to protect the integrity of the Company's
Confidential Information and to keep it confidential whether it is in
written form, on electronic media or oral. The Executive shall not copy
any Confidential Information except to the extent necessary to his
employment nor remove any Confidential Information or copies thereof
from the Company's premises except to the extent necessary to his
employment and
9
then only with the authorization of an officer of the Company. All
records, files, materials and other Confidential Information obtained
by the Executive in the course of his employment with the Company are
confidential and proprietary and shall remain the exclusive property of
the Company or its customers, as the case may be. The Executive shall
not, except in connection with and as required by his performance of
his duties under this Agreement, for any reason use for his own benefit
or the benefit of any person or entity with which he may be associated
or disclose any such Confidential Information to any person, firm,
corporation, association or other entity for any reason or purpose
whatsoever without the prior written consent of or an officer of the
Company (excluding the Executive, if applicable).
8. EQUITABLE RELIEF.
(a) The Company and the Executive recognize that the services
to be rendered under this Agreement by the Executive are special,
unique and of extraordinary character, and that in the event of the
breach by the Executive of the terms and conditions of this Agreement
or if the Executive, without the prior consent of the board of
directors of the Company, shall leave his employment for any reason and
take any action in violation of Section 6 or Section 7, the Company
will be entitled to institute and prosecute proceedings in any court of
competent jurisdiction referred to in Section 8(b) below, to enjoin the
Executive from breaching the provisions of Section 6 or Section 7. In
such action, the Company will not be required to plead or prove
irreparable harm or lack of an adequate remedy at law. Nothing
contained in this Section 8 shall be construed to prevent the Company
from seeking such other remedy in arbitration in case of any breach of
this Agreement by the Executive, as the Company may elect.
(b) Any proceeding or action must be commenced in Xxxxxxx
County, Florida. The
10
Executive and the Company irrevocably and unconditionally submit to the
exclusive jurisdiction of such courts and agree to take any and all
future action necessary to submit to the jurisdiction of such courts.
The Executive and the Company irrevocably waive any objection that they
now have or hereafter irrevocably waive any objection that they now
have or hereafter may have to the laying of venue of any suit, action
or proceeding brought in any such court and further irrevocably waive
any claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum. Final judgment against
the Executive or the Company in any such suit shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment, a
certified or true copy of which shall be conclusive evidence of the
fact and the amount of any liability of the Executive or the Company
therein described, or by appropriate proceedings under any applicable
treaty or otherwise.
9. ASSIGNABILITY. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of the Company, provided that such successor or assign shall acquire all
or substantially all of the securities or assets and business of the Company.
The Executive's obligations hereunder may not be assigned or alienated and any
attempt to do so by the Executive will be void.
10. SEVERABILITY.
(a) The Executive expressly agrees that the character,
duration and geographical scope of the non-competition provisions set
forth in this Agreement are reasonable in light of the circumstances as
they exist on the date hereof. Should a decision, however, be made at a
later date by a court of competent jurisdiction that the character,
duration or geographical scope of such provisions is unreasonable, then
it is the intention and the agreement of the Executive and the Company
that this Agreement shall be construed by the court in such a
11
manner as to impose only those restrictions on the Executive's conduct
that are reasonable in the light of the circumstances and as are
necessary to assure to the Company the benefits of this Agreement. If,
in any judicial proceeding, a court shall refuse to enforce all of the
separate covenants deemed included herein because taken together they
are more extensive than necessary to assure to the Company the intended
benefits of this Agreement, it is expressly understood and agreed by
the parties hereto that the provisions of this Agreement that, if
eliminated, would permit the remaining separate provisions to be
enforced in such proceeding shall be deemed eliminated, for the
purposes of such proceeding, from this Agreement.
(b) If any provision of this Agreement otherwise is deemed to
be invalid or unenforceable or is prohibited by the laws of the state
or jurisdiction where it is to be performed, this Agreement shall be
considered divisible as to such provision and such provision shall be
inoperative in such state or jurisdiction and shall not be part of the
consideration moving from either of the parties to the other. The
remaining provisions of this Agreement shall be valid and binding and
of like effect as though such provision were not included.
11. NOTICES AND ADDRESSES. All notices, offers, acceptance and any
other acts under this Agreement (except payment) shall be in writing, and shall
be sufficiently given if delivered to the addressees in person, by Federal
Express or similar receipted delivery, by facsimile delivery or, if mailed,
postage prepaid, by certified mail, return receipt requested, as follows:
To the Company: xxXXxxx.xxx, inc.
0000 Xxxxx Xxxxxx Xxx
Xxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
With a Copy to: Xxxxxxx X. Xxxxxx, Esq.
Xxxxxxx Xxxxxx, P.A.
0000 Xxxx Xxxxx Xxxxx Xxxx., Xxxxx 000
Xxxx Xxxx Xxxxx, XX 00000
Facsimile: (000) 000-0000
12
To the Executive: Mr. Paulo Mylla
0000 Xxxxx Xxxxxx Xxx
Xxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
or to such other address as either of them, by notice to the other may designate
from time to time. The transmission confirmation receipt from the sender's
facsimile machine shall be conclusive evidence of successful facsimile delivery.
Time shall be counted to, or from, as the case may be, the delivery in person or
by mailing.
12. COUNTERPARTS. This Agreement 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 instrument. The execution of this
Agreement may be by actual or facsimile signature.
13. ARBITRATION. Except for a claim for equitable relief, any
controversy, dispute or claim arising out of or relating to this Agreement, or
its interpretation, application, implementation, breach or enforcement which the
parties are unable to resolve by mutual agreement, shall be settled by
submission by either party of the controversy, claim or dispute to binding
arbitration in Xxxxxxx County, Florida the parties agree in writing to a
different location), before the arbitrators in accordance with the rules of the
American Arbitration Association then in effect. In any such arbitration
proceeding the parties agree to provide all discovery deemed necessary by the
arbitrators. The decision and award made by the arbitrators shall be final,
binding and conclusive on all parties hereto for all purposes, and judgment may
be entered thereon in any court having jurisdiction thereof.
14. ATTORNEY'S FEES. In the event that there is any controversy or
claim arising out of or relating to this Agreement, or to the interpretation,
breach or enforcement thereof, and any action or proceeding is commenced to
enforce the provisions of this Agreement, the prevailing party shall be
13
entitled to a reasonable attorney's fee, costs and expenses.
15. GOVERNING LAW. This Agreement and any dispute, disagreement,
or issue of construction or interpretation arising hereunder whether relating to
its execution, its validity, the obligations provided therein or performance
shall be governed or interpreted according to the internal laws of the State of
Florida without regard to choice of law considerations.
16. ENTIRE AGREEMENT. This Agreement constitutes the entire
Agreement between the parties and supersedes all prior oral and written
agreements between the parties hereto with respect to the subject matter hereof.
Neither this Agreement nor any provision hereof may be changed, waived,
discharged or terminated orally, except by a statement in writing signed by the
party or parties against which enforcement or the change, waiver discharge or
termination is sought.
17. ADDITIONAL DOCUMENTS. The parties hereto shall execute such
additional instruments as may be reasonably required by their counsel in order
to carry out the purpose and intent of this Agreement and to fulfill the
obligations of the parties hereunder.
18. SECTION AND PARAGRAPH HEADINGS. The section and paragraph
headings in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the Company and the Executive have executed this
Agreement as of the date and year first above written.
Witnesses xxXXxxx.xxx, inc., a Delaware corporation
By:
----------------------------------------------
Paulo Mylla, President
----------------------------------------------
Xxxxx Xxxxx
14
