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EXHIBIT 10.5
EMPLOYMENT AGREEMENT
Emerald Solutions, Inc. (Emerald Solutions), whose address is 000 -
000xx Xxxxxx X.X., Xxxxx 0000, Xxxxxxxx, Xxxxxxxxxx 00000 and Xxx Xxxxxx
(Employee), whose address is 00000 X.X. Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxx 00000
enter this agreement.
The parties acknowledge that Emerald Solutions sells and implements
software-based custom strategic solutions and that Employee is an experienced
and successful manager and leader.
Emerald Solutions hires Employee under these terms:
1. EMPLOYMENT
1.1 LENGTH. Employee's employment with Emerald Solutions begins on or
before January 21, 1999 (Effective Date), and continues until
ended as this Agreement provides.
1.2 FULL TIME. Employee will work full time. Employee will devote his
good faith efforts in support of Emerald Solutions' operations
and goals, during the entire term of this Agreement. While
Employee's employment by Emerald Solutions under this Agreement
continues, Employee will not engage in any other employment or
consulting without Emerald Solutions' advanced written consent.
2. EMPLOYEE'S DUTIES.
Employee will serve as Emerald Solutions' Senior Vice President.
If Emerald Solutions reassigns Employee without Employee's consent, the
Employee may, at the Employee's option, decline to accept the change in
title or the new assignment and elect instead to treat it as termination
without cause by Emerald Solutions.
3. COMPENSATION PLAN.
3.1 PAY. Emerald Solutions will pay Employee initially at the rate of
$200,000.00 a year (Base Salary), payable in equal increments on
Emerald Solutions' standard payroll schedules, which are
bi-weekly as of the date of this Agreement. Payment will begin as
of the first standard payroll following the Effective Date.
Employee's compensation will otherwise be reviewed on an annual
basis, as with other Employees of the Company.
3.2 STOCK OPTIONS. Employee will be granted 300,000 stock options
on the Effective Date under Emerald Solutions' Stock Option Plan.
3.3 BONUS. Based on performance criterion approved by the Board of
Directors, Employee will be eligible for a bonus according to the
Bonus Plan in place for Senior Vice Presidents. To be eligible
for this payment, Employee must be an active employee at end of
calendar year. During first year of employment, any payments will
be prorated based on the number of full calendar months of
employment.
3.4 BONUS OPTIONS. Based on performance criterion approved by the
Board of Directors, Employee will be eligible for bonus options
according to the plan in place for Senior Vice Presidents. To be
eligible for bonus options, Employee must be an active employee
when bonuses are distributed. Bonus options will be granted
according to meeting of objectives. Potential bonus options
available are 50,000 at the end of June 30, 1999 and 50,000 at
the end of the calendar year and will be paid in the same
proportion as the targeted bonus.
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3.5 OFFICE OPENING OPTIONS. Employee will be granted 25,000 options
for each new office opened in calendar year 1999.
3.6 OTHER COMPENSATION.
3.6.1 HEALTH INSURANCE BENEFITS. Emerald Solutions will pay
medical insurance, life insurance, disability insurance,
retirement, and other fringe benefits in accordance with
Emerald Solutions' then existing policies applicable
generally to employees.
3.6.2 REIMBURSEMENT. Emerald Solutions will reimburse Employee
for all expenses reasonably incurred in discharging duties
as an employee of Emerald Solutions, subject to Emerald
Solutions' standard policies for amounts and documentation
to which all comparable employees may be subject from time
to time.
3.6.3 VACATION/PERSONAL TIME. In the first year of employment,
Employee shall be entitled to a total of 22 vacation and
sick days and will accrue such days in accordance with
Emerald Solutions' then existing Earned-Time-Off (ETO)
policies applicable generally to employees.
4. TERMINATION.
4.1 VOLUNTARY BY EMPLOYEE. Employee may resign from Emerald
Solutions by two weeks' notice.
4.2 VOLUNTARY BY EMERALD SOLUTIONS. Emerald Solutions may end
Employee's employment, without cause, by Notice, subject to
Emerald Solutions' obligation to pay termination pay noted
below.
4.3 WITH CAUSE. For the purposes of this Agreement, to be terminated
With Cause shall only mean termination for (a) substantial
failure or refusal to carry out lawful directions of the Board of
Directors and/or Emerald Solutions' senior executive officers,
which directions are reasonably consistent with the duties set
forth to be performed by Employee; (b) an act which results in
Employee being convicted of a felony; or (c) an act of
misappropriation of Emerald Solutions' monies or assets, fraud
and/or dishonesty or disloyalty to Emerald Solutions, such as but
not limited to a violation of Employee's obligations under
Section 5 or 7 of this Agreement. Emerald Solutions may terminate
this Agreement effective as of the date Notice of Termination
With Cause is given specifying the cause. Emerald will provide
specific notice of such failure or refusal to Employee with a 30
day opportunity to cure such act or omission.
4.4 COMPENSATION ON TERMINATION. Following termination, Emerald
Solutions will pay these things:
4.4.1 COMPENSATION AND EARNED VACATION EARNED THROUGH
TERMINATION DATE. Employee's Base Salary as earned through
the termination date, and a buyout of all accumulated but
unused ETO time, to be paid within thirty days of
termination.
4.4.2 BASE EXTENSION. Unless Employee is terminated With
Cause, or voluntarily resigns for reasons other than a
breach of Emerald Solutions' obligations to the Employee
of which the Employee has given Emerald Solutions Notice
and at least thirty days opportunity to cure, and provided
the employee signs Emerald Solutions' standard Termination
Agreement, Emerald Solutions will continue Employee's Base
Salary, including the health insurance then in effect, for
three months after the termination date if termination
occurs during the first year of employment and will
continue Employee Base Salary, including the health
insurance and life insurance then in effect, for one
additional month for each year of service after the first
year of employment. Payment of the Employee Base Salary
shall be made on Emerald Solutions' standard payroll
schedules from the date of termination, as if the Employee
had not been terminated. In order to qualify for
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this extension of base salary, the employee will be
required to sign a "Termination of Employment Agreement."
4.4.3 LIMIT TO PAY. Emerald Solutions shall not pay Employee any
continuation of base salary under Section 4.4.2 for any
period during which Employee violates his obligation under
Section 5 or 7 of this Agreement.
4.5 OFFSET. To the extent permissible under applicable law, without
prejudice to other remedies, Emerald Solutions may offset any
amounts Employee owes Emerald Solutions against any amounts due
upon termination or thereafter.
5. CONFIDENTIALITY.
5.1 CONFIDENTIALITY. Employee will keep Emerald Solutions' Data
confidential. In doing so, Employee will not disclose Emerald
Solutions' Data directly or indirectly to any person, other than
an employee of Emerald Solutions or a person to whom disclosure
is reasonably necessary or appropriate to further Emerald
Solutions' business.
5.2 EMERALD SOLUTIONS' DATA. Emerald Solutions' Data consists of any
trade secret or proprietary or confidential information of
Emerald Solutions or of any Emerald Solutions affiliate. Emerald
Solutions' Data includes, but is not limited to, records, files,
memorandum, reports, price lists, software, customer lists,
drawings, sketches, documents, equipment, and the like relating
to Emerald Solutions' business which Employee uses, prepares, or
comes in contact with during the course of his work for Emerald
Solutions. Any information known generally to the public or any
information of a type not otherwise generally considered
confidential by persons engaged in the same business will not be
treated as confidential.
5.3 THIRD PARTY DATA. Employee will also keep third party Data
confidential as required by Emerald Solutions' obligations to the
third party, for at least as long as is required for Emerald
Solutions' Data, but longer if required by any agreement Emerald
Solutions enters into with the third party.
5.4 RETURN ON TERMINATION. Employee will return all Emerald
Solutions' Data and third party data on termination of this
Agreement.
5.5 SURVIVAL OF OBLIGATION. The provisions of this Section 5 shall
survive termination of this Agreement.
6. INVENTIONS
6.1 DEFINITIONS. "Inventions" means new ideas, improvements, or
discoveries, whether or not patentable or copyrightable, as well
as other newly discovered or newly applied information or
concepts. An Invention is a "Covered Invention" if it relates to
Emerald Solutions' actual or anticipated business; or was
developed in any part using Emerald Solutions' resources (time,
supplies, facilities, or data); or it if results from or is
suggested by a task assigned to, or work performed for Emerald
Solutions by Employee. As used in this Section 6, "Emerald
Solutions" includes Emerald Solutions' sister corporations or
subsidiaries and Emerald Solutions' clients, consultants, and
contractors.
6.2 ASSIGNMENT. All Employee's right, title and interest to any
Covered Inventions that Employee makes or conceives while
employed by Emerald Solutions, belong to Emerald Solutions. This
Agreement operates as a prospective assignment of all those
rights to Emerald Solutions.
6.3 OBLIGATION. The provisions of this Section 6 shall survive
termination of this Agreement.
6.4 NOTICE. Notwithstanding any other provision of this Agreement
to the contrary, this Agreement does not obligate Employee to
assign or offer to assign to Emerald Solutions any of Employee's
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rights in an invention for which no equipment, supplies, facilities
or trade secret information of Emerald Solutions was used and which
was developed entirely on Employee's own time, unless (a) the
invention relates (i) directly to the business of Emerald Solutions
or (ii) to Emerald Solutions' actual or demonstrably anticipated
research or development or (b) the invention results from any work
performed by Employee for Emerald Solutions. This satisfies the
written notice and other requirements of RCW49.44.140.
7. NON-COMPETITION; NON-SOLICITATION.
7.1 COMPETING DEFINED. During Employee's employment with Emerald
Solutions, and for twelve months afterward, unless Emerald Solutions
consents in writing, Employee will not compete with Emerald
Solutions, or solicit business from Emerald Solutions' customers.
This commitment will not survive termination of this Agreement if
the Employee voluntarily terminates his employment as a result of
Emerald Solutions' breach of its obligations to the Employee under
this Agreement, provided the Employee has first given Emerald
Solutions Notice of the breach and at least thirty days' opportunity
to cure it.
7.1.1. COMPETING DEFINED. "Competing" means to provide any
services or knowledge in the area of information
technology directly or indirectly to an Emerald Solutions'
customer. Service is "indirect" if the service is provided
to another person or company who in turn provides it to an
Emerald Solutions' customer. "Service" includes acting as
an employee, independent contractor, consultant, officer,
director, or agent. Being employed by a company that
itself provides service to an Emerald Solutions' customer
or competes with Emerald Solutions is not competition
unless the Employee himself is providing the service
directly, or gives assistance that is substantively
related to a particular Emerald Solutions' customer or to
providing services or knowledge that competes with Emerald
Solutions to others to help them perform those services or
compete directly.
7.1.2. SOLICITING BUSINESS DEFINED. "Soliciting business" means
with respect to custom solutions, performing work for or
soliciting work from anyone who has been a customer or
client of Emerald Solutions, or providing knowledge or
assistance to another for any of those purposes, on either
a consulting or an employment basis.
7.1.3. EMERALD SOLUTIONS' CUSTOMERS DEFINED. Emerald Solutions'
"customers" are:
(a) EXISTING. Entities or individuals who have
purchased consulting or programming services,
software, or goods from Emerald Solutions at
anytime within three years before the day
employment ends.
(b) ACTIVE PROSPECTS. Entities or individuals who are
active prospects of Emerald Solutions. An active
prospect is one upon whom more than three calls
have been made in any one-month period, or to whom
a proposal has been submitted or by whom a proposal
has been requested, and from whom, on the date
employee's employment terminates, Emerald Solutions
reasonably believes it may secure work or product
or service orders.
(c) DEPARTMENTS OR DIVISIONS OF CUSTOMERS. In the event
a customer has more than one department and/or
division, only the particular department and/or
division which would otherwise qualify as an
Emerald Solutions' Customer if considered
independently shall be deemed a customer of Emerald
Solutions under this paragraph 7.1.3, and not any
other department or division.
7.2 NON-HIRING. During Employee's employment and for twelve months
afterward, unless Emerald Solutions consents in writing, Employee
will not solicit or assist in the solicitation of Emerald Solutions'
employees.
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7.3 NON-DEFAMATION. During Employee's employment and for twelve months
afterward, Employee will not take any action or make any statement
which could prove defamatory or prejudicial to Emerald Solutions'
interests.
7.4 SURVIVAL OF OBLIGATION. The provisions of this Section 7 shall
survive termination of this Agreement.
8. NO CONFLICTING OBLIGATIONS.
8.1 VIOLATION OF OTHER AGREEMENTS. Execution, delivery and performance
of this Agreement and the performance of Employee's other
obligations and duties to Emerald Solutions will not cause any
breach, default or violation of any other employment, nondisclosure,
confidentiality, consulting or other agreement to which Employee is
a party or by which Employee may be bound.
8.2 DISCLOSURE OF OTHER TRADE SECRETS. Employee will not use in
performance of Employee's work for Emerald Solutions or disclose to
Emerald Solutions any trade secret, confidential or proprietary
information of any prior employer or other Person if and to the
extent that such use or disclosure may cause a breach, default, or
violation of any obligation or duty that Employee owes to such other
person (e.g., under any agreement or applicable law). Employee's
compliance with this paragraph will not prohibit, restrict or impair
the performance of Employee's work, obligations and duties to
Emerald Solutions.
8.3 FALSE REPRESENTATIONS. Employee will not (a) make any false,
misleading or disparaging representations or statements with regard
to Emerald Solutions or the products or services of Emerald
Solutions or (b) make any statement that may impair or otherwise
adversely affect the goodwill or reputation of Emerald Solutions.
9. OTHER MATTERS.
9.1 EMPLOYMENT AT WILL. Employee's employment with Emerald Solutions is
"at will" and may be terminated at any time by an executive of
Emerald Solutions. This Agreement will survive any termination of
Employee's employment.
9.2 NOTICE. Notice to Employee shall be sent to Employee's most recent
address shown in Emerald Solutions' personnel records. Notice to
Emerald Solutions shall be sent to Emerald Solutions' headquarters
address, marked attention: President. Either party may change its
address by Notice. Notice shall be effective when the person to whom
it is sent actually gets it, if sent by any method that leaves a
paper or electronic record in the hands of the recipient. If sent
certified or registered mail, postage prepaid, return receipt
requested, to the proper address this section defines, notice shall
be considered effective whether or not actually received on the date
the return receipt shows the notice was accepted, refused, or
returned undeliverable.
9.3 SEVERABILITY. This agreement will be enforced to the fullest extent
permitted by applicable law. If for any reason any provision of this
Agreement is held to be invalid or unenforceable to any extent, then
(a) such provision will be interpreted, construed or reformed to the
extent reasonably required to render the same valid, enforceable and
consistent with the original intent underlying such provision and
(b) such invalidity or unenforceability will not affect any other
provision of this Agreement or any other agreement between Emerald
Solutions and Employee. If the invalidity or unenforceability is due
to the unreasonableness of the scope or duration of the provision,
the provision will remain effective for such scope and duration as
may be determined to be reasonable.
9.4 NON-WAIVER. The failure of Emerald Solutions to insist upon or
enforce strict performance of any provision of this Agreement or to
exercises any of its rights or remedies under this Agreement will
not be construed as a waiver or a relinquishment to any extent of
Emerald Solutions' rights to
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assert or rely on any such provision, right or remedy in that or any
instance, rather, the same will be and remain in full force and
effect.
9.5 ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of Emerald Solutions, its successors and assigns and
shall be binding upon and inure to the benefit of Employee, and
Employee's administrators, executors, legatees, and heirs. This
Agreement shall not be assigned by Employee.
EMERALD SOLUTIONS, INC. XXX XXXXXX:
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Title: Chief Financial Officer
-------------------------- Date:
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Date: January 18, 1999
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