Exhibit 10.4
CONFIDENTIAL TREATMENT REQUESTED
UNDER 17 C.F.R. SECTIONS 200.93 AND 230.496
[XXXXXX'X LOGO]
May 9, 2001
CONFIDENTIAL
Employee Name
Home Address
City, State ZIP
Re: Severance Provisions
Dear [NAME]:
The following letter (the "Severance Agreement") sets forth certain
severance benefits to which you would be entitled in the event of the
termination of your employment as [TITLE] of Xxxxxx'x, Inc. (the "Company")
under certain circumstances defined below.
1. SEVERANCE PAYMENTS -
a. BASELINE. You will be entitled to receive three (3)
months' salary in the event that you are terminated by
the Company at any time following execution of this
Severance Agreement, except that: (i) you will be
entitled to additional severance subject to the
conditions in paragraphs (b) and (c) below; and (ii)
you will not be entitled to such payment in the event
of your termination for Cause (as defined below).
b. CHANGE OF CONTROL OF THE COMPANY. Following a Change
of Control (as defined below) of the Company, you will
receive payment equal to six (6) months' salary at
your then current rate in the event that you are
terminated by the Company at any time during the
twelve (12) months following completion of such Change
of Control, except that you will not be entitled to
such payments in the event of your termination for
Cause.
c. CHANGE IN CHIEF EXECUTIVE OFFICER. Following any
commencement of employment by a new Chief Executive
Officer of the Company (other than Xxxxxxx X. Xxxxx),
you will receive payment equal to six (6) months'
salary at your then current rate in the event that you
are terminated by the Company at any time during the
twelve (12) months following commencement of
employment by such new Chief Executive Officer, except
that you will not be entitled to such payments in the
event of your termination for Cause.
2. ADDITIONAL EMPLOYEE BENEFITS. In addition to the severance payments
described above, the Company will continue to pay your health and
disability insurance premiums for a period of time equal to the
applicable severance payment period (three (3) or six (6) months,
as the case may be). No other employee benefits will be continued.
3. EARNED BONUSES AND COMMISSIONS. In the event that you are entitled
to severance payments as described above, you will also be entitled
to any bonuses or commissions only in the event that ALL defined
criteria for such bonus have been FULLY met as of the date of the
termination, regardless of whether the bonus period has been
completed. For example, if an affected employee is entitled to
receive a bonus based on fiscal year revenue of $100 million, and
the employee is terminated following the end of the third quarter
at which point the Company has generated revenues of greater than
$100 million, then the employee would be entitled to such bonus.
However, if the bonus criteria required the revenue target and
effective management of the employee's department as determined by
the CEO, employee would not be entitled to the bonus even if the
CEO acknowledged that employee had successfully met the effective
management criteria in the first three quarters of the fiscal year.
4. EMPLOYEE RESTRICTIONS - We each recognize that due to the nature of
your employment, and your relationship with the Company, you have
had and will have access to, and have acquired and will acquire,
and have assisted and will assist in developing, confidential and
proprietary information relating to the business and operations of
the Company including, without limitation, Trade Secrets (as
defined below) and additional confidential and proprietary
information with respect to its present and prospective services,
technologies, systems, clients, customers, agents, and sales and
marketing methods. You acknowledge that such information has been
and will be of central importance to the Company's business and
that disclosure of it to or its use by others could cause
substantial loss to the Company. We each also recognize that an
important part of your duties have been and will continue to be to
develop good will for the Company through your personal contact
with the Company's clients, and that there is a danger that this
good will, a proprietary asset of the Company, may follow if and
when your relationship with the Company is terminated.
a. You agree that during the term of your employment with
the Company and at any time thereafter, you will not
disclose any Trade Secret of the Company without the
prior written consent of the Company, which may be
withheld by it in its sole and absolute discretion,
except in connection with your duties to the Company.
You further acknowledge that all Records (as defined
below) are and shall remain the exclusive property of
the Company, and agree that upon termination of your
employment with the Company you shall return all
Records in your possession.
b. You agree that during the term of your employment with
the Company, and for any period for which you receive
payments under Section 1 above (three (3) or six (6)
months, as the case may be):
1. You will not directly or indirectly, in
any jurisdiction where the Company is
operating (currently North America and
Western Europe) on the date of such
2. termination, whether as a partner,
proprietor, employee, consultant, agent
or otherwise, participate or engage in
any business with any of the following
companies without the prior written
consent of the Company:
a. [*]
b. [*]
c. [*]
d. [*]
e. [*]
f [*]
g. [*]
h. [*]
i. [*]
2. In addition, you would be restricted from
employment with [*]; provided that in order to
enforce this non-competition restriction as
against such an additional entity, the Company
shall have given notice to you of the inclusion
of such additional entity to the restricted
employer list at least thirty (30) days prior to
the date on which you were terminated; provided
that if the existence of such new company does
not become generally known within the business
community until after your termination, the
Company shall have thirty (30) days from the
earlier of the date on which it became aware of
the existence of such entity, or the date on
which it should reasonably have become aware of
the existence of such entity based on publicly
available information, to inform you of the
application of this provision to such entity.
3. You will not directly or indirectly (for your
own account, or for the account of others)
interfere with, solicit, or accept for yourself,
or for the benefit of anyone other than the
Company, any of the clients or customers of the
Company, at the time of said termination, or any
potential clients or customers solicited or
being solicited by the Company at the time of
such termination or within the period one (1)
year prior thereto, or perform any services of
any competitive nature in connection with said
clients or customers for anyone other than the
Company,
4. You further agree that you shall not,
directly or indirectly, urge any client (or
customer) or potential client (or potential
customer) of the Company to discontinue
business, in whole or in part, or not do
business, with the Company.
5. You further agree that you shall not, at
any time, directly or indirectly,
solicit, hire or arrange to hire any
person who at the time of such hire or
within three (3) months prior to the time
of such hire was an employee of the
Company, or for yourself or for any
business entity with which you may be, or
may be planning to be, affiliated or
associated with, or otherwise interfere
with the retention of employees that the
Company desires to retain as such.
--------------------
[*] Indicates that material has been omitted and confidential treatment
requested therefor. All such material has been filed separately with the
Commission pursuant to Rule 406.
a. You expressly acknowledge and agree (i) that the
restrictions set forth herein are reasonable, in
terms of scope, duration, geographic area, and
otherwise, (ii) that the protections afforded to
the Company hereunder are necessary to protect its
legitimate business interests, and (iii) that the
agreement to observe such restrictions form a
material part of the consideration for this
Severance Agreement.
6. DEFINITIONS.
a. "Cause" is defined as follows:
1. You have been or are guilty of (i) a criminal
offense involving moral turpitude, (ii)
criminal or dishonest conduct pertaining to the
business or affairs of the Company (including,
without limitation, fraud and
misappropriation), (iii) any act or omission
the intended or likely consequence of which is
material injury to the Company's business,
property or reputation, which act or omission
continues uncured for a period of ten (10) days
after you have received written notice from the
Company, and (iv) gross negligence or willful
misconduct which continues uncured for a period
of ten (10) days after you have received written
notice from the Company;
2. You persist, for a period of ten (10) days after
written notice from the Company, in a course of
conduct reasonably determined by the Company to
be in material violation of your duties to the
Company, including without limitation duties of
care, loyalty and/or fiduciary duties;
3. Your death; or
4. The continuous and uninterrupted inability to
perform your duties on behalf of the Company, by
reason of accident, illness, or disease, for a
period of sixty (60) days from the first day of
such inability to perform his duties.
b. "Change of Control" is defined as follows:
1. The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3)
or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (a
"Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the
Exchange Act) of 35% or more of either (A) the
then-outstanding shares of common stock of the
Company (the "Outstanding Company Common
Stock") or (B) the combined voting power of the
then-outstanding voting securities of the
Company entitled to vote generally in the
election of directors (the "Outstanding Company
Voting Securities"); provided, however, that,
for purposes of this Section, the following
acquisitions shall not constitute a Change of
Control: (i) any acquisition directly from the
Company, (ii) any acquisition by the Company,
or (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or
maintained by the Company or any affiliated
company.
2. Individuals who, as of the date hereof,
constitute the Board (the Incumbent Board")
cease for any reason to constitute at least a
majority of the Board;
provided, however, that any individual becoming
a director subsequent to the date hereof whose
election, or nomination for election by the
Company's shareholders, was approved by a vote
of at least a majority of the directors then
comprising the Incumbent Board shall be
considered as though such individual were a
member of the Incumbent Board, but excluding,
for this purpose, any such individual whose
initial assumption of office occurs as a result
of an actual or threatened election contest with
respect to the election or removal of directors
or other actual or threatened solicitation of
proxies or consents by or on behalf of a person
other than the Board.
3. Consummation of a reorganization, merger,
consolidation or sale or other disposition of
all or substantially all of the assets of the
Company (a "Business Combination"), in each
case, unless, following such Business
Combination, (A) all or substantially all of
the individuals and entities that were the
beneficial owners of the Outstanding Company
Common Stock and the Outstanding Company Voting
Securities immediately prior to such Business
Combination beneficially own directly or
indirectly, more than 60% of the
then-outstanding shares of common stock and the
combined voting power of the then-outstanding
voting securities entitled to vote generally in
the election of directors, as the case may be,
of the corporation resulting from such Business
Combination (including, without limitation, a
corporation that, as a result of such
transaction, owns the Company or all or
substantially all of the Company's assets either
directly or through one or more subsidiaries) in
substantially the same proportions as their
ownership immediately prior to such Business
Combination of the Outstanding Company Common
Stock and the Outstanding Company Voting
Securities, as the case may be, (B) no person
(excluding any corporation resulting from such
Business Combination or any employee benefit
plan (or related trust) of the Company or such
corporation resulting from such Business
Combination) beneficially owns, directly or
indirectly, 20% or more of, respectively, the
then-outstanding shares of common stock of the
corporation resulting from such Business
Combination or the combined voting power of the
then-outstanding voting securities of such
corporation, except to the extent that such
ownership existed prior to the Business
Combination, and (C) at least a majority of the
members of the board of directors of the
corporation resulting from such Business
Combination were members of the Incumbent Board
at the time of the execution of the initial
agreement or of the action of the Board
providing for such Business Combination; or
4. Approval by the shareholders of the Company of a
complete liquidation or dissolution of the
Company.
c. "Record" is defined as follows:
1. files, accounts, records, customer lists,
logbook, documents, drawings, models, plans,
specifications, manuals, books, forms, notes,
reports, memoranda, studies, surveys, software,
flow charts, data, computer programs, listing
of source code, calculations, recordings,
catalogues, compilations of information,
correspondence, confidential data of customers
and all copies, abstracts or
summaries of the foregoing in any storage
medium, as well as instruments, tools, storage
devices, disks, equipment and all other physical
items related to the business of the Company
(other than merely personal items of a general
professional nature), whether of a public nature
or not, and whether prepared by the employee or
not.
d. "Trade Secret" is defined as follows: confidential
business or technical information or trade secrets of the
Company which an employee acquires while employed by the
Company, whether or not conceived of, developed or
prepared by the employee or at his direction and includes:
1. Any information or compilation of information
concerning the Company's financial position,
financing, purchasing, accounting, marketing,
merchandising, sales, salaries, pricing,
investments, costs, profits, plans for future
development, employees, prospective employees,
research, development, formulae, patterns,
strategy, inventions, plans, specifications,
devices, products, procedures, processes,
operations, techniques, software, computer
programs or data;
2. Any information or compilation of information
concerning the identity, plans, requirements,
preferences, practices and methods of doing
business on specific customers, suppliers,
prospective customers and prospective suppliers
of the Company;
3. Any other information or "know how" which is
related to any product, process, service,
business or research of the Company; and
4. Any information which the Company acquires from
another party and treats as its proprietary
information or designates as "Confidential,"
whether or not owned or developed by the
Company.
Notwithstanding the foregoing, "Trade Secrets" do not
include any of the following:
1. Information which is publicly known or which is
generally employed by the trade, whether on or
after the date that an employee first acquires
the information;
2. General information or knowledge which an
employee would have learned in the course of
similar work elsewhere in the trade; or
3. Information which an employee can prove was
known by the employee before the commencement
of the employee's engagement by the Company.
7. CHOICE OF LAW; ARBITRATION - This Agreement shall be governed by the laws
of the State of Texas. Any disputes arising hereunder shall be resolved
via arbitration pursuant to the rules of the American Arbitration
Association to be held in Austin, Texas.
8. GENERAL. This Severance Agreement is entered into in consideration of
your continuing employment with the Company, and the restrictions
described in Section 4. The severance arrangements described herein are
the sole benefits to which you may be entitled to in the event of the
termination of your employment, and this Severance Agreement supersedes
any prior oral or written communication with respect thereto. This
Severance Agreement does not create any
right to continuing employment with the Company, and your employment
relationship shall continue to be on an at-will basis.
[NAME], the Board of Directors and I appreciate your service to Xxxxxx'x
and your continuing contribution to our success. Please sign where indicated
below to indicate your agreement to the terms of this Severance Agreement.
Very truly yours,
Xxxxxxx X. Spain
Chairman and CEO
ACCEPTED AND AGREED
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[Employee]
ACKNOWLEDGMENT
STATE OF TEXAS )
)
COUNTY OF XXXXXX )
This instrument was acknowledged before me on ____________, 2001 by
___________________ and Xxxxxxx X. Xxxxx, the Chairman and CEO of Xxxxxx'x, Inc.
SUBSCRIBED AND SWORN to before me on this ____ day of____________, 2001, to
which witness my hand and seal of office.
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Notary Public, State of Texas
My Commission Expires:
