AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into as of the 21 day of October, 2003, by and
between Xxxxxx X. Xxxxx (the "Executive") and Brightstar Information Technology
Group, Inc. (the "Company").
Section 1. Term of Employment
(a) Basic Rule. The Company agrees to continue the Executive's employment,
and the Executive agrees to remain in employment with the Company, from
May 1, 2002, until the earliest of:
(1) The date of the Executive's death;
(2) October 31, 2004, or if a Transaction resulting in a Change in Control
closes on or before October 31, 2004, then 12 months after the closing
of said Transaction; or
(3) The date when the Executive's employment terminates pursuant to
Subsection (b), (c), (d) or (e) below.
(b) Early Termination or Resignation. The Company may terminate the
Executive's employment at any time and for any reason by giving the
Executive 30 days' advance notice in writing or 30 days payment of Base
Compensation in lieu of notice. The Executive may terminate the
Executive's employment for any reason by giving the Company not less
than 30 days' advance notice in writing.
(c) Termination for Cause. The Company may terminate the Executive's employment
at any time for Cause shown. For all purposes under this Agreement, "Cause"
shall mean (1) a failure by the Executive to substantially perform the
Executive's duties under this Agreement, other than a failure resulting
from the Executive's complete or partial incapacity due to physical or
mental illness or impairment, (2) an intentional act by the Executive that
constitutes gross misconduct and that is materially injurious to the
Company, (3) a breach by the Executive of a material provision of this
Agreement or (4) a material violation of a federal or state law or
regulation applicable to the business of the Company that is materially and
demonstrably injurious to the Company. No act, or failure to act, by the
Executive shall be considered "intentional" unless committed without good
faith and without a reasonable belief that the act or omission was in the
Company's best interest.
(d) Termination for Disability. The Company may terminate the Executive's
employment for Disability by giving the Executive written notice. For all
purposes under this Agreement, "Disability" shall mean that the Executive,
at the time the notice is given, has been unable to perform the Executive's
duties under this Agreement for a period of not less than six consecutive
months as a result of the Executive's incapacity due to physical or mental
illness. In the event that the Executive resumes the performance of
substantially all of the Executive's duties under this Agreement before the
termination of the Executive's employment under this Section becomes
effective, the notice of termination shall automatically be deemed to have
been revoked.
(e) Termination of Agreement. This Agreement shall expire on the earlier of
October 31, 2004 or when all obligations of the parties hereunder have
been satisfied. In addition, either the Company or the Executive may
terminate this Agreement for any reason, and without affecting the
Executive's status as an Executive, by giving the other party
one-year's advance notice in writing. A termination of this Agreement
pursuant to the preceding sentence shall be effective for all purposes,
except that such termination shall not affect the payment or provision
of compensation or benefits under this Agreement on account of a
termination of employment occurring prior to the termination of this
Agreement.
Section 2. Duties and Scope of Employment
(a) Position. The Company and each of its subsidiaries agree to employ the
Executive for the term of employment under this Agreement in the
position of President and Chief Executive Officer. Executive shall be
given such duties, responsibilities and authorities as are appropriate
to his position.
(b) Obligations. During the term of employment under this Agreement, the
Executive shall devote the Executive's full business efforts and time
to the business and affairs of the Company as needed to carry out his
duties and responsibilities hereunder subject to the overall
supervision of the Company's Board of Directors. The foregoing shall
not preclude the Executive from engaging in appropriate civic,
charitable or religious activities or from devoting a reasonable amount
of time to private investments or from serving on the boards of
directors of other entities, as long as such activities and service do
not interfere or conflict with the Executive's responsibilities to the
Company.
(c) Board of Directors. During the term of employment under this Agreement,
the Executive shall also be appointed to and serve on the Board of
Directors of the Company.
Section 3. Compensation
(a) Base Compensation. During the term of employment under this Agreement, the
Company agrees to pay the Executive as compensation for services a base
salary at the annual rate of $300,000 for the first year of employment and
$350,000 for the second year of employment and until the expiration of this
agreement. Such salary shall be payable in accordance with the standard
payroll procedures of the Company. Once the Company's Compensation/Option
Committee of the Board of Directors has increased such salary, it
thereafter shall not be reduced; provided, however, that if a Change in
Control has not occurred, such salary (including any increases) may be
reduced by the Company if (1) the Executive commits an act or omission that
meets the definition of Cause, as defined in Section 1 (c), or (2) the
Executive and all other executive officers of the Company who are parties
to written employment agreements containing substantially the same
provisions as this Agreement have their salaries (including any increases)
reduced by the same percentage amount for the same time period. The annual
compensation specified in this Section 3, together with any increases in
such compensation that the Compensation/Option Committee of the Board of
Directors may grant from time to time, and together with any reductions
made in accordance with this Section 3, is referred to in this Agreement as
"Base Compensation."
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(b) Bonus Compensation. During the term of employment under this Agreement,
the Executive shall receive annual bonus payments of 0 to 200% of Base
Compensation. For the calendar year of employment hereunder ending
12/31/02, the bonus will be at the complete discretion of the board.
For the 12-month and 10-month calendar periods of employment hereunder
ending 12/31/03 and October 31, 2004, respectively, the bonus will be
based upon such Metrics as may be agreed upon with the Executive. Bonus
Compensation shall be paid not later than 90 days after the period for
which the bonus was awarded.
In the event a transaction involving any future acquisition, merger,
divestiture or sale of equity securities (a "Transaction") is completed
in respect of the Company, the Executive shall receive a bonus in cash
within 30 days of closing equal to (i) the lesser of $55,000 or 10% of
the value of the Transaction (the "Tier One Bonus"), plus (ii) 10% of
the amount by which the Net Equity Value of the Company (having added
back the 10% bonus amount) exceeds $1.014 million (the "Tier Two
Bonus"). If there are multiple Transactions, all Transactions shall be
treated as a single Transaction for purposes of computing the Tier Two
Bonus and the most recent Tier Two Bonus amount shall be computed by
reducing it (but not below zero) by the sum of all Tier Two Bonus
amounts paid or payable in respect of all prior Transactions. Net
Equity Value shall be defined as cash received by and the market value
of securities received or retained by the Company's shareholders. The
market value of securities received or retained shall be the average of
the closing mid points of the bid and ask prices thereof for the 10
trading days following the closing of the Transaction.
In the event any bonus is payable hereunder pursuant to a Transaction
resulting in a Change in Control, a good faith estimate of the amount
payable shall be made and the amount deposited in an escrow account at
closing for the benefit of the Executive, in accordance with procedures
approved by the Executive.
Section 4. Company Stock and Stock Options
(a) Up-Front Stock Grant. Executive received seven hundred fifty thousand
(750,000) restricted shares of common stock in the Company effective
February 15, 2002, a pro rata portion of which shall vest monthly over
the succeeding 24 month period or immediately upon death, disability,
termination without cause or a Change in Control.
(b) Future Grant of Stock or Options. The Executive may be awarded
restricted stock or stock options as incentive compensation in the
future at the complete discretion of the board.
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Section 5. Executive Benefits
In General. During the term of employment under this Agreement, the Executive
shall be eligible to participate in the executive benefit plans and executive
compensation programs maintained by the Company, including (without limitation)
savings or profit-sharing plans, deferred compensation plans, stock option,
incentive or other bonus plans, life, disability, health, accident and other
insurance programs, five weeks of paid vacation per annum, and similar plans or
programs, subject in each case to the generally applicable terms and conditions
of the plan or program in question and to the discretion and determinations of
any person, committee or entity administering such plan or program.
Section 6. Business Expenses and Travel
During the term of employment under this Agreement, the Executive shall be
authorized to incur necessary and reasonable travel, entertainment and other
business expenses in connection with the Executive's duties hereunder. The
Company shall reimburse the Executive for such expenses upon presentation of an
itemized account and appropriate supporting documentation, all in accordance
with generally applicable policies.
Section 7. Involuntary Actual or Constructive Termination Without Cause
or Disability
In the event that, during the term of this Agreement, the Executive's employment
terminates in a Qualifying Termination, as defined in Subsection (a), then,
after executing the release of claims described in Section 7(e), the Executive
shall be entitled to receive the payments and rights described in Subsections
(b), (c) and (d).
(a) Qualifying Termination. A Qualifying Termination occurs if:
(1) The Company terminates the Executive's employment for any reason other
than Cause or Disability; or
(2) The Executive resigns from employment with the Company as a result of
a "Constructive Termination." For the purposes of this Agreement, a
Constructive Termination means that the Executive resigns from the
Company within 60 days of any of the following events that occur
without his written consent: (i) the Executive's responsibilities are
materially diminished; (ii) the Executive ceases to be CEO of the
Company; (iii) the Executive is removed from the Board of Directors;
(iv) the Executive's office is relocated more than 35 miles from his
current office location; or (vi) the Executive's Base Salary or Target
Bonus is reduced by more than 10%; or
(3) The Executive resigns from employment with the Company as a result of
a Change in Control, provided that such resignation occurs within 180
days after a Change in Control but not before 90 days after a Change
in Control.
(b) Severance. For a period of 12 months following the date of the
Qualifying Termination, the Executive shall receive, in accordance with
standard payroll procedures, an amount equal to the Executive's monthly
Base Compensation in effect on the date of the employment termination.
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(c) Continued Vesting of Stock Options. If the Qualifying Termination does
not occur within the 365-day period following a Change in Control,
then, for a period of 12 months following the date of the Qualifying
Termination, the Executive shall continue to vest, subject to Section
4(a) above, in any outstanding restricted stock or options to purchase
stock in the Company. Nothing in this Agreement shall give the
Executive the right to receive grants of new options to purchase stock
in the Company following a Qualifying Termination.
(d) Immediate Vesting of Stock Options. If the Qualifying Termination
occurs within the 365-day period following a Change in Control, then
the Executive shall be vested immediately in all unvested shares of
restricted stock or options to purchase stock in the Company.
(e) Release of Claims. As a condition to the receipt of the payments and
benefits described in this Section 7, the Executive shall be required
to execute a release of all claims arising out of the Executive's
employment or the termination thereof including, but not limited to,
any claim of discrimination under state or federal law, but excluding
claims for indemnification from the Company under any indemnification
agreement with the Company, its certificate of incorporation and
by-laws or applicable law or claims for directors and officers'
insurance coverage.
(f) No Mitigation. The Executive shall not be required to mitigate the
amount of any payment or benefit contemplated by this Section 7, nor
shall any such payment or benefit be reduced by any earnings or
benefits that the Executive may receive from any other source.
(g) Conditions to Receipt of Payments and Benefits. In view of Executive's
position and his access to Confidential Information, as a condition to the
receipt of payments and benefits described in this Section 7, the Executive
shall not, without the Company's written consent, directly or indirectly,
alone or as a partner, joint venturer, officer, director, Executive,
consultant, agent or stockholder (other than a less than 5% stockholder of
a publicly traded company) (i) solicit any of the Company's Executives,
consultants or customers, (ii) hire any of the Company's Executives or
consultants in an unlawful manner or actively encourage Executives or
consultants to leave the Company, or (iii) otherwise breach his
Confidential Information obligations.
Section 8. Definition of Change in Control
For all purposes under this Agreement, "Change in Control" shall mean the
occurrence of any of the following:
(i) The consummation of a merger or consolidation of the Company with or into
another entity or any other corporate reorganization, if more than 50% of
the combined voting power of the continuing or surviving entity's
securities outstanding immediately after such merger, consolidation or
other reorganization is owned by persons who were not stockholders of the
Company immediately prior to such merger, consolidation or other
reorganization;
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(ii) The sale, transfer or other disposition of all or substantially all of the
Company's assets;
(iii) A change in the composition of the Board after April 30, 2002, as a result
of which fewer than one-half of the incumbent directors are directors who
either (i) had been directors of the Company on the date 12 months prior to
the date of the event that may constitute a Change in Control (the
"original directors") or (ii) were elected, or nominated for election, to
the Board with the affirmative votes of at least a majority of the
aggregate of the original directors who were still in office at the time of
the election or nomination and the directors whose election or nomination
was previously so approved;
(iv) Any transaction after April 30, 2002 as a result of which any person
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing at
least 20% of the total voting power represented by the Company's then
outstanding voting securities. For purposes of this Paragraph (iii), the
term "person" shall have the same meaning as when used in sections 13(d)
and 14(d) of the Exchange Act but shall exclude:
(A) A trustee or other fiduciary holding securities under an employee
benefit plan of the Company or a subsidiary of the Company;
(B) A corporation owned directly or indirectly by the stockholders of
the Company in substantially the same proportions as their
ownership of the common stock of the Company; and
(C) The Company; or
(v) A complete liquidation or dissolution of the Company.
Section 9. Confidential Information
(a) Acknowledgement. The Company and the Executive acknowledge that the
services to be performed by the Executive under this Agreement are
unique and extraordinary and that, as a result of the Executive's
employment, the Executive will be in a relationship of confidence and
trust with the Company and will come into possession of "Confidential
Information" (1) owned or controlled by the Company, (2) in the
possession of the Company and belonging to third parties or (3)
conceived, originated, discovered or developed, in whole or in part,
by the Executive. As used herein "Confidential Information" includes
trade secrets and other confidential or proprietary business,
technical, personnel or financial information, whether or not the
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Executive's work product, in written, graphic, oral or other tangible
or intangible forms, including but not limited to specifications,
samples, records, data, computer programs, drawings, diagrams, models,
customer names, ID's or e-mail addresses, business or marketing plans,
studies, analyses, projections and reports, communications by or to
attorneys (including attorney-client privileged communications), memos
and other materials prepared by attorneys or under their direction
(including attorney work product), and software systems and processes.
Any information that is not readily available to the public shall be
considered to be a trade secret and confidential and proprietary, even
if it is not specifically marked as such, unless the Company advises
the Executive otherwise in writing.
(b) Nondisclosure. The Executive agrees that the Executive will not,
without the prior written consent of the Company, directly or
indirectly use or disclose Confidential Information to any person,
during or after the Executive's employment, except as may be necessary
in the ordinary course of performing the Executive's duties under this
Agreement. The Executive will keep the Confidential Information in
strictest confidence and trust. This Section 9 shall apply
indefinitely, both during and after the term of this Agreement.
(c) Surrender Upon Termination. The Executive agrees that in the event of
the termination of the Executive's employment for any reason, the
Executive will immediately deliver to the Company all property
belonging to the Company, including all documents and materials of any
nature pertaining to the Executive's work with the Company, and will
not take with the Executive any documents or materials of any
description, or any reproduction thereof of any description, containing
or pertaining to any Confidential Information. It is understood that
the Executive is free to use information that is in the public domain
(not as a result of a breach of this Agreement).
Section 10. Successors
(a) Company's Successors. The Company shall require any successor (whether
direct or indirect and whether by purchase, lease, merger, consolidation,
liquidation or otherwise) to all or substantially all of the Company's
business and/or assets, by an agreement in substance and form satisfactory
to the Executive, to assume this Agreement and to agree expressly to
perform this Agreement in the same manner and to the same extent as the
Company would be required to perform it in the absence of a succession. The
Company's failure to obtain such agreement prior to the effectiveness of a
succession shall be a breach of this Agreement and shall entitle the
Executive to all of the compensation and benefits to which the Executive
would have been entitled hereunder if the Company had involuntarily
terminated the Executive's employment without Cause or Disability, on the
date when such succession becomes effective. For all purposes under this
Agreement, the term "Company" shall include any successor to the Company's
business and/or assets that executes and delivers the assumption agreement
described in this Subsection (a) or that becomes bound by this Agreement by
operation of law.
(b) Executive's Successors. This Agreement and all rights of the Executive
hereunder shall inure to the benefit of, and be enforceable by, the
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
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Section 11. Miscellaneous Provisions
(a) Waiver. No provision of this Agreement shall be modified, waived or
discharged unless the modification, waiver or discharge is agreed to in
writing and signed by the Executive and by an authorized officer of the
Company (other than the Executive). No waiver by either party of any breach
of, or of compliance with, any condition or provision of this Agreement by
the other party shall be considered a waiver of any other condition or
provision or of the same condition or provision at another time.
(b) Whole Agreement. No agreements, representations or understandings (whether
oral or written and whether express or implied) that are not expressly set
forth in this Agreement have been made or entered into by either party with
respect to the subject matter hereof. In addition, the Executive hereby
acknowledges and agrees that this Agreement supersedes in its entirety any
employment agreement between the Executive and the Company in effect
immediately prior to the effective date of this Agreement. As of the
effective date of this Agreement, such employment agreement shall terminate
without any further obligation by either party thereto, and the Executive
hereby relinquishes any further rights that the Executive may have had
under such prior employment agreement.
(c) Notice. Notices and all other communications contemplated by this Agreement
shall be in writing and shall be deemed to have been duly given when
personally delivered or when mailed by U.S. registered or certified mail,
return receipt requested and postage prepaid. In the case of the Executive,
mailed notices shall be addressed to the Executive at the home address that
the Executive most recently communicated to the Company in writing. In the
case of the Company, mailed notices shall be addressed to its corporate
headquarters, and all notices shall be directed to the attention of its
Corporate Secretary.
(d) Choice of Law. The validity, interpretation, construction and performance
of this Agreement shall be governed by the laws of the State of California,
irrespective of California's choice-of-law principles.
(e) Severability. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in full
force and effect.
(f) Arbitration. Except as otherwise provided in Section 14 and in the
enforcement of Section 15, any dispute or controversy arising out of the
Executive's employment or the termination thereof, including, but not
limited to, any claim of discrimination under state or federal law, shall
be settled exclusively by arbitration in San Francisco, California, in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court
having jurisdiction.
(g) No Assignment of Benefits. The rights of any person to payments or benefits
under this Agreement shall not be made subject to option or assignment,
either by voluntary or involuntary assignment or by operation of law,
including (without limitation) bankruptcy, garnishment, attachment or other
creditor's process, and any action in violation of this Subsection (i)
shall be void.
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(h) Employment at Will; Limitation of Remedies. The Company and the Executive
acknowledge that the Executive's employment is at will, as defined under
applicable law. If the Executive's employment terminates for any reason,
the Executive shall not be entitled to any payments, benefits, damages,
awards or compensation other than as provided by this Agreement.
(i) Employment Taxes. All payments made pursuant to this Agreement shall be
subject to withholding of applicable taxes.
(j) Benefit Coverage Non-Additive. In the event that the Executive is entitled
to life insurance and health plan coverage under more than one provision
hereunder, only one provision shall apply, and neither the periods of
coverage nor the amounts of benefits shall be additive.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case
of the Company by its duly authorized officer, as of the day and year first
above written. Executive has consulted (or has had the opportunity to consult)
with his own counsel (who is other than the Company's counsel) prior to
execution of this Agreement.
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Xxxxxx X. Xxxxx
BrightStar Information Technology Group, Inc.
By the Compensation Committee of the Board
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