EXHIBIT 10.19
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
This Amendment No. 1 to the Employment Agreement between Xxxxxx'x, Inc. and
Xxxxxxx Xxxxxx effective October 1, 2001 ("Agreement") is entered into as of
July 22, 2002 ("Amendment").
1. The parties wish to eliminate Sections 6(a)-(e) and replace them with
the following:
(a) We each recognize that due to the nature of Executive's employment, and
your relationship with the Company, you have and will continue to have access
to, will continue to acquire, and will continue to assist in developing,
Proprietary Information (as defined below) and additional confidential
information with respect to its present and prospective services, technologies,
systems, clients, customers, agents, and sales and marketing methods. Executive
acknowledges that such information is of central importance to the Company's
business and that disclosure of it to or its use by others could cause
substantial loss to the Company. We each also recognize that an important part
of Executive's duties will be to develop good will for the Company through his
personal contact with the Company's clients, and that there is a danger that
this good will, a proprietary asset of the Company, may follow if and when your
relationship with the Company is terminated.
(b) Executive agrees that during the term of his employment with the Company
and at any time thereafter, he will not disclose any Proprietary Information of
the Company without the prior written consent of the President or Board of
Directors of the Company, which may be withheld in their sole and absolute
discretion, except in connection with your duties to the Company (the
"Nondisclosure Agreement"). Executive also agrees that in connection with this
Nondisclosure Agreement, you are also bound by the non-compete provisions below.
Executive further acknowledges and agrees that the Company's conduct in
providing you with Proprietary Information in exchange for your Nondisclosure
Agreement gives rise to the Company's interest in restraining him from competing
against the Company as set forth below (the "Non-Compete Agreement"), and that
his agreement to the Non-Compete Agreement is designed to enforce his
Nondisclosure Agreement. Executive further acknowledges that all Records (as
defined below) are and shall remain the exclusive property of the Company, and
agrees that upon termination of his employment with the Company he shall return
all Records in his possession.
(c) "Record" is defined as the Company's assets, including its: files,
accounts, records, customer lists, logbook, documents, drawings, models, plans,
specifications, manuals, books, forms, notes, reports, memoranda, studies,
surveys, software, flow charts, data, computer programs, listing of source code,
calculations, recordings, catalogues, compilations of information,
correspondence, confidential data of customers and all copies, abstracts or
summaries of the foregoing in any storage medium, as well as computers, computer
equipment, laptops, instruments, tools, storage devices, disks, equipment and
all other physical items related to the business of the Company (other than
merely personal items of a general professional nature), whether of a public
nature or not, and whether prepared by the employee or not.
(d) "Proprietary Information" is defined as follows: any confidential
business or technical information or trade secrets of the Company which an
employee acquires while employed by the
Company, whether or not conceived of, developed or prepared by the employee or
at his direction and includes:
i. Any information or compilation of information concerning
the Company's financial position, financing, purchasing,
accounting, marketing, merchandising, sales, salaries,
pricing, investments, costs, profits, plans for future
development, employees, prospective employees, research,
development, formulae, patterns, strategy, inventions,
plans, specifications, devices, products, procedures,
processes, operations, techniques, software, computer
programs or data;
ii. Any information or compilation of information concerning
the identity, plans, requirements, preferences, practices
and methods of doing business on specific customers,
suppliers, prospective customers and prospective suppliers
of the Company;
iii. Any other information or "know how" which is related to any
product, process, service, business or research of the
Company; and
iv. Any information which the Company acquires from another
party and treats as its proprietary information or
designates as "Confidential," whether or not owned or
developed by the Company.
v. The identity, skills and compensation of employees,
contractors, and consultants.
vi. Information related to inventions owned by the Company or
licensed from third parties.
(e) Notwithstanding the foregoing, "Proprietary Information" does not
include any of the following:
1. Information which is publicly known or which is generally employed by the
trade, whether on or after the date that an employee first acquires the
information;
2. General information or knowledge which an employee would have learned in
the course of similar work elsewhere in the trade; or
3. Information which an employee can prove was known by the employee before
the commencement of the employee's engagement by the Company.
2. Section 7(a) is amended as follows:
(a) The Company shall have the right to terminate the employment of Executive
under this Agreement at any time, and without notice, for "Cause" as hereinafter
defined. "Cause" is defined as any of the following, if they occur during the
period of your employment with the Company:
(i) You have been or are guilty of (i) a criminal offense involving moral
turpitude, (ii) criminal or dishonest conduct pertaining to the
business or affairs of the Company (including, without limitation,
fraud and misappropriation), (iii) any act or omission the intended
or likely consequence of which is material injury to the Company's
business, property or reputation, which act or omission continues
uncured for a period of ten (10) days after you have received written
notice from the Company, and (iv) gross negligence or willful
misconduct which continues uncured for a period of ten (10) days
after you have received written notice from the Company;
(ii) You persist, for a period of ten (10) days after written notice from
the Company, in a course of conduct reasonably determined by the
Company to be in material violation of your duties to the Company,
including without limitation duties of care, loyalty and/or fiduciary
duties;
(iii) Your death; or
(iv) The continuous and uninterrupted inability to perform your duties on
behalf of the Company, by reason of accident, illness, or disease,
for a period of sixty (60) days from the first day of such inability
to perform his duties.
3. The parties wish to amend and replace entirely Section 7(g)(i) of the
Agreement with the following:
(i)(A) as Severance Payments where there has been no Change in
Control of Company, his then applicable salary compensation (payable
monthly) for a period of six (6) months from the date of such
termination, less all applicable withholdings required by state or
federal law (and the Executive shall be under no obligation to
mitigate his/her damages or seek other employment).
(B) As Severance Payments following a Termination Upon Change in
Control:
1) his then applicable salary compensation (payable monthly) for a
period of twelve months in accordance with the Company's regular
payroll schedule.
2) If after termination he elects COBRA continuation coverage for
health insurance, the Company will pay the difference in premiums
between what he paid while employed at the Company and the actual
cost of the COBRA premiums, until the earlier of the date he is
no longer eligible for COBRA or the conclusion of the Severance
Payment Period.
3) He will also be entitled to receive the pro rata portion of your
bonus for the then-current fiscal year, calculated by determining
the maximum bonus for which you would be eligible for such full
fiscal year and multiplying such amount by the number of days in
such fiscal year through the date of termination divided by 365.
For purposes of determining the maximum bonus for which he will
be eligible, such maximum bonus is currently set at fifty percent
(50%) of your base salary for the
fiscal year ending March 31, 2003; in the event that at any point
in a subsequent fiscal year, the Company has not yet specified a
bonus plan for him, then the maximum bonus to which you were
entitled in the previous fiscal year will apply for the purposes
of this Section.
3) In the event that any payment or distribution by the Company to
or for the benefit of him as a result of a Termination Upon
Change of Control (whether paid or payable or distributed or
distributable pursuant to the terms of this Severance Agreement
or otherwise) (a "Payment") is determined by the Company or its
designated auditors or accountants to be subject to the excise
tax imposed by Section 4999 of the Internal Revenue Code, or any
interest or penalties are incurred by him with respect to such
excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Company shall pay to him an additional
payment (a "Gross-Up Payment")
4) "Change of Control" shall mean:
1. The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) (a
"Person") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 35% or more of
either (A) the then-outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock") or (B) the
combined voting power of the then-outstanding voting
securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting
Securities"); provided, however, that, for purposes of this
Section, the following acquisitions shall not constitute a
Change of Control: (i) any acquisition directly from the
Company, (ii) any acquisition by the Company, or (iii) any
acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any affiliated
company.
2. Individuals who, as of the date hereof, constitute the
Board (the Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by
the Company's shareholders, was approved by a vote of at least
a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors
or other actual or threatened solicitation of proxies or
consents by or on behalf of a person other than the Board.
3. Consummation of a reorganization, merger,
consolidation or sale or other disposition of all or
substantially all of the assets of the Company (a "Business
Combination"), in each case, unless, following such Business
Combination, (A) all or substantially all of the individuals
and entities that were the beneficial owners of the
Outstanding Company Common Stock and the Outstanding Company
Voting Securities immediately prior to such Business
Combination beneficially own directly or indirectly, more than
60% of the then-outstanding
shares of common stock and the combined voting power of the
then-outstanding voting securities entitled to vote generally
in the election of directors, as the case may be, of the
corporation resulting from such Business Combination
(including, without limitation, a corporation that, as a
result of such transaction, owns the Company or all or
substantially all of the Company's assets either directly or
through one or more subsidiaries) in substantially the same
proportions as their ownership immediately prior to such
Business Combination of the Outstanding Company Common Stock
and the Outstanding Company Voting Securities, as the case may
be, (B) no person (excluding any corporation resulting from
such Business Combination or any employee benefit plan (or
related trust) of the Company or such corporation resulting
from such Business Combination) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then-outstanding
shares of common stock of the corporation resulting from such
Business Combination or the combined voting power of the
then-outstanding voting securities of such corporation, except
to the extent that such ownership existed prior to the
Business Combination, and (C) at least a majority of the
members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent
Board at the time of the execution of the initial agreement or
of the action of the Board providing for such Business
Combination; or
4. Approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
5) "Termination Upon Change of Control" is defined as any of the
following, if they occur within eighteen (18) months following a
Change in Control:
i. The Company terminates his employment without Cause;
ii. The Company reduces his base salary from its current
level and he resigns within 30 days of such action;
or
iii. The Company relocates his office more than fifty
(50) miles from his current office and he resigns
within 30 days of such action.
4. The parties agree to eliminate Section 8(a)-(e) and replace it with the
following:
(a) During Executive's employment with the Company, he will not, directly or
indirectly, participate in the ownership, management, operation, financing or
control of, or be employed by or consult for or otherwise render services to,
any person, corporation, firm, or other entity that competes with the Company in
the state of Texas, or in any other state in the United States, or in any
country in the world, in the conduct of the business of the Company as conducted
or as proposed to be conducted, nor shall you engage in any other activities
that conflict with his obligations to the Company. Notwithstanding the
foregoing, Executive is permitted to own up to 1% of any class of securities of
any corporation in competition with the Company that is traded on a national
securities exchange or through Nasdaq.
(b) Executive agrees that for 12 months following the termination of his
employment for any reason:
(i) Executive will not directly or indirectly, in any jurisdiction
where the Company is operating as of the date of your termination,
whether as a partner, proprietor, employee, consultant, agent or
otherwise, participate or engage in any business with any of the
following companies without the prior written consent of the Company:
OneSource
Factiva
Multex/MarketGuide
(ii) Executive will be restricted from employment with the units of
Bloomberg, Dun & Bradstreet, Reuters, Xxxx-Elsevier, Thomson,
InfoUSA, Dow Xxxxx or Yahoo, as well as any new entities, that are
actively engaged in the provision of business information to users on
a paid, subscription basis; provided that in order to enforce this
non-competition restriction as against any additional entity other
than those set forth in Sections (c)(i) above or this paragraph (an
"Additional Entity"), the Company shall have given notice to you of
the inclusion of such Additional Entity to the restricted employer
list at least thirty (30) days prior to the date on which you were
terminated; provided that if the existence of such new company does
not become generally known within the business community until within
30 days of the date of his termination, the Company shall have thirty
(30) days from the earlier of the date on which it became aware of
the existence of such entity, or the date on which it should
reasonably have become aware of the existence of such entity based on
publicly available information, to inform you of the application of
this provision to such entity.
(c) Executive agrees that for 12 months following the termination of your
employment for any reason, you shall not, directly or indirectly:
(i) For his own account, or for the account of others, interfere
with, solicit, or accept for yourself, or for the benefit of anyone
other than the Company, as measured at the time of your termination,
any of the clients or customers of the Company, or perform any
services of any competitive nature in connection with said clients or
customers for anyone other than the Company. The restrictions will
not prohibit Executive from soliciting clients or customers of the
Company with respect to the provision of products or services that
are in no way competitive with any products and/or services offered
by the Company at such time.
(ii) Urge any client or customer of the Company to discontinue
business, in whole or in part, or not do business, with the Company.
(d) Solicit, hire or arrange to hire any person who at the time of such hire or
within three (3) months prior to the time of such hire was an employee of the
Company, for yourself or for any business entity with which you may be, or may
be planning to be, affiliated or associated with, or otherwise interfere with
the retention of employees that the Company desires to retain as such.
(e) Executive expressly acknowledges and agrees (i) that the restrictions set
forth in this entire Section are reasonable, in terms of scope, duration,
geographic area, and otherwise, (ii) that the protections afforded to the
Company hereunder are necessary to protect its legitimate business interests,
and (iii) that the agreement to observe such restrictions form a material part
of the consideration for this Severance Agreement. Executive specifically agrees
that the Non-Compete Agreement is to be enforced to the fullest extent permitted
by law. Accordingly, if a court of competent jurisdiction determines that the
scope and/or operation of any provision of the Non-
Compete Agreement is too broad to be enforced as written, the Company and
Executive intend that the court should reform such provision to such narrower
scope and/or operation as it determines to be enforceable, provided, however,
that such reformation applies only with respect to the operation of such
provision in the particular jurisdiction with respect to which such
determination was made. If, however, any provision of the Non-Compete Agreement
is held to be illegal, invalid, or unenforceable under present or future law,
and not subject to reformation, then (i) such provision shall be fully
severable, (ii) this Agreement shall be construed and enforced as if such
provision was never a part of this Agreement, and (iii) the remaining provisions
of this Agreement shall remain in full force and effect and shall not be
affected by the illegal, invalid, or unenforceable provision or by its
severance.
5. The parties agree to delete Section 9, Options and replace it with the
following:
Executive acknowledges receipt of all stock options issued to him pursuant to
the Agreement. Attached as Exhibit A are the salient terms of these stock
options.
6. In all other respects, the Agreement shall remain in full force and
effect.
XXXXXX'X, INC. EXECUTIVE
By:
------------------------------- --------------------------------
Xxxxxxx Xxxxxx
Its:
-------------------------------
[XXXXXX'X LOGO]
EXHIBIT A
XXXXXX'X, INC.
NOTICE OF GRANT OF STOCK OPTION,
PENDING BOARD OF DIRECTORS APPROVAL
Notice is hereby given of the following option grant (the "Option") to
purchase shares of the Common Stock of Xxxxxx'x, Inc. (the "Corporation"):
OPTIONEE: Xxxxxxx Xxxxxx
GRANT DATE: June 28, 2001
VESTING COMMENCEMENT DATE: JUNE 29, 2001
EXERCISE PRICE: $4.51
NUMBER OF OPTION SHARES: 13,000
EXPIRATION DATE: June 28, 2010
EXERCISE SCHEDULE: The Option shall become exercisable with respect
to fourteen percent (14%) of the Option Shares upon Optionee's completion
of six months of Service from the Vesting Commencement Date. Thereafter,
The options will vest ratably and monthly over the remaining 36 months of
the vesting period. In no event shall the Option become exercisable for any
additional Option Shares after Optionee's cessation of Service.
Optionee understands and agrees that the Option is granted subject to and in
accordance with the terms of the Xxxxxx'x, Inc. 1999 Stock Incentive Plan (the
"Plan"), and formal approval of the Corporation's Board of Directors. Optionee
further agrees to be bound by the terms of the Plan and the terms of the Option,
as set forth in the Stock Option Agreement to be provided by the Corporation
upon formal approval of the Option by the Corporation's Board of Directors. A
copy of the Plan is available upon request made to the Corporate Secretary at
the Corporation's principal offices.
NO EMPLOYMENT OR SERVICE CONTRACT. Nothing in this Notice or in the attached
Stock Option Agreement or in the Plan shall confer upon Optionee any right to
continue in Service with the Corporation. or its subsidiary, Xxxxxx'x Online
Europe Limited, for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Corporation (or any Parent or
Subsidiary employing or retaining Optionee) or of Optionee, which rights are
hereby expressly
reserved by each, to terminate Optionee's Service at any time for any reason,
with or without cause.
EMPLOYEE INDEMNITY. As a condition to acceptance of the Option, Optionee
will agree to the following: (i) in the event that PAYE is payable, Optionee
will indemnify the Corporation and/or Xxxxxx'x Online Europe Limited to the
extent of such PAYE; and (ii) in the event that secondary class I National
Insurance Contributions are payable by the Corporation or Xxxxxx'x Online Europe
Limited, Optionee will indemnify the Corporation and/or Xxxxxx'x Online Europe
Limited to the extent of such secondary Class I National Insurance
Contributions.
DEFINITIONS. All capitalized terms in this Notice shall have the meaning
assigned to them in this Notice or in the attached Stock Option Agreement.
DATED: June 28, 2001
