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EXHIBIT 10.38
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT entered into as of the 15th day of June, 1999, by
and among XXXXXXX.XXX, INC., a Nevada corporation (the "Company") and XXXX X.
XXXXXXXX ("Xxxxxxxx").
1. EMPLOYMENT. The Company hereby employs Xxxxxxxx and Xxxxxxxx hereby
accepts employment with the Company as its Chief Executive Officer and its Chief
Operating Officer upon the terms and conditions hereinafter set forth.
Xxxxxxxx'x employment shall not be deemed an "at will" employment.
2. DUTIES. Xxxxxxxx will serve the Company as its Chief Executive
Officer and its Chief Operating Officer and will faithfully and diligently
perform the services and functions as mutually agreed to in writing, relating to
such office and position or otherwise reasonably incident to such office and
position, provided that all such services and functions will be reasonable and
within Xxxxxxxx'x areas of expertise. Xxxxxxxx'x specific duties shall include
those related to (i) oversight of all phases of the Company's operations, (ii)
development of the Company's strategic relationships and (iii) such other duties
as the Company may reasonably direct. Xxxxxxxx will, during the term of this
Agreement (or any extension thereof), devote his time, attention, skills and
best efforts as a full-time employee to the promotion of the business of the
Company. For purposes of this agreement, full-time is defined as an average of
forty hours per week.
3. TERM. This Agreement and Xxxxxxxx'x employment shall commence on
April 26, 1999 (the "Effective Date"), and shall continue for a term of four
years ("Initial Term") unless terminated earlier in accordance with this
Agreement. The term of this Agreement may be extended by agreement among the
Company and Xxxxxxxx.
4. COMPENSATION. As compensation for the services rendered to the
Company under this Agreement commencing on the Effective Date, Xxxxxxxx will be
paid a base salary of $125,000 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
or decreased if so determined by the Board of Directors of the Company (the
"Board") after a review of Xxxxxxxx'x performance of his duties hereunder.
Xxxxxxxx will also receive as compensation under this Agreement 100,000 shares
(the "Shares") of the Company's $.001 par value common stock ("Common Stock"),
50,000 shares of which shall be issued by the Company and 50,000 shares of which
shall be transferred from Xxxxxxx X. Xxxxxxxx, the Company's Chief Executive
Officer. In the event Xxxxxxxx'x employment with the Company is terminated on or
before April 26, 2000 for "Cause" (as hereinafter defined) or by voluntary
termination of this Agreement by Xxxxxxxx, then 50,000 Shares shall be sold by
Xxxxxxxx to the Company at the greater of $10.00 per share or the fair market
value of the Shares at the time of termination. In any event, the Company agrees
that Xxxxxxxx will retain a minimum of 50,000 shares as compensation for his
participation in, and assistance with, the Company's initial public offering
(the "IPO") prior to the Effective Date of this Agreement.
5. TERMINATION. This Agreement will terminate upon the occurrence of
any of the following events:
1. The death of Xxxxxxxx;
2. The "Total Disability" (as hereinafter defined) of Xxxxxxxx;
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3. Written notice to Xxxxxxxx from the Company of termination for
"Cause" (as hereinafter defined); 1.
4. The voluntary termination of this Agreement by Xxxxxxxx upon 30 days
prior written notice; or
5. The later of four years from the Effective Date of this Agreement or
the date to which this Agreement is extended in accordance with
Section 3 above.
"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 or more where
Xxxxxxxx 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 Xxxxxxxx. If the Company
disagrees with said physician's opinion, the Company may engage at their own
expense a physician to examine the Xxxxxxxx, and Xxxxxxxx hereby consents to
such examination and to waive, if applicable any privilege between the physician
and Xxxxxxxx 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 Xxxxxxxx and the
Company.
"Cause" means (i) Xxxxxxxx has failed to substantially perform his
duties in accordance with Section 2 hereof as reasonably determined by the Board
, (ii) Xxxxxxxx has failed to comply with the reasonable directives and policies
of the Board and such conduct is not cured within thirty days after counseling
by the Company or (iii) Xxxxxxxx breaches his fiduciary duty to the Company or
commits any dishonest, unethical, fraudulent, or felonious act in respect to
Xxxxxxxx'x duties to the Company.
6. STOCK OPTIONS. Xxxxxxxx shall be granted options to purchase up to
350,000 shares of Common Stock (the "Options") pursuant to the Company's Amended
and Restated 1998 Stock Option Plan (the "Plan") at $7.00 per share, all of
which Options shall vest and be exercisable on the Effective Date.
Notwithstanding anything to the contrary contained herein, the Options shall be
subject to the terms and conditions of the Plan.
Xxxxxxxx acknowledges that the Company is in the process of completing
its IPO and that as part of the IPO Xxxxxxxx may be required to lock up the
Shares and the Common Stock underlying the Options for a period not to exceed
six months from the effective date of the IPO. Accordingly, Xxxxxxxx agrees to
execute any agreement necessary to lock up the Shares and the Common Stock
underlying the Options.
7. LOAN. The Company will loan to Xxxxxxxx $100,000 (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 Xxxxxxxx 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 by the Company, and if Xxxxxxxx
has been employed by the Company for 12 continuous months from the Effective
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Date, the remaining 50% of the principal balance 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. Xxxxxxxx shall be entitled to receive benefits which are
offered to other Company executives, including, but not limited to, health
insurance, life insurance and vacation time.
9. EXPENSES. Xxxxxxxx is authorized to incur reasonable expenses as he
deems necessary and appropriate for promoting the business of the Company,
including expenses for entertainment, travel and similar items. The Company
shall reimburse Xxxxxxxx for all such expenses on the presentation by Xxxxxxxx
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.
a. Non-Competition. The Company and Xxxxxxxx acknowledge and agree
that Xxxxxxxx'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, Xxxxxxxx agrees that for a
period of two years after the termination of his employment by the Company,
irrespective of the reason for such termination, Xxxxxxxx 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, with the exception of
Xxxxxxx Xxxxxx, 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 Xxxxxxxx will not act as an
officer, director, employee, consultant, 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 engaged as of the Effective Date of this Agreement.
b. Confidentiality.
(1) Xxxxxxxx acknowledges that in Xxxxxxxx'x employment
hereunder, Xxxxxxxx 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. Xxxxxxxx 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, Xxxxxxxx agrees that during the Initial Term and any renewal term
of this Agreement and upon and after leaving the employ of the Company for any
reason whatsoever, Xxxxxxxx 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 Xxxxxxxx as a result of the Xxxxxxxx'x
employment with the Company or any trade secrets of the Company, but shall hold
all of the same confidential and inviolate. The Company acknowledges and agrees
that Xxxxxxxx has in his possession an extensive contact list and that such list
will remain Xxxxxxxx'x personal property and not become the property of the
Company.
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(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 Xxxxxxxx, the
services rendered by Xxxxxxxx, 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 Xxxxxxxx'x employment under this Agreement for
any reason whatsoever, Xxxxxxxx shall return to the Company all Records (whether
furnished by the Company or prepared by Xxxxxxxx), and Xxxxxxxx shall neither
make nor retain any copies of any of such Records after such termination.
(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 Xxxxxxxx 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 Xxxxxxxx'x employment by the Company will be disclosed
promptly by Xxxxxxxx to the Company and shall be the sole and exclusive property
of the Company. All copyrightable works created by Xxxxxxxx and covered by this
Section 10b(3) shall be deemed to be works for hire. Xxxxxxxx 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. Certain Claims Upon Termination. Xxxxxxxx understands that if
within one year prior to the termination of Xxxxxxxx'x employment with the
Company, Xxxxxxxx has either (i) committed an act of theft, dishonesty, gross
dereliction of duty, fraud, embezzlement, misappropriation, or breach of
fiduciary duty against the Company or any other act of comparable misconduct
against the Company; or (ii) breached any of his obligations under this
Agreement, then the Company shall have the right to purchase any or all shares
of Common Stock of the Company owned by Xxxxxxxx at the time of such termination
for a purchase price equal to the amount that Xxxxxxxx paid for such shares,
together with interest thereon at a rate of 10% per annum. If the Company
desires to exercise such right, it shall notify Xxxxxxxx within 60 days after
the date of such termination and Xxxxxxxx shall tender the shares being
purchased by the Company at the time and place designated in such notice from
the Company upon receipt of the purchase price for such shares. If Xxxxxxxx
fails to tender such shares, the shares shall be deemed to be canceled as of the
date the Company tenders payment of the purchase price thereof.
d. Enforceability. In the event of the breach 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
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notwithstanding any claim by Xxxxxxxx that the Company has violated or breached
this Agreement or any claim that Xxxxxxxx is entitled to any offset or
compensation.
To induce the Company to enter into this Agreement, Xxxxxxxx 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.
11. 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.
12. 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
If to Xxxxxxxx: Xxxx X. Xxxxxxxx
0000 X. Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
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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.
13. 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.
14. 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.
15. 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 Arizona and the State
of Arizona shall have exclusive jurisdiction regarding any legal actions
relating to this Agreement.
16. 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.
17. 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.
18. 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.
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19. ACKNOWLEDGMENT OF VENTURE CAPITAL AND OTHER INVESTMENT ACTIVITIES.
The Company acknowledges that Xxxxxxxx currently engages in venture capital and
other investment activities independent of Xxxxxxxx'x employment with the
Company. The Company hereby agrees that Xxxxxxxx will continue to have the right
to invest and commit reasonable amounts of time to such activities while
employed with the Company; provided, however that such activities are not in
direct competition with the Company and do not otherwise conflict with the terms
of Section 10 of this Agreement. Furthermore, the Company acknowledges that
Xxxxxxxx is a significant investor in and/or a member of the board of directors
for the following companies: Blue Cross & Blue Shield of Arizona, Xxxxx Fargo &
Co. AZ (Advisory Board), Xxxxxxx Electric Wire & Cable Inc., Xxxxxxx-Xxxxxxxx
Group, Southwest Harvard Group Companies, XXXX LLC, SERI Construction LLC,
SERI/HighPoint LLC, World Wide Wireless LLC, and Xxxxxxxx Asset Management. The
Company acknowledges that Xxxxxxxx is currently involved in the following
investment activities and that none of such activities will detract from
Xxxxxxxx'x ability to perform his duties as defined in Section 2 of this
Agreement nor violate the terms of Section 10 of this Agreement:
- Hispanic direct mail media advertising;
- Hispanic recording studios;
- Hispanic telephone communication company; and
- Hispanic Parking Company of America.
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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:
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Xxxxxxx X. Xxxxxxxx, President
XXXXXXXX:
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Xxxx X. Xxxxxxxx
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