EMPLOYMENT AGREEMENT
Exhibit 10.1
THIS EMPLOYMENT AGREEMENT (this “Agreement”) dated and effective as of June 12, 2008 (the
“Effective Date”) is by and between US Dataworks, Inc., a Nevada corporation (the
“Company”), and Xxxxx X. Xxxxxxxxxx (“Xxxxxxxxxx”). In consideration of the mutual
covenants and promises contained herein, the parties agree as follows.
WHEREAS, the Company deems it essential that it have the advantage of the services of
Xxxxxxxxxx and desires to enter into a continuing agreement of employment with him, and to provide
Xxxxxxxxxx with compensation, including stock options.
ARTICLE 1
GENERAL PROVISIONS
GENERAL PROVISIONS
Section 1.1 Employment. The Company hereby continues to employ Xxxxxxxxxx, and
Xxxxxxxxxx accepts such continued employment by the Company upon the terms and conditions hereof.
Section 1.2 Term. Subject to earlier termination as specifically set forth herein,
the initial term of this Agreement shall be commencing on the Effective Date and continuing until
June 12, 2009 (the “Term”).
Section 1.3 Termination. Xxxxxxxxxx’x employment and this Agreement shall terminate
upon the earliest to occur of any of the following events (the actual date of such termination
being referred to herein as the “Termination Date”):
| (a) | Pursuant to Section 1.2. | ||
| (b) | In the event of Xxxxxxxxxx’x death or disability as set forth in Section 3.6. | ||
| (c) | Termination of Xxxxxxxxxx’x employment by the Company for cause without any prior notice (except as specifically set forth below), upon the occurrence of any of the following events (each of which shall constitute “Cause”): |
(i) any embezzlement or wrongful diversion of funds of the Company or any affiliate of the
Company by Xxxxxxxxxx;
(ii) gross malfeasance by Xxxxxxxxxx in the conduct of Xxxxxxxxxx’x duties;
(iii) breach of this Agreement or any of the Company’s written policies and, if such breach is
capable of being cured, as determined by the Board of Directors of the Company (the “Board of
Directors”), failure of Xxxxxxxxxx to cure such breach after notice and reasonable opportunity to
cure such breach;
(iv) gross neglect by Xxxxxxxxxx in carrying out Xxxxxxxxxx’x duties; or
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(v) willful violation by Xxxxxxxxxx of any applicable federal or state securities laws or
regulations.
(d) Termination of Xxxxxxxxxx’x employment by the Company at any time without Cause.
(e) Termination by Xxxxxxxxxx of his employment at any time.
Section 1.4 Termination Obligations: Return of Company Property. Upon termination of
this Agreement, Xxxxxxxxxx shall promptly return all Company property.
ARTICLE 2
POSITION AND DUTIES; OTHER BUSINESS ACTIVITIES
Section 2.1 Position. Xxxxxxxxxx shall be employed as President and Chief Operating
Officer and shall report directly to the Chief Executive Officer of the Company.
Section 2.2 Duties: Full Attention to Business. The primary focus of Xxxxxxxxxx’x
employment is to execute approved strategies and tactics to improve the profitability, revenue and
expense management of the Company. Xxxxxxxxxx shall also be directly responsible for the product
management, product development, professional services, and customer support for the Company, and
shall perform such services for the Company that reasonably serve the purpose of this Agreement
and/or meet the needs of the Company, and that are consistent with the position Xxxxxxxxxx holds.
Xxxxxxxxxx shall devote his full business time, energies, interest, abilities, and productive
efforts to the business of the Company. Except as may be approved by the Company’s Board of
Directors, Xxxxxxxxxx shall not render any consulting services to others for compensation and, in
addition, shall not engage in any activity which conflicts or interferes with his performance of
duties hereunder. Notwithstanding the provisions of this Section 2.2, Xxxxxxxxxx may, with the
prior written consent of the Board of Directors, engage in civic, charitable, or educational
activities, provided that such service and activities do not, individually or in the aggregate,
interfere with the performance of Xxxxxxxxxx’x duties under the Agreement.
Section 2.3 Covenant Not To Compete During Term. During the Term, Xxxxxxxxxx shall
comply in all respects with the Company’s written policies with respect to conflicts of interest.
Except as may be approved by the Company’s Board of Directors, Xxxxxxxxxx shall not engage in or be
interested, directly or indirectly, in any business or operation competitive with the Company
(“Competitive Business”). For the purpose of this paragraph, Xxxxxxxxxx shall be deemed to be
interested in a business or operation which is competitive with the Company if Xxxxxxxxxx is a
holder of five percent (5%) or more of the issued and outstanding ownership interests in a
Competitive Business, or serves as a director, officer, employee, agent, partner, individual
proprietor, lender, consultant, or independent contractor of a Competitive Business.
Section 2.4 Non-Disclosure of Confidential Information. Xxxxxxxxxx acknowledges that
in connection with his continuing employment by the Company or its affiliates, he has acquired or
learned, and may continue to acquire or learn, “Confidential Information” of the Company by virtue
of a relationship of trust and confidence between Xxxxxxxxxx and the Company. Xxxxxxxxxx
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warrants and agrees that he shall continue to be bound by an obligation not disclose to anyone
(other than to officers of the Company or to such other persons as such officers may designate), or
use, except in the course of his continuing employment with the Company or its affiliates, any
Confidential Information acquired by him in the course of or in connection with his continuing
employment. As used herein, the term “Confidential Information” shall include, but not be limited
to: all information of any type or kind, whether or not reduced to a writing and whether or not
conceived, originated, discovered or developed in whole or in part by Xxxxxxxxxx, which is directly
related to the Company, its operations, policies, agreements with third parties, its financial
affairs and related matters, including business plans, strategic planning information, product
information, purchase and sales information and terms, supplier negotiation points, styles and
strategies, contents and terms of contracts between the Company and suppliers, advertisers,
vendors, contact persons, terms of supplier and/or vendor contracts or particular transactions,
potential supplies and/or vendors, or other related data; marketing information such as but not
limited to, prior, ongoing or proposed marketing programs, presentations, or agreements by or on
behalf of the Company, pricing information, customer bonus programs, marketing tests and/or results
of marketing efforts, computer files, lists and reports, manuals and memos pertaining to the
business of the Company, lists or compilations of vendor and/or supplier names, addresses, phone
numbers, requirements and descriptions, contract information sheets, compensation requirements or
terms, benefits, policies, and any other financial information whether about the Company, entities
related or affiliated with the Company or other key information pertaining to the business of the
Company, including but not limited to all information which is not generally available to or known
in the information services industry (or is available only as a result of an unauthorized
disclosure) and is treated by the Company as “Confidential Information” prior to or during the Term
of this Agreement, regardless of whether or not such Information is a “trade secret” as otherwise
defined by applicable law unless such information is in the public domain.
Section 2.5 No Solicitation of Company’s Employees. Xxxxxxxxxx specifically agrees
that during the Term and for a period of one (1) year after his termination of employment with the
Company, Xxxxxxxxxx shall not, directly or indirectly, either for himself or for any other person,
firm, corporation, or legal entity, solicit any individual, then employed by the Company to leave
the employment of the Company.
Section 2.6 Ownership of Work Product and Ideas. Any discoveries, inventions,
patents, materials, licenses and ideas applicable to the industry or relating to Xxxxxxxxxx’x
services for the Company or its affiliates, whether or not patentable or copyrightable, created by
Xxxxxxxxxx during his continuing employment by the Company or its affiliates (“Work Product”) and
all business opportunities within the industry (“Opportunities”) introduced to Xxxxxxxxxx by the
Company or its affiliates will continue to be owned by the Company, and Xxxxxxxxxx will continue to
have no personal interest in such, except to the extent that the Company allows Xxxxxxxxxx to
invest or participate in or have other rights to such Work Product or Opportunities. Xxxxxxxxxx
will, in such connection, promptly disclose any such Work Product and Opportunities to the Company
and, upon request of the Company, will assign to the Company all right in such Work Product and
Opportunities.
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ARTICLE 3
COMPENSATION; BENEFITS
Section 3.1 Salary. The Company shall pay Xxxxxxxxxx seven thousand seven hundred
eight Dollars and thirty four cents ($7,708.34) on a semi-monthly basis, for an annualized base
salary (“Base Salary”) of One Hundred Eighty Five Thousand Dollars ($185,000).
Section 3.2 Bonus. The primary focus of Xxxxxxxxxx’x employment is to execute
approved strategies and tactics to improve the revenue of the Company. The Board of Directors
will, from time-to-time, review Xxxxxxxxxx’x performance and determine whether or not a bonus (cash
or stock) should be provided.
Section 3.3 Paid Time Off. Xxxxxxxxxx shall be entitled to be paid for time off
under the Company’s policies applicable to other senior executives of the Company’s policies, but
in no event shall Xxxxxxxxxx be eligible for less than four (4) weeks of paid time off per calendar
year.
Section 3.4 Stock Options. Xxxxxxxxxx shall be eligible to receive grants of stock
options or other equity compensation in the sole discretion of the Compensation Committee of the
Board of Directors.
Section 3.5 Other Benefits. During the Term, Xxxxxxxxxx shall be entitled to
participate in present and future employee benefit plans which are available to the Company’s
employees, subject to eligibility requirements thereunder.
Section 3.6 Disability or Death. If the Board of Directors determines, on the basis
of professional medical advice, that Xxxxxxxxxx has become unable to substantially perform his
duties under this Agreement due to illness or mental or physical disability with reasonable
accommodation, and that such failure or inability has continued or is reasonably expected to
continue for any consecutive six-month period, the Company shall have the option to terminate this
Agreement by giving written notice to Xxxxxxxxxx thereof and the basis therefor at least thirty
(30) days prior to the effective date of termination. This Agreement shall also terminate
immediately upon Xxxxxxxxxx’x death. If Xxxxxxxxxx’x employment with the Company is terminated
pursuant to this Section 3.6, the Company shall pay Xxxxxxxxxx any salary and bonuses which are
earned but unpaid as of the effective date of termination, and such other amounts as may be payable
from qualified plans, nonqualified retirement plans, and deferred compensation plans, which amounts
shall be determined and paid in accordance with the terms of such plans.
Section 3.7 Severance.
| (a) | If either: |
(i) the Company terminates Xxxxxxxxxx’x employment at any time during the Term other than for
Cause pursuant to Section 1.3(d), and other than by reason of death or Disability pursuant to
Section 3.6, or
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(ii) Xxxxxxxxxx resigns during the Term within sixty (60) days following the occurrence,
within six (6) months following a Change in Control as defined in the Company’s 2000 Stock Option
Plan, of either a material reduction in his duties (as per Section 2.2) or a material reduction of
his base compensation (provided Xxxxxxxxxx has given the Company notice of intent to resign based
on such event and at least 30 days opportunity to cure),
Then subject to Xxxxxxxxxx’x continuing obligations under Section 2.4 and Section 2.5 and in
consideration of the execution, delivery and effectiveness of a general release of claims in a
standard form approved by the Company, the Company shall pay to Xxxxxxxxxx a lump sum in cash equal
to one-half (.5) of Xxxxxxxxxx’x then current Base Salary within sixty (60) days after the date of
termination. Xxxxxxxxxx shall also be entitled to receive salary and bonuses which are earned but
unpaid as of the effective date of termination, and such other amounts as may be payable from
qualified plans, nonqualified retirement plans, and deferred compensation plans, which amounts
shall be determined and paid in accordance with the terms of such plans.
(b) If Xxxxxxxxxx’x employment terminates under any circumstance not described in Sections 3.6
or 3.7(a), including the Company’s termination of his employment for Cause, or his resignation
other than pursuant to Section 3.7(a)(ii), or the expiration of the Term, then Xxxxxxxxxx shall
only be entitled to be paid salary and bonuses which are earned but unpaid as of the effective date
of termination, and such other amounts as may be payable from qualified plans, nonqualified
retirement plans, and deferred compensation plans, which amounts shall be determined and paid in
accordance with the terms of such plans.
(c) No severance benefits shall be provided pursuant to this Section 3.7 if Xxxxxxxxxx’x
employment is terminated by reason of the expiration of this Agreement in accordance with Section
1.2.
Section 3.8 Internal Revenue Code Section 409A(a)(1)(B).
(a) To the fullest extent applicable, amounts and other benefits payable under this Agreement
are intended to be exempt from the definition of “nonqualified deferred compensation” under Section
409A of the Internal Revenue Code of 1986, as amended, in accordance with one or more of the
exemptions available under the final Treasury regulations promulgated under Section 409A. In this
regard, each payment under this Agreement that is made in a series of scheduled installments shall
be deemed a separate payment for purposes of Section 409A.
(b) To the extent that any amounts or benefits payable under this Agreement are or become
subject to Section 409A due to a failure to qualify for an exemption from the definition of
nonqualified deferred compensation subject to Section 409A, this Agreement is intended to comply
with the applicable requirements of Section 409A with respect to such amounts or benefits. This
Agreement shall be interpreted and administered to the extent possible in a manner consistent with
the foregoing statement of intent.
(c) In each case where this Agreement provides for the payment of an amount that constitutes
nonqualified deferred compensation under Section 409A to be made within a
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designated period (e.g., within sixty (60) days after the date of termination) and such period
begins and ends in different calendar years, the exact payment date within such range shall be
determined by the Company, in its sole discretion, and Xxxxxxxxxx shall have no right to designate
the year in which the payment shall be made.
(d) Notwithstanding anything in this Agreement or elsewhere to the contrary, if Xxxxxxxxxx is
a “specified employee” (within the meaning of Section 409A(a)(2)(B)(i) of the Code, as determined
by the Company) on the date of his termination, and the Company reasonably determines that any
amount or other benefit payable under this Agreement on account of Xxxxxxxxxx’x separation from
service, within the meaning of Section 409A(a)(2)(A)(i) of the Code, constitutes nonqualified
deferred compensation that will subject Xxxxxxxxxx to “additional tax” under Section 409A(a)(1)(B)
of the Code (together with any interest or penalties imposed with respect to, or in connection
with, such tax, a “409A Tax”) with respect to the payment of such amount or the provision of such
benefit if paid or provided at the time specified in the Agreement, then the payment or provision
thereof shall be postponed to the first business day of the seventh month following the date of
termination or, if earlier, the date of Xxxxxxxxxx’x death. The Company and Xxxxxxxxxx may agree to
take other actions to avoid the imposition of a 409A Tax at such time and in such manner as
permitted under Section 409A.
(e) Xxxxxxxxxx’x date of termination for purposes of determining the date that any payment or
benefit that is treated as nonqualified deferred compensation under Section 409A is to be paid or
provided (or in determining whether an exemption to such treatment applies), and for purposes of
determining whether Xxxxxxxxxx is a “specified employee” on the date of termination, shall be the
date on which Xxxxxxxxxx has incurred a “separation from service” within the meaning of Treasury
Regulation section 1.409A-1(h), or in subsequent IRS guidance under Section 409A.
ARTICLE 4
MISCELLANEOUS PROVISIONS
Section 4.1 Entire Agreement. This Agreement contains the entire Agreement between
the Parties and supersedes all prior oral and written Agreements, understandings, commitments, or
practices between the Parties with respect to the subject matter hereof. Other than as expressly
set forth herein, Xxxxxxxxxx and the Company acknowledge and represent that there are no other
promises, terms, conditions or representations (verbal or written) regarding any matter relevant
hereto. No supplement, modification, or amendment of any term, provision or condition of this
Agreement shall be binding or enforceable unless evidenced in writing and executed by the parties.
The provisions of Sections 2.4, 2.5, and 2.6 shall survive termination of this Agreement.
Section 4.2 Applicable Law. This Agreement shall be governed exclusively by and
construed in accordance with the laws of the State of Texas, notwithstanding choice of law
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provisions thereof; and the venue of any litigation commenced hereunder shall be Houston,
Texas.
Section 4.3 Injunctive Relief. Xxxxxxxxxx acknowledges that his services are of a
special, unique, unusual, extraordinary and intellectual character, which gives them a peculiar
value, the loss of which cannot be reasonably or adequately compensated in damages in an action at
law. If he should breach this Agreement, in addition to its rights and remedies under general law,
the Company shall be entitled to seek equitable relief by way of injunction or otherwise.
Section 4.4 Partial Invalidity. If the application of any provision of this
Agreement, or any section, subsection, subdivision, sentence, clause, phrase, word or portion of
this Agreement should be held invalid or unenforceable, the remaining provisions thereof shall not
be affected thereby, but shall continue to be given full force and effect as if the invalid or
unenforceable provision had not been included herein.
Section 4.5 Notices. Notices given under this Agreement shall be given by registered
or certified mail, postage prepaid, return receipt requested, or by personal delivery to the
respective addresses of the parties. Notices to Xxxxxxxxxx shall be sent to 0 Xxxxx Xxxxx Xxxxxx
Xxxx, Xxxxx Xxxx, XX 00000, Attn: Xxxxx X. Xxxxxxxxxx. Notices to the Company shall be sent to 0
Xxxxx Xxxxx Xxxxxx Xxxx, Xxxxx Xxxx, XX 00000, Attn: Chief Executive Officer. A mailed first-class
notice shall be deemed given two (2) business days after deposit with U.S. Postal Service.
Section 4.6 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which shall constitute one and the same
instrument.
Section 4.7 Assignment. This Agreement may not be assigned or encumbered in any way
by Xxxxxxxxxx. The Company may assign this Agreement to any successor (whether by merger,
consolidation, or purchase of the Company’s stock) to all or a controlling interest in the
Company’s business, in which case this Agreement shall be binding upon and inure to the benefit of
such successor(s) and assign(s).
Section 4.8 Limitation on Waiver. A waiver of any term, provision, or condition of
this Agreement shall not be deemed to be, or constitute a waiver of any other term, provision or
condition herein, whether or not similar. No waiver shall be binding unless in writing and signed
by the waiving party.
Section 4.9 Attorney’s Fees. In the event that any proceeding is commenced involving
the interpretation or enforcement of the provisions of this Agreement, the party prevailing in such
proceeding shall be entitled to recover its reasonable costs and attorneys’ fees.
Section 4.10 Taxes. All payments made pursuant to the provisions of this Agreement
shall be subject to the withholding of applicable taxes.
Section 4.11 Not for the Benefit of Creditors or Third Parties. The provisions of
this Agreement are intended only for the regulation of relations among the parties. This Agreement
is
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not intended for the benefit of creditors of the parties or other third parties and no rights
are granted to creditors of the parties or other third parties under this Agreement.
IN WITNESS WHEREOF, this Agreement is executed on the dates indicated below, effective as of
the Effective Date.
| US DATAWORKS, INC. | ||||||
| By | /s/ Xxxxxxx X. Xxxxx | |||||
| Name | Xxxxxxx X. Xxxxx | |||||
| Title: | Chief Executive Officer | |||||
| Date: | ||||||
| /s/ Xxxxx X. Xxxxxxxxxx | ||||||
| Xxxxx X. Xxxxxxxxxx | ||||||
| Date: 6/12/08 | ||||||
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