EXHIBIT 10.1
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, by and between WORLDQUEST NETWORKS, INC.
("WorldQuest") and R. Xxxxxxx Xxxxxx ("Executive"), effective as of May 14,
2001.
WITNESSETH:
WHEREAS, WorldQuest desires to secure the services of the Executive as
its President and Chief Executive Officer, and the Executive is willing to
render such services; and
WHEREAS, WorldQuest and the Executive desire to evidence in this
Employment Agreement the terms under which the Executive will perform such
services;
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, receipt of which is hereby acknowledged, the Executive
and WorldQuest agree as follows:
1. Title and Duties
(a) The Executive's title will be President and Chief Executive
Officer of WorldQuest. The Executive's duties and responsibilities will be
as described in WorldQuest's Bylaws (in effect as of the date of the
Employment Agreement) and the Executive shall at all times report directly
to the Board of Directors of WorldQuest, or as otherwise agreed by the
Executive. Nothing in this Employment Agreement shall limit or restrict the
Executive from performing services as an employee or private contractor for
Trinity e-Ventures, and the Executive may serve as Chairman of the internet
businesses of Trinity e-Ventures. The Executive will exercise due diligence
and reasonable care in the performance of the Executive's duties under this
Employment Agreement.
(b) The Executive shall become a member of the Board of Directors of
WorldQuest on May 21, 2001, and shall be nominated for continued membership
on the Board during the Term of this Employment Agreement.
2. Term
(a) Unless earlier terminated as provided for herein, the term of
this Employment Agreement will be for two years, beginning on May 14, 2001,
and ending on May 13, 2003 (the "Term").
(b) If the Executive's employment with WorldQuest is terminated by
the Executive due to the Executive's voluntary resignation (other than
voluntary resignation following "Constructive Termination", as defined
below) or by WorldQuest for "Cause" (as defined below), this Employment
Agreement shall terminate immediately (except for the confidentiality
provisions of Paragraph 4 and the provisions of Paragraphs 5, 6 and 7). For
purposes of this Employment Agreement, the Executive may be terminated for
"Cause" by majority vote of (excluding the Executive) the Board of
Directors of WorldQuest as a result of (i) refusal to implement or adhere
to policies or directives of the Board of Directors of WorldQuest; or (ii)
gross negligence that is materially injurious to the operations or
financial condition of WorldQuest; and such conduct or condition causing
termination for Cause is not cured within thirty days after written notice
is delivered to the Executive from WorldQuest. For these purposes, no
refusal to act or failure to adhere shall be considered as grounds for
Cause unless it is done, or omitted to be done, in bad faith without
reasonable belief that the action or omission
1
was in the best interest of WorldQuest. In the event corrective action is
not satisfactorily taken by the Executive, a final written notice of
termination shall be provided to the Executive by WorldQuest.
(c) If the Executive's employment is terminated during the Term of
this Employment Agreement due to resignation following "Constructive
Termination" (as defined below) or for any other reason other than the
Executive's voluntary resignation, or discharge for Cause, this Employment
Agreement shall terminate immediately (except for the confidentiality
provisions of Paragraph 4 and the provisions of Paragraphs 5, 6 and 7) and
the Executive shall receive:
(i) The Executive's Base Salary as described in Paragraph 3(a)
through the date of termination;
(ii) in lieu of further cash payments to the Executive pursuant
to Paragraph 3, WorldQuest shall pay the Executive within thirty days
of the date of the Executive termination, a lump sum amount equal to
the Executive's annual Base Salary;
(iii) full vesting in all stock options previously granted to
the Executive (irrespective of the date of the grant of such stock
options and irrespective of the vesting schedule otherwise applicable
to such stock options; the Executive shall be permitted to retain such
options for future exercise or sell such stock received on exercise as
though the Executive had remained in the employment of WorldQuest
until the end of the regular Term, and WorldQuest shall take such
actions as are permitted by applicable law to cause such vesting and
option retention; and
(iv) additionally, the provisions of Paragraphs 7(g) and 7(h)
shall remain in effect as though this Employment Agreement expired at
the end of its regular Term described in Paragraph 2(a), irrespective
of its earlier termination.
For purposes of this Employment Agreement a "Constructive Termination"
shall be deemed to have occurred in the event that (i) the Executive's Base
Salary as defined in Paragraph 3(a), bonus compensation under Paragraph
3(b), option grants under Paragraph 3(d) or other compensation as described
in Paragraphs 3(e) and 3(f) is reduced; (ii) a significant diminution in
the Executive's responsibilities, authority or scope of duties is effected
by the Board of Directors and such diminution is made without the
Executive's written consent (without regard to whether or not any change is
made to the Executive's title); (iii) WorldQuest materially breaches this
Employment Agreement or (iv) a Change in Control of WorldQuest occurs. For
purposes of this Employment Agreement, a "Change in Control of WorldQuest"
means the occurrence of any of the following events after the date hereof:
(a) any "person" or "group" (as such terms are used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) is or becomes the "beneficial owner" (as defined in Rule l3d-3 under
the Exchange Act), directly or indirectly, of more than 20% of the total
voting stock of WorldQuest; (b) WorldQuest is merged with or into or
consolidated with another person and, immediately after giving effect to
the merger or consolidation, (A) less than 80% of the total voting power of
the outstanding voting stock of the surviving or resulting person is then
"beneficially owned" (within the meaning of Rule l3d-3 under the Exchange
Act) in the aggregate by (x) the stockholders of WorldQuest immediately
prior to such merger or consolidation, or (y) if a record date has been set
to determine the stockholders of WorldQuest entitled to vote with respect
to such merger or consolidation, the stockholders of WorldQuest as of such
record date and (B) any "person" or "group" (as defined in Section 13(d)(3)
or 14(d)(2) of the Exchange Act) has become the direct or indirect
"beneficial owner" (as defined in Rule l3d-3 under the Exchange Act) of
more than 20%
2
of the voting power of the voting stock of the surviving or resulting
person; (c) WorldQuest, either individually or in conjunction with one or
more of its subsidiaries, sells, assigns, conveys, transfers, leases or
otherwise disposes of, or the subsidiaries sell, assign, convey, transfer,
lease or otherwise dispose of, all or substantially all of the properties
and assets of WorldQuest and the subsidiaries, taken as a whole (either in
one transaction or a series of related transactions), to any person (other
than WorldQuest or a wholly owned subsidiary); or (d) the liquidation or
dissolution of WorldQuest. Any resignation by the Executive as a result of
assertion of a Constructive Termination shall be communicated by delivery
to the Board of Directors of WorldQuest of thirty days' advance written
notice of such Constructive Termination and the grounds therefor, during
which period WorldQuest shall be entitled to cure or remedy the matters set
forth in such notice to the Executive's reasonable satisfaction. Unless the
Executive shall withdraw such notice prior to the expiration of such thirty
day period, such resignation shall take effect upon the expiration of
thirty days from the date of the delivery of such notice. Any other
resignation by the Executive shall be communicated by thirty days' advance
written notice.
(d) If the Executive shall die, or become disabled and cannot perform
the Executive's duties, this Employment Agreement shall terminate
immediately. For purposes of this Employment Agreement, the Executive
shall be disabled as of the first date on which the Executive shall become
eligible to receive disability benefits under WorldQuest's long-term
disability plan (or Social Security disability benefits at a time when
WorldQuest does not maintain a long-term disability plan or such plan is
not available to the Executive). WorldQuest will maintain for a period of
twenty-four months from the date of the Executive's death or disability,
all Directors and Officers Liability Insurance that WorldQuest was
maintaining for the Executive and/or the Executive's estate as of the date
of the Executive's death or disability.
3. Compensation
(a) Each year during the Term hereof, the Executive will be paid a
base salary of $300,000 per annum ("Base Salary"), payable in accordance
with WorldQuest's payroll guidelines, subject to applicable tax and benefit
plan withholding. Increases may be made to the Executive's Base Salary at
the discretion of the Board of Directors, based upon the Executive's
individual performance.
(b) The Executive shall be a participant in any incentive
compensation plan sponsored by WorldQuest, at the highest level of
executive participation. Upon execution of this Employment Agreement by the
parties hereto, WorldQuest shall pay the Executive a $150,000 signing
bonus, subject to applicable withholding. The $150,000 payment, less
applicable tax withholding, constitutes an irrevocable and non-refundable
signing bonus. This signing bonus amount may not be offset against any
amount owing the Executive under the Employment Agreement, or otherwise. In
addition, upon approval of a new business plan by the Board of Directors of
WorldQuest, the Executive shall be paid an additional $125,000 by
WorldQuest on January 2, 2002, subject to applicable tax withholding, as an
irrevocable and non-refundable bonus.
(c) The Executive shall be designated as a participant in the 2001
Stock Option Plan of WorldQuest Networks, Inc. (the "Option Plan"), and any
other option or stock-based compensation plans established by WorldQuest,
and shall be entitled to purchase shares of common stock of WorldQuest
provided thereunder. As of May 14, 2001, the Executive shall be granted an
option (the "Initial Option") under the Option Plan. The Initial Option
shall grant the Executive the option to acquire 300,000 shares of stock of
WorldQuest at the per share exercise price equal to the per share closing
price of WorldQuest's stock on the NASDAQ system (or other
3
applicable system) on May 14, 2001. Such Initial Option shall have a term
of at least 10 years from date of grant, and may be exercised at any time
after a Constructive Termination, as described in Paragraph 2(c). The
Executive shall be entitled to exercise immediately following grant up to
one-half of the shares covered by the Initial Option (and thereafter until
expiration), and the remaining shares covered by the Initial Option shall
become exercisable after one year from date of approval of the new business
plan. In the event the Executive voluntarily resigns (other than voluntary
resignation following a Constructive Termination) within one year after May
14, 2001, the Initial Option shall terminate. Upon the date on which the
Board of Directors of WorldQuest shall approve a new business plan, the
Executive shall be granted an additional stock option (the "Additional
Option") for 125,000 shares of WorldQuest, at a per share exercise price
equal to the closing price of a share of WorldQuest's stock on the NASDAQ
system (or other system on which such stock is traded) on the date of
approval of the new business plan. The Additional Option shall be fully
vested and exercisable on and after May 13, 2003, and shall have a term of
at least 10 years from date of grant, with twenty-four months after any
separation of employment available for exercise.
(d) The Executive shall be entitled to participate in any
WorldQuest's benefit programs for senior management executives. The
Executive shall participate in, and be eligible to receive benefits under,
any "employee welfare benefit plans" and "employee pension benefit plans"
(as such terms are defined in the Employee Retirement Income Security Act
of 1974, as amended) and business travel insurance plans and programs as
shall apply to general and/or executive employees of WorldQuest.
(e) During the Term of this Employment Agreement, or until
termination of this Employment Agreement if this Employment Agreement
terminates prior to expiration of the regular Term (except as provided in
Paragraph 2(b)), WorldQuest will pay all premiums on a policy of insurance
providing term protection only and no cash values, with a death benefit
payable upon the Executive's death in the amount of $5,000,000. The
Executive shall at all times own the policy and have the right to designate
the beneficiary of any death proceeds. The Executive will be responsible
for policy selection, coverage and effectiveness of the policy and any
income taxes arising in connection therewith, WorldQuest's only obligation
being to pay such premiums.
(f) The Executive shall be entitled to participate in such other
compensation arrangements and receive such other perquisites as the Board
of Directors of WorldQuest in its sole discretion determines, provided that
WorldQuest shall pay or reimburse the Executive for all reasonable
business, travel or entertainment expenses incurred in connection with the
performance of services under this Employment Agreement. WorldQuest shall
furnish the Executive with an office commensurate with the Executive's
title and adequate for the performance of the Executive's duties, and with
secretarial assistance and similar services.
4. Confidentiality
The Executive recognizes and acknowledges that the Executive will have access to
certain information concerning WorldQuest that is confidential and proprietary
and constitutes valuable and unique property of WorldQuest. The Executive
agrees that the Executive will not at any time, either during or after the
Executive's employment, disclose to others, use, copy or permit to be copied,
except pursuant to the Executive's duties on behalf of WorldQuest or its
successors, assigns or nominees, any secret or confidential information of
WorldQuest (whether or not developed by the Executive) without the prior written
consent of the Board of Directors of WorldQuest.
4
5. Indemnification
If, at any time during or after the Term of this Employment Agreement,
the Executive is made a party to, or is threatened to be made a party in, any
civil, criminal or administrative action, suit or proceeding by reason of the
fact that the Executive is or was a director, officer, employee, or agent of
WorldQuest, or of any other corporation or any partnership, joint venture, trust
or other enterprise for which the Executive served as such at the request of
WorldQuest, then the Executive shall be indemnified by WorldQuest against
expenses actually and reasonably incurred by the Executive or imposed on the
Executive in connection with, or resulting from, the defense of such action,
suit or proceeding, or in connection with, or resulting from, any appeal therein
if the Executive acted in good faith and in a manner the Executive reasonably
believed to be in or not opposed to the best interest of WorldQuest, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
the Executive's conduct was unlawful, except with respect to matters as to which
it is adjudged that the Executive is liable to WorldQuest or to such other
corporation, partnership, joint venture, trust or other enterprise for gross
negligence or willful misconduct in the performance of the Executive's duties.
As used herein, the term "expenses" shall include all obligations actually and
reasonably incurred by the Executive for the payment of money, including,
without limitation, attorney's fees, judgments, awards, fines, penalties and
amounts paid in satisfaction of a judgment or in settlement of any such action,
suit or proceeding, except amounts paid to WorldQuest or such other corporation,
partnership, joint venture, trust or other enterprise by the Executive.
6. Arbitration
Any controversy or claim arising out of or relating to this Employment
Agreement, or any breach thereof, shall be adjudged only by arbitration in
accordance with the rules of the American Arbitration Association, and judgment
upon such award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. The arbitration shall be held in the City of Dallas,
Texas, or such other place as may be agreed upon at the time by the parties to
the arbitration. The arbitrator(s) shall, in their award, allocate between the
parties the costs of arbitration, which shall include reasonable attorneys' fees
of the parties, as well as the arbitrators' fees and expenses, in such
proportions as the arbitrator(s) deem just.
7. Other Provisions
(a) This Employment Agreement will be governed by, construed and
enforced in accordance with the laws of the State of Texas, excluding any
conflicts of law, rule or principle that might otherwise refer to the
substantive law of another jurisdiction.
(b) Except as otherwise indicated, this Employment Agreement is not
assignable without the written authorization of both parties; provided that
WorldQuest may assign this Employment Agreement to any entity to which
WorldQuest transfers substantially all of its assets or to any entity which
is a successor to WorldQuest by reorganization, incorporation, merger or
similar business combination. In the event of any such transfer or
assignment by WorldQuest, the rights and privileges of the Board hereunder
shall be vested in the Board of Directors or other governing body of the
transferee or successor entity. However, notwithstanding anything to the
contrary contained herein, this Employment Agreement will be binding upon
any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business
and/or assets of WorldQuest, and WorldQuest will require any such successor
by agreement, in form and substance satisfactory to the Executive, to
expressly assume and agree to perform this Employment Agreement in the same
manner and to the same extent that WorldQuest would be required to perform
if no such succession had taken place. In addition to the Executive's
rights above, if a Change in Control of WorldQuest occurs as described in
5
Paragraph 2(c) above, the failure of WorldQuest to obtain such agreement
prior to the effectiveness of any such succession shall be a breach of this
Employment Agreement and shall entitle the Executive to compensation from
WorldQuest in the same amount and on the same terms as the Executive would
be entitled to hereunder if the Executive resigned from the Executive's
employment due to a Constructive Termination, as described in Paragraph
2(c) above, except that for purposes of implementing the foregoing, the
date on which any such succession becomes effective shall be deemed the
date of termination. As used in this Employment Agreement, "WorldQuest"
shall mean WorldQuest as hereinbefore defined and any successor to its
business and/or assets as aforesaid which executes and delivers the
agreement provided for in this Paragraph 7(b) or which otherwise becomes
bound by all the terms and provisions of this Employment Agreement by
operation of law. This Employment Agreement and all rights of the parties
hereto shall inure to the benefit of and be enforceable by the parties
hereto, their assigns, personal or legal representatives, executors,
administrators, successors, heirs, distributees, devises and legatees.
(c) Except as otherwise provided herein, the provisions of Paragraphs
4, 5 and 6 of this Employment Agreement shall survive the termination of
this Employment Agreement.
(d) This Employment Agreement supersedes all previous employment
agreements, written or oral, between WorldQuest and the Executive. This
Employment Agreement may be amended only by written amendment duly executed
by both parties hereto or their legal representatives and authorized by
action of the Board. Except as otherwise specifically provided in this
Employment Agreement, no waiver by either party hereto of any breach by the
other party hereto of any condition or provision of this Employment
Agreement to be performed by such other party shall be deemed a waiver of a
subsequent breach of such condition or provision or a waiver of a similar
or dissimilar provision or condition at the same or at any prior or
subsequent time.
(e) Any notice or other communication required or permitted pursuant
to the terms of this Employment Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
mail, first class, postage prepaid and registered with return receipt
requested, addressed to the intended recipient at his or its address set
forth below and, in the case of a notice or other communication to
WorldQuest, directed to the attention of the Board of Directors with a copy
to the Secretary of WorldQuest, or to such other address as the intended
recipient may have theretofore furnished to the sender in writing in
accordance herewith, except that until any notice of change of address is
received, notices shall be sent to the following addresses:
If to the Executive: If to WorldQuest
R. Xxxxxxx Xxxxxx WorldQuest Networks, Inc.
0000 Xxxx Xxxxxx Attn: Chairman of the Board
Suite 1202 00000 Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000 Xxxxxx, Xxxxx 00000
(f) If any one or more of the provisions or parts of a provision
contained in this Employment Agreement shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity or
unenforceability shall not affect any other provision or part of a
provision of this Employment Agreement, but this Employment Agreement shall
be reformed and construed as if such invalid or illegal or unenforceable
provision or part of a provision had never
6
been contained herein and such provisions or part thereof shall be reformed
so that it would be valid, legal and enforceable to the maximum extent
permitted by law.
(g) The Executive shall not be required to mitigate damages (or the
amount of any compensation provided under this Employment Agreement to be
paid) following the Executive's termination of employment, by seeking
employment or otherwise.
(h) In the event that any Incentive Compensation Plan or the Option
Plan are amended to reduce, modify limit or restrict any of the Executive's
accrued or vested rights thereunder, no such amendment shall apply to the
Executive without the Executive's written consent.
(i) WorldQuest shall maintain during the Term of this Employment
Agreement and for a period of twenty-four months thereafter Directors and
Officers Liability Insurance covering the Executive (or the Executive's
estate, if the Executive is deceased or incompetent), which provides
coverage at least as favorable to the Executive (or the Executive's estate,
if the Executive is deceased or incompetent), as coverage under
WorldQuest's policy in effect on the date of execution of this Employment
Agreement, and which coverage shall be increased from time to time in such
amounts as the Board may determine to be appropriate in light of
WorldQuest's operations.
(j) WorldQuest will not amend the provisions of its governing
documents which pertain to the Executive's indemnification in the
Executive's capacity as an officer and/or member of the Board of WorldQuest
except to substitute therefor provisions which are more favorable to the
Executive, except as otherwise required by law or the rules of any
securities exchange or similar entity, or by applicable law.
WorldQuest Networks, Inc.
By:_______________________________
B. Xxxxxxx Xxxxx
Its: Chairman of the Board
& Chief Executive Officer
AGREED AND ACCEPTED this
___ day of ________, 2001
and effective as of May 14, 2001.
________________________________
R. Xxxxxxx Xxxxxx
7
