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EXHIBIT 10.5
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
OF GUDJON MAR GUDJONSSON
This EMPLOYMENT AGREEMENT (this "AGREEMENT") is made as of October 15,
1998 by and between OZ INTERACTIVE, INC., a California corporation ("EMPLOYER"),
and GUDJON MAR GUDJONSSON ("EXECUTIVE").
RECITALS
A. EMPLOYER
Employer is a company building a business of developing and selling
software, particularly in the area of interactive, three-dimensional
applications for use on the Internet and on local area networks.
B. EXECUTIVE
Executive has developed substantial expertise in in computer programming
and general management and is a substantial shareholder in Employer.
C. 1997 EMPLOYMENT AGREEMENT
Executive and Employer are parties to an Employment Agreement made and
entered into as of January 1, 1997 (the "1997 Employment Agreement").
D. ERICSSON
Ericsson Inc. has elected to make a substantial investment in Employer
and has made it a condition of its investment that Employer enter into this
Agreement with Executive for the purpose of securing his services for an
extended period of time, ensuring that he has sufficient incentives to continue
to serve the interests of Employer and to ensure that Executive will not, during
the time of this Agreement enter into competition with Employer, all on the
terms and conditions set forth herein.
E. INTENTIONS
Executive believes that it is in his own personal self interest as a
substantial investor in Employer that Ericsson make its investment, and Employer
and Executive desire to amend and restate the 1997 Employment Agreement as set
forth herein.
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AGREEMENT
In consideration of the foregoing and of the mutual covenants and
conditions herein contained, the parties hereby amend and restate the 1997
Employment Agreement as follows:
1. EMPLOYMENT. Employer hereby employs Executive as Chairman, and
Executive accepts such employment, upon the terms and subject to the conditions
set forth in this Agreement.
2. TERM. The term of this Agreement shall be for a period commencing
upon date hereof and ending on January 1, 2002 ("INITIAL TERM"). The term of
this Agreement shall be automatically extended for additional one-year periods
unless either party gives written notice of its desire to terminate this
Agreement to the other party within thirty days prior to the end of the Initial
Term or any one year extension provided for above. The period of time between
the commencement of the term of this Agreement and termination of Executive's
employment shall be referred to herein as the "EMPLOYMENT PERIOD."
3. POSITIONS AND SERVICES
3.1 BEST EFFORTS. Executive will initially occupy the positions
of Director and Chairman of Employer. During the Employment Period, Executive
will devote his best efforts and substantially all of his business time and
attention to the performance of his duties hereunder and to the business and
affairs of Employer, except for vacation periods as set forth herein and
reasonable periods of illness or other incapacities permitted by Employer's
general employment policies.
3.2 DUTIES. Executive shall perform such duties as are
customarily associated with his then current title(s), consistent with the
Bylaws of Employer and as required by Employer's Board of Directors ("BOARD").
Said duties shall be performed at such place or places as Employer shall
reasonably designate or as shall be reasonably appropriate and necessary to the
discharge of Executive's duties in connection with his employment.
3.3 COMPANY POLICIES. The employment relationship between the
parties shall be governed by the general employment policies and practices of
Employer, including but not limited to those relating to protection of
confidential information and assignment of inventions, except that when the
terms of this Agreement differ from or are in conflict with Employer's general
employment policies or practices, this Agreement shall control. Executive will
duly, punctually and faithfully observe Employer's general employment policies
and practices, including, without limitation, any and all rules, regulations,
policies and/or procedures which Employer may now or hereafter establish
governing the conduct of its business.
4. COMPENSATION
4.1 SALARY. During the Initial Period, Employer shall pay to
Executive base salary at the annual rate of $132,000. Executive's salary shall
be increased annually
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commencing January 1, 1999 and on each subsequent January 1 during the
Employment Period by the sum of (i) an amount equal to no less than five percent
(5%) and (ii) the percentage increase in the general Consumer Price Index for
the geographic area in which Executive is employed from the prior December 1 to
the December 1 immediately preceding the effective date of the salary increase.
Executive's salary shall be payable at the same time and basis as Employer pays
its payroll in general. If, during the term of this Agreement, Executive is
domiciled and his services are rendered substantially in the United States,
payment of Executive's salary shall be paid in U.S. dollars and subject to
deductions for social security, federal and state payroll taxes and unemployment
and other standard deductions and withholdings, otherwise Executive's salary
shall be paid in the currency of the country in which he is domiciled and his
salary shall be subject to all applicable local withholding requirements.
4.2 PARTICIPATION IN BENEFIT PLANS. During the term hereof,
Executive shall be entitled to participate in any profitsharing, group
insurance, hospitalization, medical, dental, health and accident, disability or
similar plan or program of Employer now existing or established hereafter for
executives.
4.3 VACATION. Executive shall be entitled to a period of annual
vacation time equal to that provided to employees of equal position by
Employer's policies and procedures regarding vacation, but in no event less than
three weeks per year (including one week off between Christmas and New Years Day
during which the offices of Employer will be closed). The days selected for
Executive's vacation must be mutually agreeable to Employer and Executive.
4.4 EXECUTIVE BONUS PROGRAM. Executive shall be eligible for an
annual cash bonus, which shall not exceed one hundred percent (100%) of his base
salary for such period. The bonus shall be determined in accordance with the
following formula, which shall be calculated on March 31 of the year following
the year for which the bonus is to be calculated:
1999: 2.5% of any net revenues in excess of 1998 net revenues.
2000: 2.5% of any net revenues in excess of 1999 net revenues.
2001: 2.5% of any net revenues in excess of 2000 net revenues.
4.5 EXPATRIATION BENEFITS. If Executive is required by Employer
to expatriate to any country other than Iceland, the Company will offer a
reasonable expatriation package with the intention of making the relocation
economically neutral to Executive and paying personal expenses (i.e., reasonable
travel for Executive and his family and personal phone expenses) reasonably
related to the displacement of Executive and his family from their home, family
and friends.
5. DEATH OR DISABILITY DURING EMPLOYMENT. If Executive is prevented from
performing duties hereunder by reason of illness or injury for (i) a period of
six (6) or more con-
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secutive months or (ii) more than 180 days in any consecutive twelve month
period (the date of the determination of disability under clause (i) or (ii)
shall be referred to as the "EFFECTIVE DATE OF DISABILITY"), or if Executive
dies during employment hereunder, Employer shall pay to the Executive if
disabled (or in the case of death to the executors under Executive's last will
and testament), the salary that would otherwise be payable to the Executive
under this Agreement through the end of the six (6) month following the month in
which the Executive's Effective Date of Disability or death occurs, as the case
may be. Such payments shall constitute all of Employer's obligations to
Executive in the event of Executive's death or disability, and all compensation
and benefits, except benefits provided by law (e.g., COBRA health insurance
continuation benefits), shall otherwise cease to accrue. The determination
regarding whether Executive is unable to perform duties hereunder shall be made
by Employer's Board of Directors in the reasonable, good faith exercise of its
judgment.
6. TERMINATION. This Agreement does not grant Executive any right or
entitlement to be retained by the Employer, and shall not affect or prejudice
Employer's right to discharge the Executive in accordance herewith with or
without cause.
6.1 TERMINATION WITHOUT CAUSE. Employer's Board may terminate
Executive's employment with Employer at any time, upon thirty days' written
notice, without "CAUSE," as defined below. In the event Executive's employment
is terminated without cause, Executive shall be entitled to a twelve-month
continuation of his salary and benefits that Executive would otherwise have been
entitled to pursuant to Section 4 of this Agreement, including a pro rated
portion of any bonus for which he would have otherwise been eligible under any
executive bonus program. Such salary and benefits shall constitute the entirety
of Employer's obligations to Executive in the event of the termination of
Executive's employment without cause, except benefits provided by law (e.g.,
COBRA health insurance continuation benefits). All salary payable under this
Section shall be paid at the same time and basis as Employer pays its payroll in
general.
6.2 TERMINATION WITH CAUSE. Employer's Board may terminate
Executive's employment with Employer at any time for cause, immediately upon
notice to Executive of the circumstances leading to such termination for cause.
In the event that Executive's employment is terminated for cause, all
compensation and benefits, except benefits provided by law (e.g., COBRA health
insurance continuation benefits), will immediately cease to accrue, and all
compensation and, except as otherwise required by applicable law, benefits
accrued though the date of termination shall be paid to Executive within a
reasonable time thereafter but in no event later than thirty days. The date of
termination shall be the date upon which notice of termination is given.
Employer shall have no further obligation to pay severance of any kind nor to
make any payment in lieu of notice.
6.3 DEFINITION OF CAUSE. For the purposes of this Agreement,
"CAUSE" shall mean: (a) habitual neglect or insubordination (defined as a
refusal to execute or carry out directions from the Board); (b) conviction of
any felony or any crime involving moral turpitude; (c) willful breach of
Executive's duties to Employer and (d) conduct by Executive, which in the good
faith, reasonable determination of the Board demonstrates gross unfitness to
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serve, including but not limited to gross neglect, non-prescription use of
controlled substances, any abuse of controlled substances whether or not by
prescription, or habitual drunkenness, intoxication, or other impaired state
induced by consumption of any drug, including alcohol.
7. BREACH OR VIOLATION OF AGREEMENT. The parties agree that a breach or
violation of this Agreement will result in immediate and irreparable injury and
harm to the innocent party, who shall have, in addition to any and all remedies
of law, the right to an injunction, specific performance or other equitable
relief to prevent the violation of the obligations hereunder, plus reasonable
attorneys' fees and costs incurred in obtaining any such relief.
8. COVENANT NOT TO COMPETE. Executive agrees to the following
restrictions on competition:
8.1 RESTRICTIONS. Executive will not prior to January 1, 2002,
or the later termination of this Agreement, (a) directly or indirectly engage or
have any interest in any beusiness or venture engaged in any business that
develop software and applications that enable real-time collaborative
communications in shared spaces on the Internet or competes with any other
business that the Company may engage in during the term of this Agreement (a
"Competing Business"), whether such engagement is undertaken alone, or together
with, or on behalf of, or through any other person, firm, association, trust,
venture, corporation, or other entity or enterprise, or whether such interest is
as sole proprietor, partner, shareholder, independent contractor, agent,
officer, director, employee, advisor, consultant, trustee, beneficiary, or
otherwise in a Competing Business, (b) assist any other person or entity in
conducting a Competing Business, (c) own any capital stock or any other
securities of or have any other direct or indirect interest in any person,
entity, or other enterprise which owns or operates a Competing Business (except
stock holdings of 1% or less for investment purposes in securities of publicly
traded companies), or (d) directly or indirectly recruit, or induce any party to
recruit any person who is an employee of, or who has entered into an independent
contractor arrangement with the Employer or any Affiliate of the Employer.
8.2 EXECUTIVE'S ACKNOWLEDGEMENTS AND AGREEMENTS. Executive
acknowledges and agrees (a) that the software developed by Employer is or is
intended to be marketed and licensed to customers throughout the world, (b) to
the reasonableness of this covenant not to compete and the reasonableness of the
geographic area and duration of time which are a part of said covenant, (c) that
this covenant will not preclude Executive from becoming gainfully employed
following termination of employment with Employer, (d) that because any remedy
at law for any breach or attempted breach of Section 8.1 may be inadequate,
Employer or Ericsson shall be entitled to specific performance and injunctive
relief or other equitable relief in case of any such breach or attempted breach
of Section 8.1, in addition to any other remedies that the Employer or Ericsson
may seek and which may exist at law (including, without limitation, money
damages) or in equity. The parties to this Agreement waive any requirement for
the securing or posting of any bond in connection with Employer's or Ericsson's
seeking or obtaining any such relief at law or in equity, including, without
limitation, any injunctive or equitable relief. If any provision of Section 8.1
relating to the period of the restrictions, the scope of the activities
restricted and/or the territory to which the
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restriction applies should be declared by a court of competent jurisdiction to
exceed the maximum time period, scope of activity or geographical area that the
court deems to be reasonable and enforceable by that court, then the maximum
time period, scope of activity and/or geographical area deemed to be reasonable
by that court shall become the maximum time period, scope of activity and/or
geographical area of the restrictive covenant set forth in Section 8.1.
9. NOTICES. Any notice required to be given pursuant to the provisions
of this Agreement shall be in writing and, if mailed, sent by registered or
certified mail, postage prepaid, or by an overnight delivery service, to the
party named at the address set forth below, or at such other address as each
party may hereafter designate in writing to the other party:
Employer: OZ Interactive, Inc.
000 Xxxxxxx Xxxxxx, Xxxxxx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
with a copy to: Xxxxxx X. Xxxxx, Esq.
Xxxxx & Xxxxx
18665 Via Torino
Xxxxxx, Xxxxxxxxxx 00000
Executive: Gudjon Mar Gudjonsson
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Reykjavik, Iceland
Any such notices shall be deemed to have been delivered when served personally
(including personal delivery by telecopy), in five business days after being
mailed by registered or certified mail, or in two business days after being
mailed by an overnight delivery service.
10. ENTIRE AGREEMENT. This Agreement and that certain Proprietary
Information and Inventions Agreement by and between Executive and Employer of
even date herewith supersede all prior discussions, negotiations and agreements
between the parties with respect to the subject matter, or otherwise in
consideration hereof, and reflects their entire agreement.
11. CHANGE, MODIFICATION, WAIVER. No change or modification of this
Agreement shall be valid unless it is in writing and signed by each of the
parties hereto. No waiver of any provision of this Agreement shall be valid
unless it is in writing and signed by the party against whom the waiver is
sought to be enforced. The failure of a party to insist upon strict performance
of any provision of this Agreement in any one or more instances shall not be
construed as a waiver or relinquishment of the right to insist upon strict
compliance with such provision in the future.
12. SEVERABILITY OF PROVISIONS. Whenever possible, each provision of
this Agreement will be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect
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under any applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability will not affect any other provision, but this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provisions had never been contained
herein.
13. SUCCESSORS AND ASSIGNS. The services and duties to be performed by
Executive hereunder are personal and may not be assigned. This Agreement shall
be binding upon and inure to the benefit of Employer its successors and assigns,
and Executive, his heirs and representatives. This Agreement shall be assignable
by Employer to any successor entity to Employer, or any entity controlled by or
under common control with Employer. This Agreement shall also inure to the
benefit of Ericsson Inc., which shall be a third-party beneficiary to this
Agreement.
14. ATTORNEYS FEES. If any legal proceeding is necessary to enforce or
interpret the terms of this Agreement, or to recover damages for breach
therefore, the prevailing party shall be entitled to reasonable attorneys' fees,
as well as costs and disbursements, in addition to any other relief to which he
or it may be entitled.
15. ARBITRATION OF DISPUTES
15.1 CHOICE OF ARBITRATION. Any and all disputes or
controversies, whether of law or fact of any nature whatsoever, arising from or
respecting this Agreement shall be decided in accordance with the then current
arbitration rules of the International Chamber of Commerce ("ICC") or by any
other body mutually agreed upon by the parties. Pre-arbitration discovery shall
be permitted at the request of either party under appropriate protection for
proprietary and confidential business information. If any terms in this Section
15 are inconsistent with the rules of the ICC in effect at the time of the
dispute, then the rules of the ICC shall prevail.
15.2 NOTICE AND ATTEMPTS TO RESOLVE. Before filing a demand for
arbitration, a party must send the other party written notice identifying the
matter in dispute and invoking the procedures in this paragraph. Such written
notice shall be sent promptly after the party knew or reasonably should have
known of an alleged violation of this Agreement. Within fifteen days after such
written notice is given, one or more principals of each party shall meet at a
mutually agreeable location in Reykjavik, Iceland, for the purpose of
determining whether they can resolve the dispute themselves by written
agreement. If the parties fail to resolve the dispute by written agreement
within the fifteen-day period, the complaining party may then initiate the
arbitration process by filing a demand with the ICC or such other body as the
parties may agree upon. Nothing in this paragraph shall prevent a party from
seeking temporary equitable relief, from ICC or such other body as the parties
may mutually agree upon, during the fifteen-day period if necessary to prevent
irreparable harm.
15.3 NUMBER OF ARBITRATORS. There shall be three arbitrators to
be chosen in accordance with the then current ICC rules for selecting
arbitrators. Either party may disqualify any individual arbitrator who is a
present or past employee, owner, or consultant to the opposing party or a
competing organization.
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15.4 LOCATION AND PROCEDURES. The place of arbitration shall be
Reykjavik, Iceland, unless another location is mutually agreed upon by the
parties. At the request of either party, arbitration proceedings will be
conducted in the utmost secrecy and, in such case, all documents, testimony and
records shall be received, heard and maintained by the arbitrators in secrecy
under seal, available for inspection only by Executive and Employer, their
respective attorneys, and their respective experts, consultants or witnesses who
shall agree, in advance and in writing, to receive all such information
confidentially and to maintain such information in secrecy, and make no use of
such information except for the purposes of the arbitration, until such
information shall become generally known.
15.5 POWER OF ARBITRATORS. The arbitrators, who shall act by
majority vote, shall be able to decree any and all relief of an equitable
nature, including but not limited to such relief as a temporary restraining
order, a temporary injunction, or a permanent injunction, and shall also be able
to award damages, with or without an accounting and costs. The decree or
judgment of an award rendered by the arbitrators may be entered in any court
having jurisdiction over the parties.
15.6 RIGHTS OF PREVAILING PARTIES. If any action is necessary to
enforce or interpret the terms of this Section 15, the prevailing party shall be
entitled to reasonable attorneys' fees, costs, and necessary disbursements in
addition to any other relief to which that party may be entitled.
16. MISCELLANEOUS
16.1 FORM. As used in this Agreement, the singular form shall
include, if appropriate, the plural.
16.2 HEADINGS. The headings used in this Agreement are solely
for the convenience and reference of the parties and are not intended to be
descriptive of the entire contents of any paragraph and shall not limit or
otherwise affect any of terms, provisions, or constructions thereof.
16.3 DRAFTING AND CONSTRUCTION. This Agreement shall be
interpreted as if the parties jointly and equally drafted it and any doctrine of
law that might operate to construe any ambiguity against the drafter shall be
inapplicable to this Agreement. The section and paragraph headings in this
Agreement are solely for reference purposes and shall not affect in any way the
meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, this Agreement is executed as of the date first
above written.
OZ INTERACTIVE, INC.
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By: /s/ XXXXX XXXXXXXX /s/ GUDJON MAR GUDJONSSON
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For the Board of Directors GUDJON MAR GUDJONSSON
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