EXHIBIT 10.11
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement"), effective as of May 3, 1998,
between Data Return Corporation, a Texas corporation (the "Company"), and Xxxx
Xxxxxxx, an individual ("Employee");
WITNESSETH:
WHEREAS, the Company desires to employ Employee, and Employee desires to be
employed by the, all on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby, the
Company and Employee hereby agree as follows:
1. Employment. The Company and Employee hereby agree that Employee shall
be employed by the Company, for the period set forth in Section 2, in the
position and with the duties and responsibilities set forth in Section 3, and
upon the other terms and conditions herein provided.
2. Term. The employment of Employee by the Company shall be for the one
year period commencing as of the effective hereof, unless further extended or
sooner terminated as herein provided (the "Employment Term"). At the end of the
initial or any renewal one year term hereof this Agreement shall be
automatically renewed for an additional one year term unless either party hereto
gives the other party notice of nonrenewal at least fifteen (15) days prior to
the end of the then current term hereof.
3. Position and Duties.
(a) During the Employment Term, Employee shall be employed as the Marketing
Director of the Company, and such shall report directly to the VP of Sales,
Marketing, and Business Development. Employee shall be initially responsible for
packaging and promoting Company service offerings, providing sales support, and
developing distribution channels. In addition, Employee shall have such duties,
functions, responsibilities and authority as reasonably determined by the
Company from time to time.
(b) During the Employment Term, Employee shall devote his full time, skill,
and attention and his best efforts during normal business hours to the business
and affairs of the Company to the extent necessary to discharge the duties and
responsibilities delegated and assigned to Employee herein or pursuant hereto,
except for usual, ordinary, and customary periods of vacation and absence due to
illness or other disability.
4. Compensation. During the Employment Term the Company shall pay to
Employee for his services hereunder a base salary at the rate of $90,000 per
year, payable in equal installments as nearly as practicable on the fifteenth
and last days of each month in arrears, in accordance with the general payroll
practices of the Company. In addition, the Employee shall have the opportunity
to earn a commission of up to $25,000 per year, to be earned based on a prorata
basis (plus or minus) based on the achievement of the Company's annual revenue
goals as shall be determined by the Company. The Company shall make advance
monthly payments of this commission ($2,083.33 per month), which advance
payments must be repaid to the Company in the event the revenue goals are not
achieved. The Company shall withhold from any payments to be made to Employee
hereunder such amounts (including social security contributions and federal
income taxes) as shall be required by federal, state, and local withholding tax
laws. Inasmuch as the Employee's efforts may not be reflected in the Company's
revenues for some time, the Employee will be granted a commission equal to what
the employee would earn if the Company met revenue goals for the first 180 (one
hundred eighty) days of employment.
5. Stock Options. Concurrently herewith the Company has granted to
Employee options to acquire 500 shares of the Company's common stock which vest
at a rate of 20% per year over the five year period commencing on Employee's
first date of employment by the Company. In addition, the Company agrees to
grant options to purchase up to an additional 500 shares of its common stock
which will vest at a rate of 20% per year over the five year period commencing
on the date of issuance (the "Additional Options") in such amounts (up to 100
shares per year) as shall be determined by the Company in its sole discretion
based on Employee's annual review job performance review with the Chief
Executive Officer of the Company. In the event the Company is acquired, goes
public, or both of Xxxxxxxx Xxxxxxxx and Xxxxx Xxxxxxxxxx cease being executive
officers of the Company, then (i) all Additional Options granted to Employee as
of such date shall be become fully vested and (ii) the Company shall grant to
Employee fully vested additional options to purchase common stock of the Company
in an amount equal to 500 minus the sum of (A) the number of shares covered by
the Additional Options issued as of such date, plus (B) for each year prior to
such date an amount equal to 100 minus the number of Additional Options granted
to Employee with respect to such year. (For example, if the Company completes an
Initial Public Offering in three years, and prior to such event the Company
granted 100 Additional Options to Employee during the first year of this
Agreement, and 80 Additional Options during the second year, then all 180
Additional Options would immediately vest, and the Company would issue Employee
300 fully vested Additional Options at such time. In this scenario, the Employee
would have been granted a total of 980 options (500 signing + 180 granted during
term + 300 granted at IPO.) All stock options granted pursuant hereto shall be
granted under the terms of the Company's incentive stock option plan.
5. Termination of Employment.
(a) Death. Employee's employment hereunder shall terminate automatically
upon his death.
2
(b) Disability. Employee's employment hereunder shall terminate
automatically upon the total and permanent disability (whether physical or
mental) ("Disability") of Employee. For purposes of this Agreement, the
"Disability" of Employee shall be deemed to have occurred if Employee shall have
become unable to continue the proper performance of his duties hereunder on a
full-time basis as a result of his physical or mental incapacity, which is
determined to be total and permanent by a qualified medical doctor selected by
the Company and reasonably acceptable to Employee or his legal representative.
(c) Termination by Company for Cause. The Company may terminate Employee's
employment hereunder for "Cause" (as defined below). For purposes of this
Agreement, "Cause" shall mean any of the following:
(i) conduct by Employee that constitutes fraud, dishonesty, or a
criminal act with respect to the Company;
(ii) embezzlement of funds or misappropriation of other property by
Employee from the Company;
(iii) acts of dishonesty by Employee that constitute a felony under
the laws of the State of Texas and that result or are intended to result,
directly or indirectly, in gain to or personal enrichment of Employee at
the expense of the Company;
(iv) conviction of Employee of a felony or of any other crime that
involves fraud, dishonesty, or moral turpitude;
(v) the breach by Employee of any of the provisions of this Agreement;
or
(vi) conduct by Employee that, in the good faith opinion of the Board
of Directors of the Company, is materially detrimental to the Company or
reflects unfavorably on the Company or Employee in any material respect to
such an extent that the Company's best interests reasonably require
Employee's discharge in the good faith judgement of the Company's Board of
Directors.
(d) Termination Without Cause. The Company and Employee each shall have the
right to terminate Employee's employment hereunder, without or without cause, at
any time, upon giving the other at least fifteen (15) days prior notice of
termination.
6. Noncompetition.
(a) Except as otherwise provided in Section 6(e) below, during the term of
this Agreement and for a period of one (1) year thereafter, Employee shall not,
directly or indirectly, for his own account or for the benefit of any other
person:
3
(i) engage or participate in, or own any interest in, provide any
financing for, perform any service for, or act in any other capacity for
any business or organization which engages or participates, directly or
indirectly, in, any business or activity, that is competitive with the web
hosting and related businesses of the Company as conducted by it during or
at the termination of the Employment Term;
(ii) employ, solicit for employment, or advise or recommend to any
other person that such other person employ or solicit for employment, any
employee of the Company;
(iii) solicit or induce, or in any manner attempt to solicit or
induce, any customer of the Company (A) to cease being, or any prospective
customer not to become, a customer of the Company or (B) to divert any
business of such customer from the Company; or
(iv) otherwise interfere with, disrupt, or attempt to interfere with
or disrupt the relationship, contractual or otherwise, between the Company
and any of its customers, clients, suppliers, consultants, or employees.
(b) Employee regards the restrictions contained in this Section as
reasonable in scope, duration, and geographic territory and as designed to
provide the Company with limited, legitimate, and reasonable protection against
subsequent diminution of the value of the business of the Company attributable
to any actions of Employee contrary to such restrictions. Employee acknowledges
that irreparable damage would occur in the event any of the provisions of this
Section 6 were breached and accordingly agrees that the Company shall be
entitled (without being required to prove damages or furnish any bond or other
security) to an injunction or injunctions to prevent breaches of the provisions
of this Section 6, and shall be entitled to enforce specifically the provisions
of this Section 6, in any court of the United States or any state thereof having
jurisdiction, in addition to any other remedy to which the Company may be
entitled under this Agreement or at law or in equity. It is the intent and
understanding of the parties hereto that if, in any action before any court or
governmental entity legally empowered to enforce the provisions of this Section
6, any term, restriction, covenant, or promise in this Section 6 is found to be
unreasonable and for that reason unenforceable, then such term, restriction,
covenant, or promise shall be deemed modified to the extent necessary to make it
enforceable by such court or governmental entity. Further, during any period in
which Employee is in breach of any covenant contained in Section 6(a), the time
period of such covenant shall be extended for an amount of time that Employee is
in breach thereof.
(c) The covenants of Employee contained in this Section 6 are ancillary to
and independent of any other provision of this Agreement, and the existence of
any claim or cause of action of Employee against the Company or any shareholder,
director, or officer of the Company, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by the Company of
the covenants of Employee contained in this Section 6.
4
(d) The provisions of this Section 6 shall continue in effect
notwithstanding termination or expiration of Employee's employment hereunder for
any reason.
(e) Nothing contained in this Section 6 shall be construed to prohibit
Employee from investing in stock or other securities listed on a national
securities exchange or actively traded in the over-the-counter market of any
corporation or other entity engaged in a business or activity competitive with
the business of the Company or any of its subsidiaries, provided that the
Employee and the members of his immediate family shall not, directly or
indirectly, hold more than a total of one percent (1%) of all such shares of
stock or other securities issued and outstanding.
7. Confidentiality. Employee recognizes and acknowledges that the
Company's trade secrets and other confidential or proprietary information, as
they may exist from time to time, are valuable, special, and unique assets of
the Company's business, access to and knowledge of which are essential to the
performance of Employee's duties hereunder. Accordingly, during the Employment
Term and thereafter without limitation of time, Employee shall hold in strict
confidence and shall not, directly or indirectly, disclose or reveal to any
person, or use for his own personal benefit or for the benefit of anyone else,
any trade secrets, confidential dealings, or other confidential or proprietary
information of any kind, nature, or description (whether or not acquired,
learned, obtained, or developed by Employee alone or in conjunction with others)
belonging to or concerning the Company or any of its affiliates, or any of their
customers or clients or others with whom they now or hereafter have a business
relationship, except (i) with the prior written consent of the Company duly
authorized by its Board of Directors, (ii) in the course of the proper
performance of Employee's duties hereunder, or (iii) as required by applicable
law or legal process. Employee confirms that all such information constitutes
the exclusive property of the Company. The provisions of this Section 7 shall
continue in effect notwithstanding termination of Employee's employment
hereunder for any reason.
8. Business Records. Given the secretive and competitive environment in
which the Company does business and the fiduciary relationship that Employee
will have with the Company hereunder, Employee agrees to promptly deliver to the
Company, upon termination of his employment hereunder, or at any other time when
the Company so requests, all memoranda, notes, records, drawings, manuals, and
other documents (and all copies thereof and therefrom) in any way relating to
the business or affairs of the Company or any of its affiliates or any of their
clients, whether made or compiled by Employee or furnished to him by the Company
or any of its employees, customers, clients, consultants, or agents, which
Employee may then possess or have under his control. Employee confirms that all
such memoranda, notes, records, drawings, manuals, and other documents (and all
copies thereof and therefrom) constitute the exclusive property of the Company.
The obligation of confidentiality set forth in Section 7 shall continue
notwithstanding Employee's delivery of any such documents to the Company. The
provisions of this Section 8 shall continue in effect notwithstanding
termination of Employee's employment hereunder for any reason.
5
9. Notices. All notices, requests, demands, and other communications
required or permitted to be given or made hereunder by either party hereto shall
be in writing and shall be deemed to have been duly given or made (i) when
delivered personally, (ii) when sent by telefax, or (iii) when deposited in the
United States mail, first class registered or certified mail, postage prepaid,
return receipt requested, to the party for which intended at the addresses
specified on the signature page hereof for such parties (or at such other
addresses as shall be specified by the parties by like notice).
10. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto concerning the subject matter hereof and supersedes
all prior agreements and understandings, both written and oral, between the
parties with respect to such subject matter.
11. Binding Effect; Assignment; No Third Party Benefit. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective heirs, legal representatives, successors, and assigns; provided,
however, that no party shall assign or otherwise transfer this Agreement or any
of their rights or obligations hereunder without the prior written consent of
the other party. Nothing in this Agreement, express or implied, is intended to
or shall confer upon any person other than the parties hereto, and their
respective heirs, legal representatives, successors, and permitted assigns, any
rights, benefits, or remedies of any nature whatsoever under or by reason of
this Agreement.
12. Amendment. This Agreement may not be modified or amended in any
respect except by an instrument in writing signed by both of the parties hereto.
13. Waiver. Any term or condition of this Agreement may be waived at any
time by the party hereto which is entitled to have the benefit thereof, but such
waiver shall only be effective if evidenced by a writing signed by such party,
and a waiver on one occasion shall not be deemed to be a waiver of the same or
any other type of breach on a future occasion. No failure or delay by a party
hereto in exercising any right or power hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right or power.
14. Severability. If any provision of this Agreement is held to be
unenforceable, (a) this Agreement shall be considered divisible, (b) such
provision shall be deemed inoperative to the extent it is deemed unenforceable,
and (c) in all other respects this Agreement shall remain in full force and
effect; provided, however, that if any such provision may be made enforceable by
limitation thereof, then such provision shall be deemed to be so limited and
shall be enforceable to the maximum extent permitted by applicable law.
15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO
THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
6
16. Descriptive Headings. The descriptive headings herein are inserted for
convenience of reference only, do not constitute a part of this Agreement, and
shall not affect in any manner the meaning or interpretation of this Agreement.
17. Counterparts. This Agreement may be executed by the parties hereto in
any number of counterparts, each of which shall be deemed an original, but all
of which shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date first set forth above.
Address: Data Return Corporation
000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxxxxxxx By: /s/ Sunny X. Xxxxxxxxxx
-----------------------------
Name: Sunny X. Xxxxxxxxxx
------------------------
Title: CEO
-----------------------
Address:
0000 Xxxxxxx Xxxxx
Xxxxx, Xxxxx 00000
/s/ Xxxx Xxxxxxx
-----------------------------
Xxxx Xxxxxxx
7
