Exhibit 10.5
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered
into as of November 17, 1997 (the "Effective Date") between Xxxxxx X. Xxxxxx, a
resident of Austin, Texas ("Employee"), and Deja News, Inc., a Texas corporation
(the "Company").
RECITALS:
WHEREAS, Employee and Company have previously entered into a
Confidentiality and Non-Competition Agreement;
WHEREAS, the Company has hired a new Chief Executive Officer and
employee has resigned as Chief Executive Officer, and intends to resign as
President;
WHEREAS, Employee and the Company desire to amend and restate their
employment relationship in connection with the Company's Series B Convertible
Preferred Stock financing; and
WHEREAS, the Company desires to employ Employee, and Employee
desires to be employed by the Company, upon the terms and conditions set forth
herein.
AGREEMENT:
NOW, THEREFORE, in consideration of the foregoing premises, the
mutual agreements set forth herein and certain other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Employee and the Company hereby agree as follows:
1. Employment.
1.1 Titles and Duties. Upon and subject to the terms and
conditions hereinafter set forth, the Company hereby agrees to employ Employee
for the Employment Term described in Section 1.2 below as its Chief Technology
Officer, and Employee is assigned the responsibility associated with such
position (including, but not limited to, inventing technologies useful to the
Company's business and managing the process of inventing and developing such
technologies) and such other duties consistent with his position as may from
time to time be assigned to Employee by the Chief Executive Officer (or if there
is no Chief Executive Officer, the President), and if Employee occupies the role
of President, by the Board of Directors of the Company. Employee hereby accepts
such employment and agrees that Employee will serve the Company faithfully,
diligently and to the best of his ability during the Employment Term, and
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that Employee will devote all of his business time (exclusive of paid time off
and sick leaves taken in accordance with the Company's policies), attention and
best efforts to the business of the Company and the performance of Employee's
duties hereunder and to carry out Employee's responsibilities in an efficient
and business-like manner.
1.2 Employment Term. The "Employment Term" shall commence on
the Effective Date and, unless sooner terminated pursuant to Section 3 hereof,
shall continue for a term of three years. Such employment shall continue
thereafter in successive 30-day periods on the terms set forth herein at the
option of the Company and Employee until a notice of termination is delivered by
either party to the other, which notice shall be given at least thirty (30) days
prior to the date designated therein for such termination, unless termination is
earlier made for Cause (as defined under Section 3 hereof).
1.3 Resignation as President. Employee hereby tenders his
resignation as President of the Company, such resignation to be effective as of
the date hereof.
2. Compensation.
2.1 Salary. During the Employment Term or any time this
Agreement is in effect, Employee shall be paid a monthly salary of twelve
thousand five hundred dollars ($12,500) payable in accordance with the Company's
normal payroll procedures and which may be increased from time to time if deemed
appropriate by the Board of Directors.
2.2 Benefits and Perquisites. In addition to salary, Employee
shall be entitled to receive such fringe benefits and perquisites, and
participate in any employee benefit programs, as are generally established from
time to time for vice-president-level employees of the Company.
2.3 Business Expenses. The Company shall reimburse Employee
for reasonable business expenses necessarily or appropriately incurred by
Employee in performing his duties hereunder in accordance with and subject to
such policies and procedures regarding employee expenses generally as the
Company may from time to time have in effect.
2.4 Paid Time Off. Employee shall be entitled to fully-paid
time off in accordance with the standard employee paid time off plan. Employee
has accrued 170 hours of paid time off as of October 1, 1997. In addition,
Employee shall be entitled to all holidays provided under the Company's regular
holiday schedule.
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3. Termination.
3.1 General. During the Employment Term, Employee may be
terminated by the Company at any time and for any reason, with or without Cause
(as defined below), upon delivery of written notice to Employee (i) at least
thirty (30) days prior thereto if termination is without Cause or (ii)
immediately if termination is made with Cause. In the event that, during the
Employment Term, Employee's employment with the Company is terminated by the
Company for any reason other than for Cause (other than as provided in Section
1.2), Employee shall be entitled to receive a severance payment in an amount
equal to six months of salary at the rate provided for in Section 2.1 hereof,
payable, at the option of Employee, either in a single lump sum installment or
at such time or times as such salary payments would have been paid to Employee
had Employee remained in the employ of the Company during the six month period
immediately following the date of termination. After the Employment Term, the
Company may terminate Employee for any reason or no reason, with or without
Cause, upon 30 day's notice to Employee in accordance with Section 1.2 hereof,
and no further payments of salary or compensation shall be due Employee under
this Agreement after such 30-day period. If the Company terminates Employee for
Cause, no further payments of salary or other compensation shall be due Employee
under this Agreement, except to the extent accrued to the date of termination.
3.2 Cause. For purposes of this Agreement, "Cause" shall mean
misconduct, dishonesty, or other act by Employee that in any way has a direct,
substantial and adverse effect on the Company's reputation or its relationship
with its customers or employees, which continues or recurs after notice thereof
and a reasonable cure period in light of the facts and circumstances (or
allegation thereof).
3.3 Constructive Termination. For the purposes of this
Agreement, the Company shall be deemed to have terminated Employee other than
for Cause on the earliest to occur of any of: (i) the Company's material default
or breach of Company's obligations under this Agreement which default or breach
has not been cured within thirty (30) days after notice regarding the same; (ii)
the relocation of the Company so as to make it impractical for Employee to
reside in the greater Austin area; (iii) the substantial and material reduction
by the Company of the work responsibilities and duties of the Employee, which
reduction has not been cured within thirty (30) days after notice regarding the
same; or (iv) the substantial and material change by the Company of the
conditions or circumstances of Employee's employment to induce Employee to quit,
which occurrence is not cured within thirty (30) days after notice regarding the
same to the Company detailing the particular circumstances of such occurrence.
During the pendency of all actions under this Section 3.3, Company will continue
to pay Employee so long as Employee continues to serve the Company in accordance
with this Agreement unless Employee has been terminated for Cause in accordance
with Sections 3.1 and 3.2 hereof.
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4. Non-Competition and Non-Solicitation.
4.1 Other Employment. During the Employment Term, Employee
will not, directly or indirectly, participate in the management, operation,
financing or control of, or be employed by or consult for or otherwise render
services to, any person, corporation, firm or other entity without the consent
of the Company's Board of Directors, nor shall Employee engage in any other
activities that conflict with his obligations to the Company. Notwithstanding
the foregoing, Employee is permitted to own up to one percent of the shares of
stock of any corporation having a class of equity securities actively traded on
a national securities exchange or on Nasdaq.
4.2 Non-Competition. In consideration of the premises hereof
and in further consideration of the disclosure to Employee of confidential and
proprietary information of the Company and the specialized training and
experience Employee will gain from Employee service to the Company, and for
other good and valuable consideration, Employee hereby agrees that for a period
of one (1) year after the termination of this Agreement for any reason, Employee
will not, without the Company's prior consent, directly or indirectly serve as a
partner, joint venturer, officer, director or manager of any company or business
engaging in any business activity which is directly or indirectly in competition
in the United States with any of the products or services being developed,
marketed, distributed, planned, sold or otherwise provided by the Company at
such time; provided, however, that Employee may serve in the capacity of a mere
employee, consultant, agent, independent contractor or shareholder of a company
or business developing Internet or database software. Notwithstanding the
foregoing, Employee is permitted to own up to one percent of the shares of stock
of any corporation having a class of equity securities actively traded on a
national securities exchange or on Nasdaq.
4.3 Non-Solicitation. During the Employment Term and for a
period of one (1) year after the date Employee is terminated for any reason,
Employee will not, without the express prior consent of the Company,
individually or on behalf of any other person, corporation, firm or other
entity, solicit or encourage any employee of the Company or any subsidiary of
the Company to terminate his or her employment with the Company or such
subsidiary, or solicit the business of any client or customer of the Company
(other than on behalf of the Company) for whom Employee has provided services in
the two (2) years prior to termination of this Agreement, provided that this
restriction shall only apply to solicitations made, directly or indirectly, to
customers on behalf of any person that directly or indirectly competes with the
Company.
5. Proprietary Information and Inventions Agreement. On or before
the date of this Agreement, Employee shall execute the Company's standard form
of Proprietary Information and Inventions Agreement, a copy of which is attached
as Exhibit A hereto.
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6. Miscellaneous.
6.1 Successors; Assignment. This Agreement shall be binding on
and inure to the benefit of the Company and its successors and assigns. This
Agreement may not be assigned by Employee, in whole or in part, without the
prior written agreement of the Company and any attempt to do so shall be null
and void.
6.2 Notices. All notices, requests, consents, and other
communications under this Agreement shall be in writing and shall be delivered
personally or by facsimile transmission or by overnight delivery service or
shall be deemed delivered 72 hours after having been mailed by first class
certified or registered mail, return receipt requested, postage prepaid:
If to the Company: Deja News, Inc.
0000 Xxxxxxxx Xxxxxxxxx
Echelon II, Suite 350
Austin, Texas 78759
Attention: Chief Executive Officer
Fax: (000) 000-0000
If to Employee: Xxxxxx X. Xxxxxx
0000 Xxxxxxxx
Xxxxxx, XX 00000
Any party may, by not less than ten days notice given in accordance
with this Section to the other party, designate another address or person for
receipt of notices hereunder. Notice given by personal delivery, courier service
or mail shall be effective upon actual receipt. Notice given by telecopier shall
be confirmed by appropriate answer back and shall be effective upon actual
receipt if received during the recipient's normal business hours, or at the
beginning of the recipient's next business day after receipt if not received
during the recipient's normal business hours. Any party may change any address
to which notice is to be given to it by giving notice as provided above of such
change of address.
6.3 Taxes. Employee hereby agrees to make appropriate
arrangements with the Company for the satisfaction of all federal, State or
local income tax withholding requirements and federal social security employee
tax requirements applicable to this Agreement.
6.4 Governing Law. This Agreement is made and entered into and
is to be governed by and construed in accordance with the laws of the State of
Texas applicable to agreements made and to be performed entirely within such
State, without regard to the conflicts of law principles of such State.
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6.5 Entire Agreement. This Agreement sets forth the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof except for (i) those matters related to proprietary
information and inventions, which are addressed by the Proprietary Information
and Inventions Agreement attached hereto as Exhibit A and incorporated herein by
reference; (ii) the assignment by Employee to the Company pursuant to a Xxxx of
Sale, dated August 31, 1995, of the proprietary key word search software
developed by Employee and others under Employee's direction and having been
operated under the name of "Deja News" (the "Software"), together with all
rights in and to the trade name "Deja News" and related trade names, trademarks
or service marks (collectively, the "Trademark"); and (iii) the letter of Xxxxxx
X. Xxxxxx, dated August 29, 1995, acknowledging the effectiveness of the
aforementioned Xxxx of Sale to assign to the Company all of her interest,
whether by virtue of community property laws or otherwise, in the Software and
the Trademark, and disclaiming any current ownership therein. This Agreement
supersedes all other prior contracts, agreements, arrangements, communications,
discussions, representations and warranties, whether oral or written, between
the parties with respect to such subject matter, and terminates the
Confidentiality and Non-Competition Agreement by and between the Employee (as a
shareholder) and the Company.
6.6 Amendment. This Agreement may be amended only by a written
instrument signed by both parties hereto making specific reference to this
Agreement and expressing the plan or intention to modify it.
6.7 Separability. If any provision of this Agreement shall be
adjudicated to be invalid, ineffective or unenforceable, the remaining
provisions of this Agreement shall not be affected thereby. The invalid,
ineffective and unenforceable provision shall, without further action by the
parties, be automatically amended to effect the original purpose and intent of
the invalid, ineffective or unenforceable provision; provided, however, that
such amendment shall apply only with respect to the operation of such provision
in the particular jurisdiction with respect to which such adjudication is made.
6.8 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, and all of
which together will constitute one and the same Agreement.
[Signature page follows.]
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IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first above written.
The Company:
DEJA NEWS, INC.
By: /s/ Xxx Xxxxxxx
-------------------------------------
Xxx Xxxxxxx
Chief Executive Officer
Employee:
-----------------------------------------
Xxxxxx X. Xxxxxx
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IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first above written.
The Company:
DEJA NEWS, INC.
By: /s/ Xxx Xxxxxxx
-------------------------------------
Xxx Xxxxxxx
Chief Executive Officer
Employee:
/s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Xxxxxx X. Xxxxxx
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