1
EMPLOYMENT AND NON-COMPETE AGREEMENT
Page 1
EMPLOYMENT AND NON-COMPETE AGREEMENT
------------------------------------
This Employment and Non-Compete Agreement ("Agreement") is made this 24th day
of March, 1997 by and between Xxxxxxx Re-Marketing, Inc., a Texas
corporation, with its principal office located at 00000 Xxxxxxxxx Xxxx, Xxxxx
000, Xxxxxx, XX 00000 (the "Employer") and Xxxxx X. Xxxxxxx (the "Employee").
WHEREAS, Employer is in the business of buying and selling used IBM
mainframe disk and tape subsystems, IBM mid-range disk systems and HDS and
Xxxxxx mainframe disk systems to wholesale and retail markets; and
WHEREAS, Employer desires to retain the services of the Employee; and
WHEREAS, Employee is willing to be employed by the Employer.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties agree as follows:
1. CAPACITY. Employee shall serve the Employer as its President.
--------
2. BEST EFFORTS OF EMPLOYEE. During her employment hereunder,
------------------------
the Employee shall, subject to the direction and supervision of the Chairman
of the Board and Board of Directors, devote her full business time, best
efforts, business judgment, skill and knowledge to the advancement of the
Employer's interests and to the discharge of her duties and responsibilities
hereunder. Such duties shall be provided at Dallas, Texas and other such
places as the needs, business or opportunities of the Employer may require
from time to time. She shall not engage in any other business activity,
except as may be approved by the Board of Directors; provided, however, that
nothing herein shall be construed as preventing the Employee from:
a. investing her assets in a manner which shall not require
any material services on her part in the operations or affairs of the
companies or other entities in which such investments are made;
b. serving on the Board of Directors of any company, provided
she receives the approval in writing from the Chief Executive Officer and
Board of Directors, and further provided that she shall not be required to
render any material services with respect to the operations or affairs of any
such company; or
c. engaging in religious, charitable or other community or
non-profit activities which does not impair her ability to fulfill her duties
and responsibilities under this Agreement.
3. COMPENSATION OF EMPLOYEE. As compensation for the services
------------------------
provided by Employee under this Paragraph, Employer will pay Employee an
annual salary of one hundred ten thousand dollars ($110,000.00) in accordance
with the Employer's usual payroll procedures. Employee shall receive a ten
percent (10%) increase in her base compensation upon the first anniversary of
this Agreement, thereby setting her annual compensation at one hundred
twenty-one thousand dollars ($121,000.00) for the remainder of the Agreement.
Separate incentive and stock option plans will be developed by the Employer,
together with key management, and that these plans will reflect company goals
and performance objectives.
The Employee shall also be entitled to participate in any and all
employee benefit plans, medical insurance plans, life insurance plans,
disability income plans and other benefit plans, from time to time, in effect
for executives of the Employer. Such participation shall be
2
EMPLOYMENT AND NON-COMPETE AGREEMENT
Page 2
subject to the terms of the applicable plan documents, generally applicable
Corporation policies and the discretion of the Board of Directors or any
administrative or other committee provided for in, or contemplated by, such
plan. In addition, the Employee shall be entitled to receive benefits which
are the same or substantially similar to those which are currently being
provided to the other Executives by the Employer.
4. TERMINATION OF EMPLOYMENT. Upon termination of the Agreement,
-------------------------
payments under this Agreement shall cease; provided, however, that the Employee
shall be entitled to payments for periods or partial periods that occurred
prior to the date of termination and for which the Employee has not yet been
paid.
5. REIMBURSEMENT FOR EXPENSES. In accordance with the Employer's
--------------------------
policy, the Employee will be reimbursed for all "out-of-pocket" and other
direct business expenses (exclusive of commuting costs), upon presentation of
appropriate receipts and documentation.
6. CONFIDENTIALITY. Employee recognizes that the Employer has
---------------
and will have inventions, business affairs, products, future plans, trade
secrets, customer lists and other vital information (collectively
"Confidential Information") which are valuable, special and unique assets of
the Employer. The Employee agrees that she will not at any time or in any
manner, either directly or indirectly, divulge, disclose or communicate in
any manner any Confidential Information to any third party without the prior
written consent of the Employer. The Employee will protect the Confidential
Information and treat it as strictly confidential.
In the event of a breach, or threatened breach, by Employee of
her obligations under this Paragraph, the Employee hereby acknowledges and
stipulates that the Employer shall not have an adequate remedy at law, shall
suffer irreparable harm and, therefore, it is mutually agreed and stipulated
by the parties hereto that, in addition to any other remedies at law or in
equity which Employer may have, the Employer shall be entitled to obtain in a
court of law and/or equity (i) a temporary and/or permanent injunction from
disclosing in whole or in part such Confidential Information or (ii) from
providing any services to any party to whom such Confidential Information has
been disclosed, or may be disclosed. Employer shall not be prohibited by
this Paragraph from pursuing other remedies, including a claim for losses and
damages.
7. VACATION. The Employee shall be entitled to two (2) weeks of
--------
paid vacation. Such vacation shall be taken at a time mutually convenient to
Employer and Employee. Unused vacation may be accumulated, if not used
within the year it is earned, up to a maximum of four (4) weeks.
8. SICK DAYS/PERSONAL BUSINESS. The Employee shall be entitled
---------------------------
to five (5) paid sick or personal days off due to illness or personal
business each year of employment beginning on the first day of the Employee's
employment.
9. HOLIDAYS. The Employee shall be entitled to the standard
--------
company holidays.
10. TERM. This Employment Agreement shall have an initial term of
----
three (3) years, beginning at the commencement date so indicated at the end
of this Agreement.
11. TERMINATION. Notwithstanding the provisions of Paragraph 10,
-----------
the Employee's employment hereunder shall terminate under the following
circumstances:
a. Death or Permanent Disability. In the event of the
-----------------------------
Employee's death during the Employee's employment hereunder, the Employee's
employment shall terminate on the date of her death or Permanent Disability
(as defined below).
3
EMPLOYMENT AND NON-COMPETE AGREEMENT
Page 3
Permanent Disability. For the purposes of this Agreement,
--------------------
the term "permanent disability" shall mean the Employee's inability to
perform her duties as prescribed in this Agreement, which, following a
written request by either the Employer or the Employee, shall be determined
by agreement between the parties and, if they cannot agree, by a panel of
three (3) physicians, one of whom will be selected by the Employer, one by
the Employee and the third by the first two so selected. Said panel shall
also fix the date of the occurrence of the permanent disability. Said
panel's determination shall be conclusive. Notwithstanding anything to the
contrary set forth herein, the Employee shall be presumed to be permanently
disabled as of the date she is receiving payments for permanent disability
under any disability insurance policies or under the Social Security Act.
b. Temporary Disability. If, due to physical or mental
--------------------
illness, disability or injury, the Employee shall be disabled so as to be
unable to perform substantially all of her duties and responsibilities
hereunder, the Board of Directors may designate another person to act in her
place during the period of such disability. Notwithstanding any such
designation, the Employee shall continue to receive her full salary and
benefits under Paragraph 3 of this Agreement until she becomes eligible for
disability income under the Employer disability income plan. In the absence
of a disability income plan at the time of such disability, the Employer
shall pay the Employee benefits equal to those the Employee would have
received if the Employer's current disability income plan were in effect at
such time; provided however, that the Employer's obligations hereunder shall
cease twelve (12) months from the onset of such disability.
c. Termination by the Employer for Cause. The Employee's
-------------------------------------
employment hereunder may be terminated for cause, without further liability
on the part of the Employer, by a majority vote of all of the members of the
Board of Directors. Termination for cause includes, but is not limited to:
(i) Deliberate dishonesty of the Employee with respect to
the Employer.
(ii) Conviction of the Employee of a crime involving moral
turpitude.
(iii) Gross and willful failure to perform a substantial
portion of her duties and responsibilities hereunder.
(iv) Employee's abandonment of her duties hereunder for a
period of more than thirty (30) days. Abandonment by the Employee of duties
hereunder shall be deemed to have occurred if: the Employee ceases to
function and perform duties hereunder, leaves the geographic area in which
the Employer engages in its business, or conducts herself with intentional
disregard of the Employer's interests and its business.
d. After the first anniversary date, Employee may, upon thirty
(30) days written notice, terminate this Employment Agreement.
Notwithstanding such termination, the provisions of paragraph 13 shall remain
in effect for the additional three (3) years beyond the date of resignation.
e. In the event of such early termination, Employee shall, in
addition to resigning from the Board in accordance with Section 12, she shall
also forfeit any rights she may have under paragraph 2 of this Agreement For
Sale.
12. RESIGNATION AS OFFICER AND DIRECTOR. In the event that the
-----------------------------------
Employee's employment with the Employer is terminated for any reason
whatsoever, the Employee agrees to immediately resign as an Officer and
Director of the Employer.
4
EMPLOYMENT AND NON-COMPETE AGREEMENT
Page 4
13. NON-COMPETITION. The Employee acknowledges that she has gained, and
---------------
will gain, extensive and valuable experience and knowledge in the business
conducted by Employer and has had, and will have, extensive contacts with
customers of Employer. Accordingly, the Employee covenants and agrees
with Employer that she shall not compete directly or indirectly with
Employer, either during the term of her employment or during the three (3)
year period immediately thereafter and shall not, during such period, make
public statements in derogation of Employer. For the purposes of this
Section 13, the term "Employer" shall be deemed to include subsidiaries,
parents and affiliates of Employer. Competing directly or indirectly with
Employer shall mean engaging or having a material interest, directly or
indirectly, as owner, employee, officer, director, partner, venturer,
stockholder, capital investor, consultant, agent, principal, advisor or
otherwise, either alone or in association with others, in the operation of
any entity engaged in the business of buying and selling used IBM mainframe
disk and tape subsystems, IBM mid-range disk systems and HDS and Xxxxxx
mainframe disk systems to wholesale and retail markets. Competing directly
or indirectly with Employer, as used in this Agreement, shall be deemed not
to include an ownership interest as an inactive inventor, which, for purposes
of this Agreement, shall mean the beneficial ownership of less than one
percent (1%) of the outstanding shares of any series or class of securities
of any competitor of Employer, which shares are publicly traded in the
securities markets.
In the event that one or more of the provisions contained herein
shall, for any reason, be held too excessively broad as to duration,
geographical scope activity or such provision shall be construed as limiting
and reducing its as determined by a court of competent jurisdiction and shall
be enforceable to the extent compatible with applicable law.
14. RESTRICTION ON AUTHORITY OF EMPLOYEE. Notwithstanding
------------------------------------
anything set forth in this Agreement to the contrary, the Employee, in the
performance of her duties hereunder, shall not take any of the following
actions without the written consent of the Board of Directors:
a. Enter into negotiations or execute documents which would
effect the existing debt and/or structure of alter, modify or change any
banking relations after such Closing Date.
15. REPRESENTATIONS AND WARRANTIES. The Employee hereby
------------------------------
represents and warrants that she is free to enter this Agreement and to
render her services pursuant hereto and that neither the execution and
delivery of this Agreement, nor the performance of her duties hereunder,
violates the provisions of any other agreement to which she is a party or by
which she is bound.
16. DATE OF COMMENCEMENT. This Employment Agreement is effective
--------------------
as of the 25th day of March, 1997.
17. NOTICES. All notices required or permitted under this Agreement
-------
shall be in writing and shall be deemed delivered when delivered in person or
deposited in the United States mail, postage paid, addressed as follows:
Employer: Xxxxxxx Re-Marketing, Inc.
00000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx
Chairman of the Board
Employee: Xxxxx X. Xxxxxxx
0000 Xxxx Xxxxx Xxxx
Xxxxx, XX 00000
5
EMPLOYMENT AND NON-COMPETE AGREEMENT
Page 5
Such addresses may be changed from time to time by either party by providing
written notice in the manner set forth above.
18. ENTIRE AGREEMENT. This Agreement contains the entire
----------------
agreement of the parties and there are no other promises or conditions in any
other agreement, whether oral or written. This Agreement supersedes any
prior written or oral agreements between the parties.
19. AMENDMENT. This Agreement may be modified or amended, if the
---------
amendment is made in writing and is signed by both parties.
20. ASSIGNMENT ENFORCEABILITY. If any portion or provisions of
-------------------------
this Agreement shall, to any extent, be declared illegal or unenforceable by
a court of competent jurisdiction, then the remainder of this Agreement, or
the application of such portion or provision in circumstances other than
those as to which it is so declared illegal or unenforceable, shall not be
affected thereby and each portion and provision of this Agreement shall be
valid and enforceable to the fullest extent permitted by law.
21. SEVERABILITY. If any provision of the Agreement shall be held
------------
to be invalid or unenforceable for any reason, the remaining provisions shall
continue to be valid and enforceable. If a court finds that any provision of
the Agreement is invalid or unenforceable, but that by limiting such
provision it would become valid and enforceable, then such provision shall be
deemed to be written, construed and enforced as so limited.
22. WAIVER OF CONTRACTUAL RIGHT. This failure of either party
---------------------------
to enforce any provision of this Agreement shall not be construed as a waiver
or limitation of that party's right to subsequently enforce and compel strict
compliance with every provision of this Agreement.
23. APPLICABLE LAW. This Agreement shall be governed by the laws
--------------
of the State of Texas.
24. Agreed to this 24th day of March, 1997.
EMPLOYER
Xxxxxxx Re-Marketing, Inc.
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------
Xxxxxxx X. Xxxxxxxx
Chairman of the Board
EMPLOYEE
By: /s/ Xxxxx X. Xxxxxxx
----------------------------
Xxxxx X. Xxxxxxx
