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Exhibit 10.5
EMPLOYMENT AGREEMENT
This Agreement is made by and between Emaginet, Inc. (the "Company"), a
Delaware corporation whose address is 0000 Xxxxxxxxx Xxxxx, Xxxxx 0000,
Xxxxxxxx, Xxxxxxxx 00000 and Xx. Xxxxxx Xxxxxx ("Xxxxxx"), a Maryland resident
whose home address is 0000 Xxxxx Xxxx, Xxxxxxxx, Xxxxxxxx 00000.
1. TERM AND DUTIES
(a) The Company hereby retains Xx. Xxxxxx Xxxxxx, and Xxxxxx Xxxxxx accepts
this engagement, as Chief Executive Officer ("CEO") and President of
Emaginet, Inc., for a term commencing May 8, 1998, and terminating on
August 31, 2002.
(b) As President and CEO of the Company Xx. Xxxxxx shall be in full charge
of the entire operation and management of the Company, including its day to
day operations, including but not limited to strategic planning and
execution, funding and budgeting of all Company operations, product
development, marketing, sales, business development and all personnel
issues.
2. D & O INSURANCE. The Company agrees to provide Directors and Officers
liability insurance to Xx. Xxxxxx effective from the first day of employment of
Xx. Xxxxxx.
3. COMPENSATION
(a) Base Salary. In consideration for the services to be provided by Xx.
Xxxxxx, the Company shall pay Xx. Xxxxxx a minimum of $170,000.00 per
annum, paid in bi-monthly payments. This salary will be reviewed and
adjusted by the Board of Directors prior to May 1st of each year of the
contract to provide for merit increases based upon standards set by the
Board of Directors.
(b) Performance Bonuses. Xx. Xxxxxx shall be eligible for an annual bonus
of $50,000 based on performance criteria established by the Board of
Directors.
(c) Stock. During the term of this Agreement, Xx. Xxxxxx shall earn and be
granted on the 15th day of each May an annual stock option to purchase up
to 100,000 common shares of Emaginet, Inc., provided that Xx. Xxxxxx meets
for each annual grant certain performance criteria as set by the Board of
Directors. The price per share shall be set by the Board of Directors, but
in no event greater than the market price of the stock at the time of the
award. The terms and conditions of the Option Agreement shall follow the
terms and conditions of the 1996 Stock Option Plan, except that they shall
be vested immediately upon meeting the performance criteria.
(d) Health Benefits. The Company agrees to pay health and dental insurance
premiums for Xx. Xxxxxx at the family level, for coverage under its health
plan.
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(e) Vacation. The Company agrees to provide Xx. Xxxxxx with 20 days of
personal time off per annum, in addition to the Company's standard
holidays. Vacations are accruable without limit.
(f) Other Benefits. Xx. Xxxxxx is entitled to receive all other benefits
provided to regular, full-time employees of the Company.
4. TERMINATION AND SEVERANCE
(a) Termination Without Cause. The Company shall have the right to
terminate Xx. Xxxxxx for any reason or no reason, but in either case, shall
be obligated to pay the full balance of the salaries defined in Paragraph
3(a) through the remaining term of this Agreement.
(b) Termination Events. The occurrence of any of the following events
during the term of the Agreement shall also constitute Termination Without
Cause and subject to the payment provision defined in Paragraph 4(a): (i)
Xx. Xxxxxx'x base salary is reduced for any reason without his consent;
(ii) the Company is taken over, sold, or involved in a merger or
acquisition of any kind, and the same salary is not offered to him for the
remaining term of this agreement.
(c) Termination With Cause. Termination for cause shall mean only
termination for gross or serious financial or felony misconduct by Xx.
Xxxxxx in connection with his employment. Non-performance on the Company's
business objectives shall not be deemed grounds for termination with cause.
If terminated with cause, the payment provision defined in Paragraph 4(a)
shall not be in effect.
5. PROPRIETARY INFORMATION AND NON-COMPETE AGREEMENT
(a) Xx. Xxxxxx acknowledges that during the term of the Agreement he will
have access to and become familiar with various trade secrets, confidential
and proprietary information of the Company, that such information is the
property of the Company and that it shall not be used or disclosed during
the term of his employment or for one year thereafter.
(b) Xx. Xxxxxx also agrees that for period of one year subsequent to his
termination of employment he will not compete directly with or be employed
in any way, by individuals, companies, entities or interests that compete
directly with the Company on any of the products that the Company has
developed or is in the process of developing at the time of his
termination. Subsequent to this one year non-compete period, Xx. Xxxxxx
shall continue to protect as confidential and not use any intellectual
property belonging to the Company, but may use other information he
acquired as an executive of the Company.
6. ASSIGNMENT. The parties acknowledge that a successor to the Company under
a sale, merger or acquisition shall be bound by all of the terms and conditions
of this Agreement.
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7. SEVERABILITY. If any provision of this Agreement is adjudged by any court
to be void or unenforceable in whole or in part, this adjudication shall not
effect the validity of the remainder of the Agreement. Each provision,
paragraph and subpart of this Agreement is separable from every other
provision, paragraph and subpart and constitutes a separate and distinct
covenant.
8. APPLICABLE LAW. This Agreement shall be construed in accordance with the
laws of the State of Maryland.
9. COMPLETE AGREEMENT. This Agreement embodies all the terms and conditions
as agreed to between the parties. Xx. Xxxxxx acknowledges that he has not
relied on any warranties or representations or promises except as set forth in
this document. This Agreement may be changed, amended or superseded only by an
agreement in writing signed by the parties.
10. ARBITRATION
(a) Mandatory Arbitration. The parties agree that any dispute under this
Agreement, including termination, shall be subject to mandatory arbitration
pursuant to the rules of the American Arbitration Association. The parties
acknowledge that arbitration is the sole remedy available to them regarding
their claims under this Agreement. Provided, however, that if the Company
fails to comply with its obligations in paragraph 4(a) or (b) Xx. Xxxxxx
shall have the right to seek injunctive relief to enforce the Agreement.
Xx. Xxxxxx and the Company otherwise agree to waive all fights to litigate
disputes under this Agreement in federal or state court. This provision to
arbitrate any dispute in connection with the terms and conditions of this
Agreement shall survive termination of this Agreement.
(b) Arbitration Procedures. Unless the parties to the arbitration agree
otherwise, the arbitration shall take place in Xxxxxxxxxx County, Maryland.
The arbitration award shall be final and binding upon the parties and may
be entered in any court having jurisdiction. The parties will use a single
arbitrator and shall divide the costs of the arbitration equally. Each
party shall bear its own attorney's fees and costs for the arbitration.
Xx. Xxxxxx Xxxxxx EMAGINET, INC.
/s/ Xxxxxx Xxxxxx By: /s/ Xxxxxxx Xxxxxxx
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Title: Executive Vice President
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WITNESS:
ILLEGIBLE SIGNATURE
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