EXHIBIT 10.7
AGREEMENT
THIS AGREEMENT (the "Agreement") is entered into on December 31, 2002 by
and between, on the one hand, Nextera Enterprises Inc., a Delaware corporation
("the Company") and Lexecon, Inc., an Illinois corporation ("Lexecon")
(collectively, the "Group") and, on the other hand, Xxxxxx X. Xxxxxxx ("Xx.
Xxxxxxx").
WHEREAS, Xx. Xxxxxxx and Lexecon are parties to a Confidentiality and
Proprietary Rights Agreement (the "Confidentiality Agreement") and Xx. Xxxxxxx,
the Company and Lexecon are parties to a Contribution Agreement (the
"Contribution Agreement") both dated as of December 31, 1998, pursuant to which
Xx. Xxxxxxx made certain covenants to the Company and Lexecon, regarding
confidentiality, non-competition and other matters;
WHEREAS, the non-competition covenant and certain related covenants in the
Contribution Agreement will expire on December 31, 2002;
WHEREAS, Xx. Xxxxxxx is a key service provider to the Group and the Group
deems Xx. Xxxxxxx'x service and covenants to be material and significant to the
Group's success; and
WHEREAS, Xx. Xxxxxxx and the Group have agreed to the terms of his
services relationship with the Group, for the period of time and subject to the
provisions as set forth in this Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
1. Confidential Information and Proprietary Rights.
(a) Access to Confidential Information. Xx. Xxxxxxx'x services previously
rendered to Lexecon have placed him in a position of confidence and trust with
the Group and have allowed and may continue to allow him access to Confidential
Information. As used herein, "Confidential Information" shall mean information
and compilations of information relating to the business of the Group including,
but not limited to, information regarding any trade secrets, proprietary
knowledge, operating procedures, finances, financial condition, organization,
employees, customer lists, client lists, suppliers, distributors, agents, and
other personnel, business activities, budgets, strategic or financial plans,
objectives, marketing plans, documents, products, services, price and price
lists, operating and training materials, data bases and analyses and all other
documents relating thereto or strategies of the Group. However, Confidential
Information will not include any information which is or becomes available in
the public domain or which is or becomes known to the public or the industry by
any means other than disclosure by Xx. Xxxxxxx or Xxxxxx X. Xxxxxxx ("Xx.
Xxxxxxx").
(b) Covenant as to Nondisclosure or Use of Confidential Information. Xx.
Xxxxxxx agrees that he will maintain the Confidential Information in strictest
confidence and, unless required to do so by legal process (such as subpoena),
not disclose to any individual or business enterprise of any nature, or use for
his own personal use or financial gain, whether individually or on behalf of
another person, firm, corporation or entity, any Confidential Information.
Without limiting the generality of the foregoing, Xx. Xxxxxxx agrees that the
Group's agreements with other persons may include agreements that impose
obligations or restrictions regarding the confidential nature of work pursuant
to such an agreement. Xx. Xxxxxxx agrees to be bound by all such obligations and
restrictions made known to him, and to do whatever is reasonably necessary to
satisfy such obligations of the Group. In the event Xx. Xxxxxxx is required by
legal process to disclose any Confidential Information, he shall give prompt
notice thereof to the Company to allow the Company to object to such process,
obtain a protective order or take other reasonable action.
(c) Assignment of Inventions. To the maximum extent permitted by law, Xx.
Xxxxxxx shall assign and transfer to the Company his entire right, title and
interest in and to all inventions including, but not limited to, designs,
discoveries, inventions, improvements, formulas, ideas, devices, techniques,
processes, writings, trade secrets, trademarks, trademark applications, patents,
copyrights and all other intellectual property rights including but not limited
to notes, records, reports, software, plans, memoranda and other tangible
information relating to such intellectual property, whether or not subject to
protection under applicable laws, which he solely or jointly with others
conceived, made or acquired at any time during his employment with the Group and
which relate in any manner to the actual or demonstrably anticipated business,
products, processes, work, operations, research and development or other
activities of the Group, or result from any work performed by Xx. Xxxxxxx for or
on behalf of the Group ("Inventions"), but excluding those developed in
connection with his activities at The University of Chicago (or another
institution of higher learning). All Inventions shall be the sole property of
the Company.
The Group acknowledges that Xx. Xxxxxxx has (and in the future shall be
entitled to) write books and articles for publication under his own name and is
(and shall be) entitled to receive and retain any royalties therefrom, so long
as such books or articles do not disclose or exploit any confidential or
proprietary information of the Group or its clients.
(d) Disclosure of Inventions, Patents, Copyrights and Other Rights. Xx.
Xxxxxxx agrees:
(i) Upon request, to promptly execute a written assignment of title
to the Company for any Invention required to be assigned by this Section 1
("Assignable Invention") and he will preserve any such Assignable Invention as
Confidential Information.
(ii) Upon request and at the Company's expense, to assist the
Company or its nominee in every reasonable way to obtain for the Company's or
its nominee's benefit, patents, copyrights, mask work rights and other statutory
rights ("Statutory Rights") for such Assignable Inventions in any and all
countries, which inventions shall be and remain the sole and exclusive property
of the Company or its nominee whether or not patented, copyrighted or the
subject of a mask work right. Xx. Xxxxxxx shall execute such papers and perform
such lawful acts as the Company deems reasonably necessary to exercise all
rights, title and interest in such Statutory Rights.
(iii) To execute and deliver to the Company or its nominee upon
request all documents, including applications for and assignments of Statutory
Rights to be issued therefor, as the Company reasonably determines are necessary
or desirable to apply for and obtain Statutory Rights on such assignable
inventions in any and all countries and/or to protect the interest of the
Company or its nominee in Statutory Rights and to vest title thereto in the
Company or its nominee.
(e) Return of Records, Equipment and Confidential Information. Upon
request by the Company, Xx. Xxxxxxx shall promptly return to the Company: (i)
all Confidential Information and all documents, records, procedures, books,
notebooks, and any other documentation in any form whatsoever (including, but
not limited to, written, audio, video or electronic) containing any information
pertaining to the Group which includes Confidential Information, including any
and all copies of such documentation then in his possession or control
regardless of whether such documentation was prepared or compiled by Xx.
Xxxxxxx, the Group, employees of the Group, representatives, agents, or
independent contractors, and (ii) all equipment or tangible personal property
entrusted to Xx. Xxxxxxx by the Group. Xx. Xxxxxxx will not retain any original,
copy, description, document, data base or other form of media that contains or
relates to any Confidential Information whether produced by him or otherwise.
Without limiting the generality of the foregoing, upon request Xx. Xxxxxxx shall
permanently delete all Confidential Information from all computers, disks,
CD-ROMS, tapes, and other media owned or used by or accessible to him, other
than from any of the foregoing owned, used or controlled by the Group. Xx.
Xxxxxxx acknowledges that all Confidential Information and all such
documentation, copies of such documentation, equipment, and tangible personal
property are and shall at all times remain the sole and exclusive property of
the Company.
(f) Post-Employment Cooperation. Xx. Xxxxxxx shall cooperate and assist
the Company at the Company's reasonable request and expense in any dispute,
controversy, or litigation to which the Company
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or Lexecon is a party (but not any litigation between the Company or Lexecon and
Xx. Xxxxxxx or Xx. Xxxxxxx) and with respect to which he obtained knowledge
while employed by the Company or any of its predecessors, affiliates,
successors, or assigns, including, but not limited to, his participation in any
court or arbitration proceedings, giving of testimony, signing of affidavits, or
such other personal cooperation as counsel for the Company shall request.
2. Non-Competition Covenants.
(a) The non-competition covenants set forth in Sections 2(f) and (g) below
(the "CNC") shall apply from the date of this Agreement through January 15,
2003. In addition, (1) the Company shall have the option to extend the CNC from
January 16, 2003 through July 15, 2003 by complying with Section 2(b)(i) below
(the "First CNC Option"), (2) if the Company so extends the CNC through July 15,
2003, then the Company shall have the further option to extend the CNC from July
16, 2003 through January 15, 2004 by complying with Section 2(b)(ii) below (the
"Second CNC Option") and (3) if the Company so extends the CNC through January
15, 2004, then the Company shall have the further option to extend the CNC from
January 16, 2004 through December 31, 2008 by complying with Section 2(c) below
(the "Third CNC Option" and, together with the First CNC Option and the Second
CNC Option, the "CNC Options").
(b) (i) To exercise the First CNC Option, the Company must pay to Xx.
Xxxxxxx $2.5 million in immediately available funds on or before January 15,
2003. If the Company fails to make such payment to Xx. Xxxxxxx on or before
January 15, 2003, then Xx. Xxxxxxx'x employment, the CNC and the CNC Options
shall automatically terminate on February 14, 2003 (or such later date as Xx.
Xxxxxxx may specify in writing, determined in his sole and absolute discretion),
and Xx. Xxxxxxx shall receive the Base Compensation and Bonus Payments set forth
in Section 5(i) which would be due to him if he resigned for Good Reason on such
termination date; provided that Xx. Xxxxxxx shall not have the right to receive
the $2.5 million (plus interest) described in this Section 2(b)(i). If on or
prior to February 14, 2003 (or such later date specified by Xx. Xxxxxxx), the
Company pays such $2.5 million to Xx. Xxxxxxx (plus interest at 8% per annum,
compounded quarterly, from January 15, 2003), then (x) the Company shall be
deemed to have exercised the First CNC Option, (y) the CNC shall be in effect
from January 16, 2003 through July 15, 2003, and (z) Xx. Xxxxxxx'x employment
shall continue on and subject to the terms of this Agreement. Notwithstanding
the foregoing, the Company shall not be required to make such payment (and Xx.
Xxxxxxx shall be bound by the CNC through July 15, 2003) if either (1) he has
resigned from his employment with the Group without Good Reason prior to January
15, 2003 or (2) he has breached the CNC prior to January 15, 2003, the Company
has given Xx. Xxxxxxx written notice of such breach and Xx. Xxxxxxx has failed
to cure such breach promptly following receipt of the Company's notice.
(ii) To exercise the Second CNC Option, the Company must have
exercised the First CNC Option pursuant to Section 2(b)(i) and, in addition, the
Company (A) must pay to Xx. Xxxxxxx $1.7 million (plus interest at the rate of
5% per annum from January 15, 2003 through the date of payment) in immediately
available funds on or before July 15, 2003 and (B) must not have failed to pay
$800,000 (plus interest as set forth below) in one or more installments (as
required below) on or before the Deadline. The "Deadline" for payment of the
$800,000 to Xx. Xxxxxxx shall be as follows: (x) an amount equal to 50% of the
total collections by the Group on the Receivable (as defined below) through
January 8, 2003 shall be paid to Xx. Xxxxxxx on January 15, 2003, (y) an amount
equal to 50% of each collection on the Receivable from January 9, 2003 through
December 23, 2003 shall be paid to Xx. Xxxxxxx within 5 business days after
receipt of such collection by the Group (plus interest at the rate of 3.5% per
annum from January 15, 2003 through the applicable Deadline) and (z) any portion
of the $800,000 which has not been paid to Xx. Xxxxxxx by December 31, 2003
shall be paid to him on that date (plus interest at the rate of 3.5% per annum
from January 15, 2003 through December 31, 2003). Any such amount which is not
paid to Xx. Xxxxxxx by the applicable Deadline shall accrue interest at 8% per
annum, compounded quarterly, from the Deadline to the date of payment to Xx.
Xxxxxxx.
The Company's obligation to pay the $800,000 (plus interest) to Xx.
Xxxxxxx by December 31, 2003 is not conditioned on or subject to the collection
or collectibility of the Receivable. The "Receivable" means the accounts
receivables of Lexecon set forth in Schedule A, the aggregate amount of which
shall be deemed not to exceed $1.6 million. All collections received by the
Group with respect to the
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services giving rise to the Receivable shall be considered collections of the
Receivable. The Group shall take no action to compromise or forgive the
Receivable without Xx. Xxxxxxx'x consent, which may not be unreasonably
withheld.
If the Company fails to pay to Xx. Xxxxxxx on or before July 15,
2003 the amounts described in clause (A) above, or fails to pay any portion of
the $800,000 (plus interest) as and when due as described in clause (B) above,
then Xx. Xxxxxxx'x employment, the CNC and the CNC Options shall automatically
terminate five days after the date on which such payment should have been made
(or such later date as Xx. Xxxxxxx may specify in writing, determined in his
sole and absolute discretion), and Xx. Xxxxxxx shall receive the Base
Compensation and Bonus Payments set forth in Section 5(i) which would be due to
him if he resigned for Good Reason on such termination date; provided that Xx.
Xxxxxxx shall not have the right to receive either the $1.7 million (plus
interest) described in this Section 2(b)(ii) or so much of the $800,000 (plus
interest) not theretofore paid to him. If the Company has satisfied clause (B)
above and, on or prior to July 20, 2003 (or such later date specified by Xx.
Xxxxxxx), pays the amount specified in clause (A) to Xx. Xxxxxxx (plus interest
at 8% per annum, compounded quarterly, from July 15, 2003), then (x) the Company
shall be deemed to have exercised the Second CNC Option, (y) the CNC shall be in
effect from July 16, 2003 through January 15, 2004, and (z) Xx. Xxxxxxx'x
employment shall continue on and subject to the terms of this Agreement.
Notwithstanding the foregoing, if the First CNC Option is exercised, the Company
shall not be required to pay either the $1.7 million (plus interest) described
in this Section 2(b)(ii) or so much of the $800,000 (plus interest) not
theretofore paid to him (and Xx. Xxxxxxx shall be bound by the CNC through
January 15, 2004) if either (1) he has resigned from his employment with the
Group without Good Reason prior to July 15, 2003 or (2) he has breached the CNC
prior to July 15, 2003, the Company has given Xx. Xxxxxxx written notice of such
breach and Xx. Xxxxxxx has failed to cure such breach promptly following receipt
of the Company's notice.
(c) To exercise the Third CNC Option, the Company must have exercised the
First and Second CNC Options pursuant to Section 2(b)(i) and (ii) and, in
addition, the Company must deposit $10 million in immediately available funds on
or before January 15, 2004 into an account (the "Bank Account") at a bank or
investment firm designated by Xx. Xxxxxxx and consented to by the Company (such
consent not to be unreasonably withheld) (the "Bank"). Xx. Xxxxxxx shall arrange
for the Company to have on-line access to and to receive upon request at any
time from the Bank any and all information concerning the Bank Account
(including information as to the balance) at all times. The Bank Account (and
the funds on deposit therein) shall be the property of Xx. Xxxxxxx at all times,
and Xx. Xxxxxxx can withdraw any and all funds from the Bank Account without the
consent of the Company, Lexecon or any other person, provided that Xx. Xxxxxxx
agrees that his withdrawal rights are subject to the provisions of Section 2(i).
Xx. Xxxxxxx agrees to obtain a waiver from his spouse of any beneficial interest
in the Bank Account. Xx. Xxxxxxx shall have the exclusive right to direct the
investment of all funds in the Bank Account, but shall limit such investments to
high-grade debt securities. However, Xx. Xxxxxxx shall only have the right to
withdraw funds from the Bank Account, and agrees (subject to the further
withdrawal rights set forth in this Section 2 and Section 5) to only withdraw
funds from the Bank Account, on the following terms:
(1) Xx. Xxxxxxx shall have the right to withdraw any and all
interest or other return earned on the funds in the Bank
Account at any time and from time to time, provided that
the balance of the Bank Account is not thereby reduced
below the required principal amounts set forth in this
Subparagraph (c).
(2) On or after July 15, 2004, Xx. Xxxxxxx shall have the
right to reduce the balance in the Bank Account to a
minimum of $8.75 million;
(3) On or after January 15, 2005, Xx. Xxxxxxx shall have the
right to reduce the balance in the Bank Account to a
minimum of $7.5 million;
(4) On or after April 15, 2005, Xx. Xxxxxxx shall have the
right to reduce the balance in the Bank Account to a
minimum of $6.875 million;
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(5) On or after July 15, 2005, Xx. Xxxxxxx shall have the
right to reduce the balance in the Bank Account to a
minimum of $6.25 million;
(6) On or after October 15, 2005, Xx. Xxxxxxx shall have the
right to reduce the balance in the Bank Account to a
minimum of $5.625 million;
(7) On or after January 15, 2006, Xx. Xxxxxxx shall have the
right to reduce the balance in the Bank Account to a
minimum of $5 million; and
(8) Beginning on February 15, 2006, and on or after the 15th
day of each month thereafter, Xx. Xxxxxxx shall have the
right to reduce the balance in the Bank Account to the
then applicable Minimum Balance. For purposes of this
Agreement, "Minimum Balance" shall be equal to
$4,791,667 on February 15, 2006, and shall be reduced by
$208,333 on or after the 15th day of each month
thereafter, until the Minimum Balance is reduced to zero
on and after January 15, 2008.
(9) Xx. Xxxxxxx (or his estate or guardian) shall have the
right to withdraw and retain the entire balance in the
Bank Account upon (A) the termination of Xx. Xxxxxxx'x
employment due to his death, (B) the Company's
termination of Xx. Xxxxxxx'x employment without Cause,
or (C) Xx. Xxxxxxx'x termination of his employment for
Good Reason.
(10) In the event of the termination of Xx. Xxxxxxx'x
employment due to Disability, Xx. Xxxxxxx (or his estate
or guardian) shall have the right to withdraw from the
Bank Account any amounts that he is otherwise entitled
to withdraw under the above provisions based on the
period of his employment through the date of termination
(calculated on a daily pro rata basis through the date
of termination), plus the amount that he would otherwise
have been able to withdraw from the Bank Account under
the above provisions for one additional year (calculated
on a daily pro rata basis through the first anniversary
of the date of termination).
For purposes of computing the minimum balance required to be maintained in the
Bank Account in clauses (1) - (8) above, any amounts withdrawn by Xx. Xxxxxxx
pursuant to Section 5 below shall be deemed still deposited in the Bank Account,
with the effect that Xx. Xxxxxxx shall be permitted to withdraw pursuant to
clauses (1) - (8) the same amount that he would have been entitled to withdraw
had he not withdrawn any amounts pursuant to Section 5.
(d) If the Company fails to deposit the $10 million in the Bank Account on
or before January 15, 2004, then Xx. Xxxxxxx'x employment, the CNC and the Third
CNC Option shall automatically terminate on February 14, 2004 (or such later
date as Xx. Xxxxxxx may specify in writing, determined in his sole and absolute
discretion), and Xx. Xxxxxxx shall receive the Base Compensation and Bonus
Payments set forth in Section 5(i) which would be due to him if he resigned for
Good Reason on such termination date; provided that Xx. Xxxxxxx shall not have
the right to receive such $10 million payment.; provided that, if the Company,
deposits such $10 million in the Bank Account (plus interest at 8% per annum,
compounded quarterly, from January 15, 2004) on or prior to February 14, 2004
(or such later date specified by Xx. Xxxxxxx), then (x) the Company shall be
deemed to have exercised the Third CNC Option, (y) the CNC shall be in effect
from January 16, 2004 through December 31, 2008, and (z) Xx. Xxxxxxx'x
employment shall continue on and subject to the terms of this Agreement.
Notwithstanding the foregoing, the Company shall not be required to make such
payment (and Xx. Xxxxxxx shall be bound by the CNC through January 15, 2005) if
either (1) he has resigned from his employment with the Group without Good
Reason prior to January 15, 2004 or (2) he has breached the CNC prior to January
15, 2004, the Company has given Xx. Xxxxxxx written notice of such breach and
Xx. Xxxxxxx has failed to cure such breach promptly following receipt of the
Company's notice.
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(e) Notwithstanding the foregoing, any attempt by the Company, Lexecon or
any of their affiliates to seize, attach, levy or place any legal restriction on
the Bank Account (other than actions to enforce (1) the restrictions set forth
in Section 2(c) and (2) the Company's right to recover the funds in the Bank
Account as expressly provided for herein) shall be an automatic default under
this Agreement, with the result that Xx. Xxxxxxx shall have the option to
terminate his employment and the CNC upon delivery of written notice to the
Company (such termination to be effective immediately upon delivery of such
notice). Any such termination shall constitute Good Reason under this Agreement
and shall entitle Xx. Xxxxxxx to the payments set forth in Section 5(i), and Xx.
Xxxxxxx shall also have the immediate right to withdraw and retain all funds
from the Bank Account as provided for in Section 2(c)(9) above. However, Xx.
Xxxxxxx shall not have the right to exercise his rights and remedies under this
Section 2(e) if he is in breach of the CNC at the time. The Company shall
cooperate and assist Xx. Xxxxxxx to defeat any attempt by a creditor of the
Company (or Company affiliate) to seize, attach, levy or place any legal
restriction on the Bank Account.
(f) Xx. Xxxxxxx acknowledges and agrees that he has technical expertise
associated with the business of Lexecon and is well known in the industry. In
addition, Xx. Xxxxxxx has valuable business contacts with clients and potential
clients of Lexecon and with professionals in the industry. Xx. Xxxxxxx further
acknowledges and agrees that in the event of a breach of the covenants contained
in this Subparagraph (f), the Company will be deprived of the benefits it has
bargained for pursuant to this Agreement; and that the Company would not have
entered into this Agreement but for the covenants contained in this Subparagraph
(f). During any period in which the CNC is in effect, Xx. Xxxxxxx will not,
without the Company's prior written consent, directly or indirectly on Xx.
Xxxxxxx'x own behalf or on behalf of any other person, firm or entity (i) engage
in; (ii) own or control any interest in (except as a passive investor of less
than 5% of the publicly traded stock of a publicly held company); (iii) act as a
director, officer, manager, employee, trustee, agent, partner, joint venturer,
participant, consultant of or be obligated to, or be connected in any advisory,
business or ownership capacity (except as a passive investor of less than 5% of
the publicly traded stock of a publicly held company) with; (iv) lend credit or
money for the purpose of the establishing or operating; or (v) allow Xx.
Xxxxxxx'x name or reputation to be used by, any firm, corporation, partnership,
trust or other business enterprise directly or indirectly engaged in, any
business that is competitive with (A) the existing business of the Group in any
geographic territory within which the business of the Group has been conducted,
or (B) any business of Lexecon that is conducted during the period that Xx.
Xxxxxxx is employed by Lexecon pursuant to this Agreement in any geographic
territory within which such business of Lexecon is conducted during the period
of this Agreement; provided that Xx. Xxxxxxx'x collaborative work on behalf of
Lexecon with other consulting firms in connection with a Lexecon matter, in
accordance with past practice, shall not be considered a violation of the CNC.
After fulfillment of his commitments as described in Section 3 below, Xx.
Xxxxxxx shall devote all of his business time and attention to the Group
consistent with past practices; provided that Xx. Xxxxxxx shall not be deemed in
breach hereof solely as the result of a reasonable reduction in the number of
billable hours he incurs.
(g) During any period in which the CNC is in effect, Xx. Xxxxxxx shall not
directly or indirectly, individually, or together with, or through any other
person, firm, corporation, or entity: (i) in any manner disparage the Group or
its employees or affiliates so as to discourage any person or entity which is or
has been a customer or supplier of the Group from continuing its business
relationship with the Group, (ii) approach, counsel, or attempt to induce any
person who is then in the employ of or an independent contractor of the Group,
to leave their employ or engagement, or employ, engage or attempt to employ or
engage any such person, or (iii) aid or counsel any other person, firm,
corporation, or entity to do any of the above.
(h) Xx. Xxxxxxx may contact or solicit clients, customers, employees and
other service providers of the Group or their affiliates following the
termination or lapse of the CNC hereunder (and doing so shall not constitute a
breach of Section 1 of this Agreement, so long as such individuals or
organizations are known to him through personal or work experience).
(i) Xx. Xxxxxxx shall give both the Bank and the Company at least 15 days'
written notice in the form attached as Exhibit 1 (with such changes as may be
reasonably requested by the Bank) prior to withdrawing any funds from the Bank
Account. The Bank Account shall provide that no funds may be withdrawn from the
Bank Account unless Xx. Xxxxxxx provides a letter to the Bank, in the form
attached as
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Exhibit 2 (with such changes as may be reasonably requested by the Bank) with
the attachments provided for in such letter. However, if the Bank receives such
notice and letter, it shall release to Xx. Xxxxxxx the amount of funds, at the
time, specified in such notice, and the Bank shall exercise no discretion with
respect to the release of such funds.
3. Commercial Endeavors. Other than his present academic positions at The
University of Chicago (or academic positions at another university or
institution of higher education consistent with his present academic positions
at the University of Chicago), Xx. Xxxxxxx will not, without the Company's prior
written consent, devote more than incidental amounts of time to any commercial
endeavor at any time when he is bound by the provisions of Sections 2 and 5 of
this Agreement.
4. Remedies. Xx. Xxxxxxx has carefully considered the nature and extent of
the restrictions imposed by the covenants in this Agreement and agrees that they
are fair and reasonable and such restrictions will not prevent him from earning
a livelihood (assuming the Company makes all payments contemplated by this
Agreement). In view of the position of confidence and trust which Xx. Xxxxxxx
has enjoyed with Company and his relationship with the customers, suppliers and
employees of the Company, and recognizing the access to Confidential Information
which he has had and the fact that his covenants herein constitute material
provisions of this Agreement, Xx. Xxxxxxx expressly acknowledges that the
restrictive covenants set forth in this Agreement are necessary in order to
protect and maintain the proprietary interests, goodwill and other legitimate
business interests of the Company. Xx. Xxxxxxx further acknowledges that (i) it
would be difficult to calculate damages to the Company from any breach of his
obligations under this Agreement, (ii) injury to the Company from any such
breach would be irreparable and impossible to measure, and (iii) the remedy at
law for any breach or threatened breach of this Agreement would therefore be an
inadequate remedy and, accordingly, the Company shall, in addition to all other
available remedies (including without limitation seeking such damages as it can
show it has sustained by reason of such breach and/or the exercise of all other
rights it has under this Agreement), be entitled to injunctive and other similar
equitable remedies without the necessity of showing actual damages or posting
bond.
5. Services.
(a)
(i) Services performed by Xx. Xxxxxxx for the Group after the date
of this Agreement shall be as an employee. During the term of this Agreement,
Xx. Xxxxxxx shall be paid by the Group annual base compensation equal to (A) (1)
the number of hours worked by Xx. Xxxxxxx and billed to Company or Lexecon
clients times (2) Lexecon's hourly billing rate for Xx. Xxxxxxx'x work (which
shall be set by Xx. Xxxxxxx, with notice to Lexecon, consistent with past
practice), plus (B) amounts for client development efforts up to the maximum
provided for in Section 5(b) (collectively, "Base Compensation"). Such Base
Compensation shall be paid no later than the end of the month following the
month in which such hours are worked (the Base Compensation's "Monthly Payment
Date") consistent with past practice at the same times as salary payments made
to other Lexecon professionals. Xx. Xxxxxxx authorizes the Group to deduct and
withhold from all compensation to be paid to Xx. Xxxxxxx any and all sums
required to be deducted or withheld by the Group pursuant to the provisions of
any federal, state, or local law, regulation, ruling or ordinance, including,
but not limited to, income tax withholding and payroll taxes.
(ii) So long as Xx. Xxxxxxx is employed with the Group, Xx. Xxxxxxx
will be entitled to such benefits as are provided to the executive employees of
Lexecon (vacation, medical, etc.), in accordance with and subject to the
Lexecon's policies and guidelines as in effect from time to time. The parties
acknowledge that although Xx. Xxxxxxx does not currently receive health benefits
from the Group, he has the right to elect to receive those benefits at any time
to the same extent that they are then available to other executive employees of
the Lexecon.
(b) During the term of this Agreement, Xx. Xxxxxxx, together with Xx.
Xxxxxxx (to the extent Xx. Xxxxxxx is at such relevant time performing services
for the Group under a substantially similar agreement), shall manage the Chicago
Office in accordance with the shared goal of Xx. Xxxxxxx, Xx. Xxxxxxx
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and the Company to maximize the operating income of the Chicago Office. Xx.
Xxxxxxx shall also assist in the operation of the Company and its affiliates as
reasonably requested from time to time by the Board of Directors of the Company
with the goal of increasing the operating income of the Company and its
affiliates as a whole. Xx. Xxxxxxx'x duties shall include non-billable client
development efforts on behalf of the Group, for which he will be paid at
Lexecon's then hourly billing rate for Xx. Xxxxxxx, up to a maximum of 25 hours
per year. "Chicago Office" shall mean the existing Chicago office of Lexecon,
but shall not include Lexecon's offices in the Cambridge, Massachusetts area or
any future office opened by the Company, Lexecon or their affiliates (unless the
primary purpose of such office is to provide additional professional service or
support for business generated by Xx. Xxxxxxx and/or Xx. Xxxxxxx). Xx. Xxxxxxx
and Xx. Xxxxxxx shall recommend the base compensation for the employees in the
Chicago Office, subject to the approval of the Compensation Committee of the
Board of Directors of the Company (the "Compensation Committee").
(c) The Group shall maintain a bonus pool for the Chicago Office (the
"Bonus Pool"), calculated annually based on a calendar year. Xx. Xxxxxxx,
together with Xx. Xxxxxxx (to the extent Xx. Xxxxxxx is at such relevant time
performing services for the Group under a substantially similar agreement),
shall have the authority to allocate the Bonus Pool among themselves and the
other service providers in the Chicago Office, subject to the review and
approval of the Compensation Committee; provided, however, that the Compensation
Committee shall not prohibit an allocation of the Bonus Pool to Xx. Xxxxxxx and
Xx. Xxxxxxx which is the same as their 2001 Percentages (as defined below) of
the Bonus Pool without Xx. Xxxxxxx'x consent. Notwithstanding the foregoing, Xx.
Xxxxxxx acknowledges that it may be in the mutual financial benefit of the
parties for the Company to hire one or more additional senior executives for the
Chicago Office in an effort to increase the operating income of said office and,
in said event, it may be necessary to provide to said senior executive(s) a
percentage of the Bonus Pool and to decrease Xx. Xxxxxxx'x percentage of the
Bonus Pool to reflect such hiring and the additional operating income
anticipated to be generated for the Chicago Office by such action. Xx. Xxxxxxx
agrees in any such events to act in good faith and not to unreasonably withhold
his consent to a request by the Company to reduce Xx. Xxxxxxx'x Bonus Pool
percentage below the 2001 Percentage. (Any reference in this Agreement to "Xx.
Xxxxxxx'x Percentage" shall mean his 2001 Percentage as modified as provided
above.) The "2001 Percentages" shall mean 36% for Xx. Xxxxxxx and 36% for Xx.
Xxxxxxx. The Bonus Pool shall equal:
(i) for 2002, the sum of the following:
(1) 43% of the first $18.1 million in pre-bonus operating
income for the Chicago Office;
(2) 100% of the next $870,000 (the "2002 Additional Amount")
in pre-bonus operating income for the Chicago Office
above $18.1 million; and
(3) 43% of any additional pre-bonus operating income for the
Chicago Office.
(ii) for 2003, the sum of the following:
(1) 43% of the first $18.1 million in pre-bonus operating
income for the Chicago Office;
(2) 100% of the next dollars of pre-bonus operating income
for the Chicago Office above $18.1 million, up to the
sum of the following amounts: (x) $400,000 (the "2003
Additional Amount") plus (y) one-half of any portion of
the 2002 Additional Amount not included in the Bonus
Pool in 2002; and
(3) 43% of any additional pre-bonus operating income for the
Chicago Office:
(iii) for 2004, the sum of the following:
8
(1) 43% of the first $18.1 million in pre-bonus operating
income for the Chicago Office;
(2) 100% of the next dollars of pre-bonus operating income
for the Chicago Office above $18.1 million, up to the
sum of the following amounts: (x) $200,000 plus (y) any
portion of one-half of the 2002 Additional Amount and
the 2003 Additional Amount not included in the Bonus
Pool in 2003; provided that the total amount of
pre-bonus operating income included in this clause shall
not exceed $870,000; and
(3) 43% of any additional pre-bonus operating income for the
Chicago Office.
(iv) for 2005 through 2008, 43% of pre-bonus operating income for
the Chicago Office.
The "operating income" of the Chicago Office shall equal the revenues generated
by the Chicago Office minus expenses incurred by or reasonably allocable to the
Chicago Office, calculated using the same methodology as that employed by the
parties in 2001 and prior years. During the term of this Agreement, without the
prior written consent of Xx. Xxxxxxx, the Group shall not (1) transfer or
sub-contract any material portion of the revenue-generating activities of the
Chicago Office to any other office of the Company, (2) reduce operating income
for expenses of a different type than those which reduced operating income in
2001 or earlier, (3) reduce operating income for payments made to exercise the
CNC Options, or (4) make any such other changes to the structure, organization
or activities of the Chicago Office or computation of the Bonus Pool that would
have a material adverse effect on the Bonus Pool through 2008.
Xx. Xxxxxxx'x bonus shall be calculated and paid on a quarterly basis. The
bonus payable to Xx. Xxxxxxx with respect to a particular quarter (hereinafter
"Bonus Payment") shall equal (1) the product obtained by multiplying Xx.
Xxxxxxx'x Percentage of the Bonus Pool by the total pre-bonus operating income
of the Chicago Office for the year through and including the end of such
quarter, minus (2) the total bonuses paid to him in respect of prior quarters in
the year (if any), plus or minus (3) for the fourth quarter only, any amount
necessary so that Xx. Xxxxxxx will reach his percentage of the Bonus Pool for
such year taking into account any adjustments to the Bonus Pool percentages from
prior quarters of such year; provided that, in the event that quarterly payments
to Xx. Xxxxxxx hereunder at any time exceed the amount of the Bonus Pool to
which he is entitled for the entire year to which the quarterly payments relate,
Xx. Xxxxxxx shall immediately repay to the Company the amount of any said
overpayment; or, at the Company's option, in the event that Xx. Xxxxxxx has not
made said payment, the Company may deduct the amount of said payment from any
other payments then due or to become due to Xx. Xxxxxxx. Notwithstanding the
foregoing, the bonus payable to Xx. Xxxxxxx for the year 2002 shall be reduced
by the amount of $2,100,341.
Each quarterly Bonus Payment shall be paid within 90 days after the end of
such quarter; provided that, in the case of the fourth quarter, the Bonus
Payment shall be paid within 15 days after the completion of the Company's
audited financial statements for the year in question or, if earlier, 120 days
after the end of the year. Each date on which a Bonus Payment is due pursuant to
the preceding sentence is referred to as the "Due Date" for such Bonus Payment.
Xx. Xxxxxxx shall use commercially reasonable efforts to cause the Chicago
Office to collect its accounts receivable in accordance with applicable payment
terms.
Notwithstanding the foregoing, if (i) the Company is unable to make a
Bonus Payment to Xx. Xxxxxxx on the applicable Due Date as a result of a cash
shortfall and (ii) the Company can demonstrate that such cash shortfall is the
direct result of the days sale outstanding for the Chicago Office ("Days Sales")
exceeding 112 days as calculated on such Due Date, then (x) the Company shall
use its cash on hand to pay on the Due Date as much of such Bonus Payment as is
commercially reasonable (taking into account short term cash needs for payroll,
rent and similar items at the Chicago Office) and (y) the Company shall pay the
remainder of such Bonus Payment to Xx. Xxxxxxx as soon as practicable, but in
any event no later than 5 business days following the first day after such Due
Date on which the Days Sales of the Chicago Office is equal to 112 days or less.
However, the Company shall in all events pay to Xx. Xxxxxxx an amount equal to
at least 80% of each Bonus Payment no later than the Extended Due Date for such
Bonus Payment. The term "Extended Due Date" for a Bonus Payment means initially
(i) 40 days after the Due
9
Date if the Days Sales exceed 112 days as computed on the Due Date, and (ii) 70
days if the Days Sales exceeds 122 days as computed on the Due Date. If the Days
Sales as computed at the end of the month prior to such Extended Due Date has
increased by more than 5 days from the Days Sales as computed on the Due Date,
the Extended Due Date shall be further extended for an additional 30 days. Such
procedure shall be repeated at each successive Extended Due Date until the Days
Sales as computed at the end of the month prior to the relevant Extended Due
Date has not increased by more than 5 days from the Days Sales as computed one
month earlier. For purposes of this Agreement, Days Sales shall be computed
excluding the Receivable from the calculations, but otherwise using the same
methodology as that employed by Lexecon in 2001 and prior years.
(d) (i) Interest shall accrue on Bonus Payments from and after the Due
Date, or Extended Due Date if applicable (the "Relevant Due Date"), and on the
Base Compensation Payments from and after the relevant Monthly Payment Date, at
the rate of 8% per annum, compounded quarterly.
(ii) If the Company fails to make any Bonus Payment (or pay interest
thereon) by its Relevant Due Date, Xx. Xxxxxxx shall have the right to withdraw
from the Bank Account the full amount of such Bonus Payment and interest thereon
through the date of withdrawal (even if such withdrawal causes the balance in
the Bank Account to be reduced below the minimum thresholds otherwise set forth
in Section 2(c)). After any such withdrawal, the Company shall pay such Bonus
Payment by depositing additional funds into the Bank Account equal to the amount
withdrawn by Xx. Xxxxxxx, plus interest thereon from the Relevant Due Date
through the date such additional funds are deposited in the Bank Account (the
"Additional Bonus Deposit").
(iii) Similarly, if the Group fails to make any Base Compensation
payment by its Monthly Payment Date, Xx. Xxxxxxx shall have the right to
withdraw from the Bank Account the full amount of such monthly Base Compensation
payment and interest thereon through the date of withdrawal (even if such
withdrawal causes the balance of the Bank Account to be reduced below the
minimum thresholds otherwise set forth in Section 2(c)). After such withdrawal,
the Company shall pay such Base Compensation payment by depositing additional
funds into the Bank Account equal to the amount withdrawn by Xx. Xxxxxxx, plus
interest thereon from the Monthly Payment Date through the date such additional
funds are deposited in the Bank Account ( the "Additional Base Compensation
Deposit").
(iv) If the Company (1) fails to make any Bonus Payment (or, if
applicable, an Additional Bonus Deposit) (or pay the interest due thereon) (A)
within 120 days after the Relevant Due Date in the case of a Bonus Payment with
a Due Date on or before December 31, 2004 or (B) within 60 days of the Relevant
Due Date in the case of a Bonus Payment with a Due Date at any time thereafter,
or (2) fails to make any Base Compensation payment (or, if applicable, an
Additional Base Compensation Deposit) (or pay the interest due thereon) within
60 days after the Monthly Payment Date of such Base Compensation payment, and in
the case of either (1) or (2) thereafter fails to do so within ten days of
receipt of written notice from Xx. Xxxxxxx of his intention to terminate his
employment and the CNC, Xx. Xxxxxxx shall be deemed to have resigned at the end
of said 10-day period, and (x) Xx. Xxxxxxx shall be entitled to receive his Base
Compensation and Bonus Payments for all periods through the entire quarter in
which such termination took place (plus interest as provided for herein) to the
extent not theretofore paid, (y) the CNC and the CNC Options shall automatically
terminate and (z) Xx. Xxxxxxx shall be entitled to withdraw from the Bank
Account and retain (a) the amount which he would then be entitled to withdraw
from the Bank Account under Section 2(c) based on the period of his employment
through the date of termination, calculated on a daily pro rata basis, (b) the
amount which he would be entitled to withdraw from the Bank Account under
Section 2(c) during the six months following the date of termination, calculated
on a daily pro rata basis, and (c) all Base Compensation, Bonus Payments and
interest (if any) to which he is entitled under clause (x) above. The Company
shall pay Xx. Xxxxxxx his Base Compensation and Bonus Payments not theretofore
paid in immediately available funds within five business days after the date on
which his employment so terminates, and within two business days after the
receipt of such funds (or agreement that no such funds are owing) Xx. Xxxxxxx
shall wire any remaining funds in the Bank Account to which he is not entitled
hereunder to an account designated by the Company. Xx. Xxxxxxx'x right to
terminate the Agreement and withdraw amounts pursuant to this Section 2(d) shall
exist only until the Company pays the relevant Bonus
10
Payment and/or Base Compensation and interest either to Xx. Xxxxxxx or the Bank
Account, as the case may be.
(e) Concurrent with the signing of this Agreement by the parties, the
Company shall pay Xx. Xxxxxxx a signing bonus of $2,000,341 in immediately
available funds by wire transfer to an account designated by him (the "Signing
Bonus").
(f) In addition to the compensation set forth in this Section 5, Xx.
Xxxxxxx shall be eligible to receive stock options and other non-cash
compensation at the discretion of the Board of Directors of the Company.
(g) The term of this Agreement shall begin on the date of this Agreement
and end on December 31, 2008; provided that the term of this Agreement shall
terminate prior to such date: (i) immediately upon Xx. Xxxxxxx'x resignation
(with or without Good Reason (as defined below)), death or Disability (as
defined below), (ii) immediately upon the Company's termination of Xx. Xxxxxxx
(with or without Cause (as defined below)), (iii) pursuant to Section 5(d)
hereof or (iv) at Xx. Xxxxxxx'x option, in the event of the Company's failure to
make the payments to Xx. Xxxxxxx at the times and on the terms set forth in
Section 2(b) hereof or the deposits into the Bank Account on the terms set forth
in Section 2(c) hereof.
(h) If Xx. Xxxxxxx resigns without Good Reason or the Company terminates
Xx. Xxxxxxx for Cause, then Xx. Xxxxxxx shall receive his Base Compensation
through the date of termination, his Bonus Payments for any quarter ended prior
to the date of termination (plus interest as provided for herein) to the extent
not theretofore paid and the amount that he would otherwise be entitled to
withdraw from the Bank Account under Section 2(c) as of the date of termination.
On the fifth business day after said termination, (1) Xx. Xxxxxxx shall wire the
remaining funds in the Bank Account to an account designated by the Company and
(2) the Company shall simultaneously wire any amounts due to Xx. Xxxxxxx to an
account designated by him.
(i) If (A) Xx. Xxxxxxx resigns with Good Reason or Xx. Xxxxxxx'x
employment terminates due to his death or Disability or (B) the Company
terminates Xx. Xxxxxxx without Cause, then (x) Xx. Xxxxxxx shall be entitled to
receive his Base Compensation and Bonus Payment for all periods through the
entire quarter in which such termination took place (plus interest as provided
for herein) to the extent not theretofore paid, (y) the CNC shall immediately
terminate and (z) Xx. Xxxxxxx shall be entitled to withdraw funds from the Bank
Account in accordance with Section 2(c)(9) or 2(c)(10) above, as applicable. The
Company shall pay Xx. Xxxxxxx his Base Compensation and Bonus Payments not
theretofore paid in immediately available funds within five business days after
the termination date, and within two business days after receipt of such funds
(or agreement that no such funds are owing) Xx. Xxxxxxx shall wire any remaining
funds in the Bank Account to which he is not entitled hereunder to an account
designated by the Company.
(j) For purposes of this Agreement, "Cause" shall mean a termination of
Xx. Xxxxxxx'x employment by the Company when (a) Xx. Xxxxxxx has (1) committed
an act of fraud, dishonesty, embezzlement or misappropriation involving the
Group, (2) is convicted of, or enters a plea of guilty or no contest to, any
crime involving moral turpitude or dishonesty, (3) commits an act, or fails to
commit an act, involving the Group which amounts to, or with the passage of time
would amount to, a material breach of this Agreement, which breach is not cured
within 30 days after written demand for substantial performance is received by
Xx. Xxxxxxx from the Company which specifically identifies the breach which the
Company believes Xx. Xxxxxxx has committed, or (4) willfully fails or habitually
neglects to perform his responsibilities under this Agreement (other than such
failure resulting from Disability or the circumstances described in the last
sentence of this Section 5(j)), which failure or neglect is not cured within 30
days after written demand for substantial performance is received by Xx. Xxxxxxx
from the Company which specifically identifies the manner in which the Company
believes Xx. Xxxxxxx has not performed his responsibilities, and (b) the Company
terminates Xx. Xxxxxxx and, in conjunction with such termination provides
written notice to Xx. Xxxxxxx that he is being terminated for Cause. For
clarification, "Cause" shall not include a reduction in Xx. Xxxxxxx'x
productivity or billable hours which is a result of (1) changes in business
conditions (including, without limitation, any changes resulting from the
Company's or Lexecon's entering bankruptcy or ceasing operations), (2) changes
in the manner in which he handles cases (including the use of other experts) or
(3)
11
changes in his reputation or desirability as an expert witness (other than, in
each such case, as a result of (i) circumstances constituting Cause or (ii)
intentional conduct by Xx. Xxxxxxx in an attempt to cause the termination of
this Agreement).
For purposes of this Agreement, "Good Reason" shall mean the occurrence of any
one or more of the following (without Xx. Xxxxxxx'x written consent): (i) any
failure to maintain Xx. Xxxxxxx in the office or the position, or a
substantially equivalent office or position, of or with the Group relating to
the operation of the Chicago Office which Xx. Xxxxxxx holds as of the date
hereof; (ii) the assignment to Xx. Xxxxxxx of duties materially inconsistent
with Xx. Xxxxxxx'x authorities, duties, responsibilities or status as of the
date hereof or any other action which results in a substantial diminution in Xx.
Xxxxxxx'x authorities, duties, responsibilities or status from those in effect
as of the date hereof; (iii) the Group's requiring Xx. Xxxxxxx to be based at an
office location which is at least twenty-five (25) miles from his current office
location, or the Group's requiring Xx. Xxxxxxx to travel on business to a
substantially greater degree than is required as of the date hereof; (iv) a
material reduction in Xx. Xxxxxxx'x level of participation in any employee
benefit or retirement plans, policies, practices or arrangements, (v) the
liquidation, dissolution or winding up of the Company or Lexecon or the Company
or Lexecon ceasing to do business (other than as a part of a reorganization in
which the activities of the Chicago Office are continued in substantially the
same manner as before entering the reorganization), or (vi) intentional conduct
by the Company or Lexecon in an attempt to cause a termination of this
Agreement. However, Xx. Xxxxxxx shall not be entitled to terminate his
employment for Good Reason unless he has given the Company written notice of the
facts giving rise to Good Reason and the Company has failed to cure the
situation to Xx. Xxxxxxx'x reasonable satisfaction within 30 days thereafter.
The existence of the Good Reason shall not be affected by Xx. Xxxxxxx'x
temporary incapacity due to physical or mental illness not constituting a
Disability. Xx. Xxxxxxx'x continued employment shall not constitute a waiver of
his rights with respect to any circumstances which may constitute Good Reason.
(k) For purposes of this Agreement, "Disability" shall mean Xx. Xxxxxxx'x
inability to perform the essential duties, responsibilities and functions of his
position with the Group as a result of any mental or physical disability or
incapacity for a period of at least 90 or more days within a nine month period,
as determined by a medical doctor selected by written agreement of the Company
and Xx. Xxxxxxx. If the Company and Xx. Xxxxxxx cannot agree on the selection of
a medical doctor, each of them will select a medical doctor and the two medical
doctors will select a third medical doctor who will determine whether Xx.
Xxxxxxx has a disability. The determination of the medical doctor selected under
this Section 5(k) will be binding on both parties. The medical examinations set
forth herein may only cover job related functions and must be consistent with
business necessity.
(l) If, during the term of this Agreement, Xx. Xxxxxxx occupies a position
or title with the Company or Lexecon, then the Board of the Company or Lexecon
(as appropriate) will consider in good faith whether to offer Xx. Xxxxxxx the
opportunity to occupy the same position or title, with the effect that Xx.
Xxxxxxx and Xx. Xxxxxxx would be co-holders of such position or title.
6. Transfer of Securities. In partial consideration of the Company's
obligations hereunder, if the Company exercises the First CNC Option, Xx.
Xxxxxxx shall at the time of such exercise transfer to the Company or its
designee for no additional consideration 933,940 shares of common stock of the
Company ("Stock") plus options to purchase 802,692 shares of Stock ("Forfeited
Options") with an exercise price greater than $1.00 per share and shall retain
options to purchase 1,700,000 shares of Stock ("Retained Options") with an
exercise price less than $1.00 per share. From such date Xx. Xxxxxxx shall only
have the right to exercise the Retained Options in the event that (i) the price
of the Stock, as adjusted for any stock splits, stock dividends, reverse stock
splits, recapitalizations, reclassifications or similar transactions, equals or
exceeds $2.00 per share for any period of 20 consecutive trading days from July
1, 2007 through December 31, 2008 or (ii) a Sale of the Company occurs on or
before December 31, 2008, in which case the Retained Options shall immediately
vest and Xx. Xxxxxxx shall be entitled to receive the same consideration as
other shareholders in such transaction, net the exercise price for such Retained
Options, (or to exercise such Retained Options and retain or exchange his shares
free of any restriction or risk of forfeiture, if and to the extent other
shareholders are permitted to retain or exchange their shares in such
transaction). In the event that the events set forth in the foregoing sentence
have not occurred, on
12
December 31, 2008, Xx. Xxxxxxx shall transfer his Retained Options to the
Company for $1. At the time the First CNC Option is exercised, the parties shall
amend the terms of the Retained Options to eliminate any vesting or eligibility
requirements, forfeiture provisions, re-sale restrictions (other than those
relating to compliance with federal and state securities laws), bonus offset
provisions and similar provisions, which are inconsistent with or broader than
those contained in this Section 6. This Section 6 shall not apply to any stock,
options or other securities of the Company acquired by or issued to Xx. Xxxxxxx
after the date of this Agreement. Xx. Xxxxxxx shall not dispose of any Stock or
exercise or dispose of any Options prior to the date on which the First CNC
Option is exercised or lapses, unless otherwise required by law. The term "Sale"
means an acquisition after the date hereof by a person (or group of persons
acting in concert) of a majority of the voting securities of the Company or
Lexecon or of all or a majority of the assets or business of the Company or
Lexecon.
7. Legal Fees. On the date of this Agreement, the Company shall pay to
Xxxxxxxx & Xxxxx the amount of $100,000, representing the legal fees and
expenses incurred by Xxxxxxxx & Xxxxx to date in representing Xx. Xxxxxxx in the
negotiation of this Agreement and the transactions contemplated hereby.
8. General Provisions.
(a) All notices hereunder shall be deemed to have been duly given when
delivered or sent by facsimile transmission, upon receipt, or if sent by
certified or registered mail (return receipt requested), upon the date on which
the return receipt is dated, addressed as follows (or at such other address as
the addressed party may have substituted by notice pursuant to this Section):
If to Xx. Xxxxxxx: c/o Lexecon Inc.
000 X. Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Fax: (000) 000-0000
With a copy to: Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxxx, P.C.
Fax: (000) 000-0000
If to Company: Nextera Enterprises, Inc.
0 Xxxxxxxxx Xxxxxx
Xxxxx Xxxxx
Xxxxxxxxx, XX 00000-0000
Fax: (000) 000-0000
With a copy to: Lexecon Inc.
000 X. Xxxxxxxx Xxx., Xxxxx 0000
Xxxxxxx, XX 00000
Attn: President
Fax: (000) 000-0000
With a further copy to: Maron & Sandler
0000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxx Xxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxxx, Esq.
Fax: (000) 000-0000
13
(b) This Agreement constitutes the entire agreement between the parties
relating to the subject matter hereof and supercedes all prior agreements
understandings, negotiations and discussions, whether oral or written of the
parties, including, without limitation, the Confidentiality Agreement and
Contribution Agreement.
(c) This Agreement may not be amended or modified except by a writing duly
and validly executed by each party hereto, or in the case of a waiver, the party
waiving compliance. Any waiver of any breach of any provision of this Agreement
will not be deemed to be a waiver of any subsequent breach of that provision, or
of any breach of any other provision of this Agreement. No failure or delay in
exercising any right under any provision of this Agreement will be deemed a
waiver of that or any other right. There may be no amendment to or waiver of any
material provision of this Agreement by the Company without the approval of the
Board of Directors of the Company.
(d) Time is of the essence in the performance of this Agreement.
(e) Each of the parties has had the opportunity to be represented by
counsel in the negotiation and preparation of this Agreement. The parties agree
that this Agreement is to be construed as jointly drafted. Accordingly, this
Agreement will be construed according to the fair meaning of its language, and
the rule of construction that ambiguities are to be resolved against the
drafting party will not be employed in the interpretation of this Agreement.
(f) Neither this Agreement nor any of the rights or obligations of the
parties hereunder may be assigned by the Company or by Xx. Xxxxxxx without the
other's prior written consent; provided, however, that the Company shall be
permitted to assign this Agreement to a purchaser or successor upon a sale,
merger or similar transaction involving the Company or Lexecon. Subject to the
foregoing, this Agreement shall inure to the benefit of and shall be binding
upon all of the parties hereto and upon all of their respective successors and
assigns. Each of the Company and Lexecon shall be jointly and severally liable
for the obligations of both parties as contained in this Agreement, and Xx.
Xxxxxxx shall be able to enforce his rights pursuant to this Agreement directly
against either the Company or Lexecon without demand against the other company.
Each of the Company and Lexecon shall be entitled to enforce the rights of the
other company pursuant to his Agreement against Xx. Xxxxxxx in its own name and
for its own benefit.
(g) All expenses (including reasonable attorneys' fees) incurred by the
parties hereto related to the enforcement of any provision of this Agreement
shall be reimbursed by the party in violation of the provision of this
Agreement.
(h) For convenience of the parties and to facilitate execution, this
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which shall constitute one and the same document.
Transmission by facsimile of an executed counterpart signature page hereof by a
party hereto shall constitute due execution and delivery of this Agreement by
such party.
(i) Every provision of this Agreement is intended to be severable from
every other provision of this Agreement. If any provision of this Agreement is
held to be unreasonable or excessive in scope or duration, that provision will
be deemed to be reformed to the minimum extent necessary so that such provision
as reformed may and shall be enforced to the maximum extent permitted by law. If
any provision of this Agreement is held to be void or unenforceable, in whole or
in part, the remaining provisions will remain in full force and effect, unless
the remaining provisions are so eviscerated by such holding that they do not
reflect the intent of the parties in entering into this Agreement.
(j) This Agreement shall be subject to and enforceable under the laws of
the State of Illinois. Regardless of any present or future residence, domicile
or place of business of the parties, each party hereby irrevocably consents and
agrees that any claims and disputes between or among the parties pertaining to
this Agreement or to any matter arising out of or relating to this Agreement
shall be brought in any state or federal court located in the State of Illinois,
Xxxx County. By execution and delivery of this Agreement, each party submits and
consents in advance to such jurisdiction in any action or suit commenced in any
such court. Each party hereby waives any objection which it may have based on
forum
14
non conveniens and hereby consents to the granting of such legal or equitable
relied as deemed appropriate by such court.
(k) Xx. Xxxxxxx shall cooperate with the Company's efforts to obtain key
man life insurance and disability insurance (with benefits payable to the
Company). Xx. Xxxxxxx represents that he is 51 years of age, a non-smoker, and
does not have actual knowledge of any pre-existing physical conditions that
would reasonably be expected to adversely affect the Company's ability to obtain
key man life insurance. However, none of the Company's obligations under this
Agreement are conditioned on its ability to obtain any life or disability
insurance.
(l) Xx. Xxxxxxx authorizes the Group to deduct and withhold from any
payments to be paid to Xx. Xxxxxxx pursuant to this Agreement any and all sums
required to be deducted from or withheld by the Group pursuant to the provisions
of any federal, state or local law, regulation, ruling or ordinance, including,
but not limited to income tax withholding and payroll taxes. The parties agree
that (i) amounts deposited in the Bank Account shall be taxable to Xx. Xxxxxxx
only as, when and to the extent he has the right to withdraw funds from the Bank
Account, and (ii) all other amounts due Xx. Xxxxxxx under this Agreement shall
be taxable to Xx. Xxxxxxx only as, when and to the extent actually received by
him, each to the effect that any withholding obligations shall be imposed only
as, when and to the extent Xx. Xxxxxxx is treated as being taxable on such
amounts. The parties shall construe all applicable withholding provisions, and
file all relevant tax and other informational reports, consistent with this
Section 8(l).
(m) The Company and Lexecon represent that (i) the Company has received,
or has a binding commitment to receive (not subject to closing conditions), the
financing necessary to permit it to pay the amounts owed to Xx. Xxxxxxx upon
exercise of the First CNC Option, (ii) each has received all necessary approvals
from its banks and other lenders (and any necessary approvals from stockholders
and others) to execute, deliver and perform its obligations under this
Agreement, including all approvals necessary to pay the Signing Bonus under
Section 5(e) and the legal fees under Section 7 and (iii) each has immediate
access to the funds necessary to pay the Signing Bonus and such legal fees.
(n) The parties hereby agree that (i) Article 6 and Section 7.9 of the
Contribution Agreement are hereby terminated and of no further force and effect
and (ii) this Agreement replaces and supercedes the Confidentiality and
Proprietary Rights Agreement between the Company and Xx. Xxxxxxx for periods
from and after the date of this Agreement. The Group hereby waives any provision
of any stockholders, voting or other agreement which is in conflict with, or
would prevent Xx. Xxxxxxx from exercising his rights and realizing the benefits
provided in, Section 6 above.
* * * * *
15
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives, as of the date first written
above.
NEXTERA ENTERPRISES, INC.,
a Delaware corporation
By: /s/ Xxxxx Xxxxxxxxx
---------------------------
Name: Xxxxx Xxxxxxxxx
Title: Chairman & CEO
LEXECON INC.,
an Illinois corporation
By: /s/ Xxxxxxx X. Xxxxxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Assistant Secretary
/s/ Xxxxxx X. Xxxxxxx
--------------------------------------
XX. XXXXXX X. XXXXXXX
16
Xx. Xxxxxxx'x signature page will not be effective (and Xx. Xxxxxxx will not be
bound by this Agreement) until he has received payment of the Signing Bonus
under Section 5(e). Until such payment is received, Xx. Xxxxxxx reserves the
right to revoke his signature page.
