Exhibit 10.2
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") by and between, Design
Automation Systems, Inc. (the "Company"), and Xxxx Xxxx, ("Employee") is hereby
entered into and effective as of the close, of business on December 31, 1998.
This Agreement hereby supersedes, any other employment agreements or
understandings, written or oral, between the parties.
RECITALS
The following statements are true and correct:
As of the date of this Agreement, the Company is engaged primarily in the
business of providing computer system integration, specializing in UNIX client
server architecture and its components, and offering system management services
with a complete software, selection.
Employee is employed hereunder by the Company in a confidential relationship
wherein Employee, in the course of, Employee's employment with the Company, will
be instrumental in the, development of the Company's business and has and will
continue to, become familiar with and aware of information as to the Company's,
customers, specific manner of doing business, including the, processes,
techniques and trade secrets utilized by the Company, and future plans with
respect thereto, all of which has been and, will be established and maintained
at great expense to the Company; this information is a trade secret and
constitutes the valuable, good will of the Company.
Therefore, in consideration of the mutual promises, terms, covenants and
conditions set forth herein and the performance of, each, it is hereby agreed as
follows:
AGREEMENTS
1. EMPLOYMENT AND DUTIES.
(a) The Company hereby employs Employee as Chief Executive Officer. As
such, Employee shall have the responsibilities, duties, and authority reasonably
accorded to and expected of such position, and such other duties as are assigned
to him and will report, directly to the Board of Directors. Employee hereby
accepts this, employment upon the terms and conditions herein contained and,
subject to Section 1 (c), agrees to devote such time, attention and, efforts as
are reasonably necessary to promote and further the, business of the Company.
(b) Employee shall adhere to, execute and fulfill all reasonable and
uniformly applied policies established by the, Company.
(c) Employee shall not, during the term of Employee's employment
hereunder, be engaged in any other business activity, pursued for gain,
profit or other pecuniary advantage if such, activity interferes with
Employee's duties and responsibilities, hereunder. The foregoing limitations
shall not be construed as, prohibiting Employee from making personal
investments in such form, or manner as will
neither require Employee's services in the, operation or affairs of the
companies or enterprises in which such, investments are made nor violate the
terms of Section 3 hereof.
2. COMPENSATION. For all services rendered by Employee, the Company shall
compensate Employee as follows:
(a) BASE SALARY. The base salary payable to Employee shall be $300,000.00
per year, payable twice monthly on the 5th and 20th.
(b) INCENTIVE BONUS. Employee shall be entitled to receive the following
bonus compensation: Fifty (50%) percent of the base, salary paid in equal
quarterly installments. On at least an annual, basis the Board of Directors will
review Employee's performance and, make increases to such base salary and
bonuses as appropriate.
(c) EXECUTIVE PERQUISITES, BENEFITS AND OTHER COMPENSATION. Employee shall
be entitled to receive additional benefits and compensation from the Company in
such form and to such extent as, specified below:
(i) Admittance for participation for Employee under health,
hospitalization, disability, dental, life and other, insurance plans that the
Company may have in effect from, time to time, with the benefits provided to
Employee, under this clause (i) to be at least equal to such, benefits provided
to key executives.
(ii) Reimbursement for all business travel and other out-of-pocket
expenses reasonably incurred by Employee in the performance of Employee's
services pursuant to this Agreement. All reimbursable expenses shall be
appropriately documented in reasonable detail by Employee upon submission of any
request for reimbursement and in a format and manner consistent with expense
reporting policy of the Company.
(iii) The Company shall provide Employee with other executive
perquisites as may be available to or deemed appropriate for Employee by the
Board of Directors and participation in all other the Company-wide employee
benefits as available from time to time.
3. NON-COMPETITION AGREEMENT.
(a) Employee will not, during the period of Employee's employment by or
with the Company, and for a period of one (1) year, immediately following the
termination of Employee's employment, under this agreement for any reason other
than the expiration of, its term or termination by the Company without cause,
directly or, indirectly, for Employee or on behalf of or in conjunction with
any, other person, persons, company, partnership, corporation or, business of
whatever nature:
(i) call upon any person who is, at that time, an employee of the
Company in any capacity
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for the purpose or with the intent of enticing such employee away from or out of
the employ of the Company; or,
(ii) Call upon any person or entity which is, at that time, or which
has been, within one (1) year prior to that time a customer of the Company for
the purpose of soliciting or selling products or services in direct competition
with the Company.
The foregoing covenant shall not be deemed to prohibit Employee from
acquiring as an investment not more than three, percent (3%) of the capital
stock of a competing business, whose stock is traded on a national securities
exchange or over-the-counter. The foregoing covenant shall not be deemed to
prohibit Employee from any business practice authorized by the Board of
Directors.
(b) Because of the difficulty of measuring economic losses to the
Company as a result of a breach of the foregoing covenant and because of the
immediate and irreparable damage that could be caused to the Company for which
it would have no other adequate remedy Employee agrees that the foregoing
covenant may be enforced by the Company in the event of breach by Employee, by
injunctions and restraining orders.
(c) It is agreed by the parties that the foregoing covenants in this
Section 3 impose a reasonable restraint on Employee in light of the activities
and business of the Company on the date of the execution of this Agreement; but
is also the intent of the Company and Employee that such covenants be construed
and enforced in accordance with the changing activities, business and locations
of the Company throughout the term of this covenant, whether before or after the
date of termination of the employment of Employee. For example, if, during the
term of this Agreement, the Company engage in new and different activities,
enter a new business or establish new locations for its current activities or
business in addition to or other than the activities or business enumerated
under the Recitals above or the locations currently established therefor, then
Employee will be precluded from soliciting the customers or employees of such
new activities or business, except as specifically provided for herein.
(d) The covenants in this Section 3 are severable and separate, and the
unenforceability of any specific covenant shall not affect the provisions of any
other covenant. Moreover, in the event any court of competent jurisdiction shall
determine that the scope, time or territorial restrictions set forth are
unreasonable then it is the intention of the parties that such restrictions be
enforced to the fullest extent which the court deems reasonable and the
Agreement shall thereby be reformed.
4. PLACE OF PERFORMANCE.
(a) Employee's duties shall be carried out in Houston, Texas except for
occasional traveling which may be involved in the ordinary course of Employee's
duties.
(b) Notwithstanding the above, if Employee is requested by the Board to
relocate and
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Employee refuses, such refusal shall not constitute cause for termination of
this Agreement under the terms of Section 5(c).
5. TERM; TERMINATION RIGHTS ON TERMINATION. The term of this Agreement
shall begin January 1, 1999 and continue until December 31, 2004 (the Term),
and, unless terminated sooner as, herein provided or at the end of the Term by
either party, shall continue thereafter on a year-to-year basis on the same
terms and conditions contained herein in effect as of the time of renewal.
This Agreement and Employee's employment shall be terminated in any, one of the
following ways:
(a) DEATH. The death of Employee shall immediately terminate this
Agreement with no severance compensation due to Employee's estate. In the event
of Employee's death, Employee's estate shall be entitled to all Base Salary
earned through the date of death and the pro rata portion of the Incentive
Bonus, is any, then due Employee calculated through the end of the calendar
month prior to the month in which Employee dies. The representative of
Employee's estate shall also be entitled to exercise, for a period of one
hundred twenty (120) days after Employee's death, the option covering all vested
Option shares, if any, including but not limited to the pro rata portion of the
Option Shares, if any, that would have vested in Employee through the date of
his death if he had been employed by the Company on the next vesting date. At
the end of this period, the option shall terminate as to all Option Shares with
respect to which the option has not been exercised.
(b) DISABILITY. If, as a result of incapacity due to physical or mental
illness or injury, Employee shall have been absent from full-time duties
hereunder for two (2) consecutive months, then thirty (30) days after receiving
written notice (which notice may occur before or after the end of such two (2)
month period, but which shall not be effective earlier than the last day of such
two (2) month period), the Company may terminate Employee's employment hereunder
provided Employee is unable to resume full-time duties at the conclusion of such
notice period. Also, Employee may terminate Employee's employment hereunder
provided Employee is unable to resume full-time duties at the conclusion of such
notice period. Also, Employee may terminate Employee's employment hereunder if
Employee's health should become impaired to an extent that makes the continued
performance of Employee's duties hereunder hazardous to Employee's physical or
mental health or life, provided that Employee shall have furnished the Company
with a written statement from a qualified doctor to such effect and provided,
further, that, at the Company's request made within thirty (3) days of the date
of such written statement, Employee shall submit to an examination by a doctor
selected by the Company who is reasonably acceptable to Employee or Employee's
doctor and such doctor shall have concurred in the conclusion of Employee's
doctor. In the event this agreement is terminated as a result of Employee's
disability, Employee shall receive from the Company sixty percent (60%) of the
Base Salary at the rate then in effect for whatever time period is remaining
under the Term of this Agreement or for one (1) year, whichever amount is less,
payable at regular pay intervals. The Company may satisfy this obligation
through provision of a disability policy covering Employee that, meets the terms
of this Section, with the premiums for such policy being paid by the Company.
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(c) GOOD CAUSE. The Company may terminate the Agreement ten (10) days
after written notice to Employee for good cause, which shall be: (1) Employee's
gross negligence in the performance or intentional non-performance (either of
which continuing for ten days after receipt of written notice of need to cure)
of any of Employee's material duties and responsibilities hereunder; (2)
Employee's willful, material and irreparable breach of this Agreement; (3)
Employee's willful dishonesty, fraud or misconduct with respect to the business
or affairs of the Company which materially and adversely affects the operations
or reputation of the Company; (4) Employee's conviction of a felony crime; or
(5) chronic alcohol abuse or illegal drug abuse by Employee. In the event of a
termination for good cause, as enumerated above, Employee shall have no right to
any severance compensation.
(d) WITHOUT CAUSE. At any time after the commencement of employment,
the Company or Employee may, Without cause, terminate this Agreement and
Employee's employment, effective thirty (30) days after written notice is
provided to the Company. Should Employee be terminated by the Company without
cause during the Term, Employee shall receive from the Company, at his option
either six (6) months Base Salary (at the rate then in effect) payable in a
lump-sum payment due on the effective date of termination or one year's Base
Salary payable from time to time at regular intervals. Further, any termination
without cause by the Company shall operate to invalidate the terms of Section 3.
If Employee resigns or otherwise terminates Employee's employment without cause
pursuant to this Section 5(d), Employee shall receive no severance compensation
and the terms of Section 3 shall be fully enforceable.
If termination of Employee's employment arises out of the Company's
failure to pay Employee on a timely basis the amounts to which Employee is
entitled under this Agreement or as a result of, any other breach of this
Agreement by the Company, pursuant to the provisions of Section 17 below, the
Company shall pay all amounts and damages to which Employee may be entitled as a
result of such breach, including interest thereon and all reasonable legal fees
and expenses and other costs incurred by Employee to enforce Employee's rights
hereunder. Further, none of the provisions of Section 3 shall apply in the event
this Agreement is terminated as a result of a breach by the Company.
6. RETURN OF THE COMPANY PROPERTY. All records, designs, patents, business
plans, financial statements, manuals, memoranda, lists and other property
delivered to or compiled by Employee by or, on behalf of the Company or its
representatives, vendors or customers which pertain to the business of the
Company shall be and remain the property of the Company, and be subject at all
times to its discretion and control. Likewise, all correspondence, reports,
records, charts, advertising materials and other similar data, pertaining to the
business, activities or future plans of the, Company which are collected by
Employee shall be delivered promptly to the Company without request by it upon
termination of Employee's employment.
7. INVENTIONS. Employee shall disclose promptly to the Company any and all
significant conceptions and ideas for inventions, improvements and valuable
discoveries, whether patentable or
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not, which are conceived or made by Employee, solely or jointly with another,
during the period of employment, and which are directly related to the business
or activities of the Company and which Employee conceives as a result of
Employee's employment by the Company. Employee hereby assigns and agrees to
assign all Employee's interests therein to the Company or its nominee. Whenever
requested to do so by the Company, Employee shall execute any and all
applications, assignments or other instruments that the Company shall deem
necessary to apply for and obtain Letters Patent of the United States or any
foreign country or to otherwise protect the Company's interest therein.
8. TRADE SECRETS. Employee agrees that Employee will not during or after the
Term of this Agreement with the Company disclose the Specific terms of the
Company's relationships or agreements with its respective significant vendors or
customers or any other significant vendors or customers or any other significant
and material trade secret of the Company, to any person, firm, partnership,
corporation or business for any reason or purpose whatsoever.
9. INDEMNIFICATION. In the event Employee is made a party to any threatened,
pending or completed action, suit or proceeding, whether civil or administrative
(other than an action by the, Company against Employee), by reason of the fact
that Employee is or was performing services under this Agreement, then the
Company shall indemnify Employee against all expenses (including attorneys'
fees), judgments and amounts paid in settlement, as actually and reasonably
incurred by Employee in connection therewith. In the event that both Employee
and the Company are made a party to the same third-party action, complaint, suit
or proceeding, the Company agrees to engage competent legal representation, and
Employee agrees to use the same representation, provided that if counsel
selected by Company shall have a conflict of interest that prevents such counsel
from representing Employee, Employee may engage separate counsel and the Company
shall pay all reasonable attorneys' fees of such separate counsel. Employee will
not be held liable to the Company for errors or omissions where Employee has not
exhibited gross, willful and wanton negligence and, misconduct or performed
criminal and fraudulent acts which materially damage the business of the
Company. The indemnity provisions contained herein shall be deemed to extend to
protect Employee to the maximum extent permitted by law.
10. NO PRIOR AGREEMENTS. Employee hereby represents and warrants to the
Company that the execution of this Agreement by Employee and Employee's
employment by the Company and the performance of Employee's duties hereunder
will not violate or be a breach of any written agreement with a former employer,
client or any other person or entity. Employee agrees to indemnify the Company
for any claim, including, but not limited to, attorneys' fees and expenses of
investigation by any such third party that such third party may now have or may
hereafter come to have against the Company based upon or arising out of any
written non-competition agreement, invention or secrecy agreement between
Employee and such third party which was in existence as of or prior to the date
of this Agreement. Company agrees to indemnify Employee for any claim,
including, but not limited to, attorneys' fees and expenses of investigation, by
any third party that such third party may now have or may hereafter come to have
against Employee where there was not a written
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non-competition agreement invention or secrecy agreement between Employee and
such third party which was in existence as of or prior to the date of this
Agreement and where Employee committed no illegal or fraudulent act.
11. ASSIGNMENTS; BINDING EFFECT. Employee understands that Employee has
been selected for employment by the Company on the basis of Employee's personal
qualifications, experience and skills. Employee agrees, therefore, that Employee
cannot assign all or any portion of Employee's performance under this Agreement.
Subject to the preceding two (2) sentences and the express provisions of Section
12 below, this Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties hereto and their respective heirs, legal
representatives, successors and assigns.
12. COMPLETE AGREEMENT. This Agreement is not a promise of future
employment. Employee has no oral representations, understandings or agreements
with the Company or any of its, officers, directors or representatives covering
the same subject matter as this Agreement. This written Agreement is the final
complete and exclusive statement and expression of the Agreement between the
Company and Employee and of all the terms of this Agreement, and it cannot be
varied, contradicted or supplemented by evidence of any prior or contemporaneous
oral or written agreements. This written Agreement may not be later modified
except by a further writing signed by a duly authorized officer of the Company
and Employee, and no term of this Agreement may be waived except by writing
signed by the party waiving the benefit of such term.
13. NOTICE. Whenever any notice is required hereunder, it shall be
given in writing addressed as follows:
To the Company: Design Automation Systems, Inc.
0000 Xxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000-0000
with a copy to: Xxxxxx X. Xxxxxx
0000 Xxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
To Employee: Xxxx X. Xxxx
0000 Xxx Xxxxx Xxxxx
Xxxxx Xxxx, Xxxxx 00000
Notice shall be deemed given and effective three (3) days after the
deposit in the U.S. mail of a writing addressed as above and sent first class
mail, certified, return receipt requested, or when actually received. Either
party may change the address for notice by notifying the other party of such
change in accordance with this Section 13.
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14. SEVERABILITY; HEADINGS. If any portion of this Agreement is held
invalid or inoperative, the other portions of this Agreement shall be deemed
valid and operative and, so far as is reasonable and possible, effect shall be
given to the intent manifested by the portion held invalid or inoperative. The
Section headings herein are for reference purposes only and are not intended in
any way to describe, interpret, define or limit the extent or intent of the
Agreement or of any part hereof.
15. ARBITRATION. Any unresolved dispute or controversy arising under or
in connection with this Agreement shall be settled exclusively by first
mediation and then, if necessary, by arbitration, conducted before a panel of
three (3) arbitrators in Houston, Texas, in accordance with the rules of the
American Arbitration Association then in effect. The arbitrators shall not have
the authority to add to, detract from, or modify any provision hereof nor to
award punitive damages to any injured party. The arbitrators shall have the
authority to order back-pay, severance compensation, vesting of options (or cash
compensation in lieu of vesting of options), reimbursement of costs, including
those incurred to enforce this Agreement, and interest thereon in the event the
arbitrators determine that Employee was terminated without disability or good
cause, as defined in Sections 5(b) and 5(c), respectively, or that the Company
has otherwise materially breached this Agreement. A decision by a majority of
the arbitration panel shall be final and binding. Judgment may be entered on the
arbitrators' award in any court having jurisdiction. The direct expense of any
arbitration proceeding shall be borne by the Company.
16. GOVERNING LAW. This Agreement shall in all respects be construed
according to the laws of the State of Texas with giving effect to Texas
conflicts laws provisions.
17. COUNTERPARTS. This Agreement may be executed simultaneously in two
(2) or more counterparts, each of which shall be deemed an original and all of
which together shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
COMPANY:
EMPLOYEE: DESIGN AUTOMATION SYSTEMS, INC.
/S/ XXXX X. XXXX BY: /S/ XXXX X. XXXX
----------------------- --------------------------------
XXXX X. XXXX NAME: XXXX X. XXXX
TITLE: PRESIDENT
This Agreement subject to approval of the Board of Directors of Design
Automation Systems, Inc.
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I, the Secretary of Design Automation Systems, Inc. do hereby certify
that the Board of Directors approved this Agreement on the, 21st day of
December, 1998.
/S/ Xxxxxx Xxxxxx, Secretary
--------------------------------
Xxxxxx Xxxxxx, Secretary
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