EXHIBIT 10.5
AGREEMENT
THIS AGREEMENT (the "Agreement") is made and entered into on March 9, 2000
by and between XXXXXXXX.XXX CORP. ("Corporation") and XXXXXXX XXXXX ("Xxxxx").
The Corporation and Xxxxx agree as follows:
1. DEFINITIONS.
1.1 "Agreement" means only the agreement contained in this document and as
modified in writing pursuant to Section 8.6 herein.
1.2 "Corporation" means SmartAge Corp. and any successor to its business or
assets as provided by Section 8.3 herein or which becomes bound by this
Agreement by operation of law.
1.3 "Board" means the Board of Directors of the Corporation.
1.4 "Cause" means acts of Xxxxx which: (i) breach Xxxxx'x fiduciary duty
as a Board member or Officer of the Corporation; (ii) violate the securities
law involving an intent to obtain personal or family profit; (iii) involve or
result in a criminal conviction resulting in incarceration; or (iv) consist of
committing an act of fraud against, or the knowing misappropriation of
property belonging to, Corporation either of which causes material harm to the
Corporation. A termination for any other reason shall be a termination
"Without Cause."
1.5 "Change in Control" means a change in the ownership or control of the
Corporation effected through any of the following transactions:
1.5.1 The acquisition, directly or indirectly by any person or
related group of persons (other than the Corporation or a person that directly
or indirectly controls, is controlled by, or is under common control with, the
Corporation), of beneficial ownership (within the meaning of Rule 13d-3 of the
0000 Xxx) of securities possessing more than fifty percent (50%) of the total
combined voting power of the Corporation's outstanding securities pursuant to
a tender or exchange offer made directly to the Corporation's stockholders, or
1.5.2 A merger or consolidation in which securities possessing more
than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities are transferred to a person or persons
different from the persons holding those securities immediately prior to such
transaction, or
1.5.3 The sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation or
dissolution of the Corporation.
Provided however that a Change in Control shall not occur as a result of
the sale in an Initial Public Offering or subsequent secondary offering of
Corporation's securities which result in more than fifty percent (50%) of the
common stock being held by others.
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1.6 "Disability" means any physical or mental illness preventing Xxxxx from
performing services for the Corporation for one hundred twenty (120) consecutive
calendar days. Disability shall be deemed to have occurred only after the
following procedure has been satisfied: If within thirty (30) days after
written notice of proposed Termination of this Agreement for Disability is given
to Xxxxx by Corporation, Xxxxx has not been able to resume performance of his
duties, Corporation may terminate this Agreement by giving written notice of
Termination of this Agreement for Disability. Such notice may be given by
Corporation following Xxxxx'x inability to perform services by reason of
physical or mental disability for ninety (90) consecutive calendar days.
1.7 "Effective Date" means March 9, 2000.
1.8 "Person" means an individual, a corporation, a partnership, an
association, a joint stock company, a limited liability company, a limited
liability partnership, a trust, any unincorporated organization or a
government or political subdivision thereof.
1.9 "Termination" or "Terminated" means the termination of this Agreement
and Xxxxx'x services thereunder. A Termination affected by the Corporation or
Board or their successors may either be "For Cause," as defined in Section 1.4
herein, or "Without Cause" which would include any Termination by the
Corporation or Board or their successors that is not a Termination For Cause.
A Termination effected by Xxxxx may either be for "Good Reason" as defined in
Section 5.5.1 herein, or Without Good Reason which would include any
Termination affected by Xxxxx other than a Termination for Good Reason.
1.10 "Monthly Payment" shall mean the amount set forth in Paragraph 4
below.
1.11 "Base Period" means the period of time prior to the Termination that
is either (a) the twenty-four (24) month period preceding the month in which
the Termination takes effect, or (b) if Xxxxx provides services for fewer than
twenty-four (24) months, the period of time between the Effective Date and the
Termination.
2. POSITION AND DUTIES.
2.1 Xxxxx shall serve the Corporation as its President and Chief Executive
Officer reporting to the Board, of which Xxxxx is currently a member. The
services to be performed by Xxxxx shall include, but not be limited to, any
services consistent with his position which may be assigned to Xxxxx from time
to time by the Board.
2.2 Xxxxx may perform services under this Contract at diverse locations
including, but not limited to, Xxxxx'x residence in Zephyr Cove, Nevada. Xxxxx
may choose to work primarily out of the State of California.
2.3 As President and Chief Executive Officer, Xxxxx will devote his best
efforts to perform services for the Corporation. Although Xxxxx may perform
services for other organizations, subject to the limitations is Section 2.4
below, Xxxxx must not accept any other work that would jeopardize his ability to
perform services to the best of his ability under this Contract.
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2.4 Xxxxx will not engage in competitive activity with the Corporation
including, but not limited to, performing services for any competitor of the
Corporation.
3. TERM.
3.1 The term of this Agreement shall commence as of the Effective Date and
shall continue until the date this Agreement is Terminated For Cause, Without
Cause, for Good Reason, Without Good Reason, Disability or death of Xxxxx.
Either Corporation or Xxxxx may terminate this Agreement and Xxxxx'x services
hereunder at any time for any reason, with or without cause, by providing thirty
(30) days written notice of termination to the other party.
4. COMPENSATION.
4.1 Monthly Payment. Xxxxx shall be paid under this Agreement as follows:
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4.1.1 Xxxxx will be paid $12,500 per month. This payment will be
made by Corporation to Xxxxx on the first business day of the month for
services rendered in the preceding month. Effective upon the effective date of
the Corporation's initial public offering (the "IPO Effective Date"), the
amount of such payment will be increased to $16,666 per month.
4.1.2 In addition to the fee set forth in Section 4.1.1, Xxxxx will
also be eligible for performance payments based upon achievement of certain
written goals. The goals and corresponding performance payouts will be
periodically set by Corporation in writing. These goals and the corresponding
performance payouts must be approved by a majority of the Board of Directors
[(without counting the vote of Xxxxxxx Xxxxx)].
4.1.3 Corporation will reimburse Xxxxx for reasonable business
expenses provided Xxxxx submits invoices within sixty (60) days of the date
such expenses are incurred. Extraordinary expenses, which include all expenses
exceeding twenty-five thousand dollars ($25,000) in amount, must be pre-
approved in writing by the Board.
4.1.4 Xxxxx will submit monthly invoices for all business expenses.
Xxxxx will submit such invoice within fifteen (15) days of the end of each
month. Assuming the invoice is in order and otherwise proper, Corporation will
pay such invoice within fifteen (15) days of receipt.
4.2 Benefits. Xxxxx shall be eligible to participate in or receive
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benefits under all of the Corporation's employee benefits plans upon the
Effective Date to the extent permitted under the terms of such plans.
5. TERMINATION OF SERVICES.
5.1 The provisions of this Section 5 shall govern the payments, if any,
which Xxxxx shall receive upon the Termination of this Agreement and services
thereunder.
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5.2 Payment Upon Voluntary Termination. In the event that Xxxxx Terminates
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this Agreement Without Reason, Xxxxx shall be entitled to no payments form the
Corporation except payment of his Base Salary through the date of Termination.
In such case, Xxxxx would not be entitled to any payment for achievement of any
goal unless that goal had been achieved prior to the effective date of the
Termination. If Xxxxx terminates this Agreement and stops providing services
for Good Reason, as defined in Section 5.5.1 below, then he would be entitled to
the payments set forth in Section 5.5.1.
5.3 Termination by Corporation. In the event of a Termination of this
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Agreement and Xxxxx'x services by the Corporation for the reasons set forth
below, Xxxxx shall be entitled to the following:
5.3.1 Termination for Cause. If Corporation terminates this
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Agreement for "Cause," then Xxxxx will be paid for his services through the
date of Termination and for any goal achieved prior to the date of
termination, but nothing else.
5.3.2 Termination without Cause. If this Agreement is Terminated by
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Corporation or the Board or their successors for any reason other than Cause as
set forth herein, or if Xxxxx Terminates this Agreement for Good Reason, as
defined in Section 5.5.1 below, the Corporation shall pay to Xxxxx the
following: (a) twelve (12) months of Monthly Payments pursuant to Section 4.1.1
above (or the fee then in effect if subsequently agreed to in writing) and (b)
an additional payment equal to twelve (12) months of Xxxxx'x average performance
payment during the Base Period, calculated by adding the total of all
performance payments received by Xxxxx during the Base Period divided by the
number of months in the Base Period, multiplied by twelve (12) months (the
"Severance Payment").
5.3.2.1 The Corporation shall make the Severance Payment
either in a lump-sum payment, or in twelve (12) equal monthly payments, at the
option of Xxxxx. If Xxxxx chooses the lump-sum payment option in such case,
then the payment shall be made not later than the thirtieth (30) day following
the date of Termination without Cause or Termination for Good Reason.
5.3.2.2 Although a payment triggering such section is not
intended hereby, amounts otherwise due under this Section will be reduced if,
and to the extent that, such reduction is required to avoid the imposition of
the excise tax under section 4999 of the Internal Revenue Code and the loss of
the deduction in accordance with section 280G of the Internal Revenue Code, if
applicable.
5.4 If a Change in Control occurs during the term of this Agreement,
Xxxxx may thereafter be entitled to a payment set forth in Section 5.4.2 in
accordance with the terms hereof, subject to the following limitations:
5.4.1 Termination for Good Reason. The payments set forth in Section
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5.3.2 hereof shall be made to Xxxxx if, after a Change in Control and within
one year thereafter, Xxxxx Terminates for Good Reason, upon the happening of
one or more of the following events, any of which will constitute Good Reason
for Termination:
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5.4.1.1 Without Xxxxx'x expense written consent, Xxxxx is
either (a) assigned duties substantially inconsistent with Xxxxx'x position,
duties, responsibilities and status with Corporation immediately prior to a
Change in Control, or (b) removed from the position be held prior to the
Change in Control;
5.4.1.2 A reduction by Corporation of Xxxxx'x Monthly Payment
or performance compensation formula applicable to Xxxxx as in effect
immediately prior to a Change in Control; or
5.4.1.3 The failure of the Corporation to obtain the
assumption of this Agreement by a successor of Corporation as contemplated in
Section 8.3 below.
6. USE OF CORPORATION APARTMENT.
6.1 The Corporation shall retain an apartment in the San Francisco Bay Area
for use by its executives in transacting business on behalf of the Corporation
that is equal to or substantially equal to the current apartment being provided
to Xxxxx. Such apartment shall be allocated to the executives of the Corporation
based on the order in which requests are made for it (i.e. first come first
serve basis).
7. ARBITRATION.
7.1 Any controversy between the parties hereto, including the construction,
application or breach of any of the terms, covenants or conditions of this
Agreement, and all claims resulting to or arising from Xxxxx'x services or the
termination of those services or this Agreement, including all statutory claims,
shall on a timely written request of one party served upon the other, be
submitted to arbitration to be governed by the California Arbitration Act as set
forth in the California Code of Civil Procedure (presently sections 1280 et
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seq.).
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7.2 Unless otherwise mutually agreed to by Xxxxx and Corporation in
writing, the parties will request the American Arbitration Association to
submit a list of nine names of persons who could serve as an arbitrator.
Corporation and Xxxxx shall alternatively remove names from the list
(beginning with the party which loses a flip of the coin) until one name
remains, and this person shall serve as the impartial arbitrator. The
arbitration shall take place in the City and County of San Francisco,
California.
7.3 The Arbitrator will have authority to award costs and attorneys' fees
to the prevailing party unless the dispute in question concerns a claim of a
statutory violation in which case the Arbitrator may award attorneys' fees as
provided for in that statute.
8. GENERAL PROVISION.
8.1 Nonassignability. Neither this Agreement nor any right or interest
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hereunder shall be assignable by Xxxxx, provided, however, that nothing in this
Section shall preclude (i) Xxxxx from designing a beneficiary to receive any
benefits payable hereunder upon Xxxxx'x death, or (ii) Xxxxx'x executors,
administrators or other legal representatives or Xxxxx'x estate from assigning
any rights hereunder to the person or persons entitled thereto.
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8.2 Status. Xx. Xxxxx shall have the status of an employee of Corporation.
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8.3 Assumption. The Corporation shall require any successor in interest
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(whether as a result of purchase, merger, consolidation, Change in Control or
otherwise) to all or substantially all of the business and/or assets of the
Corporation to expressly assume and agree to perform the obligations under this
Agreement.
8.4 No Attachment. Except as required or permitted by law, no right to
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receive payments under this Agreement shall be subject to anticipation,
communication, alienation, sale, assignment, encumbrance, charge, pledge or
hypothecation or to execution, attachment, levy or similar process of
assignment by operation of law, and any attempt, voluntary or involuntary, to
effect any such action shall be null, void and of no effect. The payments due
Xxxxx under Section 5 herein shall not be deemed earned until the conditions
set forth in Section 5 occur, if ever.
8.5 Binding Agreement. This Agreement shall be binding upon, and inure to
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the benefit of, Xxxxx and the Corporation, and their respective heirs,
successors and assigns. Each party acknowledges that no representations,
inducements, promises or agreements have been made by any party, or anyone
acting on behalf of any party, which are not embodied herein and that no other
agreement, statement or promise not contained in this Agreement shall be valid
or binding on either party except as provided herein.
8.6 Amendment or Augmentation of Agreement; Supercedes Prior Consulting
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Agreement. This Agreement may not be modified or amended except by an
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instrument in writing signed by the parties hereto. Unless expressly agreed to
in writing by the parties hereto, no additional rights or compensation, even if
given or accepted, shall be deemed to modify or otherwise affect the express
terms and conditions of this Agreement. This Agreement supercedes that certain
Consulting Agreement, effective as of January 20, 1998, entered into by and
between Xxxxx and the Corporation, as amended (the "Consulting Agreement"), and
effective upon the execution of this Agreement neither party to the Consulting
Agreement shall have any further obligation or liability thereunder. Nothing
herein, however, shall affect the parties' rights under any other agreement
entered into by Xxxxx with the Corporation.
8.7 Waiver. No term or condition of this Agreement shall be deemed to have
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been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each waiver shall
operate only as to the 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.
8.8 Severability. If, for any reason, any provision of this Agreement is
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held invalid, such invalidity shall not affect any other provision of this
Agreement not held so invalid, and each such other provision shall, to the
full extent consistent with law, continue in full force and effect. If any
provision of this Agreement shall be held invalid in part, such invalidity
shall in no
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way affect the rest of such provisions not held so invalid, and the rest of
such provision together with all other provisions of this Agreement shall, to
the full extent consistent with law, continue in full force and effect. If
this Agreement is held totally invalid or cannot be enforced, then to the full
extent permitted by law any prior agreement, whether oral or written, express
or implied, between the Corporation and/or its affiliates (or any successor
thereof) and Xxxxx shall be deemed reinstated as if this Agreement had not
been executed.
8.9 Notices. All notices, requests, demands and other communications
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hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered or if mailed by United States certified or registered
mail, prepaid, to the parties or their permitted assignees at the following
addresses (or at such other address as shall be given in writing by either
party to the other):
To: SmartAge Corp.
0000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Chief Financial Officer
To: Xxxxxxx Xxxxx
X.X. Xxx 00
Xxxxxx Xxxx, Xxxxxx 00000
8.10 Headings. The headings of paragraphs herein are included solely for
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convenience or reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
8.11 Governing Law. This Agreement has been executed and delivered in the
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State of California, and its validity, interpretation, performance and
enforcement shall be governed by the laws of that State.
8.12 Interpretation of Agreement. The parties acknowledge that they are
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entering into this Agreement freely and voluntarily, with full understanding of
the terms of this Agreement. Interpretation of the terms of this Agreement
shall not be construed for or against either party on the basis of identity of
the party who drafted the provisions in question.
8.13 Proprietary Information Agreement. Xxxxx will execute the SmartAge
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Proprietary Information and Inventions Agreement for Employees (the "Employee
Proprietary Information Agreement") effective upon the Effective Date
("Promissory Information Agreement"), which is attached hereto and incorporated
herein by reference. If either party Terminates this Agreement, it will not
affect the continuing validity of the Employee Proprietary Information Agreement
or of the SmartAge Proprietary Information and Inventions Agreement which was
previously executed by Xxxxx and the Corporation, and Xxxxx agrees to continue
to
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abide by all obligations set forth in the Proprietary Information Agreement even
after the Termination of this Agreement.
CORPORATION:
XXXXXXXX.XXX CORP.
By: /s/ Xxxxx Xxxx By:
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Its: Chief Financial Officer Its:
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XXXXX:
/s/ Xxxxxxx Xxxxx
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XXXXXXX XXXXX
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