EXHIBIT 10.5
January 5, 1999
Xx. Xxxxxx Xxxxxxx
000 Xxxxxxxxxx Xxxxx
Xxxxxxxxx. TX 76092
Dear Xxx:
We at C-Bridge Internet Solutions, Inc. ("C-bridge" or the "Company") are
pleased to offer you the position of President and Chief Operating Officer of
our Company. This position will report directly to the Chief Executive Officer
of C-bridge. Subject to your acceptance of the terms of this letter agreement,
your employment with us will commence on February 4, 1999.
As a full time employee, you will receive compensation as follows: (i)
$250,000.00 base salary paid in equal semi-monthly installments, (ii) $50,000.00
performance bonus depending on your achievement of certain goals to be
determined by you and the Company, and (iii) $50,000.00 additional bonus
depending on your surpassing certain goals to be determined by you and the
Company. You will be eligible to participate in all employee benefit plans and
programs made available generally to employees of C-bridge or to executive
employees of C-bridge. Descriptions of the benefit plans currently being
offered are available for your review. Please note that any benefit may, from
time to time, be amended or terminated with or without prior notice. In
accordance with Company policies, you will also be reimbursed for all business,
promotional, entertainment expenses incurred on behalf of the Company or to
further the Company's business.
Although you will be employed full time by C-bridge, you will have the
right to participate in charitable and community organizations, and also to
participate in activities outside of the Company related to the Company's
business, such as, for example, industry trade shows, seminars, forums, lectures
and standards setting committees. You will also have the right to provide
advisory services to your former employer under a separate agreement with your
former employer, such services to be limited to a maximum of 30 days per year.
However, none of these activities may interfere in any important way with your
responsibilities as Chief Operating Officer of the Company.
Effective upon your employment, you will receive stock options to purchase
1,550,000 shares of the common stock of the Company, S0.000001 par value per
share (the "Options"; "Common Stock"). To the maximum extent possible under
applicable tax rules and tax rules and regulations then in effect, the Options
will be incentive stock options within the meaning of section 422(b) of the
Internal Revenue Code of 1986, as amended, for federal income tax purposes, and
the balance, if any, of the Options will be non-qualified stock options. The
Options will be issued at the current exercise price of $.30 per share. The
Options will vest over a four year period, in eight equal semi-annual
installments commencing six months after the date of grant, except that (i) 100%
of the Options shall vest immediately upon the sale of the Company or a change
of control (a transaction after which new stockholders other than Xxxxxx
Xxxxxxxxxxx, Xxxx Xxxxxxx, or trusts for the benefit of them or their families
own more than fifty percent (50%) of the outstanding shares of the Company) and
(ii) if at the time of the Company's IPO (as defined below) less than 50% of the
Options have vested, then 50% of the Options shall vest immediately upon such
IPO and the remainder shall vest in four equal semi-annual installments
commencing six months after the IPO. The Options will terminate immediately if
your employment is terminated by the Company for "Cause" (as defined below) or
if you voluntarily leave the Company. If the Company terminates your employment
without Cause or if you die, the portion of the Options that would have vested
at the end of that semi-annual period if not for your termination or death shall
vest immediately. Accordingly, you or
your estate, as the case may be, may exercise the vested portion of the Options
in accordance with their terms. Notwithstanding anything to the contrary in this
Agreement or your Incentive Stock Option and Non-Qualified Stock Option
Agreements, which shall be in the form attached hereto as Exhibits A and B and
be dated as of the first day of your employment with the Company, in the event
that your employment is terminated by the Company without Cause, the options
which have vested as of the date of termination will remain exercisable until 90
days after termination, after which date they shall be deemed to have expired.
In the case of a conflict or ambiguity between the provisions hereof and the
provisions of Exhibit A or Exhibit B hereto, the provisions hereof shall
prevail.
For purposes of this Agreement, an IPO shall be a firm commitment
underwritten public offering of Common Stock made in compliance with the
Securities Act of 1933, as amended (the "Securities Act"), and any applicable
state laws which has an aggregate offering price of $20,000,000.00 or more.
With respect to protection against dilution, you will not be treated any
differently than any current stockholder. We anticipate that the Board may issue
further options to employees, including officers, as dictated by the interests
of the Company. All options will be issued under the Company's 1997 Stock
Incentive Plan, as amended, or successor plans. You will receive the equivalent
registration rights, if any, granted to Xxxxxx Xxxxxxxxxxx. The Company shall
use it best efforts to have the stock issued to you pursuant to the exercise of
the Options qualify under for the exemption from registration provided by Rule
701 promulgated under the Securities Act, or any successor rule.
You may exercise your options and pay for the stock with other stock which
you already hold, provided the Company will not thereby incur an expense charge
(normally, the shares must be held for six months to avoid such a charge). If
this method of payment is not feasible because of such expense charge, the
Company will cooperate with you to facilitate the exercise of the Options and
payment of the exercise price of the shares.
The Company may discharge you at any time for Cause upon delivery of
written notice to you, making reference to this paragraph and specifying with
particularity the actions or inactions constituting such Cause. For purposes of
this letter agreement, a termination for "Cause" shall mean only termination for
any one or more of the following reasons:
a. being convicted of criminal conduct constituting a felony offense, other
than a traffic offense, whether or not related to your employment;
b. negligence in the performance of your duties on behalf of the Company
which results in a material detriment to the Company and is not cured or
corrected within thirty (30) days after your receipt of written notice from the
Company referring to this paragraph and describing with specificity the conduct
or omission constituting negligence;
c. fraud or embezzlement with respect to funds of the Company, as determined
by the Board; or
d. your failure to comply with lawful instructions given to you by the Board
of Directors which is not cured or corrected within thirty (30) days after your
receipt of written notice from the Company referring to this paragraph and
describing with specificity the instructions with which you did not comply.
Notwithstanding the foregoing, a refusal by you to move your residence away from
the Boston area at the Company's request will not constitute a failure to comply
under this paragraph.
It is understood that you are not being offered employment for a definite
period of time and that either you or C-bridge may terminate the employment
relationship at any time and for any reason without prior notice.
As you know, the Immigration Reform and Control Act requires employers to
verify the employment eligibility and identity of new employees. Enclosed is a
copy of the Form I-9 that you will be
required to complete within the first three days of your employment. Please
bring the appropriate documents listed on that form with you when you report to
work.
We have agreed upon a form of "Confidentiality and Non-Competition
Agreement" (the "CNA") a copy of which is attached as Exhibit C. This offer of
employment is conditioned on your willingness to sign and abide by the terms of
this agreement. In making this offer, C-bridge understands that you are not
under any obligation to any former employer or any person, firm or corporation
which would prevent, limit or impair in any way the performance by you of your
duties as an employee of C-bridge, other than as set forth in the CNA, the
third paragraph hereof, or as otherwise disclosed in writing to the Company on
or prior to today. Please return the signed CNA with the signed copy of this
offer letter.
Please acknowledge your acceptance of this offer by signing at the bottom
of this letter agreement and returning a signed copy to the attention of Xxxxx
Xxxxx, Human Resources. An extra copy of this offer, signed on behalf of the
Company, has been included for your records.
The undersigned officer represents and warrants that he has full power and
authority to enter into this letter agreement on behalf of the Company, and that
the execution, delivery and performance of this letter agreement have been
authorized by the Board of Directors of the Company. Upon your acceptance of
this letter agreement by signing and returning it to the Company, this letter
agreement will become binding upon you and the Company. Notwithstanding the
foregoing, the Company and you may enter into a more formal employment agreement
consistent with the terms of this letter agreement, but this letter agreement
and the offer of employment contained herein are not contingent in any manner on
the execution and delivery of a separate employment agreement.
Notwithstanding the formal nature of this letter agreement, you should know
that we are very excited at the prospect of working with you to continue our
task of creating a great company. We know that your leadership will be
instrumental in moving us forward We believe this will mark the beginning of a
long-term mutually beneficial relationship. We look forward to having you on
board.
Sincerely,
/s/ Xxxxxx Xxxxxxxxxxx
______________________
Xxxxxx Xxxxxxxxxxx
Chairman
ACKNOWLEDGED AND AGREED
/s/ Xxxxxx X. Xxxxxxx
_______________________________
Xxxxxx Xxxxxxx
