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Exhibit 10.5
TELEBASE SYSTEMS, INC.
EMPLOYMENT AGREEMENT
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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made as of the 8th day of
February, 1988, by and between TELEBASE SYSTEMS, INC., a Pennsylvania business
corporation located at 000 Xxxx Xxxxxxxxx Xxxxxx, Xxxx Xxxx, Xxxxxxxxxxxx 00000
("Employer"), and XXXXX XXXXXXX, an individual residing at 000 Xxxx Xxxx,
Xxxxxxx, Xxxxxxxxxxxx 00000 ("Employee").
BACKGROUND
Employer is desirous of employing the Employee upon the terms
and conditions hereinafter set forth in this Agreement, and the Employee is
desirous of being so employed.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth and for other good and valuable consideration,
the receipt of which the parties hereby acknowledge, the parties hereto,
intending to be legally bound hereby, agree as follows:
1. Employment and Duties. Employer shall employ the Employee
and the Employee accepts such employment for the term set forth in Section 4
hereof, on the terms and conditions set forth in this Agreement. The Employee
shall serve as Vice President and Chief Financial Officer of Employer, if
elected or appointed to such office or position, and shall perform such other
duties as shall be assigned to him from time to time during the continuance of
his Agreement by the Employer. The Employee agrees to (i) give his best efforts
and skills to the business and interests of the Employer, (ii) devote
substantially all of his time and attention to the business of the Employer, and
(iii) comply, in all material respects, with all reasonable policies and rules
of Employer in effect from time to time.
2. Compensation Package.
a. In consideration of the services to be performed by
Employee hereunder, Employee shall receive:
(i) A salary at the rate of Seventy-Five Thousand
Dollars ($75,000.00) per year, payable in equal semi-monthly or bi-weekly
installments in accordance with Employer's accounting procedures and practices
in effect from time to time;
(ii) Pay scale or salary increases or other compensation
in accordance with policies established by the Board of Directors of Employer
(the "Board"), and at the sole and complete discretion of the Board;
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(iii) Reimbursement for all authorized reasonable and
necessary expenses incurred by Employee in connection with the performance of
his duties hereunder;
(iv) Term life insurance, naming Employee's designee
as beneficiary, in the face amount, at all times, equal to twice Employee's then
current annual salary rate and additional benefits as approved by the Board,
which may include medical, dental and disability income insurance, sick leave
and holidays;
(v) Vacation to be taken at such time or times as shall
not be disapproved by the Board, and in accordance with Employer's policies and
procedures in effect from time to time.
b. Employee shall be entitled to receive a bonus as
follows:
(i) Employer shall pay to Employee a bonus following
the expiration of calendar year 1988 in the event of, and based upon, the
fulfillment of goals and objectives to be mutually agreed upon by Employee and
Employer and set forth in an exhibit to be attached hereto as Exhibit A. The
terms of the bonus, including financial terms, shall be established by the
Employer within ninety (90) days of the date hereof. Employer and Employee shall
use their best efforts to establish the goals and objectives referred to in this
paragraph (i) within ninety (90) days of the date hereof.
(ii) Following the expiration of calendar year 1988,
Employee shall be entitled to participate in an executive cash bonus plan (the
"Bonus Plan") to be established by Employer prior to the end of calendar year
1988. Employee shall be entitled to participate in the decision-making process
relating to the establishment of the Bonus Plan.
3. Stock Option. Employer shall grant to Employee the option
to purchase one hundred twenty-five thousand (125,000) shares (the "Shares") of
Employer's Common Stock at a purchase price equal to One Dollar and Twenty-Five
Cents ($1.25) per share (the "Purchase Price") pursuant to Employer's Incentive
Stock Option Plan. Employee shall be entitled to exercise his option to purchase
one-quarter of such Shares per year (i.e., 31,250 Shares per year), commencing
one year from the date of this Agreement and on subsequent anniversary dates
thereafter.
4. Term. This Agreement shall continue in effect until three
(3) years from the date hereof (the "Expiration Date"), unless terminated sooner
by Employer for Cause or Disability, or pursuant to Section 5 hereof.
Termination for Cause shall mean termination by Employer of Employee due to
Employee's gross negligence, willful misconduct, dishonesty, fraud,
embezzlement, defalcation or violation of Employee's covenants contained herein.
This Agreement shall terminate automatically upon the death of the Employee.
Employer may terminate this Agreement in the event that Employee for a period of
ninety (90) continuous days, or ninety (90) days in any year during the term
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hereof (including any renewal term), becomes physically or mentally unable to
carry out his duties hereunder (herein referred to as "Disability"). In the
event that Employer terminates this Agreement upon the occurrence of Employee's
Disability, Employer shall, for a period of one (1) year from the date of
termination, continue to provide Employee with such term life insurance and such
medical insurance as are in effect at the time of termination. Unless written
notice shall have been delivered by the party desiring to terminate this
Agreement, which written notice shall have been delivered not later then one
hundred twenty (120) days prior to the Expiration Date (including the Expiration
Date with respect to any renewal term), this Agreement shall be considered
renewed for regular periods of one (1) year.
5. Termination.
a. Employer may terminate this Agreement at any time prior
to the Expiration Date (including the Expiration Date with respect to any
renewal term). Upon (i) termination of Employee by Employer prior to the
Expiration Date (other than termination for Cause or due to the Disability of
Employee), or (ii) termination of this Agreement by Employer upon the Expiration
Date (including the Expiration Date with respect to any renewal term), unless
Employer shall have Cause to terminate Employee, Employer will provide Employee,
following the date of termination, with (a) six (6) months' salary, based on
Employee's then current annual base salary level, if termination occurs on or
before one year from the date hereof, or twelve (12) months' salary if
termination occurs after one year from the date hereof, or (b) in the event of
Employee's termination at any time following the acquisition of beneficial
ownership by any person or entity of greater than fifty percent (50%) of the
then issued and outstanding stock of the Employer, or any public offering of
Employer's stock resulting in a sale of greater than fifty percent (50%) of
Employer's issued and outstanding stock (as of immediately following the
consummation of such public offering) (hereinafter "Change in Controls"), salary
for twelve (12) months (any such period of time being hereinafter referred to as
the "Benefit Period"), payable in accordance with Employer's payroll accounting
practices and procedures, and (c) continuation of all Employer paid benefits,
including life insurance (such salary and benefits being hereinafter referred to
as "Benefits") until the expiration of the Benefit Period.
b. Notwithstanding the provisions of paragraph a. above,
upon termination of Employee's Employment with Employer (provided that such
termination does not occur after a Change in Control, in which case Employer
shall be obligated to provide Employee with full Benefits throughout the Benefit
Period), and as a condition to Employer's obligation to provide Employee with
the Benefits, Employee will utilize his best efforts to obtain employment. If,
after three (3) months from the date of Employee's termination, Employee has
been or is thereafter offered a reasonable employment position, in light of,
among other things, Employee's education, experience, and salary history, then
Employer's responsibility thereafter for the provision of Benefits throughout
the course of the Benefit Period shall be to provide Employee with such
Benefits, if any, as are necessary, when added to the salary and benefit terms
of such
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offer of a reasonable employment position, to provide Employee with the same
salary level and level of Employer paid benefits as Employee received
immediately prior to termination by Employer. Upon termination of Employer's
obligations to provide Employee with Benefits, upon Expiration of the Benefit
Period or otherwise, Employee shall continue to be subject to the provisions of
Section 6 hereof.
c. Upon the termination of Employee, and in consideration
of Employer's agreement to provide Employee with the Benefits, Employee agrees
that during the Benefit Period, Employee shall at all times comply with the
provisions of Section 7 hereof.
6. Consultancy.
a. Upon the termination of Employee's employment with
Employer for Cause, or due to Disability, or upon the Expiration Date, or if
such employment is terminated by Employee, or upon the expiration of the Benefit
Period, Employer shall have the option in its sole discretion to retain Employee
as a part-time consultant ("Consultant") in the field in which Employee has
worked or with which Employee has become familiar as a consequence of or through
his employment by Employer ("Consultancy").
b. In the event that Employer desires to retain Employee as
a Consultant, Employee shall hold himself available for a period of two (2)
years for not more than twenty-five (25) hours per month, for which Employer
shall pay Employee twenty-five percent (25%) of his monthly base pay at the time
of termination of Employee's employment with Employer, whether or not Employee
is called upon to render actual services in any such month for which he shall be
paid.
c. Employee shall render such advisory and technical
consultation assistance as Employer shall request, provided that such assistance
shall not exceed the number of hours per month agreed upon herein.
d. Upon sixty (60) days' written notice prior to the end of
the duration of the Consultancy, Employer at its sole option may renew
Employee's retention as a Consultant for additional yearly periods (up to a
maximum of two additional yearly periods) provided that a subsequent renewal
(for a second additional yearly period) shall be made upon at least thirty (30)
days' written notice. Each renewal shall be accompanied by either an increase in
Employee's renumeration by a sum equal to ten percent (10%) of Employee's
Consultancy fee, or a decrease in the number of hours per month for which
Employee must hold himself available by fifteen percent (15%), at Employer's
sole option.
e. During the Consultancy period (including renewals),
Employee shall at all times comply with the provisions of Section 7 hereof.
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7. Restrictive Covenants.
a. Employee agrees that during the term of his employment
with Employer (whether pursuant to this Agreement or otherwise), and during any
Benefit Period (pursuant to Section 5 hereof), and during any period of
Consultancy (pursuant to Section 6 hereof):
(i) he will not solicit for employment or employ for his
own or for another's benefit any employee, officer, director or consultant of
Employer; and
(ii) he shall not directly or indirectly on his own
behalf or as an officer, director, consultant, partner, owner, stockholder or
employee of any individual, partnership or corporation or other entity, engage
in any activity, in those states within the United States and those countries
outside the United States in which Employer or any of its subsidiaries then
conducts or during his employment had conducted any business, where such
activity is similar to and competitive with the activities carried on by
Employer or any of its subsidiaries during his employment by Employer or is,
directly or indirectly, concerned with soliciting, serving or catering to any of
the customers of Employer or its subsidiaries during his employment by Employer
for the provision of products or services of a nature offered by Employer during
the term of Employee's employment by Employer. Employee acknowledges that the
nature of Employer's activities is such that competitive activities could be
conducted effectively regardless of the geographic distance between Employer's
place of business and the place of any competitive business.
b. In the event that any part of this Section 7 shall be
held unenforceable or invalid, the remaining parts thereof shall nevertheless
continue to be valid and enforceable as though the invalid portions had not been
a part hereof. In the event that the area or period of restriction established
in accordance with this Section 7 shall be deemed to exceed the maximum area or
period of time which a court of competent jurisdiction deems enforceable, said
area or periods of duration shall, for the purposes of this Section 7, be
reduced to the extent necessary to render them enforceable.
c. The existence of any claim or cause of action of
Employee against Employer, whether predicated on this Agreement or otherwise,
shall not constitute a defense to the enforcement thereof by Employer of any
covenant set forth in this Section 7.
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8. Injunctive Relief.
a. Employee agrees that any violation on his part of any
covenant in Section 7 hereof will cause such damage to Employer as will be
serious and irreparable and the exact amount of which will be difficult to
ascertain, and for that reason, he agrees that Employer shall be entitled, as a
matter of right, to a temporary, preliminary and/or permanent injunction and/or
other injunctive relief, ex parte or otherwise, from any court of competent
jurisdiction, restraining any further violations of Employee. Such injunctive
relief shall be in addition to and in no way in limitation of, any and all other
remedies Employer shall have in law and equity for the enforcement of such
covenants and provisions.
b. Employee agrees further that even though his employment
with Employer may be terminated, he will at any time, either before or after
such termination, cooperate at the expense of the Employer with the Employer and
its counsel in the prosecution and/or defense or any litigation which may arise
in connection with any customer, supplier, or licenser or licensee of Employer,
or in connection with any copyright, trademark, trade secret, or patent rights
of the Employer.
9. Entire Agreement. This Agreement supersedes any and all
prior agreements between the parties and represents the entire understanding of
the parties hereto with respect to the employment of Employee and there are no
other agreements, warranties or representations except as herein provided. The
parties acknowledge that this Agreement shall not affect any prior, subsequent,
or contemporaneous agreements between the parties respecting Employer's
confidential information. This Agreement including this Section 9 may not be
altered or amended except in writing executed by both parties hereto.
10. Assignment; Benefit. This Agreement is personal and may
not be assigned except that it shall inure to the benefit of and be binding upon
the successors of Employer and personal representatives of Employee.
11. Applicable Law. This Agreement shall be governed by the
laws of the Commonwealth of Pennsylvania. Employer and Employee agree and do
hereby consent to jurisdiction of any court of the Commonwealth of Pennsylvania
which has state-wide jurisdiction with respect to any proceeding arising out of
or relating to this Agreement or its subject matter, and further agree that the
mailing by registered mail of any process to the last known address of either
party shall constitute lawful and valid service of process thereof. In the event
any such suit is filed in any state or federal court in the Commonwealth of
Pennsylvania, Employer and Employee shall not raise and hereby waive the
defenses of lack of personal jurisdiction or venue. In the event that such
process requires an answer or response thereto, the time in which Employer or
Employee must file and serve such answer or response shall be computed from the
day of its or his receipt of such process.
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12. Notice. Any notice required or permitted to be given
hereunder shall be sufficient if in writing and if sent by certified or
registered mail to his residence in the case of Employee or to its principal
office in the case of Employer.
13. Separability of Provisions. If any of the provisions of
this Agreement or the application of any of such provisions hereof shall for any
reason be held invalid by a court of competent jurisdiction, such invalidity
shall not affect or impair any other provision hereof, it being the intention of
the parties hereto that such other provisions shall be and remain in full force
and effect.
14. Waiver. The waiver by Employer of a breach of any
provision of this Agreement by Employee shall not operate or be construed as a
waiver of any other or subsequent breach by Employee of such or any provision.
15. Costs of Suit. The prevailing party in a proceeding for
damages or other relief arising out of an alleged breach by either party of any
of the terms or conditions of the Employment Agreement or this Addendum shall,
in addition to other relief, be entitled to reasonable attorney fees, costs and
expenses of litigation incurred in connection with such proceeding.
IN WITNESS WHEREOF, the parties hereto have hereunto set their
hands and seals as of the day and year set forth above.
EMPLOYER:
TELEBASE SYSTEMS, INC.
By:_____________________________________
Xxxxx X. Xxxxx, President
EMPLOYEE:
________________________________________
XXXXX XXXXXXX
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