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AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EMPLOYMENT AGREEMENT entered into as of the ___
day of May, 1999, by and among XXXXXXX.XXX, INC., a Nevada corporation (the
"Company") and XXXXXX X.
XXXXXX ("Xxxxxx").
RECITALS
A. The Company and Xxxxxx entered into an Employment Agreement dated
February 23, 1999 (the "Employment Agreement") whereby the Company agreed to
employ Xxxxxx and Xxxxxx accepted employment with the Company.
B. The Company is contemplating an initial public offering of its
common stock and the Company and Xxxxxx desire to amend and restate the
Employment Agreement in connection therewith.
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree that the Employment Agreement is hereby amended and restated as follows:
1. EMPLOYMENT. The Company hereby employs Xxxxxx and Xxxxxx hereby
accepts employment with the Company as its Vice President of Strategy and
Operations upon the terms and conditions hereinafter set forth. Xxxxxx'x
employment shall not be deemed an "at will" employment.
2. DUTIES. Xxxxxx will serve the Company as its Vice President of
Strategy and Operations and will faithfully and diligently perform the services
and functions relating to such office and position or otherwise reasonably
incident to such office and position, provided that all such services and
functions will be reasonable and within Xxxxxx'x areas of expertise. Xxxxxx'x
specific duties shall include those related to (i) organizational development
and growth management, (ii) strategic operations planning and execution, (iii)
strategy review and execution and (iv) such other duties as the Company may
reasonably direct. Xxxxxx will, during the term of this Agreement (or any
extension thereof), devote his time, attention, skills and best efforts as a
full-time employee to the promotion of the business of the Company.
3. TERM. This Agreement and Xxxxxx'x employment shall commence on the
8th day of March, 1999 (the "Effective Date"), and shall continue for a term of
three years (the "Initial Term") unless terminated earlier in accordance with
this Agreement. The term of this Agreement may be extended by mutual agreement
among the Company and Xxxxxx.
4. COMPENSATION. As compensation for the services rendered to the
Company under this Agreement commencing on the Effective Date, Xxxxxx will be
paid a base salary of $80,000 per year, payable in accordance with the then
current payroll policies of the Company or as otherwise agreed to by the parties
(the "Salary"). At any time and from time to time, the Salary may be increased
if so determined by the Board of Directors of the Company (the "Board") after a
review of Xxxxxx'x performance of his duties hereunder.
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5. TERMINATION. This Agreement shall terminate upon the occurrence of
any of the following events:
a. The death of Xxxxxx;
b. The "Total Disability" (as hereinafter defined) of
Xxxxxx;
c. Written notice to Xxxxxx from the Company of
termination for "Cause" (as hereinafter defined);
d. The voluntary termination of this Agreement by Xxxxxx
upon 30 days prior written notice; or
e. The later of three years from the Effective Date of
this Agreement or the date to which this Agreement is
extended in accordance with Section 3 above.
"Total Disability" means physical or mental disability, or both,
determined to be (or reasonably expected to be, based upon then available
medical information) of not less than twelve months duration or more where
Xxxxxx is unable to reasonably perform the duties he was performing for the
Company immediately prior to such disability. The determination shall rest upon
the opinion of the physician regularly attending Xxxxxx. If the Company
disagrees with said physician's opinion, the Company may engage at their own
expense a physician to examine the Xxxxxx, and Xxxxxx hereby consents to such
examination and to waive, if applicable any privilege between the physician and
Xxxxxx that may arise as a result of said examination. If after conferring, the
two physicians cannot concur on a final opinion, they shall choose a third
consulting physician whose opinion shall control. The expense of the third
consulting physician shall be borne equally by the Xxxxxx and the Company.
"Cause" means (i) Xxxxxx has failed to substantially perform his duties
as reasonably determined by the Board, (ii) Xxxxxx engages in poor performance
that is not cured within thirty days after counseling by the Company, (iii)
Xxxxxx has failed to comply with the reasonable directives and policies of the
Board, or (iv) Xxxxxx breaches his fiduciary duty to the Company or commits any
dishonest, unethical, fraudulent, or felonious act in respect to Xxxxxx'x duties
to the Company.
6. STOCK OPTIONS. Subject to the approval of the Board, Xxxxxx shall be
granted options to purchase 100,000 shares of the Company's common stock (the
"Options") pursuant to the Company's Amended and Restated 1998 Stock Option Plan
(the "Plan"), 60,000 of which Options shall be exercisable at $8.00 per share
(the "$8.00 Options") and 40,000 of which Options shall be exercisable at $10.00
per share (the "$10.00 Options"). The Options shall vest according to the
following schedule:
a. 50,000 of the $8.00 Options shall vest and be
exercisable on the Effective Date.
b. The remaining 10,000 of the $8.00 Options and all of
the $10.00 Options shall vest and be exercisable in
accordance with the Plan.
In the event Xxxxxx'x employment is terminated for any reason other for "Cause,"
then all unexercised Options shall vest immediately upon such termination and
shall be exercisable for a period of ten years from
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March 8, 1999. Notwithstanding anything to the contrary contained herein, the
Options shall be subject to the terms and conditions of the Plan.
Xxxxxx acknowledges that the Company is in the process of completing an
initial public offering of its securities (the "IPO") and that as part of the
IPO Xxxxxx may be required to lock up the shares of common stock underlying the
Options for a period not to exceed six months from the effective date of the
IPO. Accordingly, Xxxxxx agrees to execute any agreement necessary to lock up
the shares of common stock underlying the Options.
7. LOAN. The Company will loan to Xxxxxx $20,000 (the "Loan"), to be
disbursed on the Effective Date. The Loan shall be evidenced by a promissory
note (the "Note") with interest payable at 10% per annum and with all principal
and accrued but unpaid interest due one year from the Effective Date, if not
sooner paid. The Company agrees that if Xxxxxx has been employed by the Company
for six continuous months from the Effective Date, 50% of the principal balance
and accrued but unpaid interest shall be forgiven and, if Xxxxxx has been
employed by the Company for twelve continuous months, 100% of the remaining
principal and accrued but unpaid interest shall be forgiven by the Company and
the Note evidencing the Loan shall be canceled and deemed paid in full.
8. BENEFITS. Xxxxxx shall be entitled to participate in any Company
benefits as they become available, if at all, and which are normal and customary
Company benefits for executives of the Company. In addition, Xxxxxx shall be
entitled to the following benefits:
(a) full coverage health insurance to be paid by the
Company with a maximum premium not to exceed $350 per
month;
(b) at reasonable times and upon prior Company approval,
Xxxxxx shall be entitled to three weeks paid vacation
per annum for each year employed during the term of
this Agreement;
(c) the Company will provide Xxxxxx with a moving allowance
of $15,000 to cover moving and related expenses in
conjunction with relocation from his current residence
to Phoenix, Arizona;
(d) the Company will pay the temporary housing incurred by
Xxxxxx for a term not to exceed 90 days from the
Effective Date; and
(e) the Company will reimburse Xxxxxx for airfare and
ground transportation costs incurred by either Xxxxxx
or his spouse (if Xxxxxx remains in Phoenix over the
weekend) in commuting from Chicago to Phoenix for a
period not to exceed 90 days from the Effective Date.
9. EXPENSES. Xxxxxx is authorized to incur reasonable expenses for
promoting the business of the Company, including expenses for entertainment,
travel and similar items. The Company shall reimburse Xxxxxx for all such
expenses on the presentation by Xxxxxx of itemized accounts of such expenditures
in accordance with guidelines set forth by the Company and the Internal Revenue
Service.
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10. NON-COMPETITION AND CONFIDENTIALITY.
a. Non-Competition. The Company and Xxxxxx acknowledge and
agree that Xxxxxx'x services are of a special and unusual character which have a
unique value to the Company, the loss of which cannot be adequately compensated
by damages in an action at law and if used in competition with the Company,
could cause serious harm to the Company. Accordingly, Xxxxxx agrees that during
the term of this Agreement and either (a) for a period of two years in the event
Xxxxxx'x employment is terminated for "Cause" or (b) for a period of six months
in the event Xxxxxx'x employment is terminated without "Cause," Xxxxxx will not
(i) enter into any agreement with or directly or indirectly solicit or attempt
to solicit any employee or other representatives of the Company for the purpose
of causing them to leave the Company to take employment with any other business
entity, or (ii) compete, directly or indirectly, with the Company in any way and
that Xxxxxx will not act as an officer, director, employee, consultant,
shareholder, lender or agent of any entity engaged in any business of the same
nature as, or in competition with, the business in which the Company is now
engaged, was engaged during Xxxxxx'x employment or is engaged at the time of
Xxxxxx'x termination of employment, except for the ownership of less than 5% of
the outstanding capital stock of a publicly traded company.
b. Confidentiality.
(1) Xxxxxx acknowledges that in Xxxxxx'x employment
hereunder, Xxxxxx will be making use of, acquiring and adding to the Company's
trade secrets and its confidential and proprietary information of a special and
unique nature and value relating to such matters as, but not limited to, the
Company's business operations, internal structure, financial affairs, programs,
software systems, procedures, manuals, confidential reports, lists of clients
and prospective clients and sales and marketing methods, as well as the amount,
nature and type of services, equipment and methods used and preferred by the
Company's clients and the fees paid by such clients, all of which shall be
deemed to be confidential information. Xxxxxx acknowledges that such
confidential information has been and will continue to be of central importance
to the business of the Company and that disclosure of it to or its use by others
could cause substantial loss to the Company. In consideration of employment by
the Company, Xxxxxx agrees that during the Initial Term and any renewal term of
this Agreement and upon and after leaving the employ of the Company for any
reason whatsoever, Xxxxxx shall not, for any purpose whatsoever, directly or
indirectly, divulge or disclose to any person or entity any of such confidential
information which was obtained by Xxxxxx as a result of the Xxxxxx'x employment
with the Company or any trade secrets of the Company, but shall hold all of the
same confidential and inviolate.
(2) All contracts, agreements, financial books,
records, instruments and documents; client lists; memoranda; data; reports;
programs; software, tapes; Rolodexes; telephone and address books; letters;
research; card decks; listings; programming; and any other instruments, records
or documents relating or pertaining to clients serviced by the Company or
Xxxxxx, the services rendered by Xxxxxx, or the business of the Company
(collectively, the "Records") shall at all times be and remain the property of
the Company. Upon termination of this Agreement and Xxxxxx'x employment under
this Agreement for any reason whatsoever, Xxxxxx shall return to the Company all
Records (whether furnished by the Company or prepared by Xxxxxx), and Xxxxxx
shall neither make nor retain any copies of any of such Records after such
termination.
(3) All inventions and other creations, whether or not
patentable or copyrightable, and all ideas, reports and other creative works,
including, without limitation, computer
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programs, manuals and related materials, made or conceived in whole or in part
by Xxxxxx while employed by the Company and within one year thereafter, which
relate in any manner whatsoever to the business, existing or proposed, of the
Company or any other business or research or development effort in which the
Company or any of its subsidiaries or affiliates engages during Xxxxxx'x
employment by the Company will be disclosed promptly by Xxxxxx to the Company
and shall be the sole and exclusive property of the Company. All copyrightable
works created by Xxxxxx and covered by this Section 10b(3) shall be deemed to be
works for hire. Xxxxxx shall cooperate with the Company in patenting or
copyrighting all such inventions, ideas, reports and other creative works, shall
execute, acknowledge, seal and deliver all documents tendered by the Company to
evidence its ownership thereof through the world, and shall cooperate with the
Company obtaining, defending and enforcing its rights therein.
c. Certain Claims Upon Termination. Xxxxxx understands that if
within one year prior to the termination of Xxxxxx'x employment with the
Company, Xxxxxx has either (i) committed an act of theft, dishonesty, gross
dereliction of duty, fraud, embezzlement, misappropriation, or breach of
fiduciary duty against the Company or any other act of comparable misconduct
against the Company; or (ii) breached any of his obligations under this
Agreement, then the Company shall have the right to purchase any or all shares
of Common Stock of the Company owned by Xxxxxx at the time of such termination
for a purchase price equal to the amount that Xxxxxx paid for such shares,
together with interest thereon at a rate of 10% per annum. If the Company
desires to exercise such right, it shall notify Xxxxxx within 60 days after the
date of such termination and Xxxxxx shall tender the shares being purchased by
the Company at the time and place designated in such notice from the Company
upon receipt of the purchase price for such shares. If Xxxxxx fails to tender
such shares, the shares shall be deemed to be canceled as of the date the
Company tenders payment of the purchase price thereof.
d. Enforceability. In the event of the breach of the covenants
contained in this Section 10, it is understood that damages will be difficult to
ascertain and the Company may petition a court of law or equity for injunctive
relief in addition to any other relief which the Company may have under the law,
this Agreement or any other agreement executed in connection herewith. In
connection with the bringing of any legal or equitable action for the
enforcement of this Agreement, the Company shall be entitled to recover, whether
the Company seeks equitable relief, and regardless of what relief is afforded,
such reasonable attorneys' fees and expenses as the Company may incur in
prosecution of the Company's claim for breach hereof.
It is hereby agreed that the provisions of this Section 10 are separate
and independent from the other provisions of this Agreement, that these
provisions are specifically enforceable by the Company notwithstanding any claim
by Xxxxxx that the Company has violated or breached this Agreement or any claim
that Xxxxxx is entitled to any offset or compensation.
To induce the Company to enter into this Agreement, Xxxxxx represents
and warrants to the Company that Section 10 of this Agreement is enforceable by
the Company in accordance with its terms.
The parties hereto agree that to the extent that any provision or
portion of Section 10 of this Agreement shall be held, found or deemed to be
unreasonable, unlawful or unenforceable by a court of competent jurisdiction,
then any such provision or portion thereof shall be deemed to be modified to the
extent necessary in order that any such provision or portion thereof shall be
legally enforceable to the fullest extent permitted by applicable law; and the
parties hereto do further agree that any court of competent jurisdiction shall,
and the parties hereto do hereby expressly authorize, request and empower any
court of
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competent jurisdiction to, enforce any such provision or portion thereof or to
modify any such provision or portion thereof in order that any such provision or
portion thereof shall be enforced by such court to the fullest extent permitted
by applicable law.
11. WAIVER OF BREACH. The waiver by any party hereto of a breach of any
provision of this Agreement will not operate or be construed as a waiver of any
subsequent breach by any party.
12. NOTICES. Any notices, consents, demands, request, approvals and
other communications to be given under this Agreement by either party to the
other will be deemed to have been duly given if given in writing and personally
delivered, faxed or if sent by mail, registered or certified, postage prepaid
with return receipt requested, as follows:
If to the Company: xxxxxxx.xxx, inc.
One Arizona Center
000 X. Xxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
If to Xxxxxx: Xxxxxx X. Xxxxxx
One Arizona Center
000 X. Xxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Notices delivered personally will be deemed communicated as of actual
receipt, notices by fax shall be deemed delivered when such notices are faxed to
recipient's fax number and notices by mail shall be deemed delivered when
mailed.
13. ENTIRE AGREEMENT. This Agreement and the agreements contemplated
hereby constitute the entire agreement of the parties regarding the subject
matter hereof, and supersede all prior agreements and understanding, both
written and oral, among the parties, or any of them, with respect to the subject
matter hereof.
14. SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future laws effective during
this Agreement, such provision will be fully severable and this Agreement will
be construed and enforced as if such illegal, invalid or unenforceable provision
never comprised a part hereof; and the remaining provisions hereof will remain
in full force and effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom. Furthermore, in lieu of
such illegal, invalid or unenforceable provision, there will be added
automatically, as part of this Agreement, a provision as similar in its terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
15. GOVERNING LAW. To the extent permitted by applicable law, this
Agreement and the rights and obligations of the parties will be governed by and
construed and enforced exclusively in accordance with the substantive laws (but
not the rules governing conflicts of laws) of the State of Arizona and the State
of Arizona shall have exclusive jurisdiction regarding any legal actions
relating to this Agreement.
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16. CAPTIONS. The captions in this Agreement are for convenience of
reference only and will not limit or otherwise affect any of the terms or
provisions hereof.
17. GENDER AND NUMBER. When the context requires, the gender of all
words used herein will include the masculine, feminine and neuter, and the
number of all words will include the singular and plural.
18. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which will
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
THE COMPANY:
xxxxxxx.xxx, inc.
By:
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Xxxxxxx X. Xxxxxx, Chief Operating Officer
XXXXXX:
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