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EXHIBIT 10.5
EMPLOYMENT AGREEMENT
This Employment Agreement (this "AGREEMENT") is made and entered into
as of the 1st day of October 1996, by and between EDUDATA CORPORATION, a
Delaware corporation (the "COMPANY"), and Xxxxxx X. Xxxxxxxxx ("EXECUTIVE").
1. ENGAGEMENT AND DUTIES.
(a) Upon the terms and subject to the conditions set
forth in this Agreement, the Company hereby engages and employs Executive as an
employee of the Company, with the title and designation of Chairman of the
Board of Directors, Chief Executive Officer and President. Executive hereby
accepts such engagement and employment.
(b) Executive shall be responsible for the oversight and
management of the Company's operations. Executive shall report directly to the
Board of Directors of the Company (the "BOARD").
(c) Executive agrees to devote his primary business time,
energies, skills, effort and attention to his duties hereunder and will not
render any material services to any other business concern. Executive will use
his best efforts and abilities faithfully and diligently to promote the
Company's business interests.
(d) Except for routine travel incident to the business of
the Company, Executive shall perform his duties and obligations under this
Agreement principally from an office provided by the Company in Westlake
Village, California.
2. TERM OF EMPLOYMENT. Executive's employment pursuant to this
Agreement shall commence on the date set forth above and shall terminate on the
earliest to occur of any of the following:
(a) the later to occur of (i) October 1, 1999,
and (ii) the third anniversary (the "OFFERING ANNIVERSARY") of the effective
date of a public offering of the Company's equity securities to be underwritten
by X.X. Xxxxxxxx & Co., Inc. (the "PUBLIC OFFERING"); provided, however, that
this subpart (a)(ii) shall not apply if the registration statement to be filed
with the United States Securities and Exchange Commission (the "COMMISSION") in
connection with the Public Offering (the "REGISTRATION STATEMENT") has not been
declared effective by the Commission on or prior to June 30, 1997.
(b) at any time, without cause, upon delivery by
the Company to Executive of 30 days' written notice of termination;
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(c) upon the death of Executive;
(d) upon delivery by the Company to Executive of
written notice of termination if Executive shall suffer a physical or mental
disability which renders Executive, in the reasonable judgment of the Board,
unable to perform his duties and obligations under this Agreement for 30 days
in any 12-month period; or
(e) immediately upon delivery by the Company to
Executive of written notice of termination "for cause," by reason of: (i) any
act or omission knowingly undertaken or omitted by Executive with the intent of
causing damage to the Company, its subsidiaries, its properties, assets or
business or its stockholders, officers, directors or employees; (ii) any act of
Executive involving any fraud, misappropriation or embezzlement, involving
properties, assets or funds of the Company or any of its subsidiaries; (iii)
Executive's failure to perform his normal duties or any provision of this
Agreement, in either case, as directed by the Board; (iv) conviction of, or
pleading nolo contendere to, (A) any crime or offense involving monies or other
property of the Company or its subsidiaries, (B) any felony offense, or (C) any
crime of moral turpitude; or (v) the chronic or habitual use of
non-prescription drugs or consumption of alcoholic beverages.
3. COMPENSATION
(a) During the term of his employment pursuant to this
Agreement, the Company shall pay to Executive a base salary (the "BASE SALARY")
at an annual rate of $180,000 until February 28, 1997 and thereafter at an
annual rate of $275,000. The base salary shall be payable in installments
throughout the year in the same manner and at the same times the Company pays
base salaries to other employees of the Company. Executive's performance will
be reviewed annually and, his base salary may be adjusted by the Board in the
exercise of its sole discretion; provided, however, that in no event shall
Executive's Base Salary be adjusted to (i) an annual rate of less than $180,000
prior to March 1, 1997 and (ii) an annual rate of less than $275,000 on or
after March 1, 1997.
(b) The Company shall pay to Executive a car allowance
during the term of his employment pursuant to this Agreement at a rate of $400
per month. The Company shall also provide Executive with a gas credit card
from a vendor of Executive's choosing.
(c) Executive shall be entitled to two weeks vacation
during each year of his employment pursuant to this Agreement.
(d) Executive, upon presentation of receipts or other
appropriate documentation, shall be entitled to reimbursement from the Company
for the reasonable costs and expenses which he incurs solely in connection with
the performance of his duties and obligations under this Agreement.
(e) The Company may deduct from any compensation payable
to Executive the amounts sufficient to cover applicable federal, state and/or
local income tax withholding, old-
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age and survivors' and other social security payments, state disability and
other insurance premiums and payments.
4. OTHER BENEFITS. During the term of his employment hereunder,
Executive shall be eligible to participate in the medical and dental insurance
programs (the "BENEFIT PLANS") maintained by the Company; provided, however,
that nothing contained in this Section 4 shall, in any manner whatsoever,
directly or indirectly, require or obligate the Company to adopt or implement,
or to prevent, preclude or otherwise prohibit the Company from amending,
modifying, curtailing, discontinuing or otherwise terminating the Benefit Plans
at any time (whether during or after the term hereof).
5. COMPENSATION UPON TERMINATION. Upon termination of this
Agreement, Executive shall receive all Base Salary earned through the date of
termination. If Executive's employment is terminated by the Company during the
term hereof pursuant to Section 2(b) hereof, Executive shall receive as
severance: (a) an amount equal to all Base Salary which would have been payable
to Executive through the earlier to occur of (i) September 30, 1999 and (ii)
the three-month anniversary of the Executive's final date of employment with
the Company, in either case payable at the rate of Executive's Base Salary at
the time of his termination; (b) the right to participate in all Company
Benefit Plans for a period of 12 months following the date of his termination;
and (c) the full vesting of all option rights granted to Executive by the
Company. If Executive's employment hereunder should be terminated for any of
the reasons set forth in Sections 2(a) and 2(c) through 2(e) hereof, Executive
shall not be entitled to any severance pay, benefits continuance or other
compensation not expressly set forth in the first sentence of this Section 5.
6. CONFIDENTIALITY AND TRADE SECRETS. Executive shall not, at
any time during or after the term of his employment, exploit, use for any
purpose not specifically related to Executive's employment by the Company
pursuant to the terms of this Agreement or disclose to any person (except as
required by law after first notifying the Company and giving the Company an
opportunity to object) any confidential information including, but not limited
to: price lists, pricing information, customer lists, customer names,
financial information, knowledge, trade secrets, know-how, unprinted or printed
data, and related intangible property developed during or prior to the term of
this Agreement, belonging to, used by, or developed by or for the benefit of
the Company (collectively, the "TRADE SECRETS").
7. RETURN OF CORPORATE PROPERTY AND TRADE SECRETS. Upon any
termination of this Agreement, Executive shall turn over to the Company all
property, writings or documents then in his possession or custody belonging to
or relating to the affairs of the Company or comprising or relating to Trade
Secrets.
8. DISCOVERIES AND INVENTIONS. If Executive, while employed by
the Company, makes, either solely or jointly with others, any discovery,
improvement or invention which would pertain or relate in any way to the
business, products, publications or processes of the Company, its subsidiaries
or affiliates, such discovery, improvement or invention (whether or not of
patent, copyright or trademark nature) shall be the exclusive property of the
Company.
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Executive shall execute and deliver to the Company without further
compensation, any and all documents which the Company deems necessary or
appropriate to prepare or prosecute applications for patents, copyrights, or
trademarks upon such discovery, improvement or invention, for the purposes of
assigning and transferring to the Company Executive's entire right, title and
interest in and to such discovery, improvement or invention, and patents,
copyrights or trademarks therefor, and otherwise more fully and perfectly to
evidence the Company's ownership thereof. This Section 8 shall not apply to
any discovery, improvement or invention Executive made prior to the
commencement of Executive's employment with the Company.
9. NON-COMPETITION. Executive agrees that, during the term of
this Agreement, Executive will not have any ownership interest (of record or
beneficial) in or have any interest as an employee, salesman, consultant,
officer or director of, or otherwise aid or assist in any manner, any firm,
corporation, partnership, proprietorship or other business which is competitive
with the Company anywhere in the world (a "COMPETITIVE ACTIVITY"); provided,
however, that Executive may own, directly or indirectly, solely as an
investment, securities of any person which is in competition with the Company,
which securities are traded in any national securities exchange or market, if
Executive (x) is not a controlling person of, or a member of a group which
controls, such person; or (y) does not, directly or indirectly, own two percent
or more of any class of securities of such person (a "PERMITTED COMPETITIVE
ACTIVITY"). Additionally, during the term of this Agreement and the three-
year period following the termination of this Agreement, Executive agrees not
to: (a) request or advise any then current employee of the Company to leave the
employ of the Company or (b) make an offer of employment to any person who was
employed by the Company in the six months immediately preceding the making of
such employment offer. Further, Executive agrees that during the three-year
period following the termination of this Agreement, in each year that the
Company provides Executive with a payment of $10,000 (the "Post Termination
Payment") (which Post Terminating Payments, if any, shall be due and paid to
Executive on the date of the termination of this Agreement and the first and
second anniversaries thereof), Executive will not engage in any Competitive
Activity other than a Permitted Competitive Activity; provided, however, that
if the Company fails to make any Post Termination Payment when due Executive
shall have no further objections to the Company with respect to the agreements
contained in this sentence.
10. SECURITIES REPURCHASE RIGHT. If prior to the later to occur
of (1) October 1, 1999, and (b) the Offering Anniversary (provided, however,
that this subpart (b) shall not apply if the Registration Statement has not
been declared effective by the Commission on or prior to June 30, 1997),
Executive employment hereunder is terminated and Executive engages in any
Competitive Activity other than a Permitted Competitive Activity, then the
Company shall have the right to purchase from Executive that number of shares
of the Company's Common Stock, par value $0.01 per share, (the "COMMON STOCK")
equal to fifty percent of (x) the greater of the number of shares of Common
Stock held by Executive on (i) October 1, 1996 or (ii) the date that the
Registration Statement is declared effective by the Commission (provided,
however, that this subpart (x)(i) shall not apply if the Registration Statement
is not declared effective by the Commission on or prior to June 30, 1997) (the
"ORIGINAL SHARES") less the number of Original Shares sold by Executive prior
to the date of termination of this Agreement (the "TERMINATION DATE") pursuant
to Rule 144 ("RULE 144 SALES") under the Securities Act of 1933, as amended,
plus (y) the number of shares of Common Stock, if any, acquired by Executive
prior to the Termination Date pursuant to the exercise of any options and/or
warrants granted to Executive in consideration of services rendered to the
Company by Executive (the "OPTION SHARES") less the number of Option Shares
sold in Rule 144 Sales. The per share purchase price of any share of the
Common Stock purchased by the Company pursuant to this Section 10 shall equal
fifty percent of the fair market value of a share of the Common Stock on the
Termination Date. For
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the purposes of this Section 10, fair market value shall mean price (1) if the
Common Stock is listed on the New York Stock Exchange, the American Stock
Exchange or any successor to either of such exchange, the average of the
closing price (as reported by such exchange) for the Common Stock for the ten
trading days immediately preceding the Termination Date, (2) if the Common
Stock is traded in the Nasdaq National Market, the Nasdaq Small Cap Market or
any successor to either of such markets, the average of the last sale price (as
reported by such market) for the ten trading days immediately preceding the
Termination Date, or (3) if the Common Stock is not listed on any such exchange
or market, the good faith determination of the Board as to the value of a share
of Common Stock on the Termination Date. Notwithstanding anything herein to
the contrary, the provisions of this Section 10 shall not apply, and the
Company shall have no purchase right, if Executive is terminated without cause,
or if Executive terminates his employment with the Company as a result of any
breach by the Company of its obligations hereunder. The certificates
representing the shares of Common Stock which are subject to this Section 10
shall bear a legend indicating that such shares are subject to this Section.
11. INJUNCTIVE RELIEF. Executive hereby recognizes, acknowledges
and agrees that, in the event of any breach by Executive of any of his
covenants, agreements, duties or obligations hereunder, the Company would
suffer great and irreparable harm, injury and damage, the Company would
encounter extreme difficulty in attempting to prove the actual amount of
damages suffered as a result of such breach, and the Company would not be
reasonably or adequately compensated in damages in any action at law.
Executive therefore covenants and agrees that, in addition to any other remedy
the Company may have at law, in equity, by statute or otherwise, in the event
of any breach by Executive of any of his covenants, agreements, duties or
obligations hereunder, the Company shall be entitled to seek and receive
temporary, preliminary and permanent injunctive and other equitable relief from
any court of competent jurisdiction to enforce any of the rights of the
Company, or any of the covenants, agreements, duties or obligations of
Executive hereunder, and/or otherwise to prevent the violation of any of the
terms or provisions hereof, all without the necessity of proving the amount of
any actual damage to the Company or any affiliate thereof resulting therefrom;
provided, however, that nothing contained in this Section 11 shall be deemed or
construed in any manner whatsoever as a waiver by the Company of any of the
rights which the Company may have against Executive at law, in equity, by
statute or otherwise arising out of, in connection with or resulting from the
breach by Executive of any of his covenants, agreements, duties or obligations
hereunder.
12. ARBITRATION.
(a) General. All disputes, controversies or unresolved
questions that arise under or with respect to this Agreement shall be settled
by arbitration under this Section 12. The party desiring arbitration shall
give notice to that effect to the other party. Arbitration shall be conducted
in accordance with the Employment Dispute Resolution Rules or then existing
rules for arbitration of employment disputes issued by the American Arbitration
Association. Any arbitration proceedings hereunder shall be held in Los
Angeles County, California, United States of America before a panel of three
arbitrators (one selected by Executive, one selected by the
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Company and one selected by the other two arbitrators). The arbitrators shall
only interpret and apply the terms and provisions of this Agreement and shall
not change any such terms or provisions or deprive either party of any right or
remedy expressly or impliedly provided for in this Agreement (or any agreement
relating hereto). The arbitration of such issues, including the determination
of any amount of damages suffered by any party, shall be final and binding upon
the parties hereto to the maximum extent permitted by law. The parties intend
that this Section 12 shall be valid, binding, enforceable and irrevocable and
shall survive the termination of this Agreement.
(b) Exception. Notwithstanding the foregoing provisions
of this Section 12, a party having given the other party at least ten days'
notice of the other party's alleged breach may in good faith seek immediate
equitable relief from a court of competent jurisdiction to enable the
instituting party to prevent irreparable harm (alleged to arise from the
alleged breach) pending arbitral relief.
(c) Arbitrators' Fees. The prevailing party shall
recover all fees, costs and expenses of any arbitrator, whether selected by the
Executive on the one hand or Company on the other hand.
(d) Expedited Procedure. By mutual agreement, the
parties may agree to have the arbitration conducted on an expedited basis.
Thereafter, the arbitrator shall be empowered to expedite the proceedings by
all reasonable means consistent with a fair hearing of the dispute. Such means
may include the imposition of accelerated discovery and hearing schedules,
requiring submissions within abbreviated time periods and imposing limits on
numbers of witnesses and the length of hearings.
(e) Enforcement. Judgment upon the decision of the
arbitrator may be entered in any court having jurisdiction over the party
against which enforcement is sought.
13. ATTORNEYS' FEES. If any action, suit, arbitration or other
proceeding is instituted concerning or arising out of this Agreement, the
prevailing party shall recover all of such party's costs and attorneys' fees
incurred in each and every such action, suit or other proceeding, including any
and all appeals or petitions therefrom. As used herein, "ATTORNEYS' FEES"
shall mean the full and actual costs of any legal services actually rendered in
connection with the matters involved, calculated on the basis of the usual fee
charged by the attorneys performing such services, and shall not be limited to
"reasonable attorneys' fees" as defined by any statute or rule of court.
14. MISCELLANEOUS.
(a) Notices. All notices, requests and other
communications (collectively, "NOTICES") given pursuant to this Agreement shall
be in writing, and shall be delivered by personal service or by United States
first class, registered or certified mail (return receipt requested), postage
prepaid, addressed to the party at the address set forth below:
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If to Company:
EDUDATA CORPORATION
000 Xxxxx Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: ____________________
Telephone: (000) 000-0000
Fax: (000) 000-0000
If to Executive:
Xxxxxx X. Xxxxxxxxx
__________________________
__________________________
Telephone: ( )
Fax: ( )
Any Notice shall be deemed duly given when received by the addressee thereof,
provided that any Notice sent by registered or certified mail shall be deemed
to have been duly given three days from date of deposit in the United States
mails, unless sooner received. Either party may from time to time change its
address for further Notices hereunder by giving notice to the other party in
the manner prescribed in this section.
(b) Entire Agreement. This Agreement contains the sole
and entire agreement and understanding of the parties with respect to the
entire subject matter of this Agreement, and any and all prior discussions,
negotiations, commitments and understandings, whether oral or otherwise,
related to the subject matter of this Agreement are hereby merged herein. No
representations, oral or otherwise, express or implied, other than those
contained in this Agreement have been relied upon by any party to this
Agreement.
(c) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT
REGARD TO CONFLICTS OF LAW PRINCIPLES THEREOF.
(d) Captions. The various captions of this Agreement are
for reference only and shall not be considered or referred to in resolving
questions of interpretation of this Agreement.
(e) Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but
all of which together shall constitute one and the same instrument.
(f) Business Day. If the last day permissible for
delivery of any Notice under any provision of this Agreement, or for the
performance of any obligation under this Agreement, shall be other than a
business day, such last day for such Notice or performance shall be
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extended to the next following business day (provided, however, under no
circumstances shall this provision be construed to extend the date of
termination of this Agreement).
(g) Successors and Assigns. This Agreement and all
obligations and benefits of Executive and the Company hereunder shall bind and
inure to the benefit of Executive and the Company, their respective affiliates,
and their respective successors and assigns. Conversely, no assignment of this
Agreement, of any of the rights and/or duties hereunder by any party hereto
shall be valid without the prior written consent of the other party.
(h) Amendments and Waivers. No amendment or waiver of
any term or provision of this Agreement shall be effective unless made in
writing. Any written amendment or waiver shall be effective only in the
instance given and then only with respect to the specific term or provision (or
portion thereof) of this Agreement to which it expressly relates, and shall not
be deemed or construed to constitute a waiver of any other term or provision
(or portion thereof) waived in any other instance.
In witness whereof, the parties have executed this Agreement as of the date
first set forth above.
Company: Executive:
EDUDATA CORPORATION
By: /s/ XXXXXX X. XXXXXXXXX /s/ XXXXXX X. XXXXXXXXX
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Its: Chairman of the Board Xxxxxx X. Xxxxxxxxx
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