Exhibit 10.12
EMPLOYMENT AGREEMENT
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This Employment Agreement (this "Agreement") is entered into as of February
20, 2000 ("Effective Date") between XCEL MANAGEMENT, INC., a Utah corporation
with its principal offices located at 0000 Xxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxx
00000 (the "Company"), and DJ (Xxxxxxx) Xxxxxxx, a resident of Washington (the
"Employee").
In consideration of the promises and the terms and conditions set forth in
this Agreement, the parties agree as follows:
1. Position. During the term of this Agreement, the Company will employ
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the Employee, and the Employee will serve the Company in the capacity of Chief
Financial Officer. The Employee will report directly to Xxxx X. Xxxxx, the
Company's Chief Executive Officer and Chairman. The Company acknowledges the
importance of the Employee's involvement in the staffing of account and finance
positions at the Company and agrees that the Employee will be consulted in
connection with the staffing of such positions.
2. Duties. The Employee will perform duties assigned by the Chief
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Executive Officer or Board of Directors as are executive in nature and
consistent with his title.
3. Exclusive Service. The Employee will devote substantially all his
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working time and efforts to the business and affairs of the Company; provided,
however, that during the first ninety (90) days following the Effective Date,
Employee shall not be required to devote substantially all of his working time
to the Company, to permit Employee's winding up of prior business commitments.
The foregoing shall not, however, preclude the Employee: (a) from engaging in
appropriate civic, charitable or religious activities; (b) from devoting a
reasonable amount of time to private investments; (c) from serving on the boards
of directors of other entities, with the consent of the Company, which consent
shall not be unreasonably withheld; or (d) from providing incidental assistance
to family members on matters of family business, so long as the foregoing
activities and service do not conflict with the Employee's responsibilities to
the Company.
4. Term of Agreement.
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4.1 Initial Term. The Company agrees to continue the Employee's
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employment, and the Employee agrees to remain in the employ of the Company,
pursuant to the terms of this Agreement for a period of three (3) years after
the Effective Date, unless the Employee's employment is earlier terminated
pursuant to the provisions of this Agreement.
4.2 Renewal. The term of this Agreement shall be extended
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automatically, without further action of either party, beginning three (3) years
after the Effective Date and on each succeeding anniversary of that date, for
terms of one (1) year, unless on or before ninety (90) days prior to the last
day of the term of this Agreement or any extension thereof, the Company or the
Employee shall notify the other in writing of its intention not to renew this
Agreement, in which case the Employee's employment shall terminate at the end of
the original
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term or any extension thereof. If either party notifies the other of its
intention not to renew this Agreement less than ninety (90) days prior to the
end of the term of this Agreement or any extension thereof, then such
termination shall be effective ninety (90) days from such notice. No notice of
non-renewal may be given by either party after a renewal term has commenced. Any
such renewal shall be upon such terms and conditions set forth in this
Agreement, unless otherwise agreed between the Company and the Employee. The
notice of non-renewal by either party shall in no way constitute a breach of
this Agreement.
5. Compensation and Benefits.
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5.1 Base Salary. The Employee's initial base annual salary will be no
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less than $120,000 per year for the first year of his employment with the
Company. The Employee's salary will be payable as earned in accordance with the
Company's customary payroll practice. The Employee's base salary will be
reviewed by the Chief Executive Officer and/or Board of Directors at least
annually and will increase as follows:
(a) The Employee's base annual salary will be no less than
$145,000 per year effective on the first anniversary of the Effective Date; and
(b) The Employee's base annual salary will be no less than
$175,000 per year effective on the second anniversary of the Effective Date.
5.2 Performance Bonus. Based on the Employee's achievement of annual
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objectives or milestones agreed to by Employee and the Company, the Employee
will be paid cash and granted stock option bonuses, no later than ten days
following the anniversary of the Effective Date, in the amounts agreed to by
Employee and the Company. Prior to each anniversary of the Effective Date, the
Company and Employee shall establish objectives or milestones and the targeted
cash bonus and stock option associated with the achievement of such objectives
or milestones for the next twelve-month period commencing February 20 and ending
February 19. These annual objectives or milestones and the targeted cash bonus
and stock option associated with their achievement will be evidenced by a
written document that is to be attached to this Agreement as an addendum and
made part of this Agreement. The performance bonus criteria for the period
February 20, 2000 through February 19, 2001 is attached hereto as Addendum No.1.
5.3 Additional Benefits. The Employee will be eligible to participate
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in the Company's employee benefit plans of general application, including
without limitation pension and profit-sharing plans, stock option, incentive or
other bonus plans, life, health, disability, accident, vision and dental
insurance programs, paid vacations and sabbatical leave plans, and similar plans
or programs, in accordance with the rules established for individual
participation in any such plan. The Employee will also be entitled to reasonable
holidays and illness days with full pay in accordance with the Company's policy
from time to time in effect. The Employee will be entitled to the same benefits
extended to members of the senior executive staff of the Company, including but
not limited to vacation accrual. The Company shall ensure that the Employee does
not suffer a break in health, vision and dental coverage from the Effective Date
until the date the Employee participates in the Company's health, vision and
dental plans. If the
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Company is unable to extend immediate health, vision and dental coverage to the
Employee as of the Effective Date, the Company shall pay the Employee's COBRA
premiums for the Employee to remain covered by his predecessor's health, vision
and dental plans until such date as the Employee participates in the Company's
health, vision and dental plans.
5.4 Initial Stock Option. On the Effective Date, the Employee shall
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be granted a compensatory stock option for 212,500 shares of the Company's
Common Stock at an exercise price per share of $1.00 for the first 25,000 shares
and $2.00 per share for the next 187,500 shares (the "Initial Option"). The
shares subject to the Initial Option are subject to Rule 144 and are not
registered with the Securities and Exchange Commission. The Initial Option shall
be vested as to the first 25,000 shares on the Effective Date. As to the
remaining 187,500 shares, and provided the Employee continues to be engaged
under this Agreement on each of the vesting dates, the remainder of the Initial
Option shall vest in the following manner: 62,500 shares on the one year
anniversary of the Effective Date (February 20, 2001), and thereafter 1/36 of
the remaining shares subject to the Initial Option each month the Employee
continues to be engaged under this Agreement. The Initial Option shall be fully
vested on the third anniversary of the Effective Date. The Initial Option cannot
be transferred by the Employee except in the event of his death, and must be
exercised by the Employee (or in the event of his death, by his estate or such
other designee) within ten (10) years from the Effective Date or if Employee's
employment terminates before that date, within the later of: (a) ninety (90)
days following termination of the Employee's engagement under this Agreement for
any or no reason and (b) ninety (90) days following the date that the shares
subject to the options are freely tradable by Employee on a public market. Forms
of permissible consideration to purchase the shares of common stock on exercise
of the Initial Option shall be cash, cashless exercise (also called net zero
transaction), recourse promissory note and such other forms of consideration
with which other executives have or are given the opportunity to purchase
shares. In the event that the number of outstanding shares of the Company's
common stock is changed by a stock dividend, recapitalization, stock split or
similar change in the capital structure of the Company without consideration,
then the number of shares subject to the Initial Option will be proportionately
adjusted.
5.5 Relocation Expenses. The Company shall promptly reimburse the
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Employee for all reasonable expenses incurred by the Employee in connection with
moving the household goods and personal effects of the Employee from his present
residence to his new residence, up to a maximum of $4,000.00.
5.6 Legal Expenses. The Company shall promptly reimburse the Employee
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for all reasonable legal expenses incurred by the Employee in connection with
the preparation of this Agreement, up to a maximum of $2,600.
5.7 Expenses. The Company will reimburse the Employee for all
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reasonable and necessary expenses incurred by the Employee in connection with
the Company's business.
5.8 Piggyback Registration of Options and Shares. At any time the
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Company files a Form S-8 registration statement or similar registration
statement with the Securities and Exchange Commission registering its common
stock subject to compensatory awards for public resale, the Company will, on a
best efforts basis and at its sole cost and expense, seek to register
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the options or the common stock awarded to the Employee or underlying the
options awarded to Employee with the Securities and Exchange Commission.
6. Termination.
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6.1 Events of Termination. The Employee's employment with the
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Company shall terminate upon any one of the following:
(a) Thirty (30) days after the date of a written notice sent to
the Employee stating the Company's determination made in good faith that it is
terminating the Employee for "Cause" as defined under Section 6.2 below
("Termination for Cause"); or
(b) Thirty (30) days after the date of a written notice sent to
the Employee stating the Company's determination made in good faith that, due to
a mental or physical incapacity, the Employee has been unable to perform his
duties under this Agreement for a period of not less than six (6) consecutive
months ("Termination for Disability"); or
(c) Upon the Employee's death ("Termination Upon Death"); or
(d) Upon the date of a written notice sent to the Company
stating the Employee's determination made in good faith of "Constructive
Termination" by the Company, as defined under Section 6.3 below ("Constructive
Termination"); or
(e) Thirty (30) days after the date of a notice sent to the
Employee stating that the Company is terminating his employment, without Cause,
which notice can be given by the Company at any time after the Effective Date at
the Company's sole discretion, for any reason or for no reason ("Termination
Without Cause"); or
(f) The date of a notice sent to the Company from the Employee
stating that the Employee is electing to terminate his employment with the
Company ("Voluntary Termination").
6.2 "Cause" Defined. For purposes of this Agreement, "Cause" for the
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Employee's termination will exist at any time after the occurrence of one or
more of the following events:
(a) Any willful act or acts of dishonesty undertaken by the
Employee and intended to result in substantial gain or personal enrichment of
the Employee at the expense of the Company; or
(b) Any willful act of gross misconduct which is materially and
demonstrably injurious to the Company. No act, or failure to act, by the
Employee shall be considered "willful" if done, or omitted to be done, by him in
good faith and in the reasonable belief that his act or omission was in the best
interest of the Company and/or required by applicable law.
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6.3 "Constructive Termination" Defined. "Constructive Termination"
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shall mean:
(a) A material reduction in the Employee's salary or benefits
not agreed to by the Employee;
(b) A material change in the Employee's responsibilities not
agreed to by the Employee;
(c) The Company's failure to comply in any material respect with
any material term of this Agreement after thirty (30) days written notice of the
Employee's claim of such failure; or
(d) A requirement that the Employee relocate to an office that
would increase the Employee's one-way commute distance by more than thirty (30)
miles.
6.4 "Termination Without Cause" shall mean:
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(a) Termination of the Employee's employment with the Company
for any reason other than Cause; or
(b) Termination of the Employee's employment with the Company
for any reason following a Change in Control. "Change in Control" shall mean the
occurrence of any of the following events: (i) a merger or consolidation
involving the Company in which the shareholders of the Company immediately prior
to such merger or consolidation own less that fifty percent (50%) of the voting
power of the surviving corporation; (ii) the sale of all, or substantially all,
of the assets of the Company; (iii) any "person" or "group" (as defined in the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) becoming the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) directly or
indirectly of securities representing more than fifty percent (50%) of the
voting power of the Company then outstanding; or (iv) less than a majority of
the Board of Directors are persons who were either nominated for election by the
Board of Directors or were elected by the Board of Directors.
7. Effect of Termination.
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7. 1 Termination for Cause or Voluntary Termination. In the event of
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any termination of the Employee's employment pursuant to Section 6.1(a) or
Section 6.1(f), the Company shall immediately pay to the Employee the
compensation and benefits accrued and otherwise payable to the Employee under
Section 5 through the date of termination. The Employee's rights under the
Company's benefit plans of general application shall be determined under the
provisions of those plans.
7.2 Termination for Disability. In the event of termination of
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employment pursuant to Section 6.1(b):
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(a) The Company shall immediately pay to the Employee the
compensation and benefits accrued and otherwise payable to the Employee under
Section 5 through the date of termination;
(b) For three (3) months after the termination of the Employee's
employment, the Company shall pay the Employee: (i) his salary under Section
5.1 above at the Employee's then-current salary, less applicable withholding
taxes, payable on the Company's normal payroll dates during that period; (ii)
any accrued but unpaid cash bonus and any earned but ungranted stock option
under Section 5.2 above with respect to achievement of objectives or milestones
during such three (3) month period (that is, the Employee is entitled to receive
the unpaid cash bonus and ungranted stock option if the objective or milestone
is achieved within three (3) months after the effective date of termination),
any such option grant shall provide Employee with a period of at least ninety
(90) days in which Employee may exercise such option for shares that are freely
tradable on a public market; and (C) his COBRA premium for a period of three
months;
(c) The Employee shall receive other benefit payments as
provided in the Company's standard benefit plans, and
(d) The Employee shall become fully and immediately vested in
the entire balance of his Initial Option under Section 5.4 above.
7.3 Termination Upon Death. In the event of termination of employment
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pursuant to Section 6.1(c), all obligations of the Company and the Employee
shall cease, except the Company shall immediately pay to the Employee's estate
the compensation and benefits accrued and otherwise payable to the Employee
under Section 5 through the date of termination, and the Employee shall become
fully and immediately vested in the entire balance of his Initial Option under
Section 5.4 above.
7.4 Constructive Termination or Termination Without Cause. In the
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event of any termination of employment pursuant to Section 6.1(d) or Section
6.1(e):
(a) The Company shall immediately pay to the Employee the
compensation and benefits accrued and otherwise payable to the Employee under
Section 5 through the date of termination;
(b) For three (3) months after the termination of the Employee's
employment, the Company shall pay the Employee: (i) his salary under Section 5.1
above at the Employee's then-current salary, less applicable withholding taxes,
payable on the Company's normal payroll dates during that period; (ii) any
accrued but unpaid cash bonus and any earned but ungranted stock option under
Section 5.2 with respect to achievement of milestones during such three (3)
month period (that is, the Employee is entitled to receive the unpaid cash bonus
and ungranted stock option if the objective or milestone is achieved within
three (3) months after the effective date of termination), any such option grant
shall provide Employee with a period of at least ninety (90) days in which
Employee may exercise such option for shares that are freely tradable on a
public market; and (iii) his COBRA premium for a period of three months.
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(c) If the termination occurs within the first twelve (12)
months following the Effective Date, in addition to the 25,000 shares vested on
the Effective Date, the Employee shall be vested as of the date of termination
of employment in 62,500 of shares of the Initial Option provided in Section 5.4.
If the termination occurs after the first twelve (12) months following the
Effective Date, in addition to the 25,000 shares and the 62,500 shares, the
Employee shall be vested as of the date of employment termination in an
additional 20,833 shares of the Initial Option provided in Section 5.4, and the
portion of such Initial Option that is unvested as of the date of employment
termination shall terminate immediately upon such date. In addition, in such
termination event, the Employee shall have twelve (12) months from the date of
such termination of employment to exercise all of the options described in this
paragraph 7.4(c).
(d) If the termination occurs for any reason after a Change in
Control, then in addition to the foregoing benefits, the remainder of the
Initial Option provided in Section 5.4 shall, as of the date of employment
termination, be immediately vested in full and shall remain exercisable for the
periods specified in Section 5.4; provided, that if the total amount of the
benefits available to the Employee under this Section 7.4, either alone or
together with other payments which the Employee has the right to receive from
the Company, would constitute a "parachute payment" as defined in Section 280G
of the Internal Revenue Code (the "Code"), then the Employee will receive
whichever provides him with the greater economic benefit: (i) the total amount
of such benefits; or (ii) the largest amount that would result in no portion of
such benefits being subject to the excise tax imposed by Section 4999 of the
Code. The determination of which of the foregoing would provide the greatest
economic benefit to the Employee shall be made by an independent accounting firm
the fees for which determination shall be paid by the Company.
8. Nondisclosure. The Employee acknowledges that during the course of his
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employment by the Company, the Company will provide, and the Employee will
acquire, knowledge of special and unique value with respect to the Company's
business operations, including, by way of illustration, the Company's existing
and contemplated product line, trade secrets, compilations, business and
financial methods or practices, plans, hardware and software technology
products, systems, programs, projects and know-how, pricing, cost of providing
service and equipment, operating and maintenance costs, marketing and selling
techniques and information, customer data, customer names and addresses,
customer service requirements, supplier lists, and confidential information
relating to the Company's policies, employees, and/or business strategy (all of
such information herein referenced to as the "Confidential Information"). The
Employee recognizes that the business of the Company is dependent upon
Confidential Information and that the protection of the Confidential Information
against unauthorized disclosure or use is of critical importance to the Company.
The Employee agrees that, without prior written authorization of the Chief
Executive Officer of the Company, the Employee will not, during his employment,
divulge to any person, directly or indirectly, except to the Company or its
officers and agents or as reasonably required in connection with the Employee's
duties on behalf of the Company, or make any independent use of, except on
behalf of the Company, any of the Company's Confidential Information, whether
acquired by the Employee during his employment or not. The Employee further
agrees that the Employee will not, at any time after
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his employment has ended, use or divulge to any person directly or indirectly
any Confidential Information, or use any Confidential Information in subsequent
employment of any nature. Confidential Information does not include information
which (i) was in the public domain or publicly known or available prior to the
date of disclosure, (ii) becomes generally available to the public other than as
a result of a disclosure by the Employee, or (iii) becomes available to the
Employee on a nonconfidential basis from a source other than any party named in
this Agreement, or their respective advisor, provided that such sources are not
known by the Employee to be bound by a confidentiality agreement with or
obligation of secrecy to any party with respect to such information. If the
Employee is subpoenaed, or is otherwise required by law to testify concerning
Confidential Information, the Employee agrees to notify the Company upon receipt
of a subpoena, or upon belief that such testimony shall be required. This
nondisclosure provision shall survive the termination of this Agreement for any
reason. The Employee acknowledges that the Company would not employ the Employee
but for his covenants and promises contained in this Section 8.
9. Return of Documents. The Employee agrees that if the Employee's
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relationship with the Company is terminated (for whatever reason), the Employee
shall not remove or take with the Employee, but will leave with the Company or
return to Company, all Confidential Information, in whatever form, including but
not limited to records, files, data, memoranda, reports, customer lists,
customer information, product information, price lists, documents and other
information, in whatever form (including on computer disk), and any and all
copies thereof, or if such items are not on the premises of the Company, the
Employee agrees to return such items immediately upon the Employee's termination
or the request of the Company. The Employee acknowledges that all such items are
and remain the property of the Company.
10. No Interference or Solicitation. The Employee agrees that during his
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employment, and for a period of six (6) months following the termination of his
employment (for whatever reason), that neither he nor any individual,
partner(s), limited partnership, corporation or other entity or business with
which he is in any way affiliated, including, without limitation, any partner,
limited partner, director, officer, shareholder, employee, or agent of any such
entity or business, will: (i) request, induce or attempt to influence, directly
or indirectly, any employee of the Company to terminate his or her employment
with the Company; or (ii) employ any person who as of the date of this Agreement
was, or after such date is or was, an employee of the Company. The Employee
further agrees that during the period beginning with the commencement of the
Employee's engagement with the Company and ending six (6) months after the
termination of the Employee's employment with the Company (for whatever reason),
he shall not, directly or indirectly, as an employee, agent, consultant,
stockholder, director, partner or in any other individual or representative
capacity of the Company or of any other person, entity or business, solicit or
encourage any present or future customer, supplier, contractor, partner or
investor of the Company to terminate or otherwise alter his, his or its
relationship with the Company. This provision shall survive the termination of
this Agreement for any reason.
11. Non-Competition. In consideration of the numerous mutual promises
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contained in the Agreement between the Company and the Employee, including,
without limitation, those involving Confidential Information, and in order to
protect the Company's Confidential Information and to reduce the likelihood of
irreparable damage which would occur in the event
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such information is provided to or used by a competitor of the Company, the
Employee agrees that during his employment and for an additional period of six
(6) months immediately following the termination of his employment, whether
voluntary or involuntary (the "Noncompetition Term"), not to, directly or
indirectly, either through any form of ownership or as a director, officer,
principal, agent, employee, employer, adviser, consultant, shareholder, partner,
or in any individual or representative capacity whatsoever, without the prior
written consent of the Company (which consent may be withheld in its sole
discretion): (i) compete for or solicit application service provider ("ASP")
business for or on behalf of any person or business entity with a place of
business in the United States or Canada; (ii) own, operate, participate in,
undertake any employment with or have any interest in any entity with a place of
business in the United States or Canada in the business of marketing and selling
ASP services to persons or business entities, except owning publicly traded
stock for investment purposes only in which the Employee owns less than 5%;
(iii) compete for or solicit ASP services from any customer of the Company (or
its successors by merger); or (iv) use in any competition, solicitation, or
marketing effort any Confidential Information of the Company. The Company
acknowledges and agrees that these non-competition covenants shall apply only to
business entities and individuals that provide applications to customers through
the Internet or World Wide Web which applications such business entity or
individual did not develop. The Company further acknowledges and agrees that the
non-competition covenants are not applicable to business entities or individuals
that sell applications via the Internet or World Wide Web which such business
entity or individual developed, nor shall such covenants extend to internet
hosting or other internet service provider functions other than ASP services as
described in this Section 11.
If, during any period within the Noncompetition Term, the Employee is
not in compliance with the terms of this Section 11, the Company shall be
entitled to, among other remedies, compliance by the Employee with the terms of
this Section 11 for an additional period equal to the period of such
noncompliance. For purposes of this Agreement, the term "Noncompetition Term"
shall also include this additional period. The Employee hereby acknowledges that
the geographic boundaries, scope of prohibited activities and the time duration
of the provisions of this Section 11 are reasonable and are no broader than are
necessary to protect the legitimate business interests of the Company.
This noncompetition provision shall survive the termination of the
Employee's employment and can only be revoked or modified by a writing signed by
the parties which specifically states an intent to revoke or modify this
provision. The Employee acknowledges that the Company would not employ him but
for his covenants or promises contained in this Section 11.
12. Reformation of Section 11. The Company and the Employee agree and
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stipulate that the agreements and covenants not to compete contained in Section
11 hereof are fair and reasonable in light of all of the facts and circumstances
of the relationship between the Employee and the Company; however, the Employee
and the Company are aware that in certain circumstances courts have refused to
enforce certain agreements not to compete. Therefore, in furtherance of, and not
in derogation of the provisions of Section 11, the Company and the Employee
agree that in the event a court should decline to enforce the provisions of
Section 11, that Section 11 shall be deemed to be modified or reformed to
restrict the Employee's
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competition with the Company or its affiliates to the maximum extent, as to
time, geography and business scope, which the court shall find enforceable;
provided, however, in no event shall the provisions of Section 11 be deemed to
be more restrictive to the Employee than those contained herein.
13. Injunctive Relief. The Employee acknowledges and agrees that the
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agreements and covenants contained in this Agreement are essential to protect
the Confidential Information, business, and goodwill of the Company. The
Employee further acknowledges that the breach of any of the agreements contained
herein, including, without limitation, the confidentiality covenants specified
in Section 8, the non-solicitation covenants specified in Section 10, and the
non-competition covenants contained in Section 11, will give rise to irreparable
injury to the Company, inadequately compensable in damages. Accordingly, the
Company shall be entitled to injunctive relief to prevent or cure breaches or
threatened breaches of the provisions of this Agreement and to enforce specific
performance of the terms and provisions hereof in any court of competent
jurisdiction. The Employee further acknowledges and agrees that in the event of
the termination of the Employee's employment with the Company, whether voluntary
or involuntary, that the enforcement of a remedy hereunder by way of injunction
shall not prevent the Employee from earning a reasonable livelihood. The
Employee further acknowledges and agrees that the covenants contained herein are
necessary for the protection of the Company's legitimate business interests and
are reasonable in scope and content.
14. Miscellaneous
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14.1 Indemnification and Errors and Omissions Insurance. The Company
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agrees to indemnify and defend the Employee on terms no less favorable than any
indemnification agreement the Company has at any time during the term of this
Agreement with an executive or officer of the Company. Any errors and omissions
insurance which the Company holds that applies to any officer or director of the
Company shall be applicable to Employee.
14.2 Arbitration. The Employee and the Company shall submit to
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mandatory binding arbitration in any controversy or claim arising out of, or
relating to, this Agreement or any breach hereof. Such arbitration shall be
conducted in accordance with the commercial arbitration rules of the American
Arbitration Association in effect at that time, and judgment upon the
determination or award rendered by the arbitrator may be entered in any court
having jurisdiction thereof. The arbitrator is hereby authorized to award to the
prevailing party the costs (including reasonable attorneys' fees and expenses)
of any such arbitration.
14.3 Severability. If any provision of this Agreement shall be found
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by any arbitrator or court of competent jurisdiction to be invalid or
unenforceable, then the parties hereby waive such provision to the extent that
it is found to be invalid or unenforceable and to the extent that to do so would
not deprive one of the parties of the substantial benefit of its bargain. Such
provision shall, to the extent allowable by law and the preceding sentence, be
modified by such arbitrator or court so that it becomes enforceable and, as
modified, shall be enforced as any other provision hereof, all the other
provisions continuing in full force and effect.
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14.4 No Waiver. The failure by either party at any time to require
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performance or compliance by the other of any of its obligations or agreements
shall in no way affect the right to require such performance or compliance at
any time thereafter. The waiver by either party of a breach of any provision
hereof shall not be taken or held to be a waiver of any preceding or succeeding
breach of such provision or as a waiver of the provision itself. No waiver of
any kind shall be effective or binding, unless it is in writing and is signed by
the party against whom such waiver is sought to be enforced.
14.5 Assignment. This Agreement and all rights hereunder are personal
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to the Employee and may not be transferred or assigned by the Employee at any
time. The Company may assign its rights, together with its obligations
hereunder, to any parent, subsidiary, affiliate or successor, or in connection
with any sale, transfer or other disposition of all or substantially all of its
business and assets, provided, however, that any such assignee assumes the
Company's obligations hereunder.
14.6 Withholding. All sums payable to the Employee hereunder shall be
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reduced by all federal, state, local and other withholding and similar taxes and
payments required by applicable law.
14.7 Entire Agreement. This Agreement constitutes the entire and only
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agreement between the parties relating to employment of the Employee with the
Company, and this Agreement supersedes and cancels any and all previous
contracts, arrangements or understandings with respect thereto.
14.8 Amendment. This Agreement may be amended, modified, superseded,
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canceled, renewed or extended only by an agreement in writing executed by both
parties hereto.
14.9 Notices. All notices and other communications required or
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permitted under this Agreement shall be in writing and hand delivered, sent by
telecopier, sent by registered first class mail, postage pre-paid, or sent by
nationally recognized express courier service. Such notices and other
communications shall be effective upon receipt if hand delivered or sent by
telecopier, five (5) days after mailing if sent by mail, and one (1) day after
dispatch if sent by express courier, to the following addresses, or such other
addresses as any party shall notify the other parties:
If to the Company:
XCEL MANAGEMENT, INC.
Attn: Xxxx X. Xxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
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If to the Employee:
XX Xxxxxxx
0000-000xx XX X-000
Xxxxxxxx, XX 00000
14.10 Binding Nature. This Agreement shall be binding upon, and inure
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to the benefit of, the successors and personal representatives of the respective
parties hereto.
14.11 Headings. The headings contained in this Agreement are for
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reference purposes only and shall in no way affect the meaning or interpretation
of this Agreement. In this Agreement, the singular includes the plural, the
plural included the singular, the masculine gender includes both male and female
referents, and the word "or" is used in the inclusive sense.
14.12 Counterparts. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed to be an original but all of which,
taken together, constitute one and the same agreement.
14.13 Governing Law. This Agreement and the rights and obligations of
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the parties hereto shall be construed in accordance with the laws of the State
of Washington, without giving effect to the principles of conflict of laws.
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14.14 Attorneys' Fees. In the event of any claim, demand or suit
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arising out of or with respect to this Agreement, the prevailing party shall be
entitled to reasonable costs and attorneys' fees, including any such costs and
fees upon appeal.
IN WITNESS WHEREOF, the Company and the Employee have executed this
Agreement as of the date first above written.
"THE COMPANY" "EMPLOYEE"
XCEL MANAGEMENT, INC.
/s/ Xxxx X. Xxxxx /s/ XX Xxxxxxx
By:________________________________ _____________________________
XXXX X. XXXXX DJ (XXXXXXX) XXXXXXX
Chief Executive Officer & Chairman
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ADDENDUM NO. 1
TO
EMPLOYMENT AGREEMENT
OF
XX XXXXXXX
PERFORMANCE BONUS CRITERIA FOR PERIOD FROM FEBRUARY 20, 2000
THROUGH FEBRUARY 19, 2001 UNDER PARAGRAPH 5.2 OF EMPLOYMENT
AGREEMENT
1. The Employee shall be entitled to the following bonus upon the
Company's receipt of a total of $25.0 Million in investment capital between
February 20, 2000 and February 19, 2001 (including, but not limited to, capital
from transactions with GKM): $100,000 in cash, plus a stock option to purchase
100,000 shares of the Company's common stock at $2.00 per share;
2. The Employee shall be entitled to the following bonus if, between
February 20, 2000 and August 20, 2001, the Company is listed on the Nasdaq
National Market: a stock option for 25,000 shares of the Company's common stock
at $1.00 per share.
Each of the options granted under this Addendum is not transferable by the
Employee except in the event of the Employee's death, is fully vested upon
grant, and must be exercised within ten (10) years of the date of grant, or if
Employee's employment terminates before that date, within the later of (a)
ninety (90) days following termination of the Employee's engagement under the
Employment Agreement for any or no reason and (b) ninety (90) days following the
date that the shares subject to the options are freely tradable by Employee on a
public market. Forms of permissible consideration to purchase the shares on
exercise of the options granted under this Addendum shall be cash, cashless
exercise (also called net zero transaction), recourse promissory note and such
other forms of consideration with which other executives have or are given the
opportunity to purchase shares. In the event that the number of outstanding
shares of the Company's common stock is changed by a stock dividend,
recapitalization, stock split or similar change in the capital structure of the
Company without consideration, then the number of shares subject to the option
granted under this Addendum will be proportionately adjusted.
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