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EXHIBIT 10.5
EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into on December 20, 1999 (the "Effective
Time"), by and between Xxxx Xxx, an individual resident of the State of
California ("Executive"), and Stockpoint, Inc., a Delaware corporation
("Company").
WHEREAS, Executive has heretofore been employed as the Executive Vice
President of Sales of the Company; and
WHEREAS, the Company desires to continue to have the benefit of the
Executives services as a corporate officer of the Company;
WHEREAS, certain guarantors of borrowings of the Company have required,
as a condition to their guarantees, that the Company execute an employment
agreement with Executive and
WHEREAS, the proceeds from such borrowings are necessary for the
Company's operations and will benefit the Company and the Executive.
NOW, THEREFORE, in consideration of the premises, the respective
undertakings of the Company and Executive set forth below, the Company and
Executive agree as follows:
1. Employment. The Company hereby agrees to employ Executive, and
Executive accepts such employment and agrees to perform services for the
Company, upon the other terms and conditions set forth in this Agreement.
2. Term. The term of this agreement is one year and renews annually,
unless either party provides written notification 90 days prior to the renewal.
See section 8 below for Termination definitions and remedies.
3. Positions, Duties and Reporting.
3.01 Service with Company. During the term of this Agreement,
Executive agrees to perform such reasonable employment duties consistent with
the role of Executive Vice President of Sales, as the Company shall assign to
him/her from time to time. These duties shall include: overseeing and directing
domestic and global expansion of the sales efforts; developing sales systems and
processes; and implementing sales strategies for the Company.
3.02 Performance of Duties. Executive agrees to serve the Company
faithfully and to the best of his/her ability and to devote his/her full time,
attention, and efforts to the business and affairs of the Company during the
term of this Agreement. Executive represents to the Company that he/she is under
no contractual commitments inconsistent with his/her obligations set forth in
this Agreement, and that during the term of this Agreement, he/she will not
render or perform services for any other corporation, firm, entity or person
which are inconsistent with the provisions of this Agreement.
3.03 Reporting. This position will report to the Chief Operating
Officer of the Company.
4. Compensation.
4.01 Base Salary. As base compensation for all services to be
rendered by Executive under this Agreement during the first year of the term of
this Agreement, the Company shall pay to Executive a base salary at a rate of
$150,000 per year, which salary shall be paid on a twice-monthly basis in
accordance with the Company's normal payroll procedures and policies. The salary
payable to Executive during each subsequent year during the term of this
Agreement shall be established by the Company and Executive, but in no event
shall the salary for any subsequent year be less than the base salary in effect
for the prior year.
4.02 Participation in Benefit Plans. During the term of this
Agreement, Executive shall be entitled to receive such medical and
hospitalization insurance and other fringe benefits as are being provided
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to the Company's other executive level employees from time to time to the extent
that Executive's age, position or other factors qualify him/her for such fringe
benefits.
4.03 Expenses. The Company will pay or reimburse Executive for all
reasonable and necessary out-of-pocket expenses incurred by him/her in the
performance of his/her duties under this Agreement, subject to the presentment
of appropriate vouchers in accordance with the Company's normal policies for
expense verification.
4.04 Sales Commission Plan. Prior to December 31, 1999, Executive
shall be paid commission based on Executive's existing commission plan. The
Executive's existing commission plan, payable upon receipt of invoice payment,
is as follows: 2% of all sales revenue generated by Company; 7% of personal
sales up to monthly quota and 10% of personal sales exceeding monthly quota;
Executive's Personal Monthly Quota equals $75,000 of annualized revenue.
Although the Executive and the Company have not finalized terms of the
year 2000 sales commission plan, both parties agree that the
Executive's year 2000 commission plan will be set such that the sum of
base salary and the expected sales commissions will be equal $500,000
during the year 2000 if the Company achieves its year 2000 sales goals.
Sales closed is defined, for purposes of this agreement, as a License
Agreement which has been executed.
4.05 Incentive for completion of an initial public offering. Upon the
completion of an initial public offering of the Company's common stock, the
Company will also pay Executive an IPO cash bonus of $30,000, which is due and
payable, immediately upon the close.
4.06 Vesting of Stock Options.
On September 15, 1999, the Company issued to the Executive an
additional option ("September 1999 Option") to purchase up to 130,000 shares of
Company Common Stock at a price of $7.20 per share pursuant to the Company's
1995 Stock Incentive Plan (the "Plan"). Such option shall become exercisable
with respect to 20% of the shares immediately upon execution of this Agreement
and the balance shall vest monthly at a rate of 1/60 of the total September 1999
Option grant over the balance of the term. Such option shall expire 10 years
from the date of the grant and shall contain such other provisions as are
contained in the form of stock option agreement used by Company under the Plan.
In the event that this Agreement is terminated as a result of the "Constructive
Termination" (as defined in Section 8.01(2)) or without "Cause" (as defined in
Section 8.01(1)) of the Executive, the September 1999 Option will vest with
respect to 40% of the shares subject thereto. In addition, the Company will
permit the Executive to exercise all of his/her vested options for a period of
12 months, commencing from the date of termination.
Vesting of all options granted to Executive will be accelerated with respect to
100% of the shares subject thereto in the event of a "Change in Control" of the
Company. For such purposes, a "Change in Control" shall mean any of the
following:
(i) A sale of all or substantially all of the assets of the Company;
(ii) The acquisition of more than 50% of the then outstanding Company
Common Stock by any person or group of persons acting in concert;
(iii) Any change that results in the Continuing Directors constituting
less than a majority of the Board of Directors;
(iv) A reorganization or, a merger of Company with another company
after which the holders of common stock of the Company
immediately prior to the merger or reorganization hold less than
50% of the voting power of the resulting corporations, or any
other transaction in which the Company (other than as the parent
corporation) is consolidated for federal income tax
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purposes or is eligible to be consolidated for federal income tax
purposes with another corporation; or
(v) In the event that the Company Common Stock is traded on an
established securities market: a public announcement that any
person has acquired beneficial ownership of more than 25% of the
then outstanding Company Common Stock and for this purpose the
terms "person" and "beneficial ownership" shall have the meanings
provided in Section 13(d) of the Securities and Exchange Act of
1934 or related rules promulgated by the Securities and Exchange
Commission or; the commencement of or public announcement of an
intention to make a tender offer for more than 50% of the then
outstanding Company Common Stock.
For purposes of this Section 4.06, "Continuing Directors" shall include only
those directors of the Company on the date hereof and those directors, as of a
date 30 days prior to an event that would otherwise be considered a "Change in
Control," who were nominated by Continuing Directors and duly elected by
shareholders at an annual meeting thereof or nominated and elected by directors
who were "Continuing Directors."
5. Confidential Information. Except as permitted or directed by the
Company's Board of Directors, during the term of this Agreement or at any time
thereafter, Executive shall not divulge, furnish or make accessible to anyone or
use in any way (other than in the ordinary course of the business of the
Company) any confidential or secret knowledge or information of the Company
which Executive has acquired or become acquainted with or will acquire or become
acquainted with during the period of his/her employment by the Company, whether
developed by himself/herself or by others, concerning any trade secrets,
confidential or secret designs, processes, formulae, plans, devices or material
(whether or not patented or patentable) directly or indirectly useful in any
aspect of the business of the Company, any confidential or secret development or
research work of the Company, or any other confidential information or secret
aspects of the business of the Company. Executive expressly acknowledges that,
in addition to the Company's proprietary software and technical know-how, the
Company's customer lists and the form (including, without limitation, payment
terms) of the Company's relationships with its customers is not publicly known
and that the disclosure or use of such information for any purpose other than
for the benefit of the Company could cause substantial damage the Company and
would place the Company at a competitive disadvantage. Executive acknowledges
that the above-described knowledge or information constitutes a unique and
valuable asset of the Company and that any disclosure or other use of such
knowledge or information other than the sole benefit of the Company would be
wrongful and would cause irreparable harm to the Company. The foregoing
obligations of confidentiality shall not apply to any knowledge or information
which is now published, which subsequently becomes generally publicly known,
other than as a direct or indirect result of the breach of this Agreement by
Executive, or which was known to the Executive prior to the term of his/her
employment with the Company. Executive agrees to notify any person or entity
with which Executive is employed or for which Executive provides services of the
requirements of this Section 5 and to notify the Company of the identity of any
such person or entity with which Executive is employed during the One year after
termination of this Agreement.
6. Employee Solicitation. During employment, and for a period of nine months
thereafter, Executive shall not (i) directly or indirectly solicit any employee
of the Company or any of Company's affiliates to leave the employ of any such
entity or in any way interfere adversely with the relationship between any such
employee and any such entity, (ii) directly or indirectly solicit any employee
of the Company or any affiliates to work for, render services or provide advice
to or supply confidential business information or trade secrets of any such
entity to any third person, firm or corporation, or (iii) directly or indirectly
solicit any existing customers and potential customers that have an unexpired
written proposals under consideration. For purposes of the foregoing,
solicitation shall not include solicitation of employees, vendors or customers
(i) who first solicit employment or a relationship from Executive, or (ii) who
are solicited (A) by advertising in periodicals of general circulation or by
general circulation Internet advertising, or (B) by a search or consulting firm
on behalf of Executive or Executive's affiliates, so long as Executive or such
affiliates did not direct or encourage such firm to solicit such employee,
vendor or customer of the Company. If any restriction set forth in this
paragraph is held to be unreasonable, then Executive and the Company agree, and
hereby submit, to the reduction and limitation of such prohibition to such area
or period as shall be deemed reasonable.
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7. Patent and Related Matter.
7.01 Disclosure and Assignment. Executive will promptly disclose in
writing to the Company complete information concerning each and every
invention, discovery, improvement, work of authorship, device, design,
apparatus, practice, process, method or product whether patentable or
not, made, developed, authored, perfected, devised, conceived or first
reduced to practice by Executive, either solely or in collaboration
with others, during the term of this Agreement, whether or not during
regular working hours, relating to the Business of the Company
(hereinafter referred to as "Developments"). Executive, to the extent
that he/she has the legal right to do so, hereby acknowledges that any
and all of said Developments are the property of the Company and hereby
assigns and agrees to assign to the Company any and all of Executive's
right, title and interest in and to any and all of such Developments.
7.02 Limitation on Section 7.01. The provisions of section 7.01
shall not apply to any Development meeting the following conditions:
(a) such Development was developed entirely on
Executive's own time; and
(b) such Development was made without the use of
any Company equipment, supplies, facility or
trade secret information, excluding Executives
laptop; and
(c) such Development does not relate (I) directly
to the Business of the Company, or (ii) to the
Company's actual or demonstrably anticipated
research or development; and
(d) such Development does not result from any work
performed by Executive for the Company.
7.03 Assistance of Executive. Upon request and without further
compensation therefor, but at no expense to Executive, and whether during the
term of this Agreement or thereafter, Executive will do all lawful acts,
including, but not limited to, the execution of papers and lawful oaths and the
giving of testimony, that in the opinion of the Company, its successors and
assigns, may be necessary or desirable in obtaining, sustaining, reissuing,
extending and enforcing United States and foreign patents and/or registrations
including, but not limited to, design patents, on any and all of such
Developments (other than those described in 7.02), and for perfecting affirming
and recording the Company's complete ownership and title thereto, and to
cooperate otherwise in all proceedings and matters relating thereto.
7.04 Obligations, Restrictions and Limitations. Executive understands
that the Company may enter into agreements or arrangements with agencies of the
United States Government, and that the Company may be subject to laws and
regulations which impose obligations, restrictions and limitations on it with
respect to inventions and patents which may be acquired by it or which may be
conceived, authored or developed by employees, consultants or other agents
rendering services to it. Executive agrees that he/she shall be bound by all
such obligations, restrictions and limitations applicable to any such invention
or work of authorship conceived, authored or developed by him/her during the
term of this Agreement and shall take any and all further action which may be
required to discharge such obligations and to comply with such obligations and
to comply with such restrictions and limitations.
8. Termination
8.01 Grounds for Termination. This Agreement may be
terminated:
(a) by the Company, if Executive dies, or
(b) by the Executive, if Executive becomes disabled
(as defined below), or
(c) by the Company, if the Executive has engaged in
conduct constituting cause for his/her
termination and the Company notifies Executive
in writing of such election, or
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(d) by the Company without cause upon notice to the
Executive in writing of such election, provided
that such termination may only occur by
unanimous decision of the Board of Directors if
there are then three or fewer Directors or by a
majority decision of the Board of Directors if
there are then four or more Directors.
(e) by the Executive, if the Executive is
constructively terminated, as defined in
paragraph 8.01(2) herein and the Executive has
notified the Company of his/her election to
terminate for Constructive Termination, or
(f) by the Executive upon notice to the Company in
writing of such election.
If this Agreement is terminated pursuant to subsection (a), (b), (c),
(e) or (f) of this section 8.01, such termination shall be effective
immediately. If this Agreement is terminated pursuant to subsection (d)
of this section 8.01, such termination shall be effective thirty (30)
days after delivery of the notice of termination.
(1) "Cause" Defined. "Cause" means:
(a) The Employee has breached the provisions of
Section 5, 6 or 7 of this Agreement in any material respect,
(b) The Executive has engaged in willful and
material misconduct, including willful and material failure to
perform the Employee's duties as an officer or employee of the
Company and has failed to cure such default within 30 days
after receipt of written notice of default from the Company,
(c) The Executive has committed fraud,
misappropriation or embezzlement in connection with the
Company's business, or
(d) Executive has been convicted or has pleaded
nolo contendere to criminal misconduct that is detrimental to
the Company's reputation or that calls into question, in the
judgement of the Board, Executive's integrity in fulfilling
his/her duties under this Agreement.
In the event the Company terminates Executive's employment for
"cause" pursuant to subsection 8.01 and Executive objects in writing to
the Board's determination that there was proper "cause" for such
termination within (30) days after Executive is notified of such
termination, the matter shall be resolved by arbitration in accordance
with the provisions of section 10.01. If Executive fails to object to
any such determination of "cause" in writing within such thirty (30)
day period, he/she shall be deemed to have waived his/her right to
object to that determination. If such arbitration determines that there
was not proper "cause" for termination, such termination shall be
deemed to be a termination pursuant to subsection 8.01(d).
(2) "Constructive Termination" defined. Constructive
Termination means termination by Executive after written notice to the
Company that Executive deems such termination by Executive as a result
of Constructive Termination, and only after:
(a) A material breach by the Company of a material
obligation of the Company under this Agreement
after the Executive has given the Company
written notice of the breach and the Company
has not remedied the breach within 30 days;
(b) A failure of the Company to pay when due to the
Executive any annual base salary, annual bonus
or other earned bonus or awards or commissions
referred to in this Agreement;
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(c) The relocation of the Executive's principal
place of employment to a location not within a
30 mile radius of such place of employment on
the Effective Date;
(d) A material reduction by the Company of the
Executive's duties or responsibilities;
(e) The failure of the Company to obtain an
agreement reasonably satisfactory to the
Executive from any successor to assume and
agree to perform this Agreement , or, if the
business for which the Executive's services are
principally performed is sold or transferred,
the failure of the Company to obtain such an
agreement from the purchaser or transferee of
such business; or
(f) The Company becomes insolvent or bankrupt where
executive can no longer perform his/her duties
as outlined above.
In the event the Executive terminates Executive's employment
for "Constructive Termination" pursuant to subsection 8.01 and the
Company objects in writing to the Executive's determination that there
was Constructive Termination within (30) days after Executive has
notified the Company of the same, the matter shall be resolved by
arbitration in accordance with the provisions of section 10.01. If the
Company fails to object to any such determination of "Constructive
Termination" in writing within such thirty (30) day period, it shall be
deemed to have waived its right to object to that determination. If
such arbitration determines that there was not proper "Constructive
Termination", such termination shall be deemed to be a termination
pursuant to subsection 8.01(c).
8.02 "Disability" Defined. For purposes of this Agreement, the
term "disabled" means any mental or physical condition which
renders Executive unable to perform the essential functions of
his/her positions, with or without reasonable accommodation,
for a period of more than ninety (90) days during any
consecutive one hundred twenty (120) day period.
8.03 Surrender of Records and Property. Upon termination of
his/her employment with the Company, Executive shall deliver
promptly to the Company all records, manual, book, blank
forms, document, letters, memoranda, notes, notebooks,
reports, data, tables, calculations or copies thereof, which
are the property of the Company or which relate in any way to
the business, products, practices or techniques of the
Company, and all other property, trade secrets and
confidential information of the Company, including, but not
limited to, all documents which in whole or case are in
his/her possession or under his/her control.
8.04 Wage and Benefit Continuation. If Executive's employment by the
Company is terminated pursuant to subsection 8.01 (d) or 8.01(e), the Company
shall continue to pay to Executive a total compensation of $450,000 payable in
equal twice-monthly installments over a 9 month period after termination and
shall continue to provide health insurance benefits for Executive for a period 9
months after termination. Notwithstanding anything else in this Section 8.04,
Executive shall not be entitled under this Section 8.04 or any other provision
of this Agreement to receive any cash compensation pursuant to this Agreement
which constitutes an "excess parachute payment" within the meaning of Section
280G of the Internal Revenue Code of 1986, as amended, or any successor
provision or regulations promulgated.
If this Agreement is terminated pursuant to subsection 8.01 (a), 8.01 (c), or
8.01 (f), Executive's right to base salary and benefits shall immediately
terminate except as may otherwise be required by applicable law.
9. Indemnification and Directors & Officers Insurance
9.01 Indemnification. The Company will provide Executive
indemnification, exculpation and expense advancement, to the fullest extent of
the law, including, without limitation, entering into an indemnification
agreement with Executive in at least as beneficial a form to Executive as the
Company has entered into with any other officer or director of the Company.
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9.02 Directors and Officers Insurance. The Company will provide, at
its expense, Directors and Officers (D&O) insurance in an amount deemed
appropriate by its Board of Directors and Officers. If the Company shall show
any employee as a named insured under such policy, the Executive shall be a
named insured under such policy.
10. Settlement of Disputes.
10.01 Arbitration. Except as provided in section 10.02 any claims or
disputes of any nature between the Company and Executive arising from or related
to the performance, breach, termination, expiration, application, or meaning of
this Agreement or any related matter relating to Executive's employment and the
termination of that employment by the Company shall be resolved exclusively by
arbitration in Denver, CO, in accordance with the then applicable rules of the
American Arbitration Association. Any such arbitration shall be conducted by an
arbitrator with said Rules, who has at least ten (10) years experience as an
attorney in executive compensation and employment law. The fees of the
arbitrator (s) and other cost, including attorney fees, incurred by Executive
and the Company in connection with such arbitration shall be paid by the party
who is unsuccessful in such arbitration, as determined by the arbitrator. The
decision if the arbitrator(s) shall be final and binding upon both parties.
Judgement of the award rendered by the arbitrator(s) may be entered in any court
having jurisdiction thereof. In the event of submission of any dispute to
arbitration, each party shall, not later than thirty (30) days prior to the date
set forth hearing, provide to the other party and to the arbitrator(s) a copy of
all exhibits upon which the party intends to rely at the hearing and a list of
all persons each party intends to call at the hearing.
10.02 Resolution of Certain Claims- Injunctive Relief. Section 10.01
shall have no application to claims by the Company asserting a violation of
section 5, 6, 7 or 8.03 or seeking to enforce, by injunction or otherwise, the
terms of section 5, 6, 7 or 8.03. Such claims may be maintained by the Company
in a lawsuit subject to the terms of section 10.03. Executive agrees that, in
addition to, but not to the exclusion of any other available remedy, the Company
shall have the right to enforce the provisions of sections 5, 6, 7 and 8.03 by
applying for and obtaining temporary and permanent restraining orders
injunctions from a court of competent jurisdiction without the necessity of
filing a bond therefor and without the necessity of proving actual damages, and
the Company shall be entitled to recover from the Employee its reasonable
attorneys' fees and costs in enforcing the provisions of Sections 5, 6, 7 and
8.03.
10.03 Venue. Any action at law, suit in equity, or judicial proceeding
arising directly or indirectly, or otherwise in connection with, out of, related
to or from this Agreement or any provisions hereof shall be litigated only in
the courts of the State of California. Executive waives any right the Executive
may have to transfer or change the venue of any litigation brought against
Executive by the Company.
10.04 Severability. To the extent any provisions of this Agreement
shall be invalid or unenforceable, it shall be considered deleted herefrom and
the remainder of such provisions and if this Agreement shall be unaffected and
shall continue in full force and effect. In furtherance and not in limitation of
the foregoing, should the duration or geographical extent of, or business
activities covered by, any provisions of this Agreement be in excess of that
which is valid and enforceable under applicable law, then such provisions shall
be construed to cover only that duration, extent or activities which may validly
and enforceably be covered. Executive acknowledges the uncertainty of the law in
respect and expressly stipulates that this Agreement be given the construction
which renders its provisions valid and enforceable to the maximum extent (not
exceeding its express terms) possible under applicable law.
11 Miscellaneous.
11.01 Governing Law. This Agreement is made under and shall be governed
by and construed in accordance with the laws of the State of California.
11.02 Prior Agreements. Except as set forth in Section 1, this
Agreement contains the entire agreement of the parties relating to the
employment of Executive by the Company and the ancillary matters discussed
herein and supersedes all prior agreements and undertakings with respect to such
matters, and the parties hereto made no arrangements, representations or
warranties relating to such employment or ancillary matters which are not set
forth herein.
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11.03 Withholding Taxes. The Company may withhold from any benefits
payable under this Agreement all federal, state, city or other taxes shall be
required pursuant to any law governmental regulation, or ruling or any other
amount owed to the Company.
11.04 Amendments. No amendment or modification of this Agreement shall
be deemed effective unless made in writing and signed by the both Executive and
Company.
11.05 No Waiver. No term or condition of this Agreement shall be deemed
to have been waived, nor shall there be any estoppel to enforce any provisions
of this Agreement, except by a statement in writing signed by the party against
whom enforcement of the waiver or estoppel is sought. Any written waiver shall
not be deemed a continuing waiver unless specifically stated, shall operate only
as to specific term or condition waived and shall not constitute a waiver of
such term or condition for the future or as to any act other than that
specifically waived.
11.06 Assignment. This Agreement shall not be assignable, in whole or
in part, by either party without the written consent of the other party, except
that the Company may, without the consent of the Executive, assign its rights
and obligations under this Agreement to any corporation, firm or other business
entity with or into which the Company may merge or consolidate, or to which the
Company may sell or transfer all or substantially all of its assets, or of which
50% or more of the equity investment and of the voting control is owned,
directly or indirectly, by, or is under common ownership with, the Company;
provided, however, that no such assignment will relieve Company of any of its
obligations hereunder. After any such assignee shall thereafter be deemed to be
the Company for the purposes of all provisions of this Agreement including
section 9.
11.07 Counterparts. This Agreement may be simultaneously executed in
any number of counterparts, and such counterparts executed and delivered, each
as an original, shall constitute but the same instrument.
11.08 Notices. All notices, demands and other communications to be
given or delivered under or by reason of the provisions of this Agreement will
be in writing and will be deemed to have given when personally delivered or
three days after being mailed, if mailed, by first class mail, return receipt
requested, or when receipt is acknowledged, if sent by facsimile, telecopy or
other electronic transmission device. Notices, demands and communications to
Company and the Executive will, unless another address is specified in writing ,
be sent to the address indicated below:
Notices to Company: Notice to Executive:
Stockpoint, Inc. ________________
0000 Xxxxxxxxx Xxxx ________________
Xxxxxxxxxx, Xxxx 00000 ________________
Attn: President
11.09 Captions and Headings. The captions and paragraph headings used
in this Agreement are for convenience of reference only, and shall not affect
the construction or interpretation of this Agreement or any of the provisions
hereof.
11.10 Effect of Termination. It is expressly understood that
neither the Company nor the Executive shall have any continuing obligation under
this agreement upon termination hereof, except in respect of the matters
referenced in Sections 5, 6, 7 and 8.03.
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IN WITNESS WHEREOF, Executive and the Company have executed this
Agreement as of date set forth herein.
Stockpoint, Inc.
By: /s/ Xxxxxxx X. Xxxxx
---------------------------
Its CEO
---------------------------
EXECUTIVE
/s/ Xxxx Xxx
-----------------------------
Xxxx Xxx
