EXHIBIT 10.5
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of January 1, 2000, between iTract, LLC,
a Delaware limited liability company, with offices at 000 Xxxx 00xx Xxxxxx, Xxx
Xxxx, XX 00000 (the "Company"), and Xxxxx Xxxxxxx, an individual (the
"Employee").
W I T N E S S E T H:
WHEREAS, the Company desires to engage the Employee to perform services
for the Company; and
WHEREAS, the Employee desires to perform such services on the terms
herein set forth. NOW,
THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties hereto agree as follows:
1. Term. The Company agrees to employ the Employee, and the Employee
agrees to provide services to the Company, on the terms of, and subject to the
conditions set forth in, this Agreement for a period of three (3) years
commencing as of the date hereof ("Commencement Date") and ending on the third
(3rd) anniversary hereafter, or such shorter period as may be provided for
herein (the "Employment Period"). This Agreement shall automatically be renewed,
and the Employment Period extended, annually beginning on the third anniversary
of the Commencement Date pursuant to the terms specified herein unless either
the Company or the Employee gives written notice of non-renewal at least 90 days
before the anniversary.
2. Duties and Services.
(a) During the Employment Period, the Employee shall be employed in the
business of the Company as Executive Vice President and shall have such duties
as may be from time to time assigned to the Employee by the President, Chief
Executive Officer ("CEO") and Chairman. The Employee shall report to the
Chairman, or to such other executive officers as are designated by the Chairman,
in such manner and at such times as may be requested of the Employee. The
Employee shall devote his entire working day to, and utilize his best efforts on
behalf of, the Company, and shall undertake such other activities as may from
time to time be requested by the Company's executive officers. The Employee will
have a joint role with the Chairman, CEO and President in planning the vision
and direction of the Company.
(b) Employee warrants that the Employee is not currently restricted
from accepting employment with the Company or from performing any duties at the
Company and that the Employee is not restricted in the solicitation of
customers.
3. Compensation.
(a) The Company shall pay the Employee, during the first year of the
Employment Period, an annual base salary of One Hundred Twenty Thousand
($120,000) Dollars, payable in equal installments based upon the then-current
payment schedule for the Company's employees. During the second year of the
Employment Period, the Employee's annual base salary shall increase to One
Hundred Fifty Thousand ($150,000) Dollars and shall increase during the third
year of the Employment Period to Two Hundred Thousand ($200,000) Dollars.
(b) The Employee shall be entitled to (a) an annual bonus fund upon a
revenue schedule attached hereto as Exhibit A; and (b) a bonus based on
performance, in the discretion of the Chairman.
(c) The Company shall provide such family health insurance benefits as
are provided by the Company to its executive officers. The Company shall provide
disability insurance up to an aggregate premium of $3,000 yearly.
(d) The Employee shall be compensated for business expenses, including
without limitation, expenses relating to commuting, parking and cell phone, and
such other expenses which are both pre-approved and incurred while on Company
business.
(e) The Employee shall be entitled to three (3) weeks of paid vacation
in the first year hereof, and four (4) weeks of paid vacation in the second and
third years hereof.
(f) Upon the offering of the equity of the Company to the public and
its subsequent establishment of a Stock Option Plan, the Employee may receive
stock options to purchase equity in the Company, as determined by, and subject
to the terms and conditions to be adopted by, the Stock Option Committee of the
Company. Said options shall have a cashless exercise option
(g) Employee shall be entitled to participate in any and all pensions
and retirement plans available to other employees of the Company.
(h) Employee shall be eligible to receive such further fringe benefits
as the Board of Directors of the Company, or similar managing body of the
Company, may from time to time make available to its employees.
4. Termination. Notwithstanding anything herein contained, the
Chairman, acting on behalf of the Company, shall have the right to terminate the
Employee for cause, without any notice period, by delivery to the Employee or
the Employee's representative a written notice specifying the cause and date of
termination, if on or after the date hereof and prior to the end of the
Employment Period:
(a) the Employee shall be physically or mentally incapacitated or
otherwise unable fully to discharge the Employee's duties hereunder for an
aggregate period exceeding twelve weeks within any consecutive twelve month
period, during which period the Employee's salary, benefits, bonuses, and other
compensation under this Agreement shall continue in full effect, (ii) the
Employee shall be convicted of a felony or criminal misdemeanor; (iii) the
Employee shall commit any act or omit to take any action in bad faith or to the
detriment of the Company; (iv) the Employee shall fail to perform satisfactorily
the duties and responsibilities assigned to the Employee; or (v) the Employee
shall willfully breach any material term of this Agreement and, if such breach
is curable, shall not have cured or diligently commenced to cure same within
five (5) days after notice thereof. In the event that Employee's employment is
terminated pursuant to paragraph 4(a)(i), Employee shall be entitled to
severance compensation equal to one (1) year of continuous salary and benefits
from the date of termination. In the event the Employee's employment is
terminated pursuant to paragraph 4(a)(iv), Employee shall be entitled to
severance compensation equal to one (1) month of salary for each three (3)
months in which he had been employed hereunder. In the event that the Employee
is terminated pursuant to this paragraph 4(a), Employee's obligations under
paragraphs 5, 6, 7 and 8 of this Agreement shall survive.
(b) the Employee shall die, then this Agreement shall terminate on the
date of Employee's death.
5. Non-Competition/Non-Solicitation of Customer and Employees.
(a) Employee acknowledges that the Employee's employment hereunder will
provide the Employee with access to and knowledge of the customers, trade
secrets, business plans, and other confidential or proprietary information
relating to the Company and its customers, suppliers, plans, strategies, and/or
method of operation .
(b) Employee agrees that, during the term hereof and for a period of
one (1) year after the Employee ceases to be employed by the Company (the
"Restricted Period"), the Employee will not compete with, be engaged in the same
business as, or, directly or indirectly, for the Employee's own benefit or for,
with, or through any other person, firm, or company, own, manage, operate,
control, or participate in the ownership, management, operation, or control of,
or be connected as a director, officer, executive, partner, shareholder (other
than less than a 5% shareholder in a Company whose shares are publicly traded),
manager, consultant, agent, independent contractor, or otherwise with, or
acquiesce in the use of Employee's name in any other business or organization
which competes with, or is engaged in the same business as, the Company in any
geographical area in which the Company conducts business.
(c) During the Restricted Period, the Employee will not, directly or
indirectly, solicit or interfere with, or endeavor to entice away from the
Company any of its suppliers, customers, business contacts or executives. During
the Restricted Period, the Employee will not, directly or indirectly, solicit
for employment, hire or cause to be hired, any
person who, at any time up to the time the Employee ceases to be an executive of
the Company (under this Agreement or otherwise), was an employee of the Company.
(d) Employee acknowledges that the Company's obligations under
paragraph 3 hereunder are part of the valuable consideration provided to the
Employee in exchange for the Employee's agreement to the non-competition and
non-solicitation provisions contained in paragraph 5 of this Agreement. If
Employee breaches any provision of paragraph 5, the Company shall have no
obligation to pay Employee any such compensation or severance and the Employee's
right to further compensation or severance under paragraphs 3 and 4 of this
Agreement shall immediately cease.
(e) Because a breach of the provisions of this paragraph 5 could not
adequately be compensated by money damages, the Company shall be entitled, in
addition to any other right and remedy available to it, to an injunction
restraining such breach or a threatened breach, and in either case no bond or
other security shall be required in connection therewith, and the Employee
hereby consents to the issuance of such injunction.
(f) The Employee agrees that the provisions of this paragraph 5 are
necessary and reasonable to protect the Company in the conduct of its business.
If any restriction contained in this paragraph 5 shall be deemed, by a court of
competent jurisdiction, to exceed the maximum permissible duration or
geographical scope or to exceed the maximum permissible restraints on Employee's
conduct during the Restricted Period, Employee and the Company agree that
paragraph 5 shall be deemed limited to the maximum duration, geographical scope
or restraint that a court of competent jurisdiction would deem valid and
enforceable, and the remainder of this Agreement shall remain in full force and
effect.
6. Company Property. Any interest in inventions, intellectual property,
proprietary information, business contacts, or other goodwill relating to the
business of the Company (the "Company Property") which the Employee now or
hereafter during the period Employee is employed by the Company (under this
Agreement or otherwise) may own or develop shall belong to the Company; and
forthwith upon request of the Company, the Employee shall execute all such
assignments and other documents and take all such other action as the Company
may reasonably request in order to vest in the Company all of Employee's right,
title, and interest in and to the Company Property free and clear of all liens,
charges, and encumbrances of any kind or nature.
7. Confidential Information. All confidential information which the
Employee may obtain or possess during the Employment Period, relating to the
business of the Company or any customer, supplier or business contact of any of
them shall not be published, disclosed, or made accessible by the Employee to
any other person, firm, or company during the term of Employee's employment or
used by Employee, except during the period during which Employee is employed by
the Company in the business and for the benefit of the Company, in each case
without prior written permission of the Company. The Employee shall return all
tangible evidence of such confidential information to the Company prior to or at
the termination of Employee's employment.
8. Notices. All notices hereunder shall be to the other party at the
last known address of such party by certified mail, return receipt requested.
Notice shall be deemed given upon mailing.
9. Enforceability. If any provision of this Agreement is held to be
invalid or unenforceable, such a holding shall not in any way affect the
validity or enforceability of any other provision of the Agreement. If either
party waives any breach of this Agreement, the remainder of this Agreement shall
remain enforceable. The provisions of this Agreement shall be binding upon you,
the Company and its successors and assigns.
10. Entire Agreement. This Agreement sets forth the final and entire
agreement of the parties hereto in respect of the subject matter contained
herein and supersedes any and all other prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral or
written, by any officer, executive or representative of any party hereto; and
any prior agreement of the parties hereto in respect of the subject matter
contained herein is hereby terminated and canceled; provided, however, that in
the event the Company and the Employee enter into a separate letter agreement
relating to the items set forth in Paragraphs 5,6, and/or 7 hereof, then the
terms of said letter agreement shall supplement, and if contradictory, shall
supersede and govern, the terms contained herein. This Agreement may not be
amended, and no provision hereof may be deemed waived, by the conduct or
inaction of either or both of the parties hereto, but only in a writing signed
by both the Employee and an authorized representative of the Company.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the date first above written.
COMPANY: iTract, LLC
By: /s/ Xxxxx Xxxxxxxxx
---------------------------------
Xxxxx Xxxxxxxxx, Manager
EMPLOYEE: /s/ Xxxxx Xxxxxxx
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Xxxxx Xxxxxxx
EXHIBIT A
Xxxxx Xxxxxxx Bonus Schedule
Year One
Itract Business Plan Forecast: If the Company attains its annual Business Plan
forecast, for every $1 Million dollars in Gross Revenue generated by the
Company, Xx. Xxxxxxx will receive a $20,000 bonus.
Year Two
Itract Business Plan Forecast : If the Company attains its annual Business Plan
forecast, for every $1 Million dollars in Gross Revenue generated by the
Company, Xx. Xxxxxxx will receive a $12,500 bonus and for every $1 Million
dollars in Operating Profit generated by the Company, Xx. Xxxxxxx will receive
an additional $41,666.
Year Three
If the Company attains its Business Plan forecast, for every $1 Million dollars
in Operating Profit, Xx. Xxxxxxx will receive an additional $50,000 in bonus.
InfoSpace Bonus Arrangement:
If the Company attains the forecast as set forth in the Company's Internet
Promotion Agreement with XxxxXxxxx.xxx, Inc., dated as of April 3, 2000, for
every $1 Million dollars in Operating Profit generated by the Company, Xx.
Xxxxxxx will receive $50,000 in bonus. This bonus will be computed at the end of
every one (1) year anniversary of the date that XxxxXxxxx.xxx, Inc. placed its
first banner advertisement for the Company (following the Company's launch of
its website), for the prior 12 month period. The forecast in such agreement may
be amended, upon approval by the Chairman of the Company, and the bonus
arrangement contained herein shall remain unchanged.
As used herein, the terms "Gross Revenue" and "Operating Profit" shall be
determined finally by the Company's certified public accountants.
