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EXHIBIT 10.5
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "AGREEMENT") is made as of April 4, 2000,
by and between, eVENTURES GROUP, INC., a Delaware corporation, with its
principal office at 000 Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000 (the
"COMPANY"), and XXXXXX X. XXXXXX residing at 0000 Xxxxxx Xxxxx, Xxxxxx, Xxxxx
00000 ("EXECUTIVE").
WITNESSETH:
WHEREAS, effective April 3, 2000 (the "COMMENCEMENT DATE"), the Company
desires to employ Executive as its Senior Vice President, and Executive desires
to accept such employment; and
WHEREAS, the Company and Executive desire to enter into this Agreement as
to the terms of his employment by the Company.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the parties
agree as follows:
1. Term of Employment. Except for earlier termination as provided in
Section 7 hereof, Executive's employment under this Agreement shall be for a
three (3) year term (the "EMPLOYMENT TERM") commencing on the Commencement Date
and ending on April 2, 2003 (the "EXPIRATION DATE").
2. Position.
(a) Executive shall serve as a Senior Vice President of the Company
(the "SENIOR VICE PRESIDENT"), reporting directly to the Chief Executive
Officer or President of the Company (the "CHIEF EXECUTIVE OFFICER"), with
functional responsibility for acquisitions, investments and operational
oversight. If requested by the Board of Directors of the Company (the
"BOARD") or the Chief Executive Officer, Executive shall also serve on the
Board and committees thereof, as an executive, officer and director of
subsidiaries of the Company and/or as a director of associated companies of
the Company without additional compensation and subject to any policy of
the Compensation Committee of the Company's Board (the "COMPENSATION
COMMITTEE") with regard to retention or turnover of the director's fees.
(b) Executive shall have such duties and authority, consistent with
his position, as shall be assigned to him from time to time by the Chief
Executive Officer.
(c) During the Employment Term, Executive shall devote substantially
all of his business time and efforts to the performance of his duties
hereunder. Nothing contained herein shall be construed to prohibit
Executive from (i) owning less than ten percent (10%) of the outstanding
securities of any publicly traded entity, (ii) pursuing any business
opportunity that is not in Competition, as such term is defined in Section
10(b) below, with the Company or its subsidiaries or any portfolio company
in which the
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Company or its subsidiaries hold securities (other than entities in which
the Company or its subsidiaries make a nominal investment) (provided the
time devoted by Executive to such personal investment does not materially
interfere with Executive's duties hereunder), (iii) continuing service as a
consultant of Broadband NOW, in the same capacity and extent as Executive
rendered such service immediately prior to the Commencement Date, (iv)
continuing service on the boards of directors of the companies set forth on
Exhibit "D" attached hereto or, with the written consent of the Board, on
the board of directors of any other company that is not in Competition with
the Company or its subsidiaries or any portfolio company in which the
Company or its subsidiaries hold securities (other than entities in which
the Company or its subsidiaries make a nominal investment), or (v) service
on the boards of directors of a reasonable number of charitable
organizations so long as such service is not inconsistent with his position
and duties hereunder (such activities described in clause (i), (ii), (iii),
(iv) or (v) immediately preceding being herein referred to as the "ALLOWED
ACTIVITIES"). Executive shall be entitled to retain any consideration that
he receives from service permitted by clauses (iii) and (iv) of the
immediately preceding sentence on any board of directors of a corporation
unrelated to the Company. For purposes of this Section 2(c) and Section
10(b) to the extent expressly applicable, a "nominal investment" of the
Company or its subsidiaries will be determined in relation to the size of
investments made from time to time by the Company or its subsidiaries in
its portfolio companies (including, without limitation, investments made in
exchange for cash, securities or services rendered).
3. Base Salary. During the Employment Term, the Company shall pay Executive
a Base Salary at the annual rate of One Hundred Eighty Thousand Dollars
($180,000). Base Salary shall be payable in accordance with the usual payroll
practices of the Company. Executive's Base Salary may be reviewed annually by
the Board or the Compensation Committee and may be increased, but not decreased,
from time to time by the Board or the Compensation Committee. The Base Salary as
determined as aforesaid, from time to time for the applicable fiscal year shall
constitute "BASE SALARY" for purposes of this Agreement.
4. Incentive Compensation.
(a) Bonus. For each fiscal year or portion thereof during the
Employment Term, Executive shall be entitled to participate in an incentive
bonus plan established by the Company on such terms and conditions, and
subject to such standards, as shall be determined from time to time in the
sole discretion of the Board or the Compensation Committee. Such incentive
bonus for any such fiscal year shall be payable in cash and shall not be
greater than fifty percent (50%) of Executive's rate of Base Salary in
effect for the fiscal year to which such incentive bonus relates. During
the Employment Term, the Company shall maintain an incentive bonus plan
providing a target bonus equal to not less than fifty percent (50%) of
Executive's rate of Base Salary in effect for the fiscal year to which the
bonus relates.
(b) Stock Options. The Company hereby grants to Executive stock
options (the "STOCK OPTIONS") to purchase 1,020,000 shares of Common Stock
of the Company. The Stock Options shall be granted pursuant to a stock
option award agreement or agreements between Executive and the Company
substantially in the form attached hereto
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as Exhibit "B" (the "STOCK OPTION GRANTS"). The exercise price for such
Stock Options shall be equal to $23.00 per share of Common Stock. Subject
to the terms and provisions of the Stock Option Grants, the Stock Options
shall become exercisable on the dates indicated below as to that number of
shares of Common Stock of the Company as set forth below opposite each such
date.
Date Number of Shares
---- ----------------
July 2, 2000 255,000
April 2, 2001 255,000
April 2, 2002 255,000
April 2, 2003 255,000
The foregoing schedule to the contrary notwithstanding, the Stock Options
shall become fully exercisable in the event the Employment Term terminates
prior to the Expiration Date by reason of termination of the Executive's
employment hereunder by Executive for Good Reason or by the Company without
Cause (as such terms are hereinafter defined). The Stock Options shall in
all events expire on the date ten years after the Commencement Date, if not
terminated or canceled earlier. The Executive shall be permitted to
transfer the Stock Options to the Executive's immediate family members
and/or lineal descendents (or a trust or family limited partnership
established solely for the benefit of any such immediate family member
and/or lineal descendent). Notwithstanding anything in the Stock Option
Grants to the contrary, to the extent any provisions contained therein are
inconsistent with or differ from the explicit terms and conditions of this
Agreement, the terms and conditions of this Agreement shall control. To the
extent this Agreement does not specifically address an issue or term set
forth in the Stock Option Grants, then the provisions and terms of the
Stock Option Grants shall apply.
(c) Adjustments. As more fully specified in the Stock Option Grants,
the number of shares covered by, and the option price per share of, the
Stock Options will be subject to adjustment by the Company for any stock
split, reclassification, combination or similar change in the Company's
capital stock.
5. Employee Benefits and Vacation.
(a) During the Employment Term, Executive shall be entitled to
participate in all pension, profit sharing, long-term incentive
compensation, retirement, savings, welfare and other employee benefit plans
and arrangements and fringe benefits and perquisites generally maintained
by the Company from time to time for the benefit of senior executive
officers of the Company of a comparable level, in each case in accordance
with their respective terms as in effect from time to time (other than any
special arrangement entered into by contract with an executive or that
applies on a grandfathered basis). Without limiting the foregoing, the
Company shall pay all premiums for Executive and his dependent family
members under health, hospitalization, disability, dental, life and other
employee benefit plans that the Company may have in effect from time to
time.
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Executive acknowledges that the Company does not currently provide a profit
sharing plan, and has no current intention of providing profit sharing
benefits to its employees.
(b) During the Employment Term, Executive shall be entitled to at
least three (3) weeks paid vacation each year in accordance with the
Company's policies in effect from time to time. Executive shall also be
entitled to such periods of sick leave as is customarily provided by the
Company to its senior executive employees.
6. Business Expenses. The Company shall reimburse Executive for the
reasonable travel, entertainment and other business expenses incurred by
Executive, subject to such pre-approval procedures as may be established from
time to time by the Board, in the performance of his duties hereunder, in
accordance with the Company's policies as in effect from time to time.
7. Termination.
(a) The employment of Executive and the Employment Term shall
terminate as provided in Section 1 hereof or, if earlier, upon the earliest
to occur of any of the following events:
(i) the death of Executive;
(ii) the termination of Executive's employment by the Company
due to Executive's Disability (as defined in Exhibit
"A") pursuant to Section 7(b) hereof;
(iii) the termination of Executive's employment by Executive
for Good Reason (as defined in Exhibit "A") pursuant to
Section 7(c) hereof,
(iv) the termination of Executive's employment by the Company
without Cause (as defined in Exhibit "A") pursuant to
Section 7(e) hereof;
(v) the termination of employment by Executive without Good
Reason upon thirty (30) days prior written notice
pursuant to Section 7(f) hereof; or
(vi) the termination of Executive's employment by the Company
for Cause pursuant to Section 7(d) hereof.
(b) Disability. If Executive is unable to perform his material duties
hereunder due to a physical or mental condition and the Company desires to
terminate Executive's employment for Disability (as defined in Exhibit
"A"), the Company shall deliver to Executive a written Notice of Disability
Termination (herein so called), effective upon the date (the "DISABILITY
TERMINATION DATE") which is the later of (i) the date such condition
becomes a Disability or (ii) thirty (30) days following the delivery of the
Notice of Disability Termination; provided that the Disability Termination
Date shall be
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suspended, and the Employment Term shall not terminate, so long as
Executive returns to the full performance of his duties by and following
such date.
(c) Termination for Good Reason. A Termination for Good Reason (herein
so called) means a termination by Executive by written notice given within
thirty (30) days after Executive knows of the occurrence of the Good Reason
event, unless such circumstances are corrected prior to the date of
termination specified in the Notice of Termination for Good Reason and the
Company informs Executive of such correction prior to such date. In such
event, the Employment Term shall not terminate. A Notice of Termination for
Good Reason shall mean a notice that shall indicate the specific Good
Reason event in Section (d) of Exhibit "A" relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis
for Termination for Good Reason. The failure by Executive to set forth in
the Notice of Termination for Good Reason any facts or circumstances which
contribute to the showing of Good Reason shall not waive any right of
Executive hereunder or preclude Executive from asserting such fact or
circumstance in enforcing his rights hereunder. The Notice of Termination
for Good Reason shall provide for a date of termination not less than
thirty (30) nor more than sixty (60) days after the date such Notice of
Termination for Good Reason is given.
(d) Cause. Subject to the notification provisions of this Section
7(d), Executive's employment hereunder may be terminated by the Company for
Cause. A Notice of Termination for Cause (herein so called) shall mean a
notice that shall indicate the specific termination provision in Section
(a) of Exhibit "A" relied upon and shall set forth in reasonable detail the
facts and circumstances which provide for a basis for Termination for
Cause. The effective date of termination for a Termination for Cause shall
be the date indicated in the Notice of Termination. Any purported
Termination for Cause which is held by a court by a non-appealable final
judgment not to have been based on the grounds set forth in this Agreement
or not to have followed the procedures set forth in this Agreement shall be
deemed a termination by the Company without Cause.
(e) Termination without Cause. The Company may terminate its
employment of Executive for reasons other than Cause at any time upon
thirty (30) days prior written notice.
(f) Voluntary Resignation. Executive may terminate his employment with
the Company at any time upon thirty (30) days prior written notice.
8. Consequences of Termination of Employment. Executive shall be entitled
to the following compensation from the Company (in lieu of all other sums owed
or payable to Executive) upon the termination of employment as described below:
(a) Death, Disability, Voluntary Resignation without Good Reason or by
the Company with Cause. If Executive's employment and the Employment Term
are terminated (1) by reason of Executive's death or Disability, (2) by
Executive without Good Reason or (3) by the Company for Cause, the
employment period under this Agreement shall terminate without further
obligations to Executive or Executive's legal representatives under this
Agreement except for: (i) any Base Salary earned but unpaid,
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any accrued but unused vacation pay payable pursuant to the Company's
policies and any unreimbursed business expenses payable pursuant to Section
6 (which amounts, in the case of the death of Executive, shall be promptly
paid in a lump sum to Executive's estate), (ii) any other amounts or
benefits earned, accrued and owing to Executive under the then applicable
employee benefit plans, long term incentive plans or equity plans and
programs of the Company, including, without limitation, any earned but
unpaid incentive bonus for any prior completed fiscal year, and (iii)
except in the case of a termination by the Company for Cause or by
Executive without Good Reason, a pro-rata portion (based on the number of
days Executive is employed by the Company during the fiscal year of such
termination) of Executive's incentive bonus earned for the fiscal year in
which termination occurs, which, in any case, shall be paid in accordance
with the applicable plans, programs and agreements, and any unpaid
reimbursable business expenses (such amounts referred to in clauses (i) and
(ii) collectively, the "ACCRUED AMOUNTS").
(b) Termination by Executive for Good Reason or Termination by Company
without Cause. If Executive's employment and the Employment Term are
terminated (i) by Executive for Good Reason, or (ii) by the Company without
Cause (and other than for Disability or as a result of expiration of the
Employment Term), Executive shall be entitled to receive the Accrued
Amounts and shall, subject to Sections 9(b), 9(c) and 10 hereof, be
entitled to receive equal monthly payments of an amount equal to his
monthly rate of Base Salary in effect at the time of such termination plus
his incentive bonus paid for the most recently ended fiscal year (provided,
however, if Executive was employed hereunder for only a portion of such
prior fiscal year, such bonus shall be annualized for purposes of this
calculation, and, if no bonus was paid for such prior fiscal year, the
current fiscal year's bonus, at 100 percent of target, shall be deemed to
be the incentive bonus paid for the most recently ended fiscal year for
purposes of this calculation) divided by twelve (12) for a period equal to
the greater of (x) six (6) months or (y) the remaining period of time from
the date of such termination through the Expiration Date.
(c) Termination as a Result of Nonextension of Employment Term. If
Executive's employment with the Company terminates on the Expiration Date
by reason of expiration of the Employment Term and the Company's failure to
offer to extend the Employment Term, Executive shall be entitled to receive
the Accrued Amounts and shall, subject to Sections 9(b), 9(c) and 10
hereof, be entitled to receive equal monthly payments of an amount equal to
his monthly rate of Base Salary in effect immediately prior to the
Expiration Date plus his incentive bonus paid for the most recently ended
fiscal year divided by twelve (12) for a period of six (6) months.
9. No Mitigation; No Set-Off.
(a) In the event of any termination of employment under Section 8,
Executive shall be under no obligation to seek other employment and there
shall be no offset against any amounts due Executive under this Agreement
on account of any remuneration attributable to any subsequent employment
that Executive may obtain. Any amounts due under Section 8 are in the
nature of severance payments and are not in the nature of a penalty. Such
amounts are inclusive, and in lieu of any amounts payable under any other
salary continuation or cash severance arrangement of the Company and to the
extent paid
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or provided under any other such arrangement shall be offset from the
amount due hereunder.
(b) (i) Executive agrees that, as a condition to receiving the
payments and benefits provided under Section 8(b) or (c) hereunder he will
execute, deliver and not revoke (within the time period permitted by
applicable law) a release of all claims of any kind whatsoever against the
Company, its affiliates, officers, directors, employees, agents and
shareholders in the then standard form being used by the Company for senior
executives (but without release of the right of indemnification hereunder
or under the Company's By-laws or rights under benefit or equity plans that
by their terms are intended to survive termination of his employment or
claims that the Company fulfill its obligations under this Agreement).
(ii) The Company agrees that, as a condition to Executive's
agreements under Section 10 hereof, the Company will execute and
deliver a release of all claims of any kind whatsoever against
Executive (but without release of claims that Executive fulfill his
obligations under this Agreement). The Company's release under this
paragraph (b)(ii) of this Section 9 shall be executed and delivered
simultaneously with the execution and delivery of Executive's release
under paragraph (b)(i) of this Section 9. The releases referred to in
this paragraph (b) of this Section 9 shall apply to all claims
described in this paragraph existing from the beginning of time
through the date of each party's execution of his or its release.(c)
Upon any termination of employment, Executive hereby resigns as an
officer and director of the Company, any subsidiary and any affiliate
and as a fiduciary of any benefit plan of any of the foregoing.
Executive shall promptly execute any further documentation thereof as
requested by the Company and, if Executive is to receive any payments
from the Company, execution of such further documentation shall be a
condition thereof.
10. Confidential Information, Non-Competition and Non-Solicitation of the
Company.
(a) (i) Executive acknowledges that as a result of his employment by
the Company, Executive will obtain secret and confidential information as
to the Company and its affiliates and create relationships with customers,
suppliers and other persons dealing with the Company and its affiliates and
the Company and its affiliates will suffer irreparable damage, which would
be difficult to ascertain, if Executive should use such confidential
information or take advantage of such relationships and that because of the
nature of the information that will be known to or obtained by Executive
and the relationships created it is necessary for the Company and its
affiliates to be protected by the prohibition against Competition as set
forth herein, as well as the confidentiality restrictions set forth herein.
(ii) Executive acknowledges (A) that the retention of nonclerical
employees, employed by the Company and its affiliates in which the
Company and its affiliates have invested training and depends on for
the operation of their businesses, is important to the businesses of
the Company and its affiliates, and
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(B) that Executive will obtain unique information as to such employees
as an executive of the Company and will develop a unique relationship
with such persons as a result of being an executive of the Company.
Therefore, it is necessary for the Company and its affiliates to be
protected from Executive's Solicitation (defined below) of such
employees as set forth below.
(iii) Executive acknowledges that the provisions of this
Agreement are reasonable and necessary for the protection of the
businesses of the Company and its affiliates and that part of the
compensation paid under this Agreement and the agreement to pay
severance in certain instances is in consideration for the agreements
in this Section 10.
(b) COMPETITION shall mean: participating, directly or indirectly, as
an individual proprietor, partner, stockholder, officer, employee,
director, joint venturer, investor, lender with equity participation,
consultant or in any capacity whatsoever (within the United States of
America, or in any country where the Company or its affiliates do business)
in a Competing Business; provided, however, that such participation shall
not include (i) the ownership of not more than ten percent (10%) of the
total outstanding stock of a publicly held company; (ii) following a
termination of Executive's employment hereunder, the ownership of not more
than five percent (5%) of the total outstanding stock of a private company
if Executive is neither a member of, or represented on, the board of
directors of such private company and does not have an executive officer
role in such private company; (iii) the Allowed Activities; or (iv) any
activity engaged in with the prior written approval of the Board. As used
herein, "Competing Business" means any business that the Company and/or its
subsidiaries and/or any entity in which the Company and/or its subsidiaries
holds securities (other than entities in which the Company or its
subsidiaries make a "nominal investment" (determined as described in
Section 2(c) hereof)) are engaged in (I) from time to time (while Executive
is employed by the Company) or (II) at the time of termination (upon
termination of Executive's employment) (consisting principally of the
services described in the Company's Registration Statement on Form 10 under
the Securities Exchange Act of 1934, as amended, and any amendments
thereof). For purposes of the immediately preceding sentence, but solely
following a termination of Executive's employment hereunder, the Company
and its subsidiaries shall be deemed to have made a "nominal investment" in
an entity if, at the time of such termination of employment, the Company
and its subsidiaries own or control less than ten percent (10%) of the
outstanding equity interests, on a fully diluted basis, of such entity. The
Company shall furnish Executive with a list of all Competing Businesses on
or promptly following termination of his employment hereunder.
(c) SOLICITATION shall mean: recruiting, soliciting or inducing, of
any nonclerical employee or employees of the Company or its affiliates to
terminate their employment with the Company or its affiliates or hiring or
assisting another person or entity to hire any nonclerical employee of the
Company or its affiliates or any person who within twelve (12) months
before had been a nonclerical employee of the Company or its affiliates and
were recruited or solicited for such employment or other retention while an
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employee of the Company, provided, however, that solicitation shall not
include any of the foregoing activities engaged in with the prior written
approval of the Board.
(d) If any restriction set forth with regard to Competition or
Solicitation is found by any court of competent jurisdiction, or in
arbitration, to be unenforceable because it extends for too long a period
of time or over too great a range of activities or in too broad a
geographic area, it shall be interpreted to extend over the maximum period
of time, range of activities or geographic area as to which it may be
enforceable. In the event that the agreements in this Section 10 shall be
determined by any court of competent jurisdiction to be unenforceable by
reason of their extending for too great a period of time or over too great
a geographical area or by reason of their being too extensive in any other
respect, they shall be interpreted to extend only over the maximum period
of time for which they may be enforceable and/or over the maximum
geographical area as to which they may be enforceable and/or to the maximum
extent in all other respects as to which they may be enforceable, all as
determined by such court in such action.
(e) During the Employment Term and for two (2) years following a
termination of Executive's employment for any reason whatsoever, whether by
the Company or by Executive and whether or not for Cause, Good Reason or
non-extension of the Employment Term, Executive shall hold in a fiduciary
capacity for the benefit of the Company and its affiliates all secret or
confidential information, knowledge or data relating to the Company and its
affiliates, and their respective businesses, including any confidential
information as to customers of the Company and its affiliates, (i) obtained
by Executive during his employment by the Company and its affiliates and
(ii) not otherwise public knowledge or known within the applicable
industry. Executive shall not, without prior written consent of the
Company, unless compelled pursuant to the order of a court or other
governmental or legal body having jurisdiction over such matter,
communicate or divulge any such information, knowledge or data to anyone
other than the Company and those designated by it. In the event Executive
is compelled by order of a court or other governmental or legal body to
communicate or divulge any such information, knowledge or data to anyone
other than the foregoing, he shall promptly notify the Company of any such
order and he shall cooperate fully with the Company in protecting such
information (at the Company's expense) to the extent possible under
applicable law.
(f) Upon termination of his employment with the Company and its
affiliates, or at any time as the Company may request, Executive will
promptly deliver to the Company, as requested, all documents (whether
prepared by the Company, an affiliate, Executive or a third party) relating
to the Company, an affiliate or any of their businesses or property which
he may possess or have under his direction or control other than documents
provided to Executive in his capacity as a participant in any employee
benefit plan, policy or program of the Company or any agreement by and
between Executive and the Company with regard to Executive's employment or
severance.
(g) During the Employment Term and for two (2) years following a
termination of Executive's employment for any reason whatsoever, whether by
the
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Company or by Executive and whether or not for Cause, Good Reason or
non-extension of the Employment Term, Executive will not engage in
Solicitation.
(h) During the Employment Term and for the Restricted Period (as
hereinafter defined) following a termination of Executive's employment,
Executive will not enter into Competition with the Company. The Restricted
Period shall be (i) for a termination for Cause, twelve (12) months
following the date of termination; (ii) for termination without Cause by
the Company, or for Good Reason by Executive, the period in which the
Company is making payments to Executive as specified in Section 8(b) above;
(iii) for a termination as a result of the voluntary resignation of
Executive without Good Reason, six (6) months from the date of termination;
and (iv) termination as a result of expiration or non-renewal of this
Agreement, after the Company has made a good faith offer for continued
employment, six (6) months following the date of termination.
Notwithstanding the immediately preceding sentence to the contrary, (1) if
the Company terminates Executive's employment without Cause (other than as
a result of expiration of the Employment Term), and the Executive waives,
in writing, at any time after such termination, his right to receive any
future amounts under Section 8(b) hereof, there shall be no Restricted
Period following such termination of employment and waiver, (2) if
Executive terminates his employment for Good Reason, and, after a period of
six (6) months following the date of such termination, the Executive
waives, in writing, at any time after such six-month period, his right to
receive any future amounts that would otherwise be payable after the
expiration of such six-month period under Section 8(b) hereof, the
Restricted Period shall terminate following such six-month period and
waiver, and (3) if the Employment Term expires and the Company fails to
make a good faith offer for continued employment, there shall be no
Restricted Period following such termination of employment.
(i) In the event of a breach or potential breach of this Section 10,
Executive acknowledges that the Company and its affiliates will be caused
irreparable injury and that money damages may not be an adequate remedy and
agree that the Company and its affiliates shall be entitled to injunctive
relief (in addition to its other remedies at law) to have the provisions of
this Section 10 enforced. It is hereby acknowledged that the provisions of
this Section 10 are for the benefit of the Company and all of the
affiliates of the Company and each such entity may enforce the provisions
of this Section 10 and only the applicable entity can waive the rights
hereunder with respect to its confidential information and employees.
(j) Furthermore, in addition to and not in limitation of any other
remedies provided herein or at law or in equity, in the event of breach of
this Section 10 by Executive, while he is receiving amounts under Section
8(b) or (c) hereof, Executive shall not be entitled to receive any future
amounts pursuant to Section 8(b) or (c) hereof after the earlier to occur
of (i) ninety (90) days following the Company's notification of Executive
of its good faith determination of such breach, specifying in reasonable
detail the grounds for such determination, and (ii) a final determination
by an arbitrator or court of competent jurisdiction of such breach, and,
upon such final determination, which is not
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appealable, he shall reimburse the Company for any amounts previously paid
to Executive pursuant to Section 8(b) or (c) hereof.
11. Indemnification. The Company shall indemnify and hold harmless
Executive to the extent provided in the Certificate of Incorporation, the
By-Laws of the Company and the Delaware General Corporation Law as amended and
as applicable, for any action or inaction of Executive while serving as an
officer and director of the Company or, at the Company's request, as an officer
or director of any subsidiary or affiliate of the Company or as a fiduciary of
any benefit plan. The Company shall cover Executive under directors and officers
liability insurance both during and, while potential liability exists, after the
Employment Term in the same amount and to the same extent as the Company covers
its other officers and directors.
12. Intellectual Property.
(a) Executive shall disclose promptly to the Company copyrights, trade
secrets, proprietary information, patents, unpatented inventions,
trademarks, service marks, processes, techniques, methods, know-how, flow
charts, diagrams, computer programs and/or databases, and any and all
significant conceptions and ideas for inventions, improvements and valuable
discoveries, whether patentable or not (all of the foregoing, collectively,
"INTELLECTUAL PROPERTY"), which are conceived, created, developed or made
by Executive, solely or jointly with another, during the period of
employment or within one (1) year thereafter, and which are substantially
related to the business or activities of the Company or its subsidiaries
which Executive conceived, created, developed or made as a result of his
employment by the Company or any of its subsidiaries. Executive hereby
assigns and agrees to assign all of his right, title and interest
throughout the world in any Intellectual Property to the Company or its
nominee. Whenever requested to do so by the Company, Executive shall
execute any and all applications, assignments or other instruments that the
Company shall deem necessary to apply for and obtain registrations of
copyrights or marks, or Letters Patent of the United States or any foreign
country or to otherwise protect the Company's interest in Intellectual
Property.
(b) Executive agrees that he will not, during or after the Employment
Term, disclose the specific terms of the Company's relationships or
agreements with its significant vendors or customers or any other
significant material trade secrets of the Company, whether in existence or
proposed (other than any of the foregoing that becomes public knowledge
other than through disclosure by Executive), to any person, firm,
partnership, corporation or business for any reason or purpose whatsoever,
except as is disclosed in the ordinary course of business, unless compelled
by a court order upon advice of counsel.
13. Legal and Other Fees and Expenses. In the event that a claim for
payment or benefits under this Agreement is disputed, the Company shall pay all
reasonable attorney, accountant and other professional fees and reasonable
expenses incurred in such dispute unless the finder of fact determines that the
Company is the prevailing party in such dispute.
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14. Certain Additional Payments. Executive shall be grossed up for any
excise tax payable under Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code"), in accordance with Exhibit C attached hereto.
15. Resolution of Disputes. The parties shall use their best efforts and
good will to settle all disputes by amicable negotiations. The Company and
Executive agree, for purposes of the resolution of any disputes under this
Agreement, that such disputes shall be settled by arbitration in Dallas, Texas,
or such other place agreed to by the parties, in accordance with the rules and
procedures of the American Arbitration Association, as follows:
(a) Any such arbitration shall be heard before a panel consisting of
one to three arbitrators, each of whom shall be impartial. All arbitrators
shall be appointed in the first instance by agreement between the parties
hereto. If the parties cannot agree upon a single arbitrator, each of the
Company and the Executive shall be entitled to appoint one arbitrator.
These two appointed arbitrators shall then appoint a third arbitrator by
their mutual agreement.
(b) An arbitration may be commenced by either party to this Agreement
by the service of a written request for arbitration upon the other affected
party. Such request for arbitration shall summarize the controversy or
claim to be arbitrated. If the panel of arbitrators is not appointed within
thirty (30) days following such service, either party may apply to any
court within the State of Texas for an order appointing arbitrators
qualified as set forth below. No request for arbitration shall be valid if
it relates to a claim, dispute, disagreement or controversy that would have
been time barred under the applicable statute of limitations had such
claim, dispute, disagreement or controversy been submitted to the courts of
the State of Texas.
(c) The parties hereby expressly waive punitive damages, and under no
circumstances shall an award contain any amount that in any way reflects
punitive damages.
(d) Judgment on the award rendered by the arbitrators may be entered
in any court having jurisdiction thereof.
16. Miscellaneous.
(a) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas without reference to
principles of conflict of laws.
(b) Entire Agreement/Amendments. This Agreement and the instruments
contemplated herein, contain the entire understanding of the parties with
respect to the employment of Executive by the Company from and after the
Commencement Date and supersedes any prior agreements between the Company
and Executive with respect thereto. There are no restrictions, agreements,
promises, warranties, covenants or undertakings between the parties with
respect to the subject matter herein other than those
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expressly set forth herein and therein. This Agreement may not be altered,
modified, or amended except by written instrument signed by the parties
hereto.
(c) Construction and Severability. If any provision of this Agreement
shall be held invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired, and the parties
undertake to implement all efforts which are necessary, desirable and
sufficient to amend, supplement or substitute all and any such invalid,
illegal or unenforceable provisions with enforceable and valid provisions
which would produce as nearly as may be possible the result previously
intended by the parties without renegotiation of any material terms and
conditions stipulated herein.
(d) No Waiver. Any failure of a party to insist upon strict adherence
to any term of this Agreement on any occasion shall not be considered a
waiver of such party's rights or deprive such party of the right thereafter
to insist upon strict adherence to that term or any other term of this
Agreement. Any such waiver must be in writing and signed by Executive or an
authorized officer of the Company, as the case may be.
(e) Assignment. This Agreement shall not be assignable by Executive.
This Agreement shall be assignable by the Company only to an entity which
is owned, directly or indirectly, in whole or in part by the Company or by
any successor to the Company or an acquirer of all or substantially all of
the assets of the Company or all or substantially all of the assets of a
group of subsidiaries and divisions of the Company, provided such entity or
acquirer promptly assumes all of the obligations hereunder of the Company
in a writing delivered to Executive and otherwise complies with the
provisions hereof with regard to such assumption. Upon such assignment and
assumption, all references to the Company herein shall be to such assignee.
(f) Successors; Binding Agreement; Third Party Beneficiaries. This
Agreement shall inure to the beneficiaries and permitted assignees of the
parties hereto. In the event of Executive's death while receiving amounts
payable pursuant to Section 8(b) hereof, any remaining amounts shall be
paid to Executive's estate.
(g) Communications. For the purpose of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given (i) when faxed or delivered, or
(ii) two (2) business days after being mailed by United States registered
or certified mail, return receipt requested, postage prepaid, addressed to
the respective addresses set forth on the initial page of this Agreement,
provided that all notices to the Company shall be directed to the attention
of the General Counsel and Secretary of the Company, or to such other
address as any party may have furnished to the other in writing in
accordance herewith. Notice of change of address shall be effective only
upon receipt.
(h) Withholding Taxes. The Company may withhold from any and all
amounts payable under this Agreement such Federal, state and local taxes as
may be required to be withheld pursuant to any applicable law or
regulation.
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(i) Survivorship. The respective rights and obligations of the parties
hereunder, including without limitation Section 10 and Section 11 hereof,
shall survive any termination of Executive's employment to the extent
necessary to the agreed preservation of such rights and obligations.
(j) Counterparts. This Agreement may be signed in counterparts, each
of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
(k) Headings. The headings of the sections contained in this Agreement
are for convenience only and shall not be deemed to control or affect the
meaning or construction of any provision of this Agreement.
(l) Executive's Representation. Executive represents and warrants to
the Company that there is no legal impediment to him entering into this
Agreement, and entering into this Agreement will not violate any agreement
to which he is a party or any other legal restrictions, and he has provided
to the Company true and complete copies of any agreements or covenants to
which he is a party that could restrict or adversely affect his performance
under this Agreement. Executive further represents and warrants that in
performing his duties hereunder he will not wrongfully use or disclose any
confidential information of any prior employer or other person or entity.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
COMPANY:
eVENTURES GROUP, INC.,
a Delaware corporation
By: /s/ Xxxxx X. Xxxx
----------------------------------------
Name: Xxxxx X. Xxxx
--------------------------------------
Title:Chairman of the Compensation Committee
--------------------------------------
EXECUTIVE:
/s/ Xxxxxx X. Xxxxxx
--------------------------------------------
XXXXXX X. XXXXXX
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EXHIBIT "A"
TO THE
EMPLOYMENT AGREEMENT
BETWEEN
eVENTURES GROUP, INC.
AND
XXXXXX X. XXXXXX
DEFINITIONS
(a) Cause. For purposes of this Agreement, the term "CAUSE" shall be
limited to the following:
(i) Executive's willful misconduct or gross negligence with
regard to the Company or its affiliates or their
business, assets or employees (including, without
limitation, Executive's fraud, embezzlement or other act
of dishonesty with regard to the Company or its
affiliates), or Executive's willful misconduct other
than the foregoing, which in any case has a material
adverse impact on the Company or its affiliates, whether
economic, or reputationwise or otherwise, each as
determined by the Board, and which is not fully
rectified or cured, if susceptible to rectification or
cure, within thirty (30) days after written notice is
given to Executive; provided, however, that this clause
(i) shall not include an action or omission of Executive
done or omitted to be done in his good faith exercise of
business judgment or in good faith reliance on advice of
legal counsel to the Company;
(ii) Executive's conviction of, or pleading nolo contendere
to, a felony or other crime involving fraud, dishonesty
or moral turpitude or which carries a minimum prison
sentence upon conviction of one (1) year or longer;
(iii) Executive's refusal or willful failure to follow the
lawful written direction of the Board, the Chief
Executive Officer or his designee which is not remedied
within ten (10) business days after receipt by Executive
of a written notice specifying the details thereto;
(iv) Executive's breach of Section 10 or Section 12 hereof,
which has a material adverse economic impact on the
Company or its affiliates, as determined by the Board;
(v) the representations or warranties in Section 16(l)
hereof prove false, which has a material adverse
economic impact on the Company or its affiliates, as
determined by the Board; or
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(vi) any other breach by Executive of this Agreement, which
has a material adverse impact on the Company or its
affiliates, whether economic, or reputationwise or
otherwise, each as determined by the Board, that remains
uncured for thirty (30) days after written notice is
given to Executive.
(b) Change in Control. For purposes of this Agreement, the term
"CHANGE IN CONTROL" shall mean the occurrence of any of the following:
(i) any "person" as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934 ("Act")
(other than (a) Permitted Assignees, (b) the Company,
(c) any trustee or other fiduciary holding securities
under any employee benefit plan of the Company, or (d)
any company owned, directly or indirectly, by the
stockholders of the Company in substantially the same
proportions as their ownership of Common Stock of the
Company) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Act), directly or
indirectly, of securities of the Company representing
fifty percent (50 %) or more of the combined voting
power of the Company's then outstanding securities.
Permitted Assignees shall mean the holders of the equity
securities (whether or not voting) of any shareholder of
the Company owning more than fifteen percent (15%) of
the Company on the date after the date of execution of
this Agreement, so long as the voting power and
disposition authority with respect to the securities of
such holders is held directly or indirectly by any two
or three of the following individuals: Xxxxxxx X.
Xxxxxxx, Xxxxx X. Xxxx or Xxxxx X. Xxxxxxx;
(ii) during any period of two (2) consecutive years,
individuals who at the beginning of such period
constitute the Board, and any new director (other than a
director designated by a person who has entered into an
agreement with the Company to effect a transaction
described in clause (i), (iii), or (iv) of this
paragraph) whose election by the Board or nomination for
election by the Company's stockholders was approved by a
vote of at least two-thirds of the directors then still
in office who either were directors at the beginning of
the two-year period or whose election or nomination for
election was previously so approved, cease for any
reason to constitute at least a majority of the Board;
(iii) a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which
would result in the voting securities of the Company
outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being
converted into voting securities of the surviving
entity) more than fifty percent (50%) of the
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combined voting power of the voting securities of the
Company or such surviving entity outstanding immediately
after such merger or consolidation; or
(iv) the stockholders of the Company approve a plan of
complete liquidation of the Company or the sale or
disposition by the Company of assets where the proceeds
thereof are not retained by the Company, in a single
transaction or a series of related transactions, that
result in a 66-2/3 percent or greater decline in the
enterprise value of the Company, valued based on the
weighted average fair market value of any outstanding
class of stock of the Company plus the book value of the
outstanding indebtedness of the Company.
(c) Disability. For purposes of this Agreement, "DISABILITY" shall
mean if Executive is unable to perform his material duties pursuant to this
Agreement, as determined by the Board, because of mental or physical incapacity,
including, without limitation, alcoholism or drug abuse, which requires a leave
of absence in excess of ninety (90) consecutive days in any twelve (12) month
period.
(d) Good Reason. For purposes of this Agreement, "GOOD REASON" shall
mean the occurrence, without Executive's express written consent, in the case of
(i), (ii), (iii) or (iv), of any of the following circumstances:
(i) (a) any material demotion of Executive from his position
as Senior Vice President or (b) any assignment of duties
to Executive materially and adversely inconsistent with
Executive's position as Senior Vice President (except in
connection with the termination of Executive's
employment for Cause or due to Disability or as a result
of Executive's death, or temporarily as a result of
Executive's illness or other absence);
(ii) a failure by the Company to pay to Executive any amounts
due under this Agreement in accordance with the terms
hereof, which failure is not cured within fifteen (15)
days following receipt by the Company of written notice
from Executive of such failure;
(iii) the termination of Xxxxxxx X. Xxxxxx' ("Marcus")
employment with the Company under any circumstances
other than death, "Disability," termination by the
Company with "Cause," or termination by Marcus without
"Good Reason," as each such term is defined in that
certain Employment Agreement made as of April 3, 2000,
by and between the Company and Marcus;
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(iv) any other material breach by the Company of this
Agreement that remains uncured for fifteen (15) days
after written notice thereof by Executive to the
Company; or
(v) following a Change in Control, the Board requires
Executive to relocate to an area other than the Dallas,
Texas greater metropolitan area; or if the Company's
corporate headquarters are located in an area other than
the Dallas, Texas greater metropolitan area, to an area
more than fifty (50) miles from the Company's corporate
headquarters, and Executive declines to so relocate.
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EXHIBIT "B"
TO THE
EMPLOYMENT AGREEMENT
BETWEEN
eVENTURES GROUP, INC.
AND
XXXXXX X. XXXXXX
STOCK OPTION GRANTS
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EXHIBIT "C"
TO THE
EMPLOYMENT AGREEMENT
BETWEEN
eVENTURES GROUP, INC.
AND
XXXXXX X. XXXXXX
GROSS-UP PAYMENT
As provided in Section 14 of the Employment Agreement of which this Exhibit C is
a part:
(a) In the event that Executive shall become entitled to payments
and/or benefits provided by this Agreement or any other amounts in the "nature
of compensation" (whether pursuant to the terms of this Agreement or any other
plan, arrangement or agreement with the Company, any person whose actions result
in a change of ownership or effective control covered by Section 280G(b)(2) of
the Code or any person affiliated with the Company or such person) as a result
of such change in ownership or effective control (collectively the "Company
Payments"), and such Company Payments will be subject to the tax (the "Excise
Tax") imposed by Section 4999 of the Code, the Company shall pay to Executive,
subject to required withholding, at the time specified in subsection (d) below
an additional amount (the "Gross-up Payment") such that the net amount retained
by Executive, after deduction of any Excise Tax on the Company Payments and on
the Gross-up Payment provided for under this paragraph (a) and any U.S. federal,
state, and local income or payroll tax upon the Gross-up Payment provided for by
this paragraph (a), but before deduction for any U.S. federal, state, and local
income or payroll tax on the Company Payments, shall be equal to the Company
Payments.
(b) In the event that the Excise Tax is subsequently determined by the
Company to be less than the amount taken into account hereunder at the time the
Gross-up Payment is made, Executive shall repay to the Company, at the time that
the amount of such reduction in Excise Tax is finally determined, the portion of
the prior Gross-up Payment attributable to such reduction (plus the portion of
the Gross-up Payment attributable to the Excise Tax and U.S. federal, state and
local income tax imposed on the portion of the Gross-up Payment being repaid by
Executive), plus interest on the amount of such repayment at the rate provided
in Section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is later
determined by the Company or the Internal Revenue Service to exceed the amount
taken into account hereunder at the time the Gross-up Payment is made (including
by reason of any payment the existence or amount of which cannot be determined
at the time of the Gross-up Payment), the Company shall make an additional
Gross-up Payment in respect of such excess (plus any interest or penalties
payable with respect to such excess) at the time that the amount of such excess
is finally determined.
(c) The Gross-up Payment or portion thereof provided for in subsection
(c) above shall be paid not later than the thirtieth (30th) day following
delivery by Executive to the Company of notice that an event that subjects
Executive to the Excise Tax has occurred; provided, however, that if the amount
of such Gross-up Payment or portion thereof cannot be finally determined on or
before such day, the Company shall pay to Executive on such day an estimate, as
determined in good faith by the Company, of the minimum amount of such
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payments and shall pay the remainder of such payments (together with interest at
the rate provided in Section 1274(b)(2)(B) of the Code) promptly following such
time as the amount thereof has been determined. In the event that the amount of
the estimated payments exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Company to Executive, payable on
the fifth day after demand by the Company (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code).
(d) In the event of any controversy with the Internal Revenue Service
(or other taxing authority) with regard to the Excise Tax, Executive shall
permit the Company to control issues related to the Excise Tax, but Executive
shall control any other issues. In the event of any conference with any taxing
authority as to the Excise Tax or associated income taxes, Executive shall
permit the representative of the Company to accompany Executive, and Executive
and Executive's representative shall cooperate with the Company and its
representative.
(e) The Company and Executive shall promptly deliver to each other
copies of any written communications, and summaries of any verbal
communications, with any taxing authority regarding the Excise Tax covered by
this Exhibit C.
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