EMPLOYMENT AGREEMENT
This Employment Agreement is entered into as of April 1, 2000 (the
"Effective Date"), by and between Xxxxxxxxx.xxx Sales, Inc., a California
corporation (the "Company"), with principal corporate offices at 000 X. Xx
Xxxxxx Xxxx, Xxxxx 000, Xxxxxxxx Xxxx, XX 00000, and Xxxxx Xxxxxx, Ph.D., whose
address is currently 000 Xxxx Xxxxxx Xxx, Xxx. 000, Xxxxxxxx Xxxx, XX 00000
("Employee"). The Company and Employee are collectively referred to herein as
"the Parties."
WHEREAS, the Company desires to retain Employee as Chief Executive
Officer, and Employee desires to perform such service for the Company, on the
terms and conditions as set forth herein;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, it is mutually agreed by the
parties as follows:
1. Duties and Scope of Employment.
(a) Position. Employee shall be employed as Chief Executive
Officer.
(b) Duties. During the term of Employee's employment with the
Company, Employee shall devote her full time, skill and attention to
her duties and responsibilities, which Employee shall perform
faithfully, diligently and competently, and Employee shall use her best
efforts to further the business of the Company. During the term of the
Agreement, Employee agrees not to actively engage in any other
employment, occupation or consulting activity for any direct or
indirect remuneration without the prior approval of the Board, except
that this provision shall not be interpreted to prohibit Employee from
involvement in any charitable or community activity/organization that
he is currently involved in and that does not materially interfere with
her ability to perform her duties under this Agreement. Employee shall
be permitted, to the extent such activities do not materially and
adversely affect the ability of Employee to fully perform her duties
and responsibilities hereunder, to (i) manage Employee's personal,
financial and legal affairs, (ii) serve on civic or charitable boards
or committees, and (iii) with the consent of the Board of Directors
(which consent shall not be unreasonably withheld), serve as a member
of the board of directors of any noncompeting business.
2. Nature of Employment. Employee agrees not to leave or discontinue
her employment with the Company during the first three (3) months of her
employment. Similarly, the Company agrees not to terminate Employee during the
first three (3) months of employment with the Company, except for cause as
defined in paragraph 2(b). After the three month period has ended, Employee will
become an "at-will" employee which means that the employment relationship may be
terminated at any time, with or without cause, at the option of either the
Company or Employee, upon two weeks written notice to the other party.
(a) Termination by Company without Cause. If Employee is
terminated by the Company without Cause (as defined in paragraph 2(b)) after the
initial three months of employment, Employee shall receive her salary and
benefits earned through the date of termination.
(b) Termination for Cause. If Employee is terminated for
"Cause" as defined herein at any time, Employee will receive only payment of her
salary and benefits through the date of termination. For purposes of this
Agreement, "Cause" is defined as (i) gross misconduct by Employee that is
materially injurious to the Company's business; (ii) the commission by Employee
of a felony; or (3) the willful failure or refusal of the Employee, following
receipt of an explicit directive from the Company, to comply with the material
terms of this Agreement.
3. Compensation and Fringe Benefits
(a) Base Salary. Employee will receive a base salary at the
annualized rate of $192,000.00 (the "Base Salary"), which shall be paid
periodically in accordance with normal Company payroll practices and subject to
the usual and applicable required withholding. Employee understands and agrees
that neither her job performance nor promotions, commendations, bonuses or the
like from the Company give rise to or in any way serve as the basis for
modification, amendment, or extension, by implication or otherwise, of this
Agreement.
(b) Productivity Bonus Plan. In addition to the Base Salary,
Employee shall participate in the company's Productivity Bonus Plan. A copy of
the bonus plan is attached.
(c) Vacation and Holiday Pay. Employee shall receive two weeks
of paid vacation per year, which accrues over the course of the year. In
addition, the Company provides eight (8) paid holidays each year, along with two
(2) "floating holidays" which can be used by Employee at any time.
(d) Health Insurance. The Company shall pay Employee up to
$600.00 per month (upon submission of receipts or other proof of payment) as
reimbursement for the costs of Employee's health insurance.
(e) Other Benefits. Employee will be entitled to participate
in or receive such benefits under the Company's employee benefit plans and
policies and such other benefits which may be made available as in effect from
time to time and as are provided to similarly situated employees of the Company,
subject in each case to the generally applicable terms and conditions of the
plans and policies in question.
4. Expenses. The Company will pay or reimburse Employee for reasonable
travel, entertainment or other expenses incurred by Employee in the furtherance
of or in connection with the performance of Employee's duties hereunder in
accordance with the Company's established policies.
5. Certain Covenants.
(a) Intellectual Property Rights.
(i) Employee agrees that the Company will be the sole
owner of any and all of Employee's "Discoveries" and "Work
Product," hereinafter defined, made during the term of her
employment with the Company, whether pursuant to this
Agreement or otherwise. For purposes of this Agreement,
"Discoveries" means all inventions, discoveries, improvements,
and copyrightable works (including, without limitation, any
information relating to the Company's software products,
source code, know-how, processes, designs, algorithms,
computer programs and routines, formulae, techniques,
developments or experimental work, work-in-progress, or
business trade secrets) made or conceived or reduced to
practice by Employee during the term of her employment by the
Company, whether or not potentially patentable or
copyrightable in the United States or elsewhere. For purposes
of this Agreement, "Work Product" means any and all work
product relating to Discoveries.
(ii) Employee shall promptly disclose to the Company all
Discoveries and Work Product. All such disclosures must
include complete and accurate copies of all source code,
object code or machine-readable copies, documentation, work
notes, flow-charts, diagrams, test data, reports, samples, and
other tangible evidence or results (collectively, "Tangible
Embodiments") of such Discoveries or Work Product. All
Tangible Embodiments of any Discoveries or Work Project will
be deemed to have been assigned to the Company as a result of
the act of expressing any Discovery or Work Product therein.
(iii) Employee hereby assigns and agrees to assign to the
Company all of her interest in any country in any and all
Discoveries and Work Product, whether such interest arises
under patent law, copyright law, trade-secret law,
semiconductor chip protection law, or otherwise. Without
limiting the generality of the preceding sentence, Employee
hereby authorizes the Company to make any desired changes to
any part of any Discovery or Work Product, to combine it with
other materials in any manner desired, and to withhold
Employee's identity in connection with any distribution or use
thereof alone or in combination with other materials. This
assignment and assignment obligation applies to all
Discoveries and Work Product arising during Employee's
employment with the Company (or its predecessors), whether
pursuant to this Agreement or otherwise. Employee's agreement
to assign to the Company any of her rights as set forth in
this Section 5(a)(iii) shall not apply to any invention that
qualifies fully under the provisions of California Labor Code
Section 2870, where no equipment, supplies, facility or trade
secret information of the Company was used and that was
developed entirely upon Employee's own time, and (i) that does
not relate to Company business or to the Company's actual or
anticipated research or development, or (ii) that does not
result from any work performed by Employee for the Company.
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(iv) At the request of the Company, Employee shall
promptly and without additional compensation execute any and
all patent applications, copyright registration applications,
waivers of moral rights, assignments, or other instruments
that the Company deems necessary or appropriate to apply for
or obtain Letters Patent of the United States or any foreign
country, copyright registrations or otherwise to protect the
Company's interest in such Discovery and Work Product, the
expenses for which will be borne by the Company. Employee
hereby irrevocably designates and appoints the Company and its
duly authorized officers and agents as her agents and
attorneys-in-fact to, if the Company is unable for any reason
to secure Employee's signature to any lawful and necessary
document required or appropriate to apply for or execute any
patent application, copyright registration application, waiver
of moral rights, or other similar document with respect to any
Discovery and Work Product (including, without limitation,
renewals, extensions, continuations, divisions, or
continuations in part), (i) act for and in her behalf, (ii)
execute and file any such document, and (iii) do all other
lawfully permitted acts to further the prosecution of the same
legal force and effect as if executed by him; this designation
and appointment constitutes an irrevocable power of attorney
coupled with an interest.
(v) To the extent that any Discovery or Work Product
constitutes copyrightable or similar subject matter that is
eligible to be treated as a "work made for hire" or as having
similar status in the United States or elsewhere, it will be
so deemed. This provision does not alter or limit Employee's
other obligations to assign intellectual property rights under
this Agreement.
(vi) The obligations of Employee set forth in this Section
5 (including, without limitation, the assignment obligations)
will continue beyond the termination of Employee's employment
with respect to Discoveries and Work Product conceived or made
by Employee alone or in concert with others during Employee's
employment with the Company, whether pursuant to this
Agreement or otherwise. Those obligations will be binding upon
Employee, her assignees permitted under this Agreement,
executors, administrators, and other representatives.
(b) Exposure to Proprietary Information.
(i) As used in this Agreement, "Proprietary Information"
means all information of a business or technical nature that
relates to the Company including, without limitation, all
information about software products whether currently released
or in development, all inventions, discoveries, improvements,
copyrightable work, source code, know-how, processes, designs,
algorithms, computer programs and routines, formulae and
techniques, and any information regarding the business of any
customer or supplier of the Company or any other information
that the Company is required to keep confidential.
Notwithstanding the preceding sentence, the term "Proprietary
Information" does not include information that is or becomes
publicly available through no fault of Employee, or
information that Employee learned prior to the Effective Date.
(ii) In recognition of the special nature of her
employment under this Agreement, including her special access
to the Proprietary Information, and in consideration of her
employment pursuant to this Agreement, Employee agrees to the
covenants and restrictions set forth in Section 5 of this
Agreement.
(c) Use of Proprietary Information; Restrictive Covenants.
(i) Employee acknowledges that the Proprietary Information
constitutes a protectible business interest of the Company,
and covenants and agrees that during the term of her
employment, whether under this Agreement or otherwise, and
after the termination of such employment, he will not,
directly or indirectly, disclose, furnish, make available or
utilize any of the Proprietary Information, other than in the
proper performance of her duties for the Company.
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(ii) Employee will not, during the term of this Agreement
or, solely with respect to clauses 2 and 3 of this
subparagraph (ii), for a period of one year thereafter (the
"Restricted Period"), anywhere within the United States (the
"Restricted Territory"), directly or indirectly (whether as an
owner, partner, shareholder, agent, officer, director,
employee, independent contractor, consultant, or otherwise):
1. perform services for, or engage in, any business
that develops or sells products or services which are
competitive with any products or services sold or
developed by the Company for which Employee has provided
any assistance in planning, development, marketing,
training, support, or maintenance during the period of
Employee's employment with the Company (the "Products");
2. except on behalf of the Company, solicit any
person or entity who is, or was at any time during the
twelve-month period immediately prior to the termination
of Employee's employment with the Company, a customer of
the Company for the sale of the Products or any product or
service of a type then sold by the Company for which
Employee provided any assistance in planning, development,
marketing, training, support, or maintenance; or
3. solicit for employment any person who is, or was
at any time during the twelve-month period immediately
prior to the termination of Employee's employment with the
Company, an employee of the Company.
(d) Scope/Severability. The Parties acknowledge that the
business of the Company is and will be national and international in scope and
thus the covenants in this Section 5 would be particularly ineffective if the
covenants were to be limited to a particular geographic area of the United
States. If any court of competent jurisdiction at any time deems the Restricted
Period unreasonably lengthy, or the Restricted Territory unreasonably extensive,
or any of the covenants set forth in this Section 5 not fully enforceable, the
other provisions of this Section 5, and this Agreement in general, will
nevertheless stand and to the full extent consistent with law continue in full
force and effect, and it is the intention and desire of the parties that the
court treat any provisions of this Agreement which are not fully enforceable as
having been modified to the extent deemed necessary by the court to render them
reasonable and enforceable and that the court enforce them to such extent (for
example, that the Restricted Period be deemed to be the longest period
permissible by law, but not in excess of the length provided for in Section
5(c), and the Restricted Territory be deemed to comprise the largest territory
permissible by law under the circumstances).
(e) Return of Company Materials upon Termination. Employee
acknowledges that all records, documents, and Tangible Embodiments containing or
of Proprietary Information prepared by Employee or coming into her possession by
virtue of her employment by the Company are and will remain the property of the
Company. Upon termination of her employment with the Company, Employee shall
immediately return to the Company all such items in her possession and all
copies of such items.
6. Equitable Remedies.
(a) Employee acknowledges and agrees that the agreements and
covenants set forth in Sections 5(a), (b), (c), (d) and (e) are reasonable and
necessary for the protection of the Company's business interests, that
irreparable injury will result to the Company if Employee breaches any of the
terms of said covenants, and that in the event of Employee's actual or
threatened breach of any such covenants, the Company will have no adequate
remedy at law. Employee accordingly agrees that, in the event of any actual or
threatened breach by him of any of said covenants, the Company will be entitled
to immediate injunctive and other equitable relief, without bond and without the
necessity of showing actual monetary damages. Nothing in this Section 6 will be
construed as prohibiting the Company from pursuing any other remedies available
to it for such breach or threatened breach, including the recovery of any
damages that it is able to prove.
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(b) Each of the covenants in Sections 5(a), (b), (c), (d) and (e)
will be construed as independent of any other covenants or other provisions of
this Agreement.
(c) In the event of any judicial determination that any of the
covenants in Sections 5(a), (b), (c), (d), and (e) are not fully enforceable, it
is the intention and desire of the parties that the court treat said covenants
as having been modified to the extent deemed necessary by the court to render
them reasonable and enforceable, and that the court enforce them to such extent.
7. Assignment. This Agreement shall be binding upon and inure to the
benefit of (a) the heirs, executors and legal representatives of Employee upon
Employee's death and (b) any successor of the Company. Any such successor of the
Company shall be deemed substituted for the Company under the terms of this
Agreement for all purposes. As used herein, "successor" shall include any
person, firm, corporation or other business entity which at any time, whether by
purchase, merger or otherwise, directly or indirectly, acquires all or
substantially all of the assets or business of the Company. None of the rights
of Employee to receive any form of compensation payable pursuant to this
Agreement shall be assignable or transferable except through a testamentary
disposition or by the laws of descent. Any attempted assignment, transfer,
conveyance or other disposition (other than as aforesaid) of any interest in the
rights of Employee to receive any form of compensation hereunder shall be null
and void.
8. Notices. All notices, requests, demands and other communications
called for hereunder shall be in writing and shall be deemed given if delivered
personally, one (1) day after mailing via Federal Express overnight or a similar
overnight delivery service, or three (3) days after being mailed by registered
or certified mail, return receipt requested, prepaid and addressed to the
parties or their successors in interest at the addresses listed above, or at
such other addresses as the parties may designate by written notice in the
manner aforesaid.
9. Severability. In the event that any provision hereof becomes or
is declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision.
10. Entire Agreement. This Agreement, and the Stock Option
Agreement, represent the entire agreement and understanding between the Company
and Employee concerning Employee's employment relationship with the Company, and
supersede in their entirety any and all prior agreements and understandings
concerning Employee's employment relationship with the Company.
11. Resolution of Disputes Regarding Employment.
(a) The Parties agree to submit any dispute or controversy
arising out of, relating to, or in connection with this Agreement, or the
interpretation, validity, construction, performance, breach, or termination
thereof, to mediation. The Parties shall mutually select the mediator and shall
equally pay for the costs of the mediator.
(a) If and only if a mediation is unsuccessful, and the
dispute or controversy is not resolved within 30 days after a mediation, either
party may submit the matter to binding arbitration, to the extent permitted by
law, to be held in or near San Jose, California in accordance with the National
Rules for the Resolution of Employment Disputes then in effect of the American
Arbitration Association (the "Rules"). The arbitrator may grant injunctions or
other relief in such dispute or controversy. The decision of the arbitrator
shall be final, conclusive and binding on the parties to the arbitration.
Judgment may be entered on the arbitrator's decision in any court having
jurisdiction. The arbitrator may award the prevailing party in any such
attorneys' fees and costs incurred in connection therewith.
(b) The arbitrator shall apply California law to the merits of
any dispute or claim, without reference to rules of conflict of law. Employee
hereby expressly consents to the personal jurisdiction of the state and federal
courts located in Santa Xxxxx County, California or the Northern District of
California for any action or proceeding arising from or relating to this
Agreement and/or relating to any arbitration in which the Parties are
participants.
(c) Employee understands that nothing in this Section modifies
Employee's at-will status. Either the Company or Employee can terminate the
employment relationship at any time, with or without cause, subject only to the
restrictions set forth in Section 2 above.
(d) Employee has read and understands Section 11, which
discusses arbitration. employee understands that by signing this agreement,
employee agrees to submit any future claims arising out of, relating to, or in
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connection with this agreement, or the interpretation, validity, construction,
performance, breach, or termination thereof to binding arbitration to the extent
permitted by law, and that this arbitration clause constitutes a waiver of
employee's right to a jury trial and relates to the resolution of all disputes
relating to all aspects of the employer/employee relationship, including but not
limited to, the following claims:
(i) Any and all claims for wrongful discharge of
employment; breach of contract, both express and implied; breach of the covenant
of good faith and fair dealing, both express and implied; negligent or
intentional infliction of emotional distress; negligent or intentional
misrepresentation; negligent or intentional interference with contract or
prospective economic advantage; and defamation;
(ii) Any and all claims for violation of any federal
state or municipal statute, including, but not limited to the California Fair
Employment and Housing Act, the Civil Rights Act of 1991, the Age Discrimination
in Employment Act of 1967, the Americans with Disabilities Act of 1990, and the
Fair Labor Standards Act;
(iii) Any and all claims arising out of any other
laws and regulations relating to employment or employment discrimination.
(e) The Parties may apply to any court of competent
jurisdiction for a temporary restraining order, preliminary injunction, or other
interim or conservatory relief, as necessary, without breach of this arbitration
agreement and without abridgment of the powers of the arbitrator.
12. No Oral Modification, Cancellation or Discharge. This Agreement may
only be amended, canceled or discharged in writing signed by Employee and the
Company.
13. Governing Law. This Agreement shall be governed by the internal
substantive laws, but not the choice of law rules, of the State of California.
14. Acknowledgment. Employee acknowledges that he has had the
opportunity to discuss this matter with and obtain advice from her private
attorney, has had sufficient time to, and has carefully read and fully
understands all the provisions of this Agreement, and is knowingly and
voluntarily entering into this Agreement,
IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
respective dates set forth below.
COMPANY:
XXXXXXXXX.XXX SALES, INC.
By: /s/ X. Xxxxxx
--------------------------------------
Title: President
Date: March 31, 2000
EMPLOYEE:
/s/ X. Xxxxxx
-----------------------------------------
Xxxxx Xxxxxx
Date: 3/31/2000
-----------------------------------
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XXXXXXXXX.XXX SALES
PRODUCTIVITY BONUS PLAN
MARCH 31, 2000
HOW THE PLAN WORKS
We are pleased to present you with this information covering the details of how
Xxxxxxxxx.xxx Sales, Inc. (including its successors, the "Company") will share
increased productivity with its employees through a Productivity Bonus Plan (the
"Plan") that will become effective as of March 31, 2000. Accordingly, the first
Productivity Bonuses will be paid with respect to the period commencing January
1, 2000 and ending March 31, 2000.
The Productivity Bonus will consist of a quarterly bonus, which will be based on
the "net profit" before taxes of the Company. The bonus amount will be 5% of
such net profit before taxes and will be distributed equally to all full-time
employees at the end of the second month following a fiscal quarter of the
Company.
For purposes of this Plan, "net profit" is defined as revenues from banner
advertising, display advertising, classifieds advertising and commissions from
advertisers for the quarter less (i) sales and marketing expenses for such
period, (ii) research and development expenses for such period and (iii) general
and administrative expenses for such period, all as determined in conformity
with generally accepted accounting principles consistently applied.
Because the Productivity Bonus will be paid in cash, it is taxable. Accordingly,
appropriate withholdings will be made from each payment of the Productivity
Bonus to Company employees. All bonus payments supplement and are in addition to
an employee's salary and any contributions under a tax deferred 401(k)
retirement or other similar plan.
WHO IS ELIGIBLE
All full time employees of the Company are eligible to participate in the Plan
and to receive a Productivity Bonus. Because the bonus is based on the Company's
productivity through the end of each quarter, an employee must be actively
employed on each day of the quarter comprising the bonus computation period in
order to be eligible to participate in the bonus. There will be no proration of
the bonus distribution for employees who terminate before the end of the
applicable bonus period.
ADMINISTRATION AND DEFINITIONS
The Company will administer the Plan. The calculation of the bonus amount and
all other calculations relating to the Plan shall be performed by the Company's
accounting department. All matters pertaining to the administration and
interpretation of the Plan shall be determined by the Company in its sole
discretion, and the Company's determinations shall be final and binding for all
purposes.
CHANGES OR TERMINATION OF THE PLAN
The Company reserves the right to modify, add to or discontinue the Productivity
Bonus or the Plan, or its interpretation of any provision of the Plan, from time
to time and at any time in its sole discretion; provided, however, that in the
event the Plan is terminated, employees shall be promptly advised and shall
receive all bonus amounts earned prior to said termination in due course in
accordance with the terms of the Plan previously in effect.
NO GUARANTEE OF EMPLOYMENT
The Plan is not a contract of employment and does not guarantee continuation of
employment for any specified period of time. Employment with the Company is at
the mutual consent of the employee and the Company and is subject to termination
without cause or notice at the option of either party.
