EXHIBIT 10.5
EMPLOYMENT AGREEMENT
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THIS AGREEMENT, dated November 3, 1997 (the "Agreement"), is between
EarthWeb, Inc., a New York corporation ("EarthWeb"), and Xxxxxxx Xxxxxx (the
"Employee").
In consideration of Employee's employment with EarthWeb, Employee
hereby agrees to be bound by and comply with the following terms and conditions
of employment:
Section 1. At-Will Employment. Employee acknowledges and agrees that
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his/her employment status is that of an employee-at-will and that Employee's
employment may be terminated by EarthWeb or Employee at any time with or without
cause subject to the conditions outlined in Schedule A.
Section 2. Compensation. In consideration of the services to be
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rendered hereunder, Employee shall be paid in accordance with the attached
Schedule A.
Section 3. Employee Inventions and Ideas.
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(a) Employee will disclose to EarthWeb all Inventions (as
herein defined). "Inventions" shall mean all ideas, potential marketing and
sales relationships, inventions, copyrightable expression, research, plans for
products or services, business development strategies, marketing plans, computer
software (including, without limitation, source code), computer program,
original works of authorship, characters, know-how, trade secrets, information,
data, developments, discoveries, improvements, modifications, technology,
algorithms and designs, whether or not subject to patent or copyright
protection, made, conceived, expressed, developed, or actually or constructively
reduced to practice by Employee solely or jointly with others during the term of
Employee's employment with EarthWeb, which refer to, are suggested by, or result
from any work which Employee may do during his/her employment, or from any
information obtained from EarthWeb or any affiliate of EarthWeb, such that said
information is obtained in the performance of duties related to employment at
EarthWeb.
(b) The Inventions shall be the exclusive property of
EarthWeb, and Employee acknowledges that all of said Inventions shall be
considered as "work made for hire" belonging to EarthWeb. To the extent that any
such Inventions, under applicable law, may not be considered work made for hire
by Employee for EarthWeb, Employee agrees to assign and, upon its creation,
automatically assigns to EarthWeb the ownership of such material, including any
copyright or other intellectual property rights in such materials, Without the
necessity of any further consideration. EarthWeb shall have the exclusive right
to use the Inventions, whether original or derivative, for all purposes without
additional compensation to Employee. At EarthWeb's expense, Employee will assist
EarthWeb in every proper way to protect the Inventions throughout the world,
including, without limitation, executing in favor of EarthWeb, or any affiliate
of EarthWeb, patent, copyright, and other applications and assignments relating
to the Inventions.
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Section 4. Proprietary Information.
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(a) Employee will not disclose or use, at any time either
during or after the term of employment, except at the request of EarthWeb or an
affiliate of EarthWeb, any Confidential Information (as herein defined).
"Confidential Information" shall mean all proprietary information, technical
data, trade secrets, and know-how, including, without limitation, research,
product plans, customer lists, markets, software, developments, inventions,
discoveries, processes, formulas, algorithms, technology, designs, drawings,
marketing and other plans, business strategies and financial data and
information, including but not limited to Inventions, whether or not marked as
"Confidential." "Confidential Information" shall also mean information received
by EarthWeb from customers of EarthWeb or other third parties subject to a duty
to keep confidential.
(b) Employee hereby acknowledges and agrees that all personal
property, including, without limitation, all books, manuals, records, reports,
notes, contracts, lists, blueprints, and other documents, or materials, or
copies thereof, Confidential Information, and equipment furnished to or prepared
by Employee in the course of or incident to his employment, including, without
limitation, records and any other materials pertaining to Inventions, belong to
EarthWeb and shall be promptly returned to EarthWeb upon termination of
employment. Following termination, the Employee will not retain any written or
other tangible or electronic material containing any Confidential Information or
information pertaining to any Invention.
Section 5. Limited Agreement Not to Compete.
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(a) While employed by EarthWeb, Employee shall not, directly
or indirectly, as an employee, employer, consultant, agent, principal, partner,
manager, stockholder, officer, director, or in any other individual or
representative capacity, engage or participate in any business that is
competitive with the business of EarthWeb. Notwithstanding the foregoing,
Employee may own less than two percent (2%) of any class of stock or security of
any corporation which competes with EarthWeb listed on a national securities
exchange.
(b) While employed by EarthWeb and for a period of twelve
(12) months after the termination of Employee's employment with EarthWeb,
Employee shall not, directly or indirectly, solicit for employment or employ any
person who was employed by EarthWeb during Employee's employment with EarthWeb.
(c) For a period of twelve (12) months after the termination
of Employee's employment with EarthWeb, Employee shall not, directly or
indirectly:
(1) work as an employee, employer, consultant, agent,
principal, partner, manager, officer, director, or in any other individual or
representative capacity for any person or entity on a project which directly
competes with a project of EarthWeb. For the purpose of this section, the term
"project" is defined as any formal or informal business activity, goal, product,
service, or function which is implemented or is expected to be implemented. For
the purpose of this section, the term "directly competing" is defined as (a) any
project which in its main capacity functions as (i) an on-line service for
Internet software and site developers, in
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which the primary purpose of such on-line service is to provide such developers
with a directory of third party Internet technology and/or developer resources
and/or (ii) an on-line store in which the primary purpose of such is to sell or
distribute third party software or products used for Internet site or software
development; or (b) a project which in its main capacity develops and/or markets
interactive community or conferencing products or services based on technology
written in Java, excluding any person, project or entity whose on-line service
or product merely incorporates a community or conferencing function as a
secondary feature,
(2) call on, solicit, or take away for Employee or for
any other person or entity any person or entity who or which was a customer of
EarthWeb during Employee's employment with EarthWeb, or
(3) work as an employee, employer, consultant, agent,
principal, partner, manager, officer, director, or in any other individual or
representative capacity for any person or entity with which EarthWeb has a
formal or informal consulting agreement at the time of individual's termination
and through which such activity by individual, would impinge upon or interfere
with in any way, EarthWeb's consulting relationship with said person or entity.
Section 6. EarthWeb Resources. Employee may not use any EarthWeb
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equipment for personal purposes without written permission from EarthWeb.
Employee may not give access to EarthWeb's offices or files to any person not in
the employ of EarthWeb without written permission of EarthWeb.
Section 7. Injunctive Relief. Employee agrees that the remedy at law
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for any breach of the provisions of Section 3, Section 4 or Section 5 of this
Agreement shall be inadequate and EarthWeb. shall be entitled to injunctive
relief in addition to any other remedy at law which EarthWeb may have.
Section 8. Severability. In the event any of the provisions of this
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Agreement shall be held by a court, arbitrator or other tribunal of competent
jurisdiction to be unenforceable or invalid, that part will be amended to
achieve as nearly as possible the same effect and the other provisions of this
Agreement shall remain in full force and effect.
Section 9. Survival. In the event of termination of this Agreement,
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the provisions of Sections 1, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13 and 14 shall
survive.
Section 10. Representations and Warranties. Employee represents and
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warrants that Employee is not under any obligations to any third party which
could interfere with the Employee's performance under this Agreement, and that
Employee's performance of his/her obligations to EarthWeb during the term of
his/her employment with EarthWeb will not breach any agreement by which Employee
is bound not to disclose any proprietary information including, without
limitation, that of former employers.
Section 11. Governing Law. The validity, interpretation,
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enforceability, and performance of this Agreement shall be governed by and
construed in accordance with the laws of the State of New York, exclusive of its
choice of law rules.
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Section 12. Dispute Resolution. Except for disputes relating to or
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arising out of Sections 3, 4, 5 and/or 7 of this Agreement, any dispute relating
to or arising out of Employee's employment at EarthWeb, which cannot be resolved
by negotiation, shall be settled by binding arbitration in accordance with the
AAA Employment Dispute Arbitration Rules and Procedures, as amended by this
Agreement. Employment disputes include, but are not limited to, all claims,
demands or actions under Title VII of the Civil Rights Act of 1964, Civil Rights
Act or 1866, Civil Rights Act of 1991 and all amendments to the aforementioned,
and any other federal, state, or local statute or regulation or common law
regarding employment discrimination in employment or the termination of
employment. The costs of arbitration, including the fees and expenses of the
arbitrator, shall be shared equally by the parties. Each party shall bear the
cost of preparing and presenting its case. The arbitration shall take place in
the Borough of Manhattan, in the City of New York, in the State of New York. The
arbitration shall be conducted in strict confidence. In no event shall the
arbitrator have the authority to make any award that provides for punitive or
exemplary damages or attorneys' fees. The arbitrator's decision shall be based
upon the substantive law of the State of New York. The arbitrator's decision
shall follow the plain meaning of the relevant documents, and shall be final and
binding. The award may be confirmed and enforced in any court of competent
jurisdiction. The parties hereby agree that any federal or state court sitting
in New York City in the State of New York is a court of competent jurisdiction.
This paragraph does not limit EarthWeb's right to seek monetary damages and
injunctive relief in any state or federal court sitting in the New York City in
the State of New York Jurisdictional, venue and inconvenient forum objections to
which are hereby waived by both parties) in the event that a dispute relates to
or arises under Sections 3, 4 or 5 of this Agreement.
Section 13. Modification. EarthWeb reserves the right to modify the
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terms of this Agreement on a quarterly basis, subject to notice and
acknowledgment by the Employee of such modifications. Notice of any such
modifications shall be presented to the Employee for acknowledgment and shall be
attached as Schedule B.
Section 14. General. This Agreement supersedes and replaces any
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existing agreement entered into by Employee and EarthWeb relating generally to
the same subject matter, and may be modified only in a writing signed by
EarthWeb. Failure to enforce any provision of the Agreement shall not constitute
a waiver of any term herein. This Agreement contains the entire agreement
between the parties with respect to the subject matter herein.
AGREED TO BY: /S/ XXXXXXX XXXXXX
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NAME OF EMPLOYEE
By: /S/ XXXX X. XXXXXX By: XXXXXXX XXXXXX
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Title: CEO / PRESIDENT Title: SENIOR VICE PRESIDENT
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Date: 11/3/97 Date: 11/3/97
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SCHEDULE A
1. Definitions.
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The Xxxxxxxxx.xxx division: The Xxxxxxxxx.xxx division is the operating
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business unit for Xxxxxxxxx.xxx. This unit serves the developer community though
online and offline resources which at this time include, but are not limited to:
on ' line editorial content, an online store, an offline book series,
international versions of the Web site, push channel versions, JARS and Gamelan.
The various components of xxx0XXxxxxxxxx.xxx business may change over time.
Milestone A: The Xxxxxxxxx.xxx division achieves at least sixty percent (60%)
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of projected monthly revenues (as attached to this schedule through June 30,
1998 and as provided below for beyond that date) for 3 consecutive months. If
the actual total revenue achieved for a 3 month period is sixty percent (60%) or
more of the revenue projected for that period, Milestone A shall be deemed to
have been met so long as in any one month no less than fifty percent (50%) of
the revenue projections for that month were achieved.
Milestone B: The Xxxxxxxxx.xxx division achieves at least ninety percent (90%)
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of projected monthly revenues (as attached to this schedule through June 30,
1998 and as provided below for beyond that date) for 3 consecutive months. If
the actual total revenue achieved for a 3 month period is ninety percent (90%)
or more of the revenue projected for that period, Milestone B shall be deemed to
have been met so long as in any one month no less than seventy percent (70%) of
the revenue projections for that month were achieved.
Milestone C: Xxxxxxxxx.xxx achieves profitability for at least 3 consecutive
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months. In calculating profitability, all expenses including overhead shall be
included with the exception of capital expenditures.
2. Compensation.
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(a) Annual Compensation.
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EarthWeb shall pay to Employee for the services to be rendered hereunder a base
salary at an annual rate of One Hundred and Thirty-Seven Thousand Five Hundred
Dollars (US $137,500) This salary shall increase as follows upon certain
Milestones being achieved:
Upon reaching Milestone A: increase to US $145,000
Upon reaching Milestone B: increase to US $160,000
Upon reaching Milestone C: an increase of US$25,000 in annual pay rate if
Employee's salary is below US$150,000 at the time that Milestone C is
reached; an
increase of US$15,000 in annual pay rate if Employee's salary is at or above
US$150,000 at the time that Milestone C is reached. If Milestone B is achieved
at the same time as Milestone C, the increase of US$15,000 shall apply.
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The salary increase shall be taken into account in determining whether a
particular Milestone has been reached. For example, Milestone A has not been
reached if the definition of Milestone A is no longer satisfied upon Employee's
salary increase being taken into account.
If a Milestone is reached but the performance of the Xxxxxxxxx.xxx division
subsequently reverts to pre-Milestone performance, EarthWeb reserves the right
to review and adjust Employee's salary going forward so that it is at the
appropriate pre-Milestone level.
Employee's salary shall be payable in periodic installments in accordance with
EarthWeb's usual practice. Salary increases shall take effect within two pay
periods of a new Milestone having been reached and EarthWeb's Finance department
having been notified in writing by Employee that the Milestone has been reached.
Salary increases shall not be retroactive.
(b) Bonus Compensation.
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Employee will be eligible to receive bonus compensation ("Bonus") upon achieving
to EarthWeb's satisfaction certain performance goals set by EarthWeb. Any bonus
compensation shall be earned on a quarterly basis but paid to Employee on a
semi-annual basis.
November 1997 and December 1997 Plan
For November and December of 1997 only, Employee shall receive a total Bonus of
US$4,000 to be paid out to Employee in the January 15 payroll if each of the
following goals are accomplished to EarthWeb's satisfaction by December 31,
1997:
1. Develop a detailed budget and plan for 1998.
2. Ensure that a viable ad management system is in place and working.
3. Produce for each staff member on Xxxxxxxxx.xxx a job description and goal
statement.
4. Roll out new site GUI
5. Implement ZD reciprocal edit agreement
6. List rental process and contracts completed
7. Hire at least one additional ad/private label sales person, to be approved
by EarthWeb, for site (or have one transferred from another EarthWeb
division with EarthWeb's approval).
A pro-rated portion of the Bonus shall be paid out if at least four of the above
goals have been met to EarthWeb's satisfaction.
First and Second Quarter 1998 Plan
For the first and second quarters of 1998 only, Employee will be eligible for a
Bonus of US$6,250 if seventy-five percent (75%) of the revenue goals (as
attached to this schedule) for Xxxxxxxxx.xxx division are met for those
quarters. Employee will be eligible for an additional Bonus of US$5,000 per
quarter if the actual revenues of the Xxxxxxxxx.xxx division for the first and
second quarters of 1998 are equal or greater than the projected revenue figures
for those quarters.
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Third and Fourth Quarter 1998 Plan
For the third and fourth quarters of 1998 only, Employee will be eligible for a
Bonus of US$6,250 per quarter if one hundred percent (100%) of the revenue goals
for the Xxxxxxxxx.xxx division are met for those quarters. If such revenue goals
are not met for those quarters, Employee will remain eligible for a pro-rated
share of the Bonus based on revenues for those quarters so long as not less than
eighty percent (80%) of revenue goals for those quarters were met. Employee will
be eligible for an additional Bonus of US$5,000 per quarter if quarterly
revenues exceed by twenty-five percent (25%) projected revenue's for that
quarter.
Within thirty days following execution of this Agreement, EarthWeb shall
transmit to Employee the quarterly revenue goals for the first and second
quarters of 1998 as well as for November and December of 1997. Thereafter,
EarthWeb will provide Employee with the revenue goals for subsequent quarters as
such subsequent quarters approach and following discussions with Employee
(although revenue goals are to be in EarthWeb's sole discretion). In the event
that EarthWeb has failed to provide Employee with quarterly revenue goals for an
approaching quarter by the Monday before such quarter is to begin, Employee
agrees to request in writing to the CEO of EarthWeb that such goals be
established.
(c) Stock Options.
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Employee shall receive an initial grant of an option to purchase 24,000 shares
of EarthWeb common stock, which option will be subject to the terms and
conditions set out in the Stock Option plan and relevant granting agreements.
An additional grant of an option to purchase 6,000 shares of EarthWeb common
stock (representing .1946 percent of the company's outstanding common stock on a
converted basis) will occur upon closing and funding of a strategic investment
deal for Xxxxxxxxx.xxx, resulting in net proceeds of not less than Three Million
Five Hundred Thousand Dollars (US$3,500,000) in cash to EarthWeb and/or its
subentities by March 31, 1998, provided that Employee is determined to be the
lead negotiator and deal maker for such transaction, such determination to be
made by EarthWeb in its sole discretion.
If Xxxxxxxxx.xxx is spun out of EarthWeb within and Xxxxxxxxx.xxx adopts its own
stock option plan, Employee agrees that, upon such adoption, Employee's options
hereunder shall be exchanged for options in Xxxxxxxxx.xxx having the terms and
conditions to be set out by the Xxxxxxxxx.xxx stock option plan and relevant
granting agreements.
All grants of options are contingent upon entering into an options agreement
with EarthWeb (or Xxxxxxxxx.xxx if there is a spin-out).
(d) Severance.
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In the event that EarthWeb terminates Employee without cause, EarthWeb shall (i)
pay Employee all compensation, benefits, and vacation, personal and sick days
accrued through the date of such termination; and (ii) accelerate Employee's
stock options in accordance with the
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terms of the Stock Option plan and relevant granting agreements. In addition, in
the event that EarthWeb terminates Employee without cause and Employee has been
employed by EarthWeb for less than eighteen months, EarthWeb shall pay Employee
for six months at the rate at which he is being paid at the time plus base
bonus. If Employee at the time of termination without cause has been employed by
EarthWeb for eighteen months or more, but less than thirty months, EarthWeb
shall pay Employee for nine months at the rate at which he is being paid at the
time plus base bonus. If Employee at the time of termination without cause has
been employed by EarthWeb for thirty months or more, Company shall pay Employee
for twelve months at the rate at which he is being paid at the time plus base
bonus. All such payments shall be made in equal installments on a twice-monthly
basis.
Termination shall be without cause if termination is for reasons other than
criminal or other inappropriate conduct, negligence or Employee's failure to
perform his responsibilities to EarthWeb's satisfaction with regard to the
operations, financing or other relevant aspects of Xxxxxxxxx.xxx. If Employee
resigns, it shall be considered termination for cause and no severance payments
shall be made, provided that if (i) Employee resigns within thirty days of a
President/COO being installed to supervise Employee in a new entity that is
dedicated solely to Xxxxxxxxx.xxx and (ii) someone other than Xxxx X. Xxxxxx,
Xxxxxx Xxxxxx or Xxxx Xxxxxxx is named as the President/COO, Employee will be
eligible to receive severance payments in accordance with the terms and
conditions of this subsection d.
(e) Title
Employee's title shall be Senior Vice-President of Online Services. Employee
shall be responsible for profit/loss, operations, financing and other relevant
aspects of Xxxxxxxxx.xxx. Employee shall establish plans and budgets for the
project in coordination with senior management and shall submit such plans to
the President/CEO for approval. Employee shall prepare reports requested by
management and make presentations at the request of the President/CEO to the
Board of Directors, the financial community and the public in coordination with
senior management. Employee shall report to the President/CEO. Employee shall
also assist in other general management issues and projects as requested by the
President/CEO.
(f) Signing bonus
A one-time signing bonus of US$42,500 to be paid within thirty days of signing
of this contract or at Employee's discretion, in the first quarter of 1998. If
Employee is terminated with cause or resigns within the first year of
employment, this bonus is to be returned on a pro-rated basis.
(g) Apartment
Company shall continue to pay for Employee's New York apartment at a cost of
US$2,500 per month until a) June 30, 1998 b) the sale of Employee's New
Hampshire house, whichever is earlier. Employee shall be responsible for all
finder's fees, moving and other costs associated with such apartment.
(h) Consulting Agreement
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The parties agree that, upon execution of this Agreement, the previously-
executed Consulting Agreement between the parties shall terminate, provided that
(i) any provisions of the Consulting Agreement which, under the terms of the
Consulting Agreement, survive termination of the Consulting Agreement shall so
survive such termination and (ii) the Consulting Agreement's grant to Xxxxxxx
Xxxxxx of an option to purchase 500 shares of EarthWeb common stock shall
survive, subject to the terms and conditions set out in the Consulting
Agreement, the Stock Option plan and relevant granting agreements.
(i) Deadline
The terms set forth in this Schedule A are contingent upon the parties'
execution of this Agreement by Monday, November 3, 1997.
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