EMPLOYMENT AGREEMENT
AGREEMENT, dated as of November 1, 1997, between Tekgraf, Inc., a Delaware
corporation (the "Company"), and Xxxxx X. Xxxxxxxxx (the "Employee").
W I T N E S S E T H:
WHEREAS, Company desires to employ Employee and Employee desires to be
employed by Company on the terms and conditions hereinafter set forth;
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. Employment. The Company agrees to employ Employee for the position of
Chief Financial Officer. Employee shall perform such duties as the Board of
Directors of the Company from time to time may assign to him or her hereunder.
2. Duties and Responsibilities. Employee agrees to devote his or her full
time and attention and his or her best efforts to performing his or her duties
hereunder. While employed by the Company, Employee will not, without the
Company's prior written consent, engage in any other business activity, other
than investment of Employee's personal funds on a passive basis and without
lending assistance directly or indirectly to any competitor. In no event shall
Employee pursue outside business or personal interests that interfere with his
or her full-time responsibilities or entail any use of the Company's resources.
The Employee acknowledges that while his headquarters will be at the Company's
facility located in Norcross, Georgia, Employee's duties will involve a
substantial amount of travel.
3. Compensation.
(a) The Company shall pay to Employee as compensation for all services
rendered hereunder a base salary in the amount of One Hundred Twenty Thousand
Dollars ($120,000.00) per annum, payable according to the Company's normal
procedures as adopted from time to time; and
(b) Commencing with the year ending December 31, 1999, Employee shall
be entitled, along with certain other officers of the Company, to participate in
a Company bonus/commission plan (the "Bonus Plan"), based on Employee's
performance. In the event the Bonus Plan is not in effect by July 1, 1998, the
Company shall develop a substitute plan for Employee which shall remain in
effect until such time as the Bonus Plan is in effect. The payment of bonuses to
Employee under the Bonus Plan shall be at the sole discretion of the Board of
Directors. The Company reserves the right to modify or terminate the Bonus Plan
or change the terms of eligibility in its discretion at any time, provided,
however, that any such
modification or termination shall be non-discriminatory as to employees at the
same or similar grade or level of employment with the Company; and
(c) On the effective date of the Company's proposed initial public
offering, if any (the "Effective Date"), Employee shall be granted incentive
stock options to purchase 15,000 shares of the Company's Class A Common Stock
("Common Stock") at an exercise price of $6.00 per share. Employee shall also be
granted incentive stock options to purchase an additional 15,000 shares of
Common Stock on each of the first and second anniversaries of the Effective Date
at an exercise price equal to the fair market value of the Common Stock on the
date of grant. All of the foregoing options shall vest in full one year from the
date of grant..
4. Reimbursable Expenses and Fringe Benefits. In addition to the
compensation provided under Section 3 above:
(a) Employee shall be reimbursed for all pre-approved out-of-pocket
expenses incurred by him while conducting Company business in accordance with
the policies adopted by the Company from time to time for such purpose; and
(b) Employee shall be entitled to participate in other benefit
programs, such as group insurance policies, and medical and health benefits
plans, to the extent maintained by the Company and offered to other executive
employees under the programs adopted by the Company from time to time for such
purpose. Employee shall be entitled to initial paid vacation periods aggregating
two (2) weeks per year. The Company reserves the right to modify or terminate
any such benefit program or change the terms of eligibility at any time in its
discretion to the fullest extent permitted by applicable law.
5. Term of Employment.
(a) The term of Employee's employment shall commence on the effective
date of this Agreement and continue for an initial term of two (2) years and
sixty (60) days, unless sooner terminated as provided herein. Upon expiration of
the initial term, and annually thereafter, the term of Employee's employment
shall automatically renew on a year-to-year basis, unless and until terminated
as provided herein. In the event of any renewal of the term of such employment,
automatic or otherwise, the compensation of Employee shall be determined by the
Board of Directors of the Company effective at the time of renewal; provided
however, that if the Employee is not satisfied with the compensation determined
by the Board of Directors, he may, by written notice to the Board of Directors
within ten (10) days after receiving written notice of such compensation,
terminate this Agreement without liability except under the restrictive
covenants contained herein.
(b) Either the Company or Employee may terminate this Agreement at any
time within the first sixty (60) days of its term for any reason without
penalty.
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(c) Employee's employment hereunder may be terminated hereunder at any
time following the occurrence of any of the following events:
(i) the death of Employee;
(ii) the total disability of Employee, which shall be considered
to occur if Employee is unable to substantially perform his or her normal
required services hereunder for a period of 90 days within any 120-day period by
reason of Employee's mental or physical disability as so determined by an
independent licensed physician reasonably satisfactory to the Company;
(iii) a finding that Employee has committed negligence or
misconduct that materially departs from the standard of care applicable to
Employee or the duties assigned to Employee hereunder; that Employee has failed
or refused to comply with his or her duties; that Employee has been chronically
inattentive to his or her duties or habitually absent from his or her work; or
that Employee has committed any breach of this Agreement; provided that the
Company shall give Employee notice of its finding prior to terminating
Employee's employment on such grounds and, if the matter is such as to permit
cure in the reasonable judgment of the Company, Employee shall have a reasonable
period of time, not to exceed thirty (30) days, to avert termination by curing
the grounds for such termination;
(iv) a finding that Employee has committed any act that casts the
Company in public disrepute; that Employee has been advised that he or she is a
target or subject of a grand jury investigation or similar proceeding or
investigation (which Employee shall promptly communicate to the Company); that
Employee has been indicted for, pleads guilty or nolo contendere to, or is
convicted of any felony; or that Employee has otherwise committed any act or
offense involving moral turpitude;
(v) the decision of either the Company or Employee to terminate
Employee's employment upon the expiration of the current term of Employee's
employment; provided that the party electing termination shall give the other
party notice of such decision at least thirty (30) days before such expiration
is to occur;
Any finding, determination or decision on the part of the Company referred to in
this Section 5(c) shall be made by the Board of Directors of the Company.
(d) In the event of any termination of Employee's employment, Employee
shall immediately tender his or her resignation from all positions as officer
and director of the Company and each subsidiary and affiliate (if any) which
Employee serves in such capacity. All parties may rely on this provision as
evidence of such resignation at such time.
(e) In the event of any termination of Employee's employment by the
Company prior to expiration of the current term, other than pursuant to Section
5(b) or (c),
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Employee shall receive the balance of his salary pursuant to Section 3(a) for
the remainder of the current term.
(f) Notwithstanding any termination of Employee's employment, Sections
6 through 12 hereof inclusive shall continue in accordance with their terms.
6. Ownership of Work Product.
(a) Employee shall diligently disclose to the Company as soon as it is
created or conceived by Employee, and the Company shall own, all Work Product
(as defined below). To the extent permitted by law, all Work Product shall be
considered work made for hire by Employee and owned by the Company.
(b) If any of the Work Product may not, by operation of law, be
considered work made for hire by Employee for the Company (or if ownership of
all right, title and interest of the intellectual property rights therein shall
not otherwise vest exclusively in the Company), Employee agrees to assign, and
upon creation thereof automatically assigns, without further consideration, the
ownership of all Trade Secrets (as defined below), U.S. and international
copyrights, patentable inventions, and other intellectual property rights
therein to the Company, its successors and assigns.
(c) The Company, its successors and assigns, shall have the right to
obtain and hold in its or their own name copyrights, registrations, and any
other protection available in the foregoing.
(d) Employee agrees to perform upon the reasonable request of the
Company, during or after Employee's employment, such further acts as may be
necessary or desirable to transfer, perfect and defend the Company's ownership
of the Work Product. When requested, Employee will
(i) Execute, acknowledge and deliver any requested affidavits and
documents of assignment and conveyance;
(ii) Obtain and aid in the enforcement of copyrights (and, if
applicable, patents) with respect to the Work Product in any countries;
(iii) Provide testimony in connection with any proceeding
affecting the right, title or interest of the Company in any Work Product; and
(iv) Perform any other acts deemed necessary or desirable to
carry out the purposes of this Agreement.
The Company shall reimburse all reasonable out-of-pocket expenses incurred by
Employee at the Company's request in connection with the foregoing, including
(unless Employee is
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otherwise being compensated at the time) a reasonable per diem or hourly fee for
services rendered following termination of Employee's employment.
(e) For purposes hereof, "Work Product" shall mean all intellectual
property rights, including all Trade Secrets, U.S. and international copyrights,
patentable inventions, discoveries and improvements, and other intellectual
property rights, in any programming, documentation, technology or other work
product that relates to the business and interests of the Company and that
Employee conceives, develops, or delivers to the Company at any time during the
term of Employee's employment. "Work Product" shall also include all
intellectual property rights in any programming, documentation, technology or
other work product that is now contained in any of the products or systems
(including development and support systems) of the Company to the extent
Employee conceived, developed or delivered such Work Product to the Company
prior to the date of this Agreement while Employee was engaged as an independent
contractor or employee of the Company. Employee hereby irrevocably relinquishes
for the benefit of the Company and its assigns any moral rights in the Work
Product recognized by applicable law.
7. Confidentiality. Employee shall maintain in strict confidence and shall
not use or disclose (except as required to perform Employee's duties under this
Agreement) all Trade Secrets of Company, its affiliates and customers. This
obligation shall apply during and after the term of this Agreement for so long
as the pertinent information remains a Trade Secret, and shall apply whether or
not the Trade Secret is in written or tangible form. As provided by Georgia
statutes, "Trade Secret" shall mean any information (including, but not limited
to, technical or non-technical data, a formula, a pattern, a compilation, a
program, a device, a method, a technique, a drawing, a process, financial data,
financial plans, product plans, or a list of actual or potential customers)
that: (i) derives economic value, actual or potential, from not being generally
known to, and not being readily ascertainable by proper means by, other persons
who can obtain economic value from its disclosure or use; and (ii) is the
subject of efforts that are reasonable under the circumstances to maintain its
secrecy. In the case of Company's business, Company's Trade Secrets include
(without limitation) information regarding names and addresses of any customers,
sales personnel, account invoices, training and educational manuals,
administrative manuals, prospective customer leads, in whatever form, whether or
not computer or electronically accessible "on-line."
8. Return of Materials. Upon the request of the Company and, in any event,
upon the termination of Employee's employment,
(a) Employee shall take such steps as Company may reasonably request
in order to transfer, disclose, and give Company the full benefit of any Work
Product remaining in Employee's possession; and
(b) Employee shall deliver to Company all memoranda, notes, records,
drawings, daily or monthly appointment calendars, manuals, disks and other
documents and media, regardless of form, that contain Work Product or Trade
Secrets or otherwise relate to the
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Company's business. Employee shall not retain any such materials (whether in
original or duplicated form) following such delivery.
9. No Solicitation of Customers.
(a) For a period of two (2) years following termination of Employee's
employment, Employee shall not, either directly or indirectly, alone or in
concert with others, solicit or attempt to solicit Customers in the Restricted
Territory to acquire or obtain any product or service competitive with any
Current Product of the Company from anyone other than Company. It is intended
that this provision be limited to: (a) solicitation or attempts to solicit; (b)
Customers who meet the narrow criteria set forth in this Section and who are
located in the Restricted Territory (as defined with respect to each such
Customer); and (c) products competitive with Current Products of the Company.
(b) For purposes of this Section, a "Customer" refers to any person or
group of persons with whom Employee had direct material contact while selling
Current Products of the Company during the period of two (2) years preceding
termination of Employee's employment; "Current Products" refers to the products
and services that Employee or any personnel under his or her supervision were
authorized to market or sell on behalf of Company during the period of two (2)
years preceding termination of Employee's employment; and "Restricted Territory"
refers to the continental United States of America, it being acknowledged that
the scope of Company's business and Employee's managerial responsibilities are
of that scope.
10. No Recruitment of Personnel. For a period of three (3) years following
termination of Employee's employment, Employee shall not, either directly or
indirectly, alone or in concert with others, induce or attempt to induce any
employee, agent, independent contractor or other personnel of the Company to
terminate his, her or their relationship with the Company, or recruit or attempt
to recruit such persons to accept employment or a contract with another business
that would have the effect of terminating his, her or its relationship with the
Company.
11. Names and Marks. Following the termination of Employee's employment,
Employee shall not, for the benefit of his or her own or any other person or
entity's business, use or display the names, marks, logos or slogans of the
Company or its affiliates, or any name, xxxx, logo or slogan confusingly similar
thereto, without the prior written consent of the Company.
12. Enforcement. In the event of any breach or threatened breach by
Employee of any covenant contained in the above Sections 6 through 11, the
resulting injuries to the Company would be difficult or impossible to estimate
accurately, even though irreparable injury or damages would certainly result.
Accordingly, an award of legal damages, if without other relief, would be
inadequate to protect the Company. Employee therefore agrees that, in the event
of any such breach, the Company shall be entitled to apply to a court of
competent jurisdiction to
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obtain an injunction to restrain the breach or anticipated breach of any such
covenant, and to obtain any other available legal, equitable, statutory, or
contractual relief. Should the Company have cause to seek such relief, no bond
shall be required, and Employee shall pay all attorney's fees and court costs
which the Company may incur.
13. Representations. Employee represents and warrants to the Company that
he is not a party to any other agreement or arrangement containing
non-competition, non-solicitation, non-recruitment or similar obligations on the
part of Employee.
14. Miscellaneous.
(a) This Agreement shall inure to the benefit of, and be binding upon,
the Company and its subsidiaries and affiliates, together with their successors
and assigns, and Employee, together with his or her executors, administrators,
personal representatives, heirs and legatees.
(b) Any notice or request hereunder shall be in writing and shall be
given by hand delivery, mail, telecopy or similar transmission addressed as set
forth beside the name of each party at the end of this Agreement or to any such
other address as either party may specify to the other by written notice. Such
notice or request shall be deemed to have been given and received only on and
after receipt by the designated individual (specifically the President, in the
case of the Company), effective as of the date of such authorized recipient's
actual receipt of such notice or request if received during normal business
hours on a normal business day or as of the first business day after receipt if
given after normal business hours or on a day other than a normal business day.
(c) THIS AGREEMENT SHALL BE GOVERNED BY AND ENFORCED UNDER THE LAWS OF
THE STATE OF GEORGIA AS THEY APPLY TO A CONTRACT EXECUTED, DELIVERED AND
PERFORMED ENTIRELY IN SUCH STATE.
(d) This Agreement merges and supersedes all prior and contemporaneous
agreements, undertakings, covenants or conditions, whether oral or written,
express or implied, to the extent they contradict or conflict with the
provisions hereof.
(e) This Agreement may be executed in two or more counterparts, each
of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
(f) This Agreement may be modified only by a written instrument signed
by each of the parties hereto. No waiver shall be effective unless made in
writing and signed by the party against whom enforcement is sought.
(g) Should any aspect or provision of this Agreement prove invalid or
unenforceable for any reason, the remainder of this Agreement shall nonetheless
be fully
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enforced to the fullest extent permitted by law, regardless of whether the
invalid or unenforceable aspect or provision is facially severable from the
remainder of this Agreement; provided that if a court of competent jurisdiction
holds any covenant herein invalid by reason of its duration or its geographic or
business scope, then the court shall have the power to rewrite or reform such
covenant so as not to be invalid under applicable law.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on
the day and year first above written.
"THE COMPANY" "EMPLOYEE"
TEKGRAF, INC.
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Signature Signature
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Title Xxxxx X. Xxxxxxxxx
Address: 0000 Xxxxxxx Xxxxx, Xxxxx X Address: 000 Xxxxxx Xxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000 Xxxxxxxx, XX 00000
Effective Date:_______________
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