Executive Employment Agreement
This agreement (the "Agreement") is made effective September 22, 1997,
between DCX, Inc. ("DCXI" or the "Company") and J. Xxxx Xxxx (the "Executive").
A. Executive is to be employed as Chief Operating Officer of PlanGraphics,
Inc. a subsidiary of the Company, has previously rendered valuable services in
operating PlanGraphics Inc., possesses valuable experience and has acquired
valuable background in and knowledge of the Geographic Information System and
related industries.
B. DCXI desires to secure the service of Executive, and Executive desires
to serve as Chief Operating Officer of PlanGraphics or its respective
successors.
In consideration of the foregoing recitals and the agreements set forth
herein, DCXI and Executive agree as follows:
1. TERM
DCXI shall employ Executive and Executive accepts such employment for a
term beginning on the date of this Agreement and ending June 30, 2000, upon the
terms and conditions set forth herein, unless earlier terminated in accordance
with the provisions herein.
Notwithstanding the foregoing, if the Agreement shall not have been
terminated in accordance with the provisions herein on or before June 30, 2000,
the remaining term of the Agreement shall be extended such that at each and
every moment of time thereafter, the remaining term shall be three years unless
(a) the Agreement is terminated earlier in accordance with the provisions
herein, or (b) on or after December 31, 1999, the Board of Directors notifies
Executive in writing of its determination to have the date of this Agreement
expire three months from the date of such notification.
2. DEFINITIONS
For purposes of this Agreement, the following terms shall have the meaning
set forth in this paragraph 2:
a. "Base Compensation" shall mean an amount per annum equal to the sum
of (i) the annual base salary in effect for Executive immediately preceding
termination of employment (excluding any reduction in base salary made in breach
of this Agreement, (ii) an amount equal to the product of (A) and (B), where (A)
equals the cumulative cash bonus paid to Executive over the three most recently
completed calendar years prior to termination (including any bonus amounts
deferred by Executive under any DCXI deferred compensation plan or arrangement)
divided by the cumulative base salary paid to Executive over the same three year
period (including any base salary deferred by Executive and where (B) equals the
amount set forth in 2.a. (i) above, (iii) continued participation in all basic
and supplemental life, accident, disability, and other Company-sponsored
insurance benefits provided to Executive immediately preceding termination (or,
it continued participation in one or more of these benefits is not possible,
benefits substantially similar to those which Executive would have been entitled
to if he had continued as an employee of the Company at the same compensation
level in effect immediately prior to termination), and (iv) continuance of
vesting and benefit accrual under any Company-sponsored basic and supplemental
retirement programs in effect for Executive immediately prior to termination
(or, if continued participation in such programs is not possible, benefits
substantially similar to those which executive would have been entitled to if he
had continued as an employee of the Company at the same compensation level
immediately prior to termination).
b. "Board" means the Board of Directors of the Company.
c. "Cause" shall mean (1) willful refusal by Executive to follow a
lawful written demand of the Board, (ii) Executive's willful and continued
failure to perform his duties under this Agreement (except due to Executive's
incapacity due to physical or mental illness) after a written demand is
delivered to Executive by the Board specifically identifying the manner in which
the Board believes that Executive has failed to perform his duties, (iii)
Executive's willful engagement in conduct materially injurious to the Company,
or (iv) Executive's conviction for any felony involving moral turpitude. For
purpose of clauses (I), (ii) or (iii) of this definition, no act, or failure to
act on Executive's part shall be deemed "willful" unless done, or omitted to be
done, by Executive not in good faith and without reasonable belief that
Executive's act, was in the best interests of the Company.
d. "Constructive Termination" shall mean Executive's voluntary
termination of employment within ninety (90) days following the occurrence of
one or more of the following events, unless such event is approved in writing by
Executive in advance of such event:
(i) A failure by the Company to abide by any part of this Agreement
that is not remedied within ten (10) business days of notification by
Executive of such failure, including any violation of Executive's rights as
described in Section 3 of this Agreement unless such rights are replaced by
alternative rights of approximately equal value;
(ii) A reduction in Executive's title or responsibilities Chief
Operating Officer of PlanGraphics or its successors; and/or
(iii) A relocation of Executive's primary place of business more than
fifty (50) miles from its location as of the date of this Agreement.
2
e. "Disability" shall be deemed to have occurred if Executive makes
application for disability benefits under any Company-sponsored long-term
disability program covering Executive and qualifies for such benefits. b.
"Retirement" shall mean Executive's termination of service with the Company in
accordance with the provisions of any Company retirement plan or the Company's
401K Retirement Savings Plan in which the Executive is eligible to participate.
f. "Retirement" shall mean Executive's termination of service with the
Company in accordance with the provisions of any Company retirement plan or the
Company's 401K Retirement Savings Plan in which the Executive is eligible to
participate.
g. "[Exchange Value]" shall mean the bid price of DCXI stock on the
date the PlanGraphics' Board of Directors recommends approval of the Exchange
Agreement to the shareholders of PlanGraphics, Inc.
3. EXECUTIVE'S RIGHTS REGARDING BASE SALARY, BONUS AND OTHER BENEFITS WHILE
EMPLOYED BY THE COMPANY
a. Base Salary. The minimum annual base salary payable to Executive
upon commencement of this Agreement shall be $115,000. The Board or its
Executive Compensation Committee of the Board (if one is designated) will review
the Executive's base salary at least annually to determine the amount of any
increase. Upon any such increase in Executive's base salary, such increased rate
shall hereafter constitute Executive's minimum annual base salary for all
purposes of this Agreement, except that the Company may reduce Executive's
annual base Salary during any year by not more than 10% below the base salary in
effect at the beginning of the year as part of any general salary reduction
which applies to all officers of the Company and its subsidiaries (if any).
b. Incentive and Performance Bonus. In recognition of the considerable
challenges accepted by him, Executive shall receive an Incentive Bonus
consisting of a stock option grant of 200,000 shares of the Company's common
stock fully vested and priced at the [Exchange Value]. In addition Executive
shall receive a stock option grant of 145,000 shares of the Company's common
stock also priced at the [Exchange Value], and vesting in accordance with the
appropriate portions of the Performance Bonus schedule delineated below (the
"Performance Options").
Executive shall, as provided herein, and subject to paragraph (i) and (ii),
below, receive a Performance Bonus for:
(i) The Company's fiscal year ending September 30, 1997, equal to:
Five percent (5%) of base salary if PlanGraphics achieves net income of one
hundred thousand dollars ($100,000) or more.
Executive shall receive an additional bonus of ten percent (10%) of base
salary if the average closing bid price for the last 20 business days on
NASDAQ of DCXI ending September 30, 1997, is equal to or exceeds the
[Exchange Value], plus $1.35.
3
Further, if the revenue of PlanGraphics exceeds $10.0 million on September
30, 1997, or the annualized revenue of the Company considering acquisitions
that may be made between the effective date of this Agreement and September
30, 1997 exceeds $10 million, the Executive shall receive an additional
bonus equal to 0.75% of the amount of revenue which exceeds $10.0 million.
(ii) The Company's fiscal years ending September 30, 1998 and later.
An amount equal to 2.0% of that portion of the net income of the Company
for each fiscal year in excess of the amount determined by multiplying
stockholder's equity for each such fiscal year by .11. For purposes of
these calculations of stockholders' equity under this Agreement,
stockholder's equity for any fiscal year shall be the average of the four
quarterly stockholders' equity figures reported by the Company for that
fiscal year.
An amount equal to 21% of base salary if the average closing bid price for
the 20 business days on NASDAQ (or the closing price if listed on another
SEC recognized stock exchange) ending September 30 of such fiscal year
exceeds the previous year's 20 day average for the same period by 51% or
more.
Further, if the consolidated gross revenue of the Company exceeds $20
million by September 30, 1998 and the consolidated gross revenue of
PlanGraphics exceeds 13.2 million, the Executive shall be deemed vested in
35 percent of the Performance Options; if the consolidated gross revenue of
the Company exceeds $30 million by September 30, 1999 and the consolidated
gross revenue of PlanGraphics exceeds 16.5 million, he will be vested in an
additional 35 percent of the Performance Options, and if the consolidated
gross revenue of the Company exceeds $40 million by September 30, 2000 and
the consolidated gross revenue of PlanGraphics exceeds 20.6 million, he
will be vested in the remaining 30% of the Performance Options.
(iii) Each cash Performance Bonus shall be payable either 30 days
following the date Company's audited consolidated financial statements for
the fiscal year become available or on January 15 following the end of that
fiscal year, whichever is later (the "Bonus Payment Date").
In the event that there shall be a combination of the Company with another
company, or any other occurrence similar to a combination, and as a result
thereof the amount or value of the bonuses payable pursuant to any of the
formulae set forth above could reasonably be expected to be significantly
affected thereby, appropriate changes will, at the request of either party,
4
be negotiated to establish a substitute formula or formulae satisfactory to
both parties. If an acceptable substitute formula(e) cannot be developed,
they shall submit such matter to arbitration by a qualified investment
banker with at least ten year's experience in corporate finance. Neither
party shall have had dealings with such arbitrator during the preceding
three years.
Executive shall be entitled to receive the bonus provided for in
the foregoing paragraphs for each fiscal year during which he is
employed hereunder and, in addition, for the next eighteen (18) months
after termination of his employment, except that said post-termination
bonus coverage shall only extend for twelve (12) months after
termination if Executive takes employment (other than as an
independent consultant pursuant to paragraph 17) with another company
in the same industry within twelve (12) months of termination and
shall not apply if Executive has been discharged for cause.
Bonus payments shall be in cash or a combination of cash and
Restricted Stock or stock options at the discretion of the Executive.
Executive shall participate in any key executive long-term incentive
program or other executive bonus program which the Board or its Executive
Compensation Committee (if any) may define.
c. Registration of Performance and Incentive Stock Options. The
Company agrees to register with the Securities and Exchange Commission the
performance and incentive stock options granted under paragraph b, above,
within 125 days of executing this Agreement.
d. Nondilution of Incentive and Performance Options. Options granted
with respect to Section c, above, shall be granted to the Executive on a
non-diluted basis, such that any increase or decrease in the number of
shares of common stock of the Company which occurs during the option period
(the time during which the Executive is an employee and the options remain
unexercised for any reason) will cause the number of options to be
proportionately increased or decreased, commensurate with the change in
outstanding shares of the Company.
e. Vacation. Executive shall receive an annual vacation consistent
with the policies and practices of PlanGraphics, Inc. Unused vacation at
the expiration of the Agreement's initial three (3) year period will be
paid in cash at a rate equal to the Base Compensation.
f. Automobile Allowance. Executive shall receive an unaccountable
automobile allowance of $200 per month.
g. Relocation Allowance. Executive shall be entitled to certain
relocation allowance as may be negotiated by the Company relative to his in
the event his primary place of business is subsequently moved in excess of
50 miles from its present location.
5
i. Executive shall be entitled to participate in all perquisites and
health and welfare benefits generally available to other executive officers
and employees of the Company but at no time shall these be less than the
perquisites and health and welfare benefits enjoyed by the Executive on
December 31, 1996 during his employment with PlanGraphics.
j. Reimbursement. Reimbursement of all reasonable expenses incurred by
Executive in connection with performance of his duties upon submission of
vouchers. Reasonable expense shall include, but not be limited to, all
reasonable out-of-pocket expenses for entertainment, automobile expenses,
travel meals, lodging, professional fees, professional dues and the like
incurred by Executive in the interest of the Company, subject to such
guidelines and policies as may be promulgated by the Company for senior
executives or employees.
k. Life Insurance. In addition to any coverage required by the
Company, Executive shall be provided with a life insurance policy in the
amount of $250,000 (provided he can meet the medical conditions for such
coverage), payable to such beneficiaries as he shall designate, with an
additional $100,000 of accidental death coverage in.
4. EXECUTIVE'S RIGHTS UPON TERMINATION
In the event that Executive's employment at DCXI is terminated for any
reason other than (a) Death, (b) Disability, (c) Cause, (d) voluntary
resignation by Executive not constituting Constructive Termination, or (e) the
expiration of the term of his Agreement, DCXI will pay to Executive Base
Compensation for a period continuing three (3) years after the date of
termination. In addition, DCXI will fully vest all stock options and restricted
stock awards previously granted by DCXI to Executive and fully vest and
immediately pay to Executive any accrued award earned by Executive under the
Performance Bonus Plan(s), above, or any other DCXI Executive incentive plans
which may exist at the time of termination and in which the Executive is a
participant.
Base Compensation payments shall be made when payments would otherwise have
been made to Executive if he were still employed by DCXI, except in such cases
where a different payment schedule is provided for in other Company-sponsored
plans or programs.
In the event the Executive's employment at DCXI is terminated for Death,
Disability, Cause, voluntary resignation not constituting Constructive
Termination, or upon expiration of the term of this Agreement, Executive shall
be entitled to all benefits under this Agreement, including base salary,
performance and incentive bonuses for eighteen (18) months after such event.
Stock options vested to date of termination may be exercised at any time during
the eighteen (18) months period following termination and may be exercised by
the estate of the Executive in the event of his death during the same time
period.
6
Should the Executive exercise his option to terminate his Executive
Employment voluntarily after June 30, 2000, the Company shall continue to employ
the Executive as an advisor and consultant ("Consulting Employment") for a
period of three years. During the period of Consulting Employment, the Executive
shall at all reasonable times, to the extent his physical and mental condition
permits, be available to consult with and advise the Company's officers,
directors, representatives and clients. In addition to all other forms of
compensation otherwise conferred in this Agreement, the Company shall pay to the
Executive during the period of Consulting Employment, a minimum annual
compensation equal to one half of the average annual salary paid to him during
the last thirty six month period of his Executive Employment subject to increase
from time to time at the discretion of the Company.
5. DESIGNATION OF BENEFICIARIES
If Executive should die while receiving Base Compensation payments pursuant
to Paragraph 4, the remaining Base Compensation payments which would have been
paid to Executive if he had lived shall be paid as designated by Executive on
his Company Beneficiary Designation Form. Such payments shall be made at the
same time and in the same manner as if the Executive were alive to receive the
payments, except in such cases where a different payment schedule is provided,
or in other company-sponsored plans or programs.
The filing of a new Company Beneficiary Designation Form will cancel all
designations previously filed. Any finalized divorce or marriage (other than a
common-law marriage) of Executive subsequent to the date of filing of a
beneficiary designation shall revoke such designation, unless:
(a) In the case of divorce, the previous spouse was not designated as
beneficiary, and
(b) In the case of marriage, Executive's new spouse had previously been
designated as beneficiary.
The spouse of a married Executive shall join in any designation of a
beneficiary other than the spouse.
If Executive fails to designate a beneficiary as provided for above, or if
the beneficiary designation is revoked by marriage, divorce, or otherwise
without execution of a new designation, then the Company's Board (or its
Compensation Comittee if one exists) shall direct the distribution of any
benefits under this Agreement to Executive's estate.
6. DUTIES OF EXECUTIVE
Executive is to be employed by DCXI as the Chief Operating of its
subsidiary corporation PlanGraphics. Executive agrees to devote substantially
all of his time and energy to the performance of the duties of those positions
so long as his employment in that position shall be continued by DCXI or its
7
successors. Notwithstanding the above, Executive shall be permitted to serve as
a Director or Trustee of other organizations, provided such service does not
prevent Executive from performing his duties under this Agreement. The Company
agrees to nominate Executive for election to the Board as a member of the
management slate at each annual meeting of stockholders of the Company during
his employment hereunder, or at which his class, if such class be designated,
comes up for election and shall perform likewise for election to the Board of
its subsidiary company, PlanGraphics.
7. MITIGATION AND OFFSET
Executive shall not be required to mitigate the amount of any payment
provided for in this Agreement by seeking employment or otherwise, nor to offset
the amount of any payment provided for in this Agreement by amounts earned as a
result of Executive's employment or self-employment during the period he is
entitled to such payment.
8. TAX "GROSS-UP" PROVISION
If any payments due Executive under this Agreement result in Executive's
liability for an excise tax ("parachute tax") under Section 4999 of the Internal
Revenue Code of 1986, as amended (the "Code"), the Company will pay to
Executive, after deducting any Federal, state or local income tax imposed on the
payment, an amount sufficient to fully satisfy the "parachute tax" liability.
Such payment shall be made to Executive not later than thirty (30) days prior to
the due date of the "parachute tax".
9. SUCCESSORS
The rights and duties of a party hereunder shall not be assignable by that
party; provided, however, that this Agreement shall be binding upon and insure
to the benefit of any successor of DCXI, and any such successor shall be deemed
substituted for DCXI under the terms of this Agreement. The term successor as
used herein shall include any person, firm, corporation or other business entity
which at any time, by merger, purchase or otherwise, acquires all or
substantially all of the assets or business of DCXI.
This Agreement shall also be binding upon and shall insure to the benefit
of Executive, Executive's heirs, executors, administrators and beneficiaries.
10. ENTIRE AGREEMENT
With respect to the matters specified herein, this Agreement contains the
entire agreement between the parties and supersedes all prior oral and written
agreements, understandings and commitments between the parties. This Agreement
shall not affect the provisions of any other compensation, retirement or other
8
benefits program of DCXI to which Executive is a party or of which he is a
beneficiary. No amendments to this Agreement may be made except through a
written document signed by both parties.
11. VALIDITY
In the event that any provision of this Agreement is held to be invalid,
void or unenforceable, the same shall not affect, in any respect whatsoever, the
validity of any other provision of the Agreement.
12. PARAGRAPHS AND OTHER HEADINGS
Paragraphs and other headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
13. NOTICE
Any notice or demand required or permitted to be given under this Agreement
shall be made in writing and shall be deemed effective upon the personal
delivery thereof is delivered or, if by express delivery service, 24 hours after
placing in the control of the express delivery service; or if mailed, 48 hours
after having been deposited in the United States mail, postage prepaid, and
addressed in the case of DCXI to its then principal place of business, presently
0000 Xxxxx Xxxxx Xxxxxxx 00, Xxxxxxxxx, XX 00000-0000, and in the case of
Executive to:
J. Xxxx Xxxx
000 X. Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Either party may change the address to which such notices are to be
addressed by giving the other party notice in the manner herein set forth.
14. ATTORNEYS' FEES
In any action at law or in equity to enforce any of the provisions or
rights under this Agreement, the unsuccessful party to such litigation, as
determined by the Court in a final judgment or decree, shall pay the successful
party or parties all costs, expenses and reasonable attorneys' fees incurred
therein by such party or parties (including without limitation such costs,
expenses and fees on any appeals), and if such successful party or parties shall
recover judgment in any such action or proceeding, such costs, expenses and
attorneys' fees shall be included a part of such judgment.
Notwithstanding the foregoing provision, in no event shall the successful
party or parties be entitled to recover any amount from the unsuccessful party
for costs, expenses and attorneys' fees that exceed the unsuccessful party's
costs, expenses and attorneys' fees in connection with the action or proceeding.
9
15. WITHHOLDING TAXES
To the extent required by law, the Company shall withhold from any payments
under this Agreement any applicable federal, state or local taxes.
16. INDEMNIFICATION
So long as Executive is not found by a court of law to be guilty of a
willful and material breach of this Agreement, or to be guilty of gross
misconduct, he shall be indemnified form and against any and all losses,
liability, claims and expenses, damages, or causes of action, proceeding or
investigations, or threats thereof (including reasonable attorney fees and
expenses of counsel satisfactory to and approved by Executive) incurred by
Executive, arising out of, in connection with, or based upon Executive's
services and the performance of his duties pursuant to this Employment
Agreement, or any other matter contemplated by this Employment Agreement,
whether or not resulting in any such liability subject to such limitations as
are provided by the Colorado Business Corporations Act; and Executive shall be
reimbursed by the Company as an when incurred for any reasonable legal and other
damage, liability, action proceeding, investigation or threat thereof, or
producing evidence, producing documents or taking any other action in respect
thereto (whether or not Executive is a defendant in or target of such action,
proceeding or investigation), subject to such limitations as are provided by the
Colorado Business Corporations Act.
17. TRADE SECRETS AND CONFIDENTIAL INFORMATION
As a material inducement to the Company to enter into this Agreement and to
pay Executive the compensation and benefits stated in Section 3, Executive
covenants and agrees that during his employment by the Company and for a period
equal to any period thereafter for which he receives payments as contemplated in
Section 4, above, Executive shall not, directly or indirectly, use, disseminate,
or disclose for any purposes other than for the purposes of the Company's
business, any of the Company's confidential information or trade secrets, unless
such disclosure is compelled in a judicial proceeding. Upon termination of this
employment, all documents, records, notebooks, and similar repositories of
records containing information relating to any trade secrets or confidential
information then in the Executive's possession or control, whether prepared by
him or by others, shall be left with the Company or returned to the Company upon
its request. This section shall not restrict the Executive from using his
General Knowledge (the ideas, concepts, know-how and other industry information
which is part of his common knowledge) from pursuit of livelihood subsequent to
any termination of this Agreement.
During the term of this Agreement and for a period of one (l) year
following the termination of the Agreement, the Executive shall not pursue
business opportunities with or serve as a Consultant or member of the staff in
10
any capacity to any of the following firms: the Convergent Group, UGC
Consulting, EMA, Xxxxxx Associates, firms generally known as "data conversion
firms" and firms specializing in geographic information system software products
and any other companies with whom the Company or PlanGraphics has had a prime or
subcontractor role during the prior year of employment, without the prior
written permission of the Company. For one year following termination of
employment, the Executive confirms that he will not, without prior written
consent, perform work that PlanGraphics holds in backlog or is pursing at the
time of termination, whether by independent contract, through a competitor, or
by direct employment with client or prospect.
During the period of Consulting Employment, the Executive shall be
permitted to engage in any business practice so long as such business practice
is not in competition with the Company. The parties agree that the Executive's
performance of services for his own account, his writing, teaching or
consulting, his employment by any company other than a competitor and his
employment by a government agency shall not be considered competition with the
Company.
This covenant of non-disclosure has been negotiated and agreed to by and
between the Company and Executive with the full knowledge of and pursuant to the
Colorado Trade Secrets Act and is deemed by both parties to be fair and
reasonable.
18. APPLICABLE LAW AND DISPUTE RESOLUTION
To the full extent controllable by stipulation of the parties, this
Agreement shall be interpreted under Colorado law. All disputes arising out of
this Agreement will be settled by binding arbitration in Denver, Colorado, with
a representative of the American Arbitration Association.
IN WITNESS THEREOF, DCX, INC., has caused this Agreement to be executed by
its duly authorized representatives and Executive has affixed his signature,
with effect from the date first above written.
Date:
For DCX, Inc. Executive
Xxxxxxx Xxxxxxxx
President/CEO J. Xxxx Xxxx
11
