EXHIBIT 10.5
EMPLOYMENT AGREEMENT
This Employment Agreement is made and entered into as of January 1,
2003 by and between Grassroots Communications, Inc., a Delaware corporation with
offices at 00000 Xx Xxxxx-Xxxxx 0X, Xxxx Xxxxxx, Xxxxxxxxxx 00000 (hereinafter
called the "Company"), and Cery Perle, residing at 00000 Xxxxxx Xxxx Xxxxxx,
Xxxx Xxxxxx, Xxxxxxxxxx 00000 (hereinafter called "Employee").
W I T N E S S E T H:
The Company desires to employ Employee to perform services for the
Company, and Employee desires to perform such services, on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. EMPLOYMENT
The Company agrees to employ Employee, and Employee agrees to serve the
Company in an executive capacity upon the terms and conditions hereinafter set
forth.
2. TERM
The term of this Agreement shall commence on the date hereof and
continue until December 31, 2005 (the "Term"), unless sooner terminated as
herein provided including termination under any of the subsections described in
Section 7. The agreement will automatically renew for the same period of time,
under the same terms with a ten percent (10%) increase in salary.
3. COMPENSATION
(a) Base Salary. The Company agrees to pay Employee during the Term
hereof, a salary at the annual rate of Two Hundred Eighteen Thousand Dollars
($218,000) (the "Base Salary"). The Company shall make all salary payments in
equal semi-monthly installments in arrears. All salary, bonus, or other
compensation payable to Employee shall be subject to the customary withholding
tax and other employment taxes and deductions as required by law with respect to
compensation paid by an employer to an employee.
(b) Option. The Company shall grant Employee an option to purchase two
million (2,000,000) shares of its common stock at a price of $.01 per share (the
"Option") pursuant to the Company's 2002 Stock Option Plan. The Option shall
vest ratably on a monthly basis during the first two (2) years of the Term of
this Agreement. The Company and Employee shall execute
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and deliver to each other an option agreement in the form annexed to this
Agreement as Exhibit A.
4. DUTIES
The Employee is hereby employed as President of the Company and shall
perform the following services in connection with the general business of the
Company:
(a) Duties and Responsibilities. Employee shall have the duties and
responsibilities of the President position and such other duties may be
specified from time to time by the Company's Board of Directors. Such other
duties shall include the position of Chief Financial Officer of the Company
until such time as the Board of Directors has elected another person to serve in
such position.
(b) Compliance. Employee hereby agrees to observe and comply with such
reasonable rules and regulations of the Company as may be duly adopted from time
to time by the Company's Board of Directors and otherwise to carry out and
perform those orders, directions and policies stated to him from time to time by
the Company's Board of Directors, either as specified in the minutes of the
proceedings of the Board of Directors of the Company or otherwise in writing
that are reasonably necessary and appropriate to carry out his duties hereunder.
Employee shall report to the Board of Directors of the Company.
5. EXTENT OF SERVICES
Employee agrees to serve the Company faithfully and to the best of his
ability and shall devote his full time, attention and energies to the business
of the Company during customary business hours. Employee agrees to carry out his
duties in a competent and professional manner and to at all times promote the
best interests of the Company. Employee shall not, during the term of his
employment hereunder, engage in any other business, whether or not pursued for
profit; provided, however, that nothing contained herein shall be construed as
preventing Employee from investing in any other business or entity which is not
in competition with the business of the Company (but in amount not to exceed
five (5%) percent of the issued and outstanding equity of the company). Nothing
contained herein shall be construed as preventing Employee from engaging in (1)
personal business affairs and other personal matters, (2) serving on civic or
charitable boards or committees, or (3) serving on the board of directors of
companies that do not compete directly or indirectly with the Company, provided
however, that none of such activities materially interferes with the performance
of his duties under this Agreement.
6. BENEFITS AND EXPENSES
During the term of this Agreement, Employee shall be entitled to, and
the Company shall provide, the following benefits in addition to those specified
in Section 3:
(a) Vacation. Employee shall be entitled to four weeks vacation in each
twelve month period during the Term. Vacation may be taken at such time(s) as
Employee may determine provided that such vacation does not interfere with the
Company's business
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operations. Employee may not accrue more than 30 days of unused vacation. If
Employee at any time has 30 days of accrued unused vacation, no further vacation
days shall accrue until Employee again has fewer than 30 days of unused
vacation. The Company shall pay Employee for accrued unused vacation days at the
Employee's request. Such payment shall be made on the basis of Employee's Base
Salary at the time of payment, pro-rated for the number of accrued unused
vacation days at the time of termination.
(b) Expense Reimbursement. The Company shall reimburse Employee upon
submission of vouchers for his out-of-pocket expenses for travel, entertainment,
meals and the like reasonably incurred by him pursuant to his employment
hereunder in accordance with the general policy of the Company as adopted by its
Board of Directors from time to time.
(c) Health Insurance. The Company shall provide Employee with health
insurance in the coverages consistent with those provided to other key
executives of the Company.
(d) Car Allowance. The Company will provide to Employee a car allowance
of $1,200 each month during the Term of this Agreement and shall pay such car
allowance not less frequently than monthly. Employee shall be responsible for
insurance with regards to the operation of the car.
(e) Disability. If the Company maintains disability insurance, then the
Company shall provide a disability policy for Employee comparable to the
policies in force for other similar executives in the Company.
(f) Other Benefits. The Company shall provide to Employee the same
benefits it makes available to other key executives of the Company.
7. TERMINATION FOR CAUSE; DISABILITY; DEATH; RESIGNATION; TERMINATION
BY EMPLOYEE IN CERTAIN EVENTS;TERMINATION WITHOUT CAUSE
(a) Termination for Cause. The Company shall have the right to
terminate Employee's employment hereunder for cause. Upon such termination,
Employee shall have no further duties or obligations under this Agreement
(except as provided in Section 8) and the obligations of the Company to Employee
shall be as set forth below. For purposes of this Agreement, "cause" shall mean:
(A) Employee's conviction of a felony under federal or state
law;
(B) Employee's failure to perform (other than as a result of
Employee's being Disabled), in any material respect, any of his duties or
obligations under or in accordance with this Agreement and Employee fails to
cure such failure within thirty (30) days following receipt of written notice
from the Company describing the failure to perform and stating that the Company
will consider the continuation of such failure to perform as cause for
termination of this Agreement;
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(C) Any willful conduct by Employee causing material harm to
the Company, but only if Employee shall not have discontinued such misconduct
within 10 days after receiving written notice from the Company describing the
misconduct and stating that the Company will consider the continuation of such
misconduct as cause for termination of this Agreement; or
(D) Employee commits any dishonest, malicious or grossly
negligent act which causes material harm to the business or reputation of the
Company, or the Company's business relationships, provided, however, the Company
shall give Employee written notice of the reason for the termination.
In the event, the Company terminates Employee's employment for cause,
then Employee shall be entitled to receive through the date of termination: (1)
his Base Salary as defined in Section 3(a) hereof; (2) the benefits provided in
Section 6 hereof including all accrued but unpaid vacation; and (3) the right to
exercise the Option in accordance with its terms with respect to the shares of
common stock that have become vested under the Option through the date of
termination.
(b) Disability. The Company shall have the right to terminate
Employee's employment hereunder:
(1) By reason of Employee's becoming Disabled for an aggregate
period of one hundred twenty (120) days in any consecutive three hundred sixty
(360) day period (the "Disability Period").
(A) "Disabled" as used in this Agreement means that,
by reason of physical or mental incapacity, Employee shall fail or be unable
substantially perform the customary duties of his employment.
(B) If the existence of a disability is in dispute,
it shall be resolved by two physicians, one appointed by Employee and one
appointed by the Board of Directors of the Company. If the two physicians so
selected cannot agree as to whether or not Employee is Disabled as defined in
subsection (A) above, the two physicians so selected shall designate a third
physician and a majority of the three physicians so selected shall determine
whether or not Employee is Disabled.
(C) In the event Employee is Disabled, during the
period of such disability he shall continue to receive his Base Salary in the
amount set forth in Section 3(a) hereof, which Base Salary shall be reduced by
the amount of all disability benefits he actually receives under any disability
insurance program in place with the Company until the first to occur of (1) the
cessation of the Disability or (2) the termination of this Agreement by the
Company at any time after the Disability Period. During the period of Disability
and prior to termination, the Employee shall continue to receive the benefits
provided in Section 6 hereof and shall have the right to exercise the Option in
accordance with its terms with respect to the shares of common stock that have
become vested under the Option through the date of termination.
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(D) For the purposes of this Section 7(b), any
amounts to be paid to Employee by the Company pursuant to subsection (C) above,
shall not be reduced by any disability income insurance proceeds received by him
under any disability insurance policies owned or paid for by Employee.
(E) If Employee is terminated at the end of the
Disability Period, then Employee shall receive through the date of termination:
(1) his Base Salary as defined in Section 3(a) hereof; (2) the benefits provided
in Section 6 hereof including all accrued but unpaid vacation; and (3) the right
to exercise the Option in accordance with its terms with respect to the shares
of common stock that have become vested under the Option through the date of
termination.
(c) Death. The Company's employment of Employee shall terminate upon
his death and all payments and benefits shall cease upon such date provided,
however, that under this Agreement the estate of such Employee shall be entitled
to receive through the date of termination (1) his Base Salary as defined in
Section 3(a) hereof, (2) the benefits provided in Section 6 hereof including all
accrued but unpaid vacation, and (3) the right to exercise the Option in
accordance with its terms with respect to the shares of common stock that have
become vested under the Option through the date of termination.
(d) Resignation. If Employee voluntarily resigns during the Term of
this Agreement, then all payments and benefits shall cease on the effective date
of resignation, provided that under this Agreement Employee shall be entitled to
receive through the date of such resignation (1) his Base Salary as defined in
Section 3(a) hereof; (2) the benefits provided in Section 6 hereof including all
accrued but unpaid vacation; and (3) the right to exercise the Option in
accordance with its terms with respect to the shares of common stock that have
become vested under the Option through the date of resignation.
(e) Termination by Employee in Certain Events.
Employee may elect, by written notice to the Company, such
notice to be effective immediately upon receipt by the Company, to terminate his
employment hereunder if:
(1) The Company sells all or substantially all of its assets;
(2) The Company merges or consolidates with another business
entity in a transaction immediately following which the holders of all of the
outstanding shares of the voting capital stock of the Company own less than a
majority of the outstanding shares of the voting capital stock of the resulting
entity (whether or not the resulting entity is the Company); provided, however,
that Employee shall not be permitted to terminate his employment under this
subsection unless he notifies the Company in writing that he does not approve of
the directors selected to serve on the Board after the merger or similar
transaction described herein;
(3) More than fifty (50) percent of the outstanding shares of
the voting common or capital stock of the Company are acquired by a person or
group (as such terms are
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used in Section 13(d) of the Securities Exchange Act of 1934, as amended), which
person or group includes neither Employee nor the holders of the majority of the
outstanding shares of the voting common or capital stock of the Company on the
date hereof; provided, however, that Employee shall not be permitted to
terminate his employment under this subsection unless he notifies the Company in
writing that he does not approve of the directors selected to serve on the Board
after the merger or similar transaction described herein; or
(4) Employee is removed as a member of the Board of Directors
without Employee's consent or approval by stockholders holding a majority of the
Company's outstanding voting stock.
If Employee elects to terminate his employment hereunder
pursuant to this Section 7(e), then: (1) the Company shall continue to pay to
Employee his Base Salary as provided in Section 3(a) hereof through the end of
the Term; (2) the Company shall continue to provide to Employee the benefits
provided in Sections 6(c) and (d) hereof through the end of the Term; and (3)
the Option granted to Employee hereunder shall vest immediately with respect to
the shares of common stock subject thereto and the term of the Option shall
continue for the period specified in the Option had the employment of Employee
not been so terminated.
(f) Termination Without Cause. If Employee's employment with the
Company is terminated by the Company without cause, then: (1) the Company shall
continue to pay Employee his Base Salary as provided in Section 3(a) hereof
through the end of the Term; (2) the Company shall continue to provide to
Employee the benefits provided in Sections 6(c) and (d) hereof through the end
of the Term; and (3) the Option granted to Employee hereunder shall vest
immediately with respect to the shares of common stock subject thereto and the
term of the Option shall continue for the period specified in the Option had the
employment of Employee not been so terminated.
8. CONFIDENTIALITY; RESTRICTIVE COVENANTS; NON COMPETITION
(a) Non-Disclosure of Information. Employee recognizes and acknowledges
that by virtue of his position as a key executive, he will have access to the
lists of the Company's referral sources, suppliers, advertisers and customers,
financial records and business procedures, sales force and personnel, programs,
software, selling practices, plans, special methods and processes for electronic
data processing, special techniques for testing commercial and sales materials
and products, custom research services in product development, marketing
strategy, product manufacturing techniques and formulas, and other unique
business information and records (collectively "Proprietary Information"), as
same may exist from time to time, and that they are valuable, special and unique
assets of the Company's business. Employee also may develop on behalf of the
Company a personal acquaintance with the present and potential future clients
and customers of the Company, and Employee's acquaintance may constitute the
Company's sole contact with such clients and customers. Employee will not during
the Term of his employment, and at any time following the end of the Term of or
earlier termination of this Agreement regardless of the reason therefor,
disclose trade secrets or other confidential information about the Company,
including but not limited to Proprietary Information, to any person, firm,
corporation, association or other entity for any reason or any purpose
whatsoever or
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utilize such trade secrets or other confidential information about the Company,
including but not limited to Proprietary Information, for his own benefit or the
benefit of any third party. All equipment, records, files, memoranda, computer
print-outs and data, reports, correspondence and the like, relating to the
business of the Company which Employee shall use or prepare or come into contact
with shall remain the sole property of the Company. Employee shall immediately
turn over to the Company all such material and all Proprietary Information in
Employee's possession, custody or control at such time as this Agreement is
terminated. Proprietary Information shall not include information that was a
matter of public knowledge on the date of this Agreement or subsequently becomes
public knowledge other than as a result of having been revealed, disclosed or
disseminated by Employee, directly or indirectly, in violation of this
Agreement.
(b) Non-Solicitation. Employee covenants and agrees that during the
Term of his employment, and for a two (2) year period immediately following the
end of the Term of or earlier termination of this Agreement, regardless of the
reason therefor, Employee shall not solicit, induce, aid or suggest to: (1) any
employee of the Company to leave such employ, (2) any contractor, consultant or
other service provider to terminate such relationship with the Company, or (3)
any customer, agency, vendor, or supplier of the Company to cease doing business
with the Company.
(c) Enforcement. In view of the foregoing, Employee acknowledges and
agrees that it is reasonable and necessary for the protection of the good will,
business, trade secrets, confidential information and Proprietary Information of
the Company that he makes the covenants in this Section 8 and that the Company
will suffer irreparable injury if Employee engages in the conduct prohibited by
Section 8 (a) or (b) of this Agreement. Employee agrees that upon a breach,
threatened breach or violation by him of any of the foregoing provisions of this
Section 8, the Company, in addition to all other remedies it may have including
an action at law for damages, shall be entitled as a matter of right to
injunctive relief, specific performance or any other form of equitable relief in
any court of competent jurisdiction without being required to post bond or other
security and without having to prove the inadequacy of the available remedies at
law, to enjoin and restrain Employee and each and every other person,
partnership, association, corporation or organization acting in concert with
Employee, from the continuance of any action constituting such breach. The
Company shall also be entitled to recover from Employee all of its reasonable
costs incurred in the enforcement of this Section 8 including its reasonable
legal fees. Employee acknowledges that the terms of Section 8(a) and (b) are
reasonable and enforceable and that, should there be a violation or attempted or
threatened violation by Employee of any of the provisions contained in these
subsections, the Company shall be entitled to relief by way of injunction,
specific performance or other form of equitable relief. In the event that any of
the foregoing covenants in Sections 8 (a) or (b) shall be deemed by any court of
competent jurisdiction, in any proceedings in which the Company shall be a
party, to be unenforceable because of its duration, scope, or area, it shall be
deemed to be and shall be amended to conform to the scope, period of time and
geographical area which would permit it to be enforced.
(d) Independent Covenants. The Company and Employee agree that the
covenants contained in this Section 8 shall each be construed as a separate
agreement
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independent of any of the other terms and conditions of this Agreement, and the
existence of any claim by Employee against the Company, whether predicated on
this Agreement or otherwise, shall not constitute a defense by Employee to the
Company's enforcement of any of the covenants of this Section 8.
(e) Exclusion from Arbitration. The terms and conditions of this
Section 8 including the enforcement thereof by the Company are specifically
excluded from the arbitration of all other matters under this Agreement as
provided in Section 13 hereof.
9. DISCLOSURE AND ASSIGNMENT OF RIGHTS.
(a) Disclosure. Employee agrees that he will promptly assign to the
Company or its nominee(s) all right, title and interest of Employee in and to
any and all ideas, inventions, discoveries, secret processes, and methods and
improvements, together with any and all patents or other forms of intellectual
property protection that may be obtainable in connection therewith or that may
be issued thereon, such as trademarks, service marks and copyrights, in the
United States and in all foreign countries, which Employee may invent, develop,
or improve or cause to be invented developed or improved, on behalf of the
Company while engaged in Company related business, during the Term or within six
(6) months after the Term or earlier termination of this Agreement, which are or
were related to the scope of the Company's business or any work carried on by
the Company or to any problems and projects specifically assigned to Employee.
All works and writings which relate to the Company's business are works for hire
under the Copyright Act, and any and all copyrights therefor shall be placed in
the name of and inure to the benefit of the Company.
(b) Assignment of Interest. Employee agrees to disclose immediately to
duly authorized representatives of the Company any ideas, inventions,
discoveries, processes, methods and improvements covered by the terms of this
Section 9 and to execute, at the Company's expense, all documents reasonably
required in connection with the Company's application for appropriate protection
and registration under the federal and foreign patent, trademark, and copyright
law and the assignment thereof to the Company's nominee (s). Employee hereby
appoints the Company's Chairman as true and lawful attorney in fact with full
powers of substitution and delegation to execute acknowledge and deliver any
such instruments and assignments which Employee shall fail or refuse to execute
or deliver.
10. INDEMNIFICATION.
The Company shall indemnify Employee to the maximum extent permitted
under Section 145 of the Delaware General Corporation Law, or any successor
thereto, and shall promptly advance any expenses incurred by Employee prior to
the final disposition of the proceeding to which such indemnity relates upon
receipt from Employee of a written undertaking to repay the amount so advanced
if it shall be determined ultimately that Employee is not entitled to indemnity
under the standards set forth in such Section 145 or its successor. The Company
shall use commercially reasonable efforts to obtain and maintain throughout the
Term of the employment of Employee hereunder directors' and officers' liability
insurance for the benefit of Employee. The indemnification obligations of the
Company under this Section 10 shall survive the termination of the Term or of
this Agreement for any reason whatsoever unless the Agreement is terminated for
cause.
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11. NOTICES.
(a) Any and all notices or other communications given under this
Agreement shall be in writing and shall be deemed to have been duly given on (1)
the date of delivery, if delivered in person or faxed to the addressee, (2) the
next business day if sent by overnight courier or overnight U.S. Postal Service,
or (3) three (3) days after mailing, if mailed within the continental United
States, postage prepaid, by certified mail, return receipt requested, to the
party entitled to receive same, at his or its address set forth below.
The Company:
00000 Xx Xxxxx Xxxxx 0X
Xxxx Xxxxxx, Xxxxxxxxxx 00000
Attn: Mr. Cery Perle
The Employee to him at his address specified above.
(b) The parties may designate by notice to each other any new address
for the purposes of this Agreement as provided in this Section 11.
12. MISCELLANEOUS PROVISIONS
(a) This agreement represents the entire Agreement between the parties
and supersedes any prior agreement or understanding between them with respect to
the subject matter hereof. No provision hereof may be amended, modified,
terminated, or revoked except by a writing signed by all parties hereto.
(b) This Agreement shall be binding upon parties and their respective
heirs, legal representatives, successors and assign. This Agreement and the
rights, duties and benefits hereunder may not be assigned in whole or in part by
either party without the express prior written consent of the other party
hereto, and any such purported assignment shall be null and void.
(c) No waiver of any breach or default hereunder shall be considered
valid unless in writing and signed by the party against whom the waiver is
asserted, and no such waiver shall be deemed the waiver of any subsequent breach
or default of the same or similar nature.
(d) If any provision of this Agreement shall be held invalid or
unenforceable, such invalidity or unenforceability shall affect only such
provision and shall not in any manner affect or render invalid or unenforceable
any other severable provision of this Agreement, and this Agreement shall be
carried out as if any such invalid or unenforceable provision were not contained
herein.
(e) This Agreement shall in all respects be governed by and construed
under the laws of the State of California without giving effect to the
principles of conflict of laws.
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(f) The captions and headings contained in this Agreement are for
convenience only and shall not be construed as a part of this Agreement.
(g) Wherever it appears appropriate from the context, each term stated
in this the singular or the plural shall include the singular and the plural.
(h) The parties hereto agree that they will take such action and
execute and deliver such documents as may be reasonably necessary to fulfill the
terms of this Agreement.
(i) The agreements and covenants set forth in Section 8 above shall
survive termination or expiration of this Agreement.
(j) Employee represents and warrants that he is not subject to any
prohibition or restriction, oral or written, preventing him from entering into
this agreement and undertaking his duties hereunder.
(k) Employee acknowledges that he has consulted with counsel and been
advised of his rights in connection with the negotiation, execution and delivery
of this Agreement including in particular Section 8 of this Agreement.
13. SUBMISSION TO ARBITRATION.
Except as hereinafter expressly provided, every difference or dispute,
of whatever nature, between the Company and Employee involving (1) any breach of
this Agreement or (2) any other difference or dispute arising out of, related
to, under or having any connection with this Agreement, shall be settled and
finally determined by arbitration in Los Angeles, California in accordance with
the then current commercial arbitration rules of the American Arbitration
Association, and judgment upon any award rendered may be entered in any court
having jurisdiction, including but not limited to the courts of the State of
California, and the determination of such arbitration proceeding shall be
binding and conclusive upon the parties. Any claim by the Company against
Employee arising out of, under, in connection with or related to, Section 8 of
this Agreement, whether for equitable relief or monetary damages or any
combination, is specifically excluded from arbitration under this Section 13.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement on the date first above written.
GRASSROOTS COMMUNICATIONS, Inc.
By _____________________________________
[TITLE]
________________________________________
Cery Perle, Employee
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