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EXHIBIT 10.16
SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT
SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this
"Agreement") entered into as of the 1st day of December, 1999, by and among
XXXXXXX.XXX, INC., a Nevada corporation (the "Company"), and XXXX X. XXXXX
("Xxxxx").
RECITALS
A. The Company and Xxxxx entered into an Employment Agreement dated
January 29, 1999, an Amendment of Employment Agreement dated April 7, 1999 and
an Amended and Restated Employment Agreement dated August 1, 1999 (collectively,
the "Employment Agreement").
B. The Company and Xxxxx desire to amend and restate the Employment
Agreement in its entirety.
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 Xxxxx and Xxxxx hereby
accepts employment with the Company as its Chief Financial Officer, Senior Vice
President, Finance and Accounting and Secretary upon the terms and conditions
hereinafter set forth. Xxxxx'x employment shall not be deemed an "at will"
employment.
2. DUTIES. Xxxxx will serve the Company as its Chief Financial Officer,
Senior Vice President, Finance and Accounting and Secretary and will faithfully
and diligently perform the services and functions relating to such offices and
positions or otherwise reasonably incident to such offices and positions,
provided that all such services and functions will be reasonable and within
Xxxxx'x areas of expertise. Xxxxx will, during the Term (as defined below) of
this Agreement (or any extension thereof), devote his time, attention and skills
and best efforts as a full time employee to the promotion of the business of the
Company.
3. TERM. Xxxxx'x employment shall commence on the 29th day of January,
1999 (the "Effective Date"), and shall continue for a term of three years (the
"Term") unless terminated earlier in accordance with this Agreement. The Term of
this Agreement may be extended by agreement among the Company and Xxxxx.
4. COMPENSATION. As compensation for the services rendered to the
Company under this Agreement, effective December 1, 1999, Xxxxx will be paid a
base salary of $150,000 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
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so determined by the Board of Directors of the Company (the "Board") after a
review of Xxxxx'x performance of this duties hereunder.
5. TERMINATION. This Agreement will terminate upon the occurrence of
any of the following events:
a. The death of Xxxxx;
b. The "Total Disability" (as hereinafter defined) of Xxxxx;
c. Written notice to Xxxxx from the Company of termination for "Cause"
(as hereinafter defined);
d. The voluntary termination of this Agreement by Xxxxx upon 60 days
prior written notice;
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; or
f. 30 days prior written notice to Xxxxx from the Company for any
reason without Cause.
"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 where Xxxxx 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 Xxxxx. If the Company disagrees
with said physician's opinion, the Company may engage at their own expense a
physician to examine the Xxxxx, and Xxxxx hereby consents to such examination
and to waive, if applicable any privilege between the physician and Xxxxx 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 Xxxxx and the Company.
"Cause" means (i) Xxxxx has failed to substantially perform his duties
as reasonably determined by the Board, (ii) Xxxxx engages in poor performance
that is not cured within thirty days after counseling by the Company, (iii)
Xxxxx has failed to comply with the reasonable directives and policies of the
Board, or (iv) Xxxxx breaches his fiduciary duty to the Company or commits any
dishonest, unethical, fraudulent, or felonious act in respect to Xxxxx'x duties
to the Company.
6. STOCK OPTIONS. Subject to the approval of the Board, Xxxxx shall be
granted options to purchase 125,000 shares of the Company's Common Stock (the
"Stock Options") pursuant to the Company's Amended and Restated 1998 Stock
Option Plan (the "Plan"), 50,000 of which Stock Options to vest upon the
Effective Date and be exercisable at $8.00 per share, 25,000 of which Stock
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Options to vest one (1) year from the Effective Date and be exercisable at $8.00
per share, 25,000 of which Stock Options to vest two (2) years from the
Effective Date and be exercisable at $8.00 per share and 25,000 of which Stock
Options to vest according to the Plan (with a grant date of December 1, 1999)
and be exercisable at $9.50 per share.
In the event Xxxxx'x employment is terminated by the Company for any
reason other for "Cause," then all unexercised Options shall be automatically
accelerated so that they will vest and be exercisable as to all shares covered
thereby upon such termination and shall be exercisable for a period of ten years
from the date of grant, notwithstanding anything to the contrary in this Section
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constituting a Change of Control (as defined below), all unexercised Options
shall be automatically accelerated so that they will vest and be exercisable as
to all shares covered thereby immediately and without further action,
notwithstanding anything to the contrary in this Section 6 or other provisions
of this Agreement. A "Change of Control" is a transaction constituting (i) a
sale of all or substantially all of the assets of the Company or (ii) a merger,
acquisition, consolidation or other transaction involving the transfer or
issuance of at least 30% of the outstanding voting stock of the Company. Except
as otherwise specifically set forth herein, the Options shall be subject to the
terms and conditions of the Plan.
7. LOAN. The Company will loan to Xxxxx $20,000 (the "Loan") 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 Xxxxx 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 Xxxxx 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. Commencing on December 1, 1999, the Company will provide
Xxxxx with a monthly car allowance equal to $500. In addition, Xxxxx 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. At reasonable times and upon prior Company approval, Xxxxx shall be
entitled to three weeks paid vacation per calendar year for each year Xxxxx is
employed by the Company during the Term of this Agreement.
9. BUSINESS EXPENSES. Xxxxx 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 Xxxxx for all such
expenses on the presentation by Xxxxx of itemized accounts of such expenditures
in accordance with guidelines set forth by the Company and the Internal Revenue
Service.
10. NON-COMPETITION AND CONFIDENTIALITY.
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a. Non-Competition. The Company and Xxxxx acknowledge and agree
that Xxxxx'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, Xxxxx agrees that during the
Term of this Agreement and for a period of two years after the termination of
this employment by the Company, irrespective of the reason for such termination,
Xxxxx will not (1) 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 (2) compete, directly or indirectly, with the
Company in any way and that Xxxxx 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 Xxxxx'x employment or is engaged
at the time of Xxxxx'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) Xxxxx acknowledges that in Xxxxx'x employment hereunder,
Xxxxx 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. Xxxxx 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, Xxxxx agrees that during the Term and any renewal term of this
Agreement and upon and after leaving the employ of the Company for any reason
whatsoever, Xxxxx 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 Xxxxx as a result of the Xxxxx'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 Xxxxx, the services
rendered by Xxxxx, 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 Xxxxx'x employment under this Agreement for any reason
whatsoever, Xxxxx shall return to the Company all Records (whether furnished by
the Company or prepared by Xxxxx), and Xxxxx shall neither make nor retain any
copies of any of such Records after such termination.
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(3) All inventions and other creations, whether or not
patentable or copyrightable, and all ideas, reports and other creative works,
including, without limitation, computer programs, manuals and related materials,
made or conceived in whole or in part by Xxxxx 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 Xxxxx'x employment by the Company will be disclosed
promptly by Xxxxx to the Company and shall be the sole and exclusive property of
the Company. All copyrightable works created by Xxxxx and covered by this
Section 10b(3) shall be deemed to be works for hire. Xxxxx 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. Enforceability. In the event of a breach by either party to this
Agreement 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 Xxxxx that the Company has violated or breached this Agreement or any claim
that Xxxxx is entitled to any offset or compensation.
To induce the Company to enter into this Agreement, Xxxxx 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 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.
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12. 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.
13. 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
Facsimile: (000) 000-0000
Attention: Chief Executive Officer
If to Xxxxx: Xxxx X. Xxxxx
One Arizona Center
000 X. Xxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
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.
14. 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.
15. 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.
16. 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
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Arizona and the State of Arizona shall have exclusive jurisdiction regarding any
legal actions relating to this Agreement.
17. 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.
18. 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.
19. 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.
[SIGNATURE PAGE FOLLOWS]
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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., a Nevada corporation
By: /s/ Xxxx X. Xxxxxxxx
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Xxxx X. Xxxxxxxx, Chairman/Chief Executive
Officer
XXXXX:
/s/ Xxxx X. Xxxxx
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