EMPLOYMENT AGREEMENT
EMPLOYMENT
AGREEMENT, dated as of October 1, 2004, by and between cXc Services, Inc. a
Delaware corporation (the "Company"), and Xxxxxxx X. Xxxxxxxxx
("Executive").
W I T
N E S E T H:
WHEREAS,
the Company desires to secure the services of Executive and to enter into an
agreement embodying the terms of such employment (the "Agreement");
and
WHEREAS,
Executive desires to accept such employment and enter into such
Agreement;
WHEREAS,
the Company is a “start-up” company and to date the Company has not generated
any revenue or cash flows;
WHEREAS,
the Company has not yet raised working capital or successfully introduced or
gained market acceptance of the Company’s products and services in North
America;
WHEREAS,
the financial obligation of the Company to Executive for compensation, benefits,
perquisites and expenses as described herein is conditioned solely upon the
Company’s ability to successfully generate revenue, cash flows and working
capital;
WHEREAS,
the Company’s ability to successfully generate revenue, cash flows and working
capital is subject to risks and uncertainties that may cause the Company’s
results to differ materially from expectations.
NOW,
THEREFORE, in consideration of the mutual covenants herein contained, the
Company and Executive here-by agree as follows:
1. Employment.
a. Agreement
to Employ. Upon
the terms and subject to the conditions of this Agreement, the Company hereby
employs Executive and Executive hereby accepts employment by the Company.
Executive's duties shall be primarily performed at the Company's headquarters in
Orange County, California.
b. Term
of Employment. Except
as provided in Paragraph 7, the Company shall employ Executive for the period
commencing on October 1, 2004 (the "Commencement Date") and ending on the second
anniversary of the Commencement Date. The term of Executive's employment
hereunder shall thereafter be automatically extended, upon the same terms and
condi-tions, for succes-sive periods of one year each, unless either party, at
least 180 days prior to the expiration of the original term or any extended
term, shall give written notice to the other of its intention not to renew such
employ-ment. The period during which Executive is employed pursuant to this
Agreement shall be referred to as the "Employ-ment Period".
--
2. Position
and Duties.
During
the Employment Period, Executive shall serve as President and Chief Executive
Officer, reporting directly to the Board of Directors of the Company (the
"Board"), and in such other position or positions with the Company as the Board
and the Executive shall agree upon from time to time. During the Employment
Period, Executive shall be the chief executive officer of the corporation and
shall, subject to the control of the board of directors, have general
supervision, direction and control of the business and the officers of the
corporation and shall have the duties, responsibilities and obligations
customarily assigned to individuals serving in the position or positions in
which Executive serves hereunder. During the Employment Period, for as long as
the Company is privately held, the Executive shall be elected and continued as a
member of (i) the
Board and (ii) the
Executive Committee of the Board, if any. In the event the Company becomes
subject to the reporting requirement prescribed by the Securities Exchange Act
of 1934, or merges into an entity which is so subject, and the majority
shareholders of the Company prior to the merger continue to be the majority
shareholders subsequent to the merger, the Company shall use its best efforts to
have Executive elected and continued as a member of (i) the
Board and (ii) the
Executive Committee of the Board. Executive shall devote substantially all of
his time to the services required of him hereunder, except during those periods
when the Company is unable to fulfill its financial obligations to the Executive
as described herein, and provided
that nothing
contained herein shall preclude Executive from (i) serving
on the board of directors of any business corpora-tion with the consent of the
Board (which will not be unreasonably withheld), (ii) serving
on the board of, or working for, any charitable or community organization or
(iii)
pursuing his personal financial and legal affairs, so long as such activities,
individually or collectively, do not in the opinion of the Board materially
interfere with the per-formance of Execu-tive's duties hereunder. Executive
represents and warrants that his employ-ment hereunder and compliance by him
with the terms and condi-tions of this Agreement does not conflict with or
result in the breach of any agreement to which he is a party or by which he may
be bound. The Company represents and warrants that this Agreement has been
authorized by due corporate action and that the terms and conditions of this
Agreement will not conflict with or result in the breach of any agreement to
which it is a party or by which it may be bound.
3. Compensation.
a. Base
Salary. During
the Employment Period, the Company shall pay Executive a base salary at the
annual rate of $192,000. The Board shall annually review Executive's base salary
in light of the base salaries paid to other executive officers of the Company,
the base salaries of chief executive officers of comparable corporations and the
performance of Executive, and the Board may, in its sole and absolute
discretion, increase such base salary by an amount it determines to be
appropriate, but shall not decrease Executive’s base salary. Any such increase
shall not reduce or limit any other obligation of the Company hereunder.
Executive's annual base salary payable hereunder, as it may be increased from
time to time, is referred to herein as "Base Salary". The Company shall pay
Executive his Base Salary in accordance with the Company's normal payroll
practices.
b. Incentive
Compensation.
Beginning with calendar year 2004, for each calendar year ending during the
Employment Period, Executive shall have the opportunity to receive an annual
bonus (prorated for the partial year 2004 and any partial year in which
Executive’s employment terminates, if otherwise payable pursuant to this
agreement), with a target bonus opportunity of not less than 100% of such Base
Salary. Such bonus shall be based upon Executive's attainment of performance
objectives established by the Company’s Board for such calendar year and shall
be subject to the terms and conditions of the Company's then current incentive
compensation programs, practices and policies, as the same may be amended by the
Board from time to time. Any bonus payable under this Paragraph 3(b) shall be
paid to Execu-tive at the same time as bonuses are paid to other execu-tive
officers of the Company, but in no event later than 90 days after the close of
the calendar year for which the bonus is payable.
4. Stock
Option Grants.
x.
Xxxxx. On the
Commencement Date, Executive shall not be awarded any options to purchase shares
of the Company’s common stock.
b.
Future
Grants.
Executive shall be eligible to participate in any equity plan or program adopted
by the Company, at a level commensurate with his position as determined by the
Board and on terms no less favorable than those offered to any other executive
officer of the Company.
c.
Terms
of the Option. Unless
otherwise required by law, any stock options granted to Executive in the future,
shall have a term of ten
years from the
date of grant and shall become exercisable in increments of 1/3 on each of the
first three anniversaries of the date of their grant. If Executive's employment
with the Company terminates due to his death or a Termination due to Disability
or for Good Reason (as defined below) or if there shall occur a Change in
Control (as defined below) during the Employment Period, any options shall vest
and become exercisable under the terms of the option plan. Except as otherwise
provided in this Section 4, Executive's rights and obligations in respect of
options shall be determined pursuant to the terms of an option agreement to be
executed by Executive and the Company.
5.
Stock
Ownership.
Initial
Stock Purchase.
Concurrent with the execution of this agreement, the Company shall offer to sell
and Executive shall purchase 4,000 shares of the Common Stock of the Company for
a purchase price of $8,000.00, (the “Stock”). The terms under which the
Executive shall purchase the Stock shall be described in a definitive
Subscription Agreement, and shall not be subject to limitations on
transferability and resale except as are required for compliance with federal
and state securities laws.
|
6. |
Benefits,
Perquisites and Expenses. |
a.
Benefits. During
the Employ-ment Period, Execu-tive shall be eligi-ble to participate in
(i) each
welfare benefit plan sponsored or maintained by the Company, includ-ing, without
limitation, each group life, hospitalization, medical, dental, health, accident
or disability insurance or similar plan or program of the Company, and
(ii) each
pen-sion, profit sharing, retirement, deferred compensa-tion or savings plan
sponsored or maintained by the Company, includ-ing any supplemental executive
retirement plan, in each case, whether now existing or established hereafter, to
the extent that Executive is eligible to participate in any such plan under the
generally applicable provisions thereof. The Company is not required by this
Agreement to provide and maintain any such plans for the benefit of employees
generally or Executive specifically, and if such plans are adopted, the Company
may amend or terminate any such plan in its discretion. In addition to the
benefits provided pursuant to the plans described herein, Executive shall be
entitled to a Company paid annual medical examination of the type provided by
executive health providers such as the UCI Executive Health Program, Scripps
Institute or a comparable provider of Executive’s choice.
In
addition, during any period where Executive will not be covered by a medical and
dental plan maintained by the Company, or is not eligible to participate fully
in any medical or dental plan maintained by the Company because of any required
waiting period for eligibility or any exclusion with respect to any pre-existing
conditions, the Company shall also advance to the Executive the cost of paying
for independent medical and dental insurance or for any COBRA continuation
coverage available to him under his prior employer's medical and health
plans.
b.
Perquisites.
Executive shall receive those perquisites and other personal benefits made
available to the Company's senior executives from time to time. Without limiting
the generality of the foregoing, Executive shall be entitled to four weeks
vacation each year.
c.
Financial Planning and Tax Preparation. During
the Employment Period, the Company will reimburse Executive for the cost of
financial planning and tax preparation by persons or firms of his choosing of up
to an aggregate amount of $10,000 per annum.
d.
Company
Car. During
the Employment Period, the Company shall not provide Executive with the use of
an automobile or an automobile allowance, unless such perquisites are offered to
other executives, in which event, Executive shall be entitled to a comparable
benefit.
e
Business
Expenses. During
the Employment Period, the Company shall pay or xxxx-xxxxx Executive for all
reasonable expenses in-curred or paid by Executive in the performance of
Executive's duties hereunder, upon presentation of expense statements or
vouchers and such other information as the Company may require and in accordance
with the generally applicable policies and procedures of the
Company.
f.
Indemnification. The
Company agrees that if Executive is made a party, or is threatened to be made a
party, to any action, suit or proceeding, whether civil, criminal,
administrative or investigative (a "Proceeding"), by reason of the fact that he
is or was a director, officer or employee of the Company, Executive shall be
indemnified and held harmless by the Company to the fullest extent legally
per-mitted or authorized by the Company's certificate of incor-poration or
bylaws or resolutions of the Board or, if greater, by the laws of the State of
Delaware, against all cost, expense, liability and loss (including, without
limi-tation, all costs pertaining to the Executive’s defense, attorney's fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid
in settlement) as reasonably incurred or suffered by Executive in connection
therewith. The
Company agrees to purchase, continue and maintain a directors' and officers'
liability insurance policy covering Executive. Executive shall be extended an
Indemnification Agreement in the form attached as Exhibit 6 at the time this
Employment Agreement is executed.
7. Termination
of Employment.
a. Early
Termination of the Employment Period.
Notwithstanding Paragraph 1(b), the Employment Period shall end upon the
earliest to occur of (i) a
termination of Executive's employment on account of Executive's death,
(ii) a
Termination due to Disability, (iii) a
Termination for Cause, (iv) a
Termination Without Cause, (v) a
Termination for Good Reason or (vi) a
Voluntary Termination.
b. Benefits
Payable Upon Termination.
Following the end of the Employment Period pursuant to Paragraph 7(a), Executive
(or, in the event of his death, his surviving spouse, if any, or his estate)
shall be paid the type or types of compensation determined to be payable in
accordance with the following table at the times established pursuant to
Paragraph 7(c):
|
Basis
of Termination |
Accrued
Bonus |
Severance
Benefit |
Non-renewal
Benefit |
|
Death |
Not
Payable |
Not
Payable |
Payable |
|
Disability |
Not
Payable |
Not
Payable |
Payable |
|
Cause |
Not
Payable |
Not
Payable |
Not
Payable |
|
Without
Cause |
Payable |
Payable |
Not
Payable |
|
Good
Reason |
Payable |
Payable |
Not
Payable |
|
Voluntary |
Payable |
Not
Payable |
Not
Payable |
|
Non-Renewal |
Not
Payable |
Not
Payable |
Payable |
c. Timing
of Payments.
Earned
Salary shall be
paid in a single lump sum as soon as required by law, but in no event more than
10 days follow-ing the end of the Employment Period. Accrued Bonus shall be
payable at the same time as annual bonuses are paid to other officers of the
Company generally for the calendar year in which Executive's employment
terminates. Vested benefits shall be payable in accordance with the terms of the
plan, policy, practice, program, contract or agreement under which such benefits
have accrued. The Severance Benefit shall be paid in a single lump sum payment
not later than 30 days after the date of Executive's termination.
d. Definitions. For
purposes of Para-graphs 7 and 8, capitalized terms have the follow-ing
meanings:
"Accrued
Bonus" means a pro-rated amount equal to the product of (i) the
annual incentive compensation Executive would have been entitled to receive
under Paragraph 3(b) for the calendar year in which his active service for the
Company terminates pursuant to Paragraph 7(a) had he remained employed for the
entire year and assuming that the performance requirements to receive a bonus at
(but not above) target for such year had been met, multiplied by (ii) a
fraction, the numerator of which is equal to the number of days in such calendar
year occurring on or prior to the- termination of Executive's active service for
the Company and the denominator of which is 365.
“Change
of Control”. For the purposes of this Agreement, a "Change of Control" shall be
deemed to have occurred if:
(i) any
Person (as defined below) has acquired, "beneficial ownership" (within the
meaning of Rule 13d-3, as promulgated under Section 13(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) of securities of the
Company representing 50% or more of the combined Voting Power (as defined below)
of the Company's securities;
(ii)
within any 24 month period, the persons who were directors of the Company
imme-diately before the beginning of such period (the "Incum-bent Di-rectors")
shall cease (for any reason other than death) to constitute at least a majority
of the Board or the board of directors of any successor to the Company,
provided
that any
director who was not a director at the beginning of such period shall be deemed
to be an Incumbent Director if such director (A) was
elected to the Board by, or on the recommendation of or with the approval of, at
least two-thirds of the directors who then qualified as Incum-bent Directors
either actually or by prior operation of this Section 2(a)(ii) and (B) was not
designated by a person who has entered into an agreement with the Company to
effect a Corporate Event, as described in Section 2(a)(iii); or
(iii) the
stockholders of the Company approve a merger, consolidation, share exchange,
division, sale or other disposition of all or substantially all of the assets of
the Company (a "Corporate Event"), as a result of which the shareholders of the
Company immediately prior to such Corporate Event shall not hold, directly or
indirectly, immediately following such Corporate Event a majority of the Voting
Power of (x) in the
case of a merger or consolidation, the surviving or resulting corporation,
(y) in the
case of a share exchange, the acquiring corporation or (z) in the
case of a division or a sale or other disposition of assets, each surviving,
resulting or acquiring corporation which, immediately following the relevant
Corporate Event, holds more than 10% of the consolidated assets of the Company
immediately prior to such Event.
"Earned
salary" means any Base Salary earned, but unpaid, for services rendered to the
Company on or prior to the date on which the Employment
Period ends (other than
Base Salary deferred pursuant to Executive's election, under the terms of any
deferred compensation plan maintained by the Company.
“Person”.
For purposes of a Change in Control, "Person" shall have the meaning ascribed to
such term in Section 3(a)(9) of the Exchange Act, as supplemented by Section
13(d)(3) of the Exchange Act; provided, however, that Person shall not include
(i) the
Company or any subsidiary of the Company or (ii) any
employee benefit plan sponsored by the Company or any subsidiary of the
Company.
“Non-renewal
Benefit” means an amount equal to the Executive’s Base Salary for a period of
twelve (12) months, plus an amount equal to the bonus which Executive would have
been entitled to at target performance for the current performance period.
"Severance
Benefit" means two times an amount equal to the sum of: (i) Executive’s Base
Salary for one year; plus (ii) the average of the bonus paid for the two prior
years on an annualized basis, or the bonus for which Executive is eligible in
the year of Termination, at target, whichever is higher. Additionally, until the
second anniversary of the date of Executive's termination of employment or such
earlier date as he shall become eligible for benefits under the plan or program
of a subsequent employer, Executive shall also be eligible to continue to
participate in the welfare benefit plans and programs (excluding the long-term
disability plan, the sick-pay plan and vacation accruals) generally made
available to employees of the Company and in which he participated immediately
prior to the termination of his employment on the same terms and conditions as
would have applied had Executive continued to be employed.
"Termination
for Cause" means a termination of Exec-utive's employment by the Company due to
(i)
Execu-tive's conviction of a felony or misdemeanor involving moral turpitude or
the entering by Executive of a plea of nolo contendere to a felony or
misdemeanor charge involving moral turpitude, (ii)
Executive's gross neglect, willful malfeasance or willful gross miscon-duct in
connection with his employment hereunder, unless Executive reasonably believed
in good faith that such act or nonact was in or not opposed to the best
interests of the Company, (iii) a
sub-stantial and continual refusal by Executive in breach of this Agree-ment to
perform the duties, responsibilities or obligations assigned to Executive
pursuant to the terms hereof, provided that such duties, responsibilities or
obli-gations are con-sistent with his positions as Chief Executive Officer and
are otherwise lawful and appro-priate and Executive has been given not less than
thirty (30) days written notice and an opportunity to cure his non-performance,
or (iv) any
other material breach by Executive of any material provision of this Agreement
which is no less substantial than those specifically described above and which
has a material adverse effect on the financial performance or reputation of the
Company.
"Termination
due to Disability" means a termina-tion of Executive's employment by the Company
because Executive has been in-capable of substantially fulfilling the positions,
duties, responsibilities and obligations set forth in this Agreement because of
physical, mental or emotional incapacity re-sulting from injury, sickness or
disease for a period of (i) at
least five consecutive months or (ii) more
than seven months in any twelve month period. The Company and Executive shall
agree on the identity of a physician to resolve any question as to Executive's
disability. If the Company and Executive cannot agree on the physician to make
such determination, then the Company and Executive shall each select a physician
and those physi-cians shall jointly select a third physician, who shall make the
determination. The determination of any such physician shall be final and
con-clusive for all purposes of this Agree--ment. Executive or his legal
representative or any adult member of his immedi-ate family shall have the right
to pre-sent to such physician such information and argu-ments as to Executive's
disability as he, she or they deem appropri-ate, including the opinion of
Executive's personal physician.
"Termination
for Good Reason" means a termination of Executive's employment by Executive
following: (i) a
reduction in Executive's annual Base Salary or incentive compensation
opportunity, (ii) failure
to continue Executive as the Company's president and chief executive officer
without Executive’s written consent, other than in connection with a Termination
for Cause or a Termination due to Disability, (iii) a
material reduction in Executive's positions, duties and responsibilities from
those described in Section 2 hereof or the assignment to Executive of any duties
inconsistent with his position or experience, (iv) the
relocation of Executive's office to a location more than 25 miles from Aliso
Viejo, California or (v) any
other material breach of this Agree-ment by the Company. Notwithstanding the
foregoing, a termination shall not be treated as a Termination for Good Reason
(i) if
Executive shall have consented in writing to the occurrence of the event giving
rise to the claim of Termination for Good Reason or (ii) unless
Executive shall have delivered a written notice to the Board within sixty (60)
days of his having actual knowledge of the occurrence of one of such events
stating that an event or circumstance constituting Good Reason has occurred and
requesting a cure by the Company, such notice to specify the factual basis for
what event or circumstance constitutes Good Reason, and such event, if capable
of being cured, shall not have been cured within 30 days of the receipt of such
notice. Executive may thereafter terminate his employment for Good Cause, or at
Executive’s election, continue with his employment for a further period of up to
six (6) months within which Executive shall be required to submit a final
written notice of his election to terminate his employment for Good Reason if
Executive chooses to do so. The failure of Executive to submit a final written
notice of termination for Good Reason within six (6) months shall act as a
waiver of the specific event or circumstance which constituted Good Reason as
identified in Executive’s initial written notice.
"Termination
Without Cause" means any termination of Executive's employment by the Company
other than (i) a
Termination due to Death or Disability or (ii) a
Termination for Cause.
"Vested
benefits" means amounts which are vested or which Executive is otherwise
entitled to receive under the terms of or in accordance with any plan, policy,
practice or program of, or any contract or agreement with, the Company, at or
sub-sequent to the date of his termination without regard to the performance by
Executive of further services or the resolution of a contingency.
"Voluntary
Termination" means any termination of Executive's employment on his own
initiative (other than a termination due to death, a Termination due to
Disability or a Termination for Good Reason) upon 30 days' advance written
notice to the Company of such termination.
“Voting
Power”. A specified percentage of "Voting Power" of a company shall mean such
number of the Voting Securities as shall enable the holders thereof to cast such
percentage of all the votes which could be cast in an annual election of
directors (without consideration of the rights of any class of stock other than
the common stock of the company to elect directors by a separate class vote);
and "Voting Securities" shall mean all securities of a company entitling the
holders thereof to vote in an annual election of directors (without
consideration of the rights of any class of stock other than the common stock of
the company to elect directors by a separate class vote).
e.
Full
Discharge of Company Obligations. The
amounts payable to Executive pursuant to this Paragraph 7 following termination
of his employment (including amounts payable with respect to Vested Benefits)
shall be in full and complete satisfaction of Executive's rights under this
Agreement and any other claims he may have in respect of his employment by the
Company or any of its subsidiaries other than claims for common law torts or
under other contracts between Executive and the Company or its subsidiaries.
Such amounts shall constitute liquidated damages with respect to any and all
such rights and claims and, upon Executive's receipt of such amounts, the
Company shall be released and discharged from any and all liability to Executive
in connection with this Agreement or otherwise in connection with Executive's
employment with the Company and its subsidiaries.
f.
No
Mitigation; No Offset. In the
event of any termination of employment under this Paragraph 7, Executive shall
be under no obligation to seek other employment and there shall be no offset
against amounts due Executive under this Agreement on account of any
remuneration attributable to any subsequent employment that he may obtain except
as specifically provided in this Paragraph 7.
g.
Notice
of Termination Any
termination by the Company for Cause or by the Executive for Good Reason shall
be communicated by Notice of Termination to the other party hereto given in
accordance with Section 9(j). For purposes of this Agreement, a "Notice of
Termination" means a written notice given, in the case of a termination for
Cause, within 30 business days of the Company's having actual knowledge of the
events giving rise to such termination, and in the case of a termination for
Good Reason, within 120 days of the Executive's having actual knowledge of the
events giving rise to such termination, and which (i)
indicates the specific termination provision in this Agree-ment relied upon,
(ii) sets
forth in reason-able detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the pro-vision so
indicated, and (iii) if the
termination date is other than the date of receipt of such notice, specifies the
termination date of the Executive's employment (which date shall be not more
than 15 days after the giving of such notice). The failure by the Executive to
set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason shall not waive any right of the
Executive hereunder or preclude the Executive from asserting such fact or
circumstance in enforcing his rights hereunder.
(h)
Limit
on Payments by the Company.
(i)
Application of Section 7(h). In the event that any amount or benefit paid or
distributed to the Executive pursuant to this Agree-ment, taken together with
any amounts or bene-fits otherwise paid or distributed to the Executive by the
Company or any affiliated company (collec-tively, the "Covered Payments"), would
be an "excess parachute payment" as defined in Section 280G of the Code and
would thereby subject the Executive to the tax (the "Excise Tax") imposed under
Section 4999 of the Code (or any similar tax that may hereaf-ter be imposed),
the provisions of this Section 7(e) shall apply to determine the amounts payable
to Executive pursuant to this Agreement.
(ii)
Calculation
of Benefits.
Immediately following delivery of any Notice of Termination, the Company shall
notify the Executive of the aggregate present value of all termination benefits
to which he would be entitled under this Agreement and any other plan, program
or arrangement as of the projected Date of Termination, together with the
projected maximum payments, determined as of such projected Date of Termination
that could be paid without the Executive being subject to the Excise
Tax.
(iii)
Imposition
of Payment Cap. If the
aggregate value of all compensation payments or benefits to be paid or provided
to the Executive under this Agreement and any other plan, agreement or
arrangement with the Company exceeds the amount which can be paid to the
Executive without the Executive incurring an Excise Tax, then the amounts
payable to the Executive under this Section 7 shall be reduced (but not below
zero) to the maximum amount which may be paid hereunder without the Executive
becoming subject to such an Excise Tax (such reduced payments to be referred to
as the "Payment Cap"). In the event that the Executive receives reduced payments
and benefits hereunder, the Executive shall have the right to designate which of
the payments and benefits otherwise provided for in this Agreement that he will
receive in connection with the application of the Payment Cap.
(iv)
Application
of Section 280G. For
purposes of determining whether any of the Covered Payments will be subject to
the Excise Tax and the amount of such Excise Tax,
(A) (x) whether
Covered Payments are "parachute payments" within the meaning of Section 280G of
the Code, and (y) whether
there are "parachute payments" in excess of the "base amount" (as defined under
Section 280G(b)(3) of the Code) shall be determined in good faith by the
Com-pany's independent certi-fied public accountants appointed prior to the
Effective Date (the "Ac-countants") or tax coun-sel selected by such
Accountants, and
(B) the value
of any non-cash benefits or any deferred payment or benefit shall be deter-mined
by the Accountants in accordance with the principles of Section 280G of the
Code.
(v)
Adjustments
in Respect of the Payment Cap. If the
Executive receives reduced payments and benefits under this Section 7(e)(or this
Section 7(e) is determined not to be applicable to the Executive because the
Accountants conclude that Executive is not subject to any Excise Tax) and it is
established pursuant to a final determination of a court or an Internal Revenue
Service proceeding (a "Final Determination") that, notwithstanding the good
faith of the Executive and the Company in applying the terms of this Agreement,
the aggregate "parachute payments" within the meaning of Section 280G of the
Code paid to the Executive or for his benefit are in an amount that would result
in the Executive's being subject to an Excise Tax, then any amounts actually
paid to or on behalf of the Executive which are treated as excess parachute
payments shall be deemed for all purposes to be a loan to the Executive made on
the date of receipt of such excess payments, which the Executive shall have an
obligation to repay to the Company on demand, together with interest on such
amount at the applicable Federal rate (as defined in Section 1274(d) of the
Code) from the date of the payment hereunder to the date of repayment by the
Executive. If the Executive receives reduced payments and benefits by reason of
this Section 7(e) and it is established pursuant to a Final Determination that
the Executive could have received a greater amount without exceeding the Payment
Cap, then the Company shall promptly thereafter pay the Executive the aggregate
additional amount which could have been paid without exceeding the Payment Cap,
together with interest on such amount at the applicable Federal rate (as defined
in Section 1274(d) of the Code) from the original payment due date to the date
of actual payment by the Company.
8. Non-exclusivity
of Rights. Except
as expressly provided herein, nothing in this Agreement shall prevent or limit
the Executive's continu-ing or future participation in any benefit, bonus,
incen-tive or other plan or program provided by the Company or any of its
affiliated companies and for which the Executive may quali-fy, nor shall
anything herein limit or otherwise prejudice such rights as the Executive may
have under any other agree-ments with the Company or any of its affiliated
companies, including employment agreements or stock option agreements. Amounts
which are vested benefits or which the Executive is otherwise entitled to
receive under any plan or program of the Company or any of its affiliated
companies at or sub-sequent to the Date of Termination shall be payable in
accordance with such plan or program.
9. Noncompetition
and Confidentiality.
a.
Noncompetition.
During
the period in which
Executive is employed by the Company or any of its subsidiaries, Executive shall
not become associated with any entity, whether as a prin-cipal, partner,
employee, consultant or shareholder (other than as a holder of not in excess of
1% of the outstanding voting shares of any publicly traded company), that is
active-ly engaged in competition with the business of the Company in the United
States of America.
b.
Confidentiality. Without
the prior written consent of the Company, except (i) in the
course of carrying out his duties hereunder or (ii) to the
extent required by an order of a court having competent jurisdic-tion or under
subpoena from an appropriate government agency, Executive shall not disclose any
trade se-crets, customer lists, drawings, designs, information regarding product
develop-ment, marketing plans, sales plans, manufacturing plans, management
organization information (including data and other informa-tion relating to
members of the Board of Directors and manage-ment), operating policies or
manuals, business plans, financial records or other financial, commercial,
business or techni-cal information relating to the Company or any of its
subsidiaries or information designated as confidential or proprietary that the
Company or any of its subsidiaries may receive belonging to suppliers, customers
or others who do business with the Company or any of its subsidiaries
(collectively, "Confidential Information") to any third person unless such
Confi-dential Information has been previously disclosed to the public by the
Company or is in the public dom-ain (other than by reason of Executive's breach
of this Section 8(b)).
c.
Company
Property.
Promptly following Execu-tive's termination of employment, Executive shall
return to the Company all property of the Company, and all copies thereof in
Executive's possession or under his control, ex-cept that Executive may retain
his personal notes, diaries, Rolodexes, calendars and
correspondence.
d.
Non-Solicitation
of Employees. During
the period in which Executive is employed by the Company and any of its
subsidiaries, and for the one year
following any
termination of employment by the Executive, Executive shall not directly or
indirectly, except in the course of carrying out his duties hereunder, induce
any employee of the Company or any of its subsidiaries to terminate employ-ment
with such entity, and shall not directly or indirect-ly, either individually or
as owner, agent, em-ployee, consultant or otherwise, solicit the employment of
any person who is employed by the Company or a sub-sidiary thereof.
e. Injunctive
Relief with Respect to Cov-enants.
Executive acknowledges and agrees that the covenants and obligations of
Executive with respect to noncompetition, nonsolicitation, confidentiality and
Company property relate to special, unique and extraordinary matters and that a
violation of any of the terms of such covenants and obligations will cause the
Company irreparable injury for which adequate remedies are not available at law.
There-fore, Executive agrees that the Company shall be entitled to seek an
injunction, restraining order or such other equitable relief (without the
requirement to post bond) restraining Executive from committing any violation of
the coven-ants and obligations contained in this Paragraph 9. These injunctive
remedies are cumulative and are in addition to any other rights and remedies the
Company may have at law or in equity.
10. Miscellaneous.
a.
Survival.
Paragraphs 6(f)(relating to indemnification), 7 (relating to early termination),
9 (relating to noncompetition, nonsolicitation and confidentiality) and 10(o)
(relating to governing law), shall survive the termination hereof, whether such
termination shall be by expiration of the Employment Period or an early
termination pursuant to Paragraph 7 hereof.
b.
Binding
Effect. This
Agreement shall be binding on, and shall inure to the benefit of, the Company
and any person or entity that succeeds to the interest of the Com-pany
(regardless of whether such succession does or does not occur by operation of
law) by reason of a merger, consolida-tion or reorganization involv-ing the
Company or a sale of all or substantially all of the assets of the Company,
pro-vided that the assignee or transferee is the successor to all or
substantially all of the assets of the Company and such assignee or transferee
assumes the liabilities, obli-gations and duties of the Company, as contained in
this Agreement, either contractually or as a matter of law. The Company further
agrees that, in the event of a sale of as-sets as described in the preceding
sentence, it shall use its reasonable best efforts to cause such as-signee or
trans-feree to expressly assume the liabilities, obligations and duties of the
Company hereunder. This Agree-ment shall also inure to the benefit of
Executive's heirs, executors, admin-i-strators and legal repre-senta-tives and
beneficiaries as provided in Paragraph 10(f).
c.
Assignment. Except
as provided under Paragraph 10(b), neither this Agreement nor any of the rights
or obligations here-under shall be assigned or delegated by any party hereto
without the prior written consent of the other party.
d.
Entire
Agreement. This
Agreement con-stitutes the entire agreement between the parties hereto with
respect to the matters referred to herein. No other agreement relating to the
terms of Executive's employment by the Company, oral or otherwise, shall be
binding between the parties unless it is in writing and signed by the party
against whom enforcement is sought. There are no promises, representations,
inducements or statements between the parties other than those that are
expressly contained herein. Executive acknowledges that he is entering into this
Agreement of his own free will and accord, and with no duress, that he has been
represented and fully advised by competent counsel in entering into this
Agreement, that he has read this Agreement and that he under-stands it and its
legal consequences.
e.
Severability;
Reformation. In the
event that one or more of the provisions of this Agreement shall become invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not be
affected thereby. In the event any of Paragraph 8(a), (b) or (c) is not
enforce-able in accordance with its terms, Executive and the Com-pany agree that
such Paragraph shall be reformed to make such Paragraph enforceable in a manner
which provides the Company the maximum rights permitted at law.
f.
Beneficiaries/References.
Executive shall be entitled, to the extent permitted under any applicable law
and the terms of any applicable plan, to select and change a beneficiary or
beneficiaries to re-ceive any compensation or benefit payable hereunder
following Executive's death by giving the Company written notice thereof. In the
event of Executive's death or a judicial determination of his incompetence,
reference in this Agree-ment to Executive shall be deemed, where appropriate, to
refer to his beneficiary, estate or other legal representa-tive.
g.
Waiver. Waiver
by any party hereto of any breach or default by the other party of any of the
terms of this Agreement shall not operate as a waiver of any other breach or
default, whether similar to or dif-ferent from the breach or default waived. No
waiver of any provision of this Agreement shall be implied from any course of
dealing between the parties hereto or from any failure by either party hereto to
assert its or his rights hereunder on any occasion or series of
occasions.
h.
Arbitration. The
Company and Executive agree that any claim, dispute or controversy arising under
or in connection with this Agreement, or otherwise in connection with
Executive's employment by the Company (including, without limitation, any such
claim, dispute or controversy arising under any federal, state or local statute,
regulation or ordinance or any of the Company's employee benefit plans, policies
or programs) shall be resolved solely and exclusively by binding arbitration.
The arbitration shall be held in the city of Irvine, California (or at such
other location as shall be mutually agreed by the parties). The arbitration
shall be conducted in accordance with the then current rules for the handling of
employment related claims (the "Rules") of JAMS (“JAMS”) in effect at the time
of the arbitration, except that the arbitrator shall be selected by
alternatively striking from a list of five arbitrators supplied by JAMS. All
fees and expenses of the arbitration provider and arbitrators, including a
transcript if either requests, shall be borne by the Company.
If
Executive prevails as to any material issue presented to the arbitrator, the
entire cost of such proceedings (including, without limitation, Executive's
reasonable attorneys fees and other expenses) shall be borne by the Company. If
Executive does not prevail as to any material issue, each party will pay for the
fees and expenses of its own attorneys, experts, witnesses, and preparation and
presentation of proofs and post-hearing briefs (unless the party prevails on a
claim for which attorney's fees are recoverable under the Rules). Any action to
enforce or vacate the arbitrator's award shall be governed by the Federal
Arbitration Act, if applicable, and otherwise by applicable state law. If either
the Company or Executive pursues any claim, dispute or controversy against the
other in a proceeding other than the arbitration provided for herein, the
responding party shall be entitled to dismissal or injunctive relief regarding
such action and recovery of all costs, losses and attorney's fees related to
such action.
h.
Notices. Any
notice required or desired to be delivered under this Agreement shall be in
writing and shall be delivered personally, by courier service, by registered
mail, return receipt requested, or by telecopy and shall be effective upon
actual receipt by the party to which such notice shall be directed, and shall be
ad-dressed as follows (or to such other address as the party entitled to notice
shall hereafter designate in accordance with the terms hereof).
If to the
Company:
cXc
Services, Inc.
1
Wakonda
Xxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention:
President and Chief Executive Officer
If to
Executive:
Xxxxxxx
X. Xxxxxxxxx
00000
Xxxxxxxxxx Xxxx
Xxxxxx
Xxxxx, Xxxxxxxxxx 00000
i.
Amendments. This
Agreement may not be altered, modified or amended except by a written
instru-ment signed by each of the parties hereto.
j.
Headings.
Headings to paragraphs in this Agreement are for the convenience of the parties
only and are not intended to be part of or to affect the meaning or
interpretation hereof.
k.
Counterparts. This
Agreement may be ex-ecuted in counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same
instrument.
l.
Withholding. Any
payments provided for herein shall be reduced by any amounts required to be
withheld by the Company from time to time under applicable Federal, State or
local income or employment tax laws or similar statutes or other provisions of
law then in effect.
m.
Governing
Law. This
Agreement shall be governed by the laws of the State of California, without
reference to principles of conflicts or choice of law under which the law of any
other jurisdiction would apply.
IN
WITNESS WHEREOF, the Company has caused this Agreement to be executed by its
duly authorized officer and Executive has hereunto set his hand as of the day
and year first above written.
CXC
SERVICES, INC..
WITNESS:
__________________
By:
____________________________
WITNESS:
__________________
_____________________________
Xxxxxxx
X. Xxxxxxxxx
