EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") by and between, DESIGN
AUTOMATION SYSTEMS, INC. (the "Company"), and XXXXX XXXXX, ("Employee") is
hereby entered into and effective as of the close of business on December 31,
1998. This Agreement hereby supersedes any other employment agreements or
understandings, written or oral, between the parties.
RECITALS
The following statements are true and correct:
As of the date of this Agreement, the Company is engaged primarily in
the business of providing computer system integration, specializing in UNIX
client server architecture and its components, and offering system management
services with a complete software selection.
Employee is employed hereunder by the Company in a confidential
relationship wherein Employee, in the course of Employee's employment with
the Company, will be instrumental in the development of the Company's
business and has and will continue to become familiar with and aware of
information as to the Company's customers, specific manner of doing business,
including the processes, techniques and trade secrets utilized by the
Company, and future plans with respect thereto, all of which has been and
will be established and maintained at great expense to the Company; this
information is a trade secret and constitutes the valuable good will of the
Company.
Therefore, in consideration of the mutual promises, terms, covenants
and conditions set forth herein and the performance of each, it is hereby
agreed as follows:
AGREEMENTS
1. EMPLOYMENT AND DUTIES.
(a) The Company hereby employs Employee as Commission Salesman. As such,
Employee shall have the responsibilities, duties and authority reasonably
accorded to and expected of such position and such other executive duties as
are assigned to him and will report directly to the President. Employee
hereby accepts this employment upon the terms and conditions herein contained
and, subject to Section 1(c), agrees to devote such time, attention and
efforts as are reasonably necessary to promote and further the business of
the Company.
(b) Employee shall adhere to, execute and fulfill all reasonable and
uniformly applied policies established by the Company.
(c) Employee shall not, during the term of Employee's employment
hereunder, be engaged in any other business activity pursued for gain,
profit or other pecuniary advantage if such activity interferes with
Employee's duties and responsibilities hereunder. The foregoing limitations
shall not be construed as prohibiting Employee from making personal
investments in such form or
manner as will neither require Employee's services in the operation or
affairs of the companies or enterprises in which such investments are made
nor violate the terms of Section 3 hereof.
2. COMPENSATION. For all services rendered by Employee, the Company shall
compensate Employee as follows:
(a) COMMISSION BASIS equal to 30% of the gross profit, as defined by
generally accepted accounting principles, and specifically defined as total
sales price, less any related taxes; cost of internal technical time spent on
the project; cost of any products; interest on sales price at 1.5% per month
if not paid within thirty (30) days. The exact amount of the commission due
Employee on each project will be solely determined by the Chief Executive
Officer on a timely basis.
(b) Employee shall receive a $2,800.00 non-recoverable draw against
future commissions.
(c) Employee's medical insurance premiums paid by the Company shall be
considered the same as (b) above.
(d) All payments due Employee are payable twice monthly on the 5th and
20th day of each month.
(e) EXECUTIVE PERQUISITES, BENEFITS AND OTHER COMPENSATION. Employee
shall be entitled to receive additional benefits and compensation from the
Company in such form and to such extent as specified below:
(i) Admittance for participation for Employee under health,
hospitalization, disability, dental, life and other insurance
plans that the Company may have in effect from time to time.
(ii) Reimbursement for all business travel and other out-of-pocket
expenses reasonably incurred by Employee in the performance of
Employee's services pursuant to this Agreement. All reimbursable
expenses shall be appropriately documented in reasonable detail by
Employee upon submission of any request for reimbursement, and in a
format and manner consistent with expense reporting policy of the
Company. Specifically, Employee to receive $100.00 per month for
use of his mobile phone.
(iii) The Company shall provide Employee with other perquisites as may be
available to or deemed appropriate for Employee by the Board of
Directors and participation in all other the Company-wide employee
benefits as available from time to time.
3. NON-COMPETITION AGREEMENT.
(a) Employee will not, during the period of Employee's employment by or
with the Company, and for a period of one (1) year immediately following the
termination of Employee's employment under this Agreement for any reason
other than the expiration of its term or termination
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by the Company without cause, directly or indirectly, for Employee or on
behalf of or in conjunction with any other person, persons, company,
partnership, corporation or business of whatever nature:
(i) call upon any person who is, at that time, an employee of the
Company (including the respective subsidiaries thereof) in any
capacity for the purpose or with the intent of enticing such
employee away from or out of the employ of the Company (including
the respective subsidiaries thereof); or
(ii) call upon any person or entity which is, at that time, or which has
been, within one (1) year prior to that time, a customer of the
Company (including the respective subsidiaries thereof) for the
purpose of soliciting or selling products or services in direct
competition with the Company.
The foregoing covenant shall not be deemed to prohibit Employee from
acquiring as an investment not more than three percent (3%) of the capital
stock of a competing business, whose stock is traded on a national securities
exchange or over-the-counter.
(b) Because of the difficulty of measuring economic losses to the
Company as a result of a breach of the foregoing covenant, and because of the
immediate and irreparable damage that could be caused to the Company for
which they would have no other adequate remedy, Employee agrees that the
foregoing covenant may be enforced by the Company in the event of breach by
Employee, by injunctions and restraining orders.
(c) It is agreed by the parties that the foregoing covenants in this
Section 3 impose a reasonable restraint on Employee in light of the
activities and business of the Company (including their respective
subsidiaries) on the date of the execution of this Agreement; but it is also
the intent of the Company and Employee that such covenants be construed and
enforced in accordance with the changing activities, business and locations
of the Company (including their respective subsidiaries) throughout the term
of this covenant, whether before or after the date of termination of the
employment of Employee. For example, if, during the term of this Agreement,
the Company (including their respective subsidiaries) engage in new and
different activities, enter a new business or establish new locations for its
current activities or business in addition to or other than the activities or
business enumerated under the Recitals above or the locations currently
established therefor, then Employee will be precluded from soliciting the
customers or employees of such new activities or business, except as
specifically provided for herein.
(d) The covenants in this Section 3 are severable and separate, and the
unenforceability of any specific covenant shall not affect the provisions of
any other covenant. Moreover, in the event any court of competent
jurisdiction shall determine that the scope, time or territorial restrictions
set forth are unreasonable, then it is the intention of the parties that such
restrictions be enforced to the fullest extent which the court deems
reasonable, and the Agreement shall thereby be reformed.
4. PLACE OF PERFORMANCE.
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(a) Employee's duties shall be carried out in Houston, Texas, except
for occasional traveling which may be involved in the ordinary course of
Employee's duties.
(b) Notwithstanding the above, if Employee is requested by the Board to
relocate and Employee refuses, such refusal shall not constitute "cause" for
termination of this Agreement under the terms of Section 5(c).
5. TERM; TERMINATION RIGHTS ON TERMINATION. The term of this Agreement
shall begin January 1, 1999 and continue until December 31, 2004 (the "Term"),
and, unless terminated sooner as herein provided or at the end of the Term by
either party, shall continue thereafter on a year-to-year basis on the same
terms and conditions contained herein in effect as of the time of renewal.
This Agreement and Employee's employment may be terminated in any one of the
following ways:
(a) DEATH. The death of Employee shall immediately terminate this
Agreement with no severance compensation due to Employee's estate. In the
event of Employee's death, Employee's estate shall be entitled to all Base
Salary earned through the date of death.
(b) DISABILITY. If, as a result of incapacity due to physical or mental
illness or injury, Employee shall have been absent from full-time duties
hereunder for two (2) consecutive months, then thirty (30) days after
receiving written notice (which notice may occur before or after the end of
such two (2) month period, but which shall not be effective earlier than the
last day of such two (2) month period), the Company may terminate Employee's
employment hereunder provided Employee is unable to resume full-time duties
at the conclusion of such notice period. Also, Employee may terminate
Employee's employment hereunder if Employee's health should become impaired
to an extent that makes the continued performance of Employee's duties
hereunder hazardous to Employee's physical or mental health or life, provided
that Employee shall have furnished the Company with a written statement from
a qualified doctor to such effect and provided, further, that, at the
Company's request made within thirty (30) days of the date of such written
statement, Employee shall submit to an examination by a doctor selected by
the Company who is reasonably acceptable to Employee or Employee's doctor and
such doctor shall have concurred in the conclusion of Employee's doctor. In
the event this Agreement is terminated as a result of Employee's disability,
Employee shall receive from the Company sixty percent (60%) of the Base
Salary at the rate then in effect for whatever time period is remaining under
the Term of this Agreement or for one (1) year, whichever amount is less,
payable at regular pay intervals. The Company may satisfy this obligation
through provision of a disability policy covering Employee that meets the
terms of this Section, with the premiums for such policy being paid by the
Company.
(c) GOOD CAUSE. The Company may terminate the Agreement ten (10) days
after written notice to Employee for good cause, which shall be: (1)
Employee's gross negligence in the performance or intentional nonperformance
(either of which continuing for ten days after receipt of written notice of
need to cure) of any of Employee's material duties and responsibilities
hereunder; (2) Employee's willful, material and irreparable breach of this
Agreement; (3) Employee's willful dishonesty, fraud or misconduct with
respect to the business or affairs of the Company which materially and
adversely affects the operations or reputation of the Company; (4) Employee's
conviction of a felony crime; or (5) chronic alcohol abuse or illegal drug
abuse by Employee. In the
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event of a termination for good cause, as enumerated above, Employee shall
have no right to any severance compensation.
(d) WITHOUT CAUSE. At any time after the commencement of employment,
the Company or Employee may, without cause, terminate this Agreement and
Employee's employment, effective thirty (30) days after written notice is
provided to the Company. Should Employee be terminated by the Company without
cause during the Term, Employee shall receive from the Company, at his
option, either six (6) months Base Salary (at the rate then in effect)
payable in a lump-sum payment due on the effective date of termination or one
year's Base Salary payable from time to time at regular intervals. Further,
any termination without cause by the Company shall operate to invalidate the
terms of Section 3. If Employee resigns or otherwise terminates Employee's
employment without cause pursuant to this Section 5(d), Employee shall
receive no severance compensation and the terms of Section 3 shall be fully
enforceable.
If termination of Employee's employment arises out of the Company's
failure to pay Employee on a timely basis the amounts to which Employee is
entitled under this Agreement or as a result of any other breach of this
Agreement by the Company, pursuant to the provisions of Section 17 below, the
Company shall pay all amounts and damages to which Employee may be entitled
as a result of such breach, including interest thereon and all reasonable
legal fees and expenses and other costs incurred by Employee to enforce
Employee's rights hereunder. Further, none of the provisions of Section 3
shall apply in the event this Agreement is terminated as a result of a breach
by the Company.
6. RETURN OF COMPANY PROPERTY. All records, designs, patents, business
plans, financial statements, manuals, memoranda, lists and other property
delivered to or compiled by Employee by or on behalf of the Company or their
representatives, vendors or customers which pertain to the business of the
Company shall be and remain the property of the Company, as the case may be,
and be subject at all times to their discretion and control. Likewise, all
correspondence, reports, records, charts, advertising materials and other
similar data pertaining to the business, activities or future plans of the
Company which is collected by Employee shall be delivered promptly to the
Company without request by it upon termination of Employee's employment.
7. INVENTIONS. Employee shall disclose promptly to the Company any and all
significant conceptions and ideas for inventions, improvements and valuable
discoveries, whether patentable or not, which are conceived or made by
Employee, solely or jointly with another, during the period of employment,
and which are directly related to the business or activities of the Company
and which Employee conceives as a result of Employee's employment by the
Company. Employee hereby assigns and agrees to assign all Employee's
interests therein to the Company or its nominee. Whenever requested to do so
by the Company, Employee shall execute any and all applications, assignments
or other instruments that the Company shall deem necessary to apply for and
obtain Letters Patent of the United States or any foreign country or to
otherwise protect the Company's interest therein.
8. TRADE SECRETS. Employee agrees that Employee will not, during or after
the Term of this Agreement with the Company, disclose the specific terms of
the Company's relationships or
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agreements with significant vendors or customers or any other significant and
material trade secret of the Company, to any person, firm, partnership,
corporation or business for any reason or purpose whatsoever.
9. INDEMNIFICATION. In the event Employee is made a party to any
threatened, pending or completed action, suit or proceeding, whether civil or
administrative (other than an action by the Company against Employee), by
reason of the fact that Employee is or was performing services under this
Agreement, then the Company shall indemnify Employee against all expenses
(including attorneys' fees), judgments and amounts paid in settlement, as
actually and reasonably incurred by Employee in connection therewith. In the
event that both Employee and the Company are made a party to the same
third-party action, complaint, suit or proceeding, the Company agrees to
engage competent legal representation, and Employee agrees to use the same
representation, provided that if counsel selected by Company shall have a
conflict of interest that prevents such counsel from representing Employee,
Employee may engage separate counsel and the Company shall pay all reasonable
attorneys' fees of such separate counsel. Employee will not be held liable to
the Company for errors or omissions where Employee has not exhibited gross,
willful and wanton negligence and misconduct or performed criminal and
fraudulent acts which materially damage the business of the Company. The
indemnity provisions contained herein shall be deemed to extend to protect
Employee to the maximum extent permitted by law.
10. NO PRIOR AGREEMENTS. Employee hereby represents and warrants to the
Company that the execution of this Agreement by Employee and Employee's
employment by the Company and the performance of Employee's duties hereunder
will not violate or be a breach of any written agreement with a former
employer, client or any other person or entity. Employee agrees to indemnify
the Company for any claim, including, but not limited to, attorneys' fees and
expenses of investigation, by any such third party that such third party may
now have or may hereafter come to have against the Company based upon or
arising out of any written non-competition agreement, invention or secrecy
agreement between Employee and such third party which was in existence as of
or prior to the date of this Agreement. Company agrees to indemnify Employee
for any claim, including, but not limited to, attorneys' fees and expenses of
investigation, by any third party that such third party may now have or may
hereafter come to have against Employee where there was not a written
non-competition agreement, invention or secrecy agreement between Employee
and such third party which was in existence as of or prior to the date of
this Agreement and where Employee committed no illegal or fraudulent act.
11. ASSIGNMENTS; BINDING EFFECT. Employee understands that Employee has
been selected for employment by the Company on the basis of Employee's
personal qualifications, experience and skills. Employee agrees, therefore,
that Employee cannot assign all or any portion of Employee's performance
under this Agreement. Subject to the preceding two (2) sentences, this
Agreement shall be binding upon, inure to the benefit of and be enforceable
by the parties hereto and their respective heirs, legal representatives,
successors and assigns.
12. COMPLETE AGREEMENT. This Agreement is not a promise of future
employment. Employee has no oral representations, understandings or
agreements with the Company or any of its officers, directors or
representatives covering the same subject matter as this Agreement. This
written
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Agreement is the final, complete and exclusive statement and expression of
the agreement between the Company and Employee and of all the terms of this
Agreement, and it cannot be varied, contradicted or supplemented by evidence
of any prior or contemporaneous oral or written agreements. This written
Agreement may not be later modified except by a further writing signed by a
duly authorized officer of the Company and Employee, and no term of this
Agreement may be waived except by writing signed by the party waiving the
benefit of such term.
13. NOTICE. Whenever any notice is required hereunder, it shall be given in
writing addressed as follows:
TO THE COMPANY: Design Automation Systems, Inc.
0000 Xxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
WITH A COPY TO: Xxxxxx X. Xxxxxx
0000 Xxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
TO EMPLOYEE: Xxxxx Xxxxx
000 Xxxx Xxxxx
Xxxxx Xxxx, Xxxxx 00000
Notice shall be deemed given and effective three (3) days after the
deposit in the U.S. mail of a writing addressed as above and sent first class
mail, certified, return receipt requested, or when actually received. Either
party may change the address for notice by notifying the other party of such
change in accordance with this Section 13.
14. SEVERABILITY; HEADINGS. If any portion of this Agreement is held
invalid or inoperative, the other portions of this Agreement shall be deemed
valid and operative and, so far as is reasonable and possible, effect shall
be given to the intent manifested by the portion held invalid or inoperative.
The Section headings herein are for reference purposes only and are not
intended in any way to describe, interpret, define or limit the extent or
intent of the Agreement or of any part hereof.
15. ARBITRATION. Any unresolved dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by first
mediation and then, if necessary, by arbitration, conducted before a panel of
three (3) arbitrators in Houston, Texas, in accordance with the rules of the
American Arbitration Association then in effect. The arbitrators shall not
have the authority to add to, detract from, or modify any provision hereof
nor to award punitive damages to any injured party. The arbitrators shall
have the authority to order back-pay, severance compensation, vesting of
options (or cash compensation in lieu of vesting of options), reimbursement
of costs, including those incurred to enforce this Agreement, and interest
thereon in the event the arbitrators determine that Employee was terminated
without disability or good cause, as defined in Sections 5(b) and 5(c),
respectively, or that the Company has otherwise materially breached this
Agreement. A decision by a majority of the arbitration panel shall be final
and binding. Judgment may be entered on the
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arbitrators' award in any court having jurisdiction. The direct expense of
any arbitration proceeding shall be borne by the Company.
16. GOVERNING LAW. This Agreement shall in all respects be construed
according to the laws of the State of Texas with giving effect to Texas
conflicts laws provisions.
17. COUNTERPARTS. This Agreement may be executed simultaneously in two (2)
or more counterparts, each of which shall be deemed an original and all of
which together shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
COMPANY:
DESIGN AUTOMATION SYSTEMS, INC.
By: /s/ Xxxx X. Xxxx
--------------------------------
Name: Xxxx X. Xxxx
EMPLOYEE:
/s/ Xxxxx Xxxxx
--------------------------------
Xxxxx Xxxxx
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