EXHIBIT 10.13
EMPLOYMENT AGREEMENT
WITH XXXXXX X. QUICK
Dated as of May 7, 2004
The parties to this Employment Agreement (the "Agreement") are Xxxxxx
Holdings, Inc., a Delaware corporation (the "Company"), and Xxxxxx X. Quick (the
"Executive").
The Company proposes to enter into a series of transactions (the
"Transactions") pursuant to which the Company shall (i) cause its newly formed,
wholly-owned subsidiary to merge with and into Xxxxxx Technologies, Inc., a
Delaware corporation ("Xxxxxx") and (ii) purchase all of the shares of the
outstanding capital stock of Protek Telecommunications Solutions Ltd, a company
organized under the laws of England and Wales ("Protek"). Upon the date of
consummation of the Transactions (the "Effective Date"), each of Xxxxxx and
Protek will be a wholly-owned subsidiary of the Company.
The Company desires to ensure itself of the services of the Executive
following the consummation of the Transactions and the Executive is willing to
provide full-time services to the Company on the terms and conditions provided
herein. Simultaneously with the execution of this Agreement, the Executive and
the Company shall also enter into an Indemnification Agreement, dated as of the
Effective Date (the "Indemnification Agreement"). In addition, under the
Company's 2004 Stock Incentive Plan (the "Incentive Plan") the Executive and the
Company shall be entering into a Stock Option Award Agreement, dated as of the
Effective Date (the "Option Agreement").
Accordingly, in consideration of the mutual covenants and representations
contained herein, the parties to this Agreement, intending to be legally bound,
agree as follows:
1. Full-time Service of Executive.
1.1 Term, Duties and Permitted Activities.
(a) Service Period. The Company hereby engages the Executive to
provide the Company and its subsidiaries full-time service for the period (the
"Service Period") commencing on the Effective Date and ending on the earliest to
occur of (i) the third anniversary of the Effective Date (the "Completion
Date"), (ii) a termination of the Executive's service by reason of any of the
circumstances defined in Sections 2 or 3, or (iii) the Executive's death;
provided, however, that the Service Period shall automatically be extended for
successive one year annual terms following the Completion Date and each renewal
term hereunder, unless either party hereto provides the other with a written
notice of non-renewal at least ninety (90) days prior to the Completion Date or
the end of any renewal term.
(b) Duties. During the Service Period, the Executive shall serve
as an officer of the Company with the title of Chief Executive Officer and shall
be entitled to exercise the rights, authority, duties and responsibilities
customarily associated with such position as reasonably assigned to him from
time to time by the board of directors of the Company (the "Board"), including,
without limitation, authority, direction and control over day-to-day business,
financial and personnel matters of the Company, subject to the lawful and
reasonable policies and guidelines as may be established by the Board. As Chief
Executive Officer of the Company, the Executive shall report to and otherwise
shall be subject to the direction and control of the Board and shall have no
other officer or employee of the Company of equal or senior rank or authority to
him. The Executive's duties, titles and responsibilities shall not be changed
materially at any time without his consent; provided, that any change in the
Executive's duties, titles and responsibilities as a result of a change in the
size or activities of the Company shall not be subject to this sentence as long
as such new duties, titles and responsibilities are substantially consistent
with those of a chief executive officer of a business of like size and nature.
The Executive shall use his best efforts to promote the Company's interests and
he shall perform his duties and responsibilities faithfully, diligently and to
the best of his ability, consistent with sound business practices. The Executive
may be required by the Board to provide services to, or otherwise serve as an
officer or director of, any direct or indirect subsidiary of the Company. The
Executive shall comply with the Company's policies applicable to executive
officers of the Company of which he is given advance written notice. During the
Service Period, the Executive shall be a member of the Board.
(c) Outside Activities. The Executive shall devote substantially
his full working time to the business and affairs of the Company.
Notwithstanding the preceding sentence, the Executive (a) may serve on the Board
of Directors (or similar managing body) of one or more corporations or other
entities, provided such service does not violate any other covenant or term of
this Agreement, interfere with the performance of the Executive's duties for the
Company or create a conflict of interest or the appearance of a conflict of
interest with respect to the Company; (b) may invest the Executive's personal
assets in any form or manner so long as it does not require the Executive's
services or advice in the operation of any business in which such investment is
made, provided such activity does not violate any other covenant or term of this
Agreement (nothing in this Agreement shall restrict the Executive's right to
invest in the Company); and (c) may engage in such other activities that do not
violate the covenants in Section 5, create a conflict of interest or the
appearance of a conflict of interest with the Company or materially interfere
with the performance of his obligations to the Company under this Agreement.
(d) Place of Employment. The Executive shall perform his duties
under this Agreement primarily in St. Louis, Missouri, with the likelihood of
substantial business travel, including regular travel to and from the Company's
offices in Boca Raton, Florida, London, England and other corporate offices. At
any time during the Service Period, but not earlier than nine (9) months after
the Effective Date, the Company, at the direction of the Board of Directors,
may, with reasonable advance notice, require the Executive to relocate his
primary residence to Boca Raton, Florida,
2
or any other mutually agreeable location. In the event that the Company requires
the Executive to relocate his primary residence, the Company shall pay or
reimburse the Executive's relocation costs in accordance with the provisions of
Appendix A to this Agreement. The Company shall further pay the Executive an
amount determined by its accountants to be equal to Executive's federal, state
and local taxes, if any, on the payment or reimbursement of the Executive's
relocation costs (taking into account the deductibility of such costs by the
Executive) (the "Relocation Tax Gross-Up"), and the federal, state and local
taxes on the Relocation Tax Gross-Up, all to the end that the Executive be held
harmless, on an after-tax basis, from the tax impact of such reimbursement.
1.2 Compensation and General Benefits. As compensation for the
Executive's services under this Agreement, the Executive shall be compensated in
the manner described below.
(a) Base Salary. During the Service Period, the Executive shall be
entitled to receive a base salary ("Base Salary") at the annual rate of not less
than $425,000 for services rendered to the Company or any of its direct or
indirect subsidiaries and payable in accordance with the Company's regular
payroll practices. The Executive's Base Salary under this Section 1.2 shall be
increased on each January 1 during the Service Period, beginning on January 1,
2006, by the amount of $25,000. The Executive's Base Salary shall be subject to
further increases, if any, as may be approved at any time by the Board of
Directors of the Company in its discretion.
(b) Bonus Compensation.
(i) Annual Formula Bonus. Appendix B to this Agreement sets
forth a framework for determining the initial annual formula bonus to be paid to
the Executive during the Service Period. Subsequent annual bonus targets will
continue to be 50% of Base Salary, and targets will be set annually by the Board
of Directors. (ii) Annual Discretionary Bonus. The Executive shall be eligible
for such annual bonus, in addition to the formula annual bonus described in
Section 1.2(b)(i) above, as the Board may approve in its sole discretion.
(c) Reimbursement of Expenses. During the Service Period, the
Executive shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by him (in accordance with the policies and practices
presently followed by the Company or as may be established by the Board for its
senior executive officers) in performing services under this Agreement, provided
that the Executive properly accounts for such expenses in accordance with the
Company's policies.
(d) Vacation. During the Service Period, the Executive shall
receive four (4) weeks of paid vacation annually, to be taken at times mutually
agreeable to the Company and the Executive. In accordance with the Company's
vacation policy, the Executive shall be entitled to carry over from year-to-year
up to four (4) weeks of unused vacation time.
3
(e) Disability and Life Insurance Coverage. During the Service
Period, the Company shall pay for or otherwise provide long-term disability
coverage for the Executive that is not less favorable than the Executive's
coverage as of the Effective Date, providing for a minimum disability benefit of
$20,000 per month. Further, during the Service Period, the Company shall
maintain life insurance coverage on the Executive's life with a minimum death
benefit of $1,500,000 at no cost to him. The Executive shall be permitted to
designate the beneficiary or beneficiaries of the life insurance and may change
such designation from time to time without the Company's consent.
(f) Option Plan. As promptly as practicable after the Effective
Date, and, in any event, within thirty days after the Effective Date, the
Executive shall be entitled to receive a grant of stock options ("Options")
under the Incentive Plan in respect of shares of Common Stock of the Company
representing a minimum of 35% of the initial shares reserved for issuance under
the Incentive Plan. Further, the Executive shall be entitled under the Incentive
Plan to an allocation of a minimum of 35% of the additional shares that become
available for allocation under the Incentive Plan by reason of the operation of
Schedule A to the Incentive Plan. Notwithstanding any provision of the Incentive
Plan or the Option Agreement to the contrary, in the event of a termination by
the Company of the Executive's service with the Company without Cause (as
defined in Section 2.2), a termination by the Executive of the Executive's
service with the Company with Good Reason (as defined in Section 2.3), the
Executive's death or the Executive's Disability, then (i) if such event occurs
prior to the second anniversary of the Effective Date, the Executive shall be
deemed vested in a total amount equal to 50% of the Options and (ii) if such
event occurs on or after the second anniversary of the Effective Date, the
Executive shall be deemed vested in 25% of the then unvested balance of his
Options. In addition, all of the Executive's then unvested Options shall vest
upon a Change in Control (as defined in the Incentive Plan) in the event that
the Executive is not retained as the highest ranking employee and executive
officer of the Company or its successor following such Change in Control.
(g) Benefits and Perquisites Generally. Subject to the foregoing
provisions, during the Service Period, the Executive shall be entitled to
participate in and to receive benefits as a senior member under all of the
Company's employee benefit plans, programs and arrangements available to senior
members of the Company, as they may be duly amended, approved or adopted by the
Board as of the Effective Date and from time to time thereafter, including any
retirement plan, profit sharing plan, savings plan, life insurance plan, health
insurance plan, stock-based compensation or incentive plan, and accident or
disability insurance plan. The Executive's benefits hereunder shall also include
the cost of annual physical examinations.
(h) Tax Gross-Up. The Company shall further pay the Executive an
amount determined by its accountants to be equal to the Executive's federal,
state and local taxes, if any, related to or arising from the Company's payment
or reimbursement of the Executive's benefit costs or expenses under subsection
(e) above (the "Benefit Tax Gross-Up"), and the federal, state and local taxes
on the Benefit Tax Gross-Up, all
4
to the end that the Executive be held harmless, on an after-tax basis, from the
tax impact of such reimbursement. 2. Termination of Services.
2.1 Death. The Executive's service under this Agreement shall terminate
upon his death.
2.2 Termination by the Company. The Company may terminate the
Executive's service under this Agreement with or without Cause (as defined
below). For purposes of this Agreement, the Company shall have "Cause" to
terminate the Executive's service under this Agreement if (i) the Executive
willfully, or as a result of gross negligence on his part, fails substantially
to (A) carry out the material and lawful policies of the Board or (B) discharge
his material duties and responsibilities under this Agreement for any reason
other than the Executive's Disability (as defined in Section 3), (ii) the
Executive is convicted of or enters a plea of no contest with respect to a
felony, (iii) the Executive engages in conduct that is materially in violation
of his obligations to the Company under this Agreement and which is demonstrably
and substantially injurious to the Company (as determined in good faith by the
Board), or (iv) the Executive materially breaches this Agreement, or commits any
deliberate and intentional violation of the provisions of Section 5. During the
initial three-year term of this Agreement, a determination that "Cause" exists
for the Executive's termination shall be made by the affirmative vote of not
less than two-thirds (2/3) of the entire membership of the Board (excluding the
Executive) at a meeting of the Board called and held for the purpose of finding
that, in the reasonable good faith opinion of the Board members so voting, there
is Cause for termination as set forth in this Section 2.2. For purposes of this
Agreement, a "termination by the Company without Cause" shall include the
termination of the Executive's service on the Expiration Date solely as a result
of the Company's electing under Section 1.1(a) not to extend the term of the
Agreement. The Executive shall be afforded a reasonable opportunity to cure any
act or omission that would otherwise constitute "Cause" hereunder according to
the following terms. The Board shall give the Executive written notice stating
with reasonable specificity the nature of the circumstances determined by the
Board of Directors in good faith to constitute "Cause." The Executive shall have
thirty (30) days from his receipt of such notice to cure such circumstances or
such breach if such breach is reasonably susceptible to cure. If, in the
reasonable good faith judgment of the Board of Directors, the alleged breach is
not reasonably susceptible to cure, or such circumstances or material breach has
not been satisfactorily cured within such thirty (30) day cure period, such
neglect of duties or material breach shall thereupon constitute "Cause"
hereunder.
2.3 Termination by Executive. The Executive may terminate his service
under this Agreement with or without Good Reason (as defined below). If such
termination is with Good Reason, the Executive shall give the Company notice,
which shall identify with reasonable specificity the grounds for the Executive's
resignation and provide the Company with thirty (30) days from the day such
notice is given to cure the alleged
5
grounds for resignation contained in the notice. For purposes of this Agreement,
"Good Reason" shall mean any of the following to which the Executive shall not
consent in writing: (i) a reduction in the Executive's Base Salary, (ii) a
material breach by the Company of this Agreement that is not remedied by the
Company within thirty (30) days after receipt of a reasonably detailed notice
given by the Executive, (iii) a relocation of the Executive's primary place of
employment from his current place of employment other than to Boca Raton,
Florida, or any other mutually agreeable location, (iv) any diminution in
offices, titles, status or reporting requirements in the Executive's specific
executive officer position, other than an insubstantial or inadvertent act that
is remedied by the Company promptly after receipt of notice given by the
Executive or (v) the removal of the Executive or the failure to reelect the
Executive as a director of the Company.
2.4 Date of Termination. "Date of Termination" shall mean the earlier of
(a) the "Completion Date" (as defined in Section 1.1(a)) and (b) if the
Executive's service is terminated (i) by his death, the date of his death, or
(ii) pursuant to the provisions of Section 2.2 or Section 2.3, as the case may
be, the date on which the Executive's service with the Company actually
terminates.
3. Disability. The Executive shall be determined to be "Disabled" if
the Executive is unable to perform his duties under this Agreement on
essentially a full-time basis for six (6) consecutive months by reason of a
physical or mental condition (a "Disability") and, within thirty (30) days after
the Company gives notice to the Executive that it intends to replace him due to
his Disability, the Executive shall not have returned to the performance of his
duties on essentially a full-time basis. Upon a determination that the Executive
is Disabled, the Company may replace the Executive without breaching this
Agreement.
4. Compensation Upon Termination.
6
4.1 Death or Disability. If the Executive's service under this Agreement
is terminated by reason of his death, the Company shall pay to the person or
persons designated by the Executive for that purpose in a notice filed with the
Company, or, if no such person shall have been so designated, to his estate, the
amount of (a) the Executive's accrued but unpaid Base Salary (b) any accrued but
unpaid Bonus; provided that such Bonus is determined to have been earned and
provided that such Bonus is payable at such time as similar Bonuses are payable
by the Company and (c) other amounts that may be reimbursable by the Company to
the Executive under this Agreement. Any amounts payable under this Section 4.1
shall be exclusive of and in addition to any payments which the Executive's
widow, beneficiaries or estate may be entitled to receive pursuant to any
pension plan, profit sharing plan, employee benefit plan, or life insurance
policy maintained by the Company. In the event that the Executive becomes
Disabled, as defined herein, then the Company may terminate the Executive's
employment and the Executive shall be entitled to the following:
(a) A cash amount equal to his Base Salary earned to the Date of
Termination, plus for the first six (6) months after the Executive is
terminated due to the disability, the Executive shall be entitled to his
then Base Salary less any amounts paid to the Executive under any
disability insurance policy provided by the Employer; and
(b) A cash amount equal to the Employee's pro rata bonus for the
year in which the Date of Termination occurs, if such bonus is deemed
earned, payable at such time as bonuses for the annual period are paid to
other executive officers of the Company.
4.2 By the Company for Cause or the Executive Without Good Reason. If
the Executive's service is terminated by the Company for Cause, or if the
Executive terminates his service other than for Good Reason, the Company shall
pay to the Executive the amount of any accrued but unpaid Base Salary within 30
days of the Date of Termination and the Company thereafter shall have no further
obligation to the Executive under this Agreement, other than for payment of any
amounts accrued and vested under any employee benefit plans or programs of the
Company.
4.3 By the Executive for Good Reason or the Company other than for
Cause.
(a) Severance Benefits on Termination. Subject to the provisions
of Section 4.3(b) and Section 4.3(d), if the Company terminates the Executive's
service without Cause, or the Executive terminates his service for Good Reason,
then the Executive shall be entitled to the following benefits (the "Severance
Benefits"):
(i) the sum of his accrued but unpaid Base Salary, that
amount being payable in a single lump sum cash payment within thirty (30) days
of the Date of Termination;
(ii) a cash amount equal to one-twelfth (1/12) of the
Executive's Base Salary in effect at the Date of Termination, that total amount
being payable on a
7
monthly basis for a period of eighteen (18) months following the month in which
the Date of Termination occurs; provided, however, that in the event any such
termination occurs in anticipation of or within eighteen (18) months following a
Change of Control (as defined below), the payments payable pursuant to this
section will be made in a single lump sum cash payment within thirty (30) days
of the Date of Termination;
(iii) a cash amount equal to the Executive's pro rata Bonus at
the target level, payable at such time as bonuses for the annual period are paid
to other executive officers of the Company, such pro rata Bonus being based on a
fraction of the target Bonus, the numerator of which is the number of days from
the first day of the fiscal year of the Company in which such termination occurs
through and including the Date of Termination and the denominator of which is
365;
(iv) all welfare benefits, including (to the extent
applicable) medical, dental, vision, life and disability benefits (including the
life and disability described in Section 1.2(c)) pursuant to plans maintained by
the Company under which the Executive and/or the Executive's family receives
benefits and/or coverage on the Date of Termination, shall be continued for a
period of eighteen (18) months following the month in which the Date of
Termination occurs, with such benefits provided to the Executive at the same
coverage levels as may be in effect for the Company's executive officers and the
Executive shall pay any portion of such cost as was required to be borne by key
executives of the Company generally on the Date of Termination; provided,
however, that, notwithstanding the foregoing, the benefits described in this
Section 4.3(a)(iv) may be discontinued prior to the end of the period provided
in this subsection (iv) to the extent, but only to the extent, that the
Executive receives substantially similar benefits from a subsequent employer.
(b) Superseding Termination. If, subsequent to the giving by
either party of a notice of termination under this Agreement and prior to the
actual Date of Termination pursuant to such notice, the Executive's service is
properly terminated pursuant to any other provision of this Agreement, the
Executive shall be entitled only to those benefits, if any, arising out of such
subsequent and superseding termination.
(c) Definition of Change in Control. For purposes of this
Agreement, a "Change in Control" shall have the meaning given to such term in
the Incentive Plan.
(d) Conditions to Receipt of Severance Benefits under Section
4.3(a).
(i) Release. As a condition to receiving any Severance
Benefits to which the Executive may otherwise be entitled under Section 4.3(a)
the Executive shall execute a release (the "Release"), which shall include an
affirmation of the restrictive covenants set forth in Section 5 and a
non-disparagement provision, in a form and substance reasonably satisfactory to
the Company and acceptable to the Executive (whose acceptance shall not be
unreasonably withheld), of any claims, whether arising under federal, state or
local statute, common law or otherwise, against the Company and its direct or
indirect subsidiaries which arise or may have arisen on or before the date of
the Release, other than any claims under this Agreement or any
8
rights to indemnification from the Company and its direct or indirect
subsidiaries pursuant to any provisions of the Company's (or any of its
subsidiaries') articles of incorporation or by-laws or any directors and
officers liability insurance policies maintained by the Company. If the
Executive fails or otherwise refuses to execute a Release within a reasonable
time after the Company's request to do so, the Executive shall not be entitled
to any Severance Benefits, or any other benefits provided under this Agreement
and the Company shall have no further obligations with respect to the payment of
those benefits.
(ii) Limitation on Benefits. If, following a termination of
service that gives the Executive a right to the payment of Severance Benefits
under Section 4.3(a) Executive violates in any material respect any of the
covenants in Section 5 or as otherwise set forth in the Release, the Executive
shall have no further right or claim to any payments or other benefits to which
the Executive may otherwise be entitled under Section 4.3(a) from and after the
date on which the Executive engages in such activities and the Company shall
have no further obligations with respect to such payments or benefits.
4.4 No Mitigation. The Executive shall not be required to mitigate the
amount of any payment or benefit provided for in this Section 4 by seeking other
employment or otherwise, and, except as otherwise expressly provided in Sections
4.3(a)(iv) the amounts of compensation or benefits payable or otherwise due to
the Executive under this Section 4 or other provisions of this Agreement shall
not be reduced by compensation or benefits received by the Executive from any
other employment he shall choose to undertake following termination of his
service under this Agreement; provided, however, that the Executive's
entitlement to Severance Benefits shall be subject to his compliance with the
covenants set forth in Section 5.
4.5 Certain Additional Payments by the Company.
(a) Notwithstanding anything in this Agreement to the contrary, in
the event it shall be determined that any economic benefit, payment or
distribution by the Company to or for the benefit of the Executive, whether
paid, payable, distributed or distributable pursuant to the terms of this
Agreement or otherwise (a "Payment"), would be subject to the excise tax imposed
by Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"),
(such excise tax referred to in this Agreement as the "Excise Tax"), the
Executive and the Company shall each undertake reasonable efforts to ensure that
such Payment is not so subject. If notwithstanding the efforts of the Executive
and the Company pursuant to, and in accordance with, the preceding sentence, a
Payment would be subject to the Excise Tax, then the Executive shall be entitled
to receive an additional payment (a "Gross-Up-Payment") in an amount such that
after payment by the Executive of all applicable federal, state and local income
and excise taxes, the Executive retains an amount equal to the amount he would
have retained had one-third (1/3) of the Excise Tax been imposed upon the
Payment.
(b) Subject to the provisions of Section 4.5(c), all
determinations required to be made under this Section 4.5, including whether a
Gross-Up Payment is
9
required and the amount of such Gross-Up Payment, shall be made by the Company's
regular outside independent public accounting firm (the "Accounting Firm") which
shall provide detailed supporting calculations both to the Company and the
Executive within 30 business days of the Date of Termination, if applicable, or
such earlier time as is requested by the Company. The initial Gross-Up Payment,
if any, as determined pursuant to this Section 4.5, shall be paid to the
Executive within 30 days of the Date of Termination or, if later, within 5
business days of the receipt of the Accounting Firm's determination. Any
determination by the Accounting Firm shall be binding upon the Company and the
Executive. As a result of the uncertainty in the application of Section 4999 of
the Code at the time of the initial determination by the Accounting Firm, it is
possible that Gross-Up Payments that have not been made by the Company should
have been made ("Underpayment"), consistent with the calculations required to be
made under this Section 4.5(b). In the event that the Company exhausts its
remedies pursuant to Section 4.5(c) and the Executive thereafter is required to
make a payment of any Excise Tax, the Accounting Firm shall determine the amount
of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive.
(c) Executive shall notify the Company of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment under the terms of this Section 4.5. This notice
shall be given as soon as practicable but no later than ten business days after
the date the Executive has actual knowledge of the claim, and shall apprise the
Company of the nature of the claim and the date on which the claim is requested
to be paid. The Executive shall not pay the claim prior to the expiration of the
thirty-day period following the date on which he gives such notice to the
Company (or such shorter period ending on the date that any payment of taxes
with respect to the claim is due). If the Company notifies the Executive prior
to the expiration of the above period that it desires to contest the claim, the
Executive shall: (A) give the Company any information reasonably requested by
the Company relating to the claim, (B) take such action in connection with
contesting the claim as the Company shall reasonably request in writing from
time to time, including accepting legal representation with respect to the claim
by an attorney reasonably selected by the Company, (C) cooperate with the
Company in good faith in order to effectively contest the claim, (D) permit the
Company to control any proceedings relating to the claim; provided, however,
that the Company shall bear and pay directly any and all costs and expenses
(including additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold the Executive harmless, on an after-tax
basis, for two-thirds (2/3) of any Excise Tax or income tax related to the
Excise Tax, including interest and penalties with respect thereto, imposed as a
result of such representation and payment of costs and expenses. Without
limitation of the foregoing provisions of this Section 4.5(c), the Company shall
control all proceedings taken in connection with such contest and, at its sole
option, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of the claim and
may, at its sole option, either direct the Executive to request or accede to a
request for an extension of the statute of limitations with respect only to the
tax claimed, or pay the tax claimed and xxx for a refund or contest the claim in
any permissible manner, and the Executive agrees to prosecute such contest to a
10
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
the claim and xxx for a refund, the Company shall advance the amount of the
required payment to the Executive, on an interest-free basis and shall indemnify
and hold the Executive harmless, on an after-tax basis, from two-thirds (2/3) of
any Excise Tax or income tax related to the Excise Tax, including interest or
penalties with respect thereto, imposed with respect to any advance or with
respect to any imputed income in relation to any advance. Furthermore, the
Company's control of the contest shall be limited to issues with respect to
which a Gross-Up Payment would be payable under the Agreement and the Executive
shall be entitled to settle or contest, as the case may be, any other issue
raised by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Section 4.5(c), the Executive becomes entitled to
receive any refund with respect to the claim, the Executive shall promptly pay
to the Company two-thirds (2/3) of the amount of that refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after the
receipt by the Executive of an amount advanced by the Company pursuant to
Section 4.5(c), a determination is made that the Executive shall not be entitled
to any refund with respect to the claim and the Company does not notify the
Executive of its intent to contest such denial of refund prior to the expiration
of thirty days after the determination, then the advance shall be forgiven and
shall not be required to be repaid and the amount of the advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) In the event that any state or municipality or subdivision
thereof shall subject any Payment to any special tax which is analogous to the
Excise Tax which shall be in addition to the generally applicable income tax
imposed by the state, municipality, or subdivision with respect to receipt of
the Payment, the foregoing provisions of this Section 4.5 shall apply, mutatis
mutandis, with respect to such special tax.
4.6 Severance Benefits Not Includable for Employee Benefits Purposes.
Subject to all applicable federal and state laws and regulations, and except to
the extent the terms of any applicable benefit plan, policy or program provide
otherwise, income recognized by the Executive pursuant to the provisions of this
Section 4 (other than income accrued but unpaid as of the Date of Termination)
shall not be included in the determination of benefits under any employee
benefit plan (as that term is defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended) or any other benefit plans, policies or
programs applicable to the Executive that are maintained by the Company or any
of its direct or indirect subsidiaries and the Company shall be under no
obligation to continue to offer or provide such benefits to the Executive after
the Date of Termination other than as provided under this Section 4.
11
4.7 Exclusive Benefits. The Severance Benefits payable under Section
4.3(a) shall be in lieu of any other severance or similar benefits that would
otherwise be payable under any other agreement, plan, program or policy of the
Company.
5. Restrictive Covenants.
5.1 Exclusive Property. The Executive confirms that all Company Property
is the exclusive property of the Company. Executive agrees that during his
employment Executive shall not make, use or permit to be used any Company
Property other than for the benefit of the Company. The term "Company Property"
shall include all automobiles, Confidential Information, notes, memoranda,
reports, lists, records, drawings, sketches, specifications, software programs,
software code, data, computers, cellular telephones, pagers, credit and/or
calling cards, keys, access cards, documentation or other materials of any
nature and in any form, whether written, printed, electronic or in digital
format or otherwise, and any copies thereof, relating to any matter within the
scope of the business of the Company or concerning any of its dealings or
affairs and any other Company property in Executive's possession, custody or
control. Executive further agrees that he shall not, after the termination of
employment, use or permit others to use any such Company Property for any
reason. Promptly upon the termination of employment (for any reason), Executive
shall immediately deliver all Company Property in Executive's possession, and
all copies thereof, to the Company; provided, however, that the Executive shall
be permitted to retain copies of any documents or materials of a personal nature
or otherwise related to the Executive's rights under this Agreement.
5.2 Nondisclosure. Executive acknowledge that the Company has agreed to
provide, and during the course of employment with the Company Executive will
acquire, knowledge with respect to the Company's business operations, including,
by way of illustration, the Company's existing and contemplated product line,
trade secrets, business and financial methods, practices, plans, pricing
information, marketing information and strategies, merchandising and selling
techniques and information, customer lists and preferences, supplier lists,
inventions, products, designs, know-how, techniques, processes, engineering
data, software programs, works of authorship, projects, proposals, and
confidential information relating to the Company's policies and/or business
strategy (all of such information herein referred to as the "Confidential
Information"). The protection of the Confidential Information against
unauthorized disclosure or use is of critical importance to the Company.
Executive agrees that he will not, during the course of employment, divulge to
any person, directly or indirectly, except to the Company or its officers and
agents or as reasonably required in connection with Executive's duties on behalf
of the Company, or use in any way, except on behalf of the Company, any
Confidential Information acquired by Executive at any time during my employment.
Executive agrees that he will not, at any time after his employment with the
Company has ended (for whatever reason), use or divulge to any person, directly
or indirectly, any Confidential Information, or use any Confidential Information
in any subsequent employment. Executive acknowledges that the Company would not
provide him with access to Confidential Information but for his covenants
contained in this Agreement. Executive understands and agrees that the
12
obligations under this Section shall survive the termination of this Agreement
and of his employment. The above restrictions on disclosure and use of
Confidential Information shall not prevent the Executive from: (i) using or
disclosing information in the good faith performance of the Executive's duties;
(ii) using or disclosing information to another employee to whom disclosure is
required to perform in good faith the duties of either; (iii) using or
disclosing information to another person or entity pursuant to a binding
confidentiality agreement in a Company-approved form as part of the performance
in good faith of the Executive's duties or as authorized in writing by the
Company; (iv) using or disclosing information to the extent such information is
or may be, through no fault or disclosure on the part of the Executive,
generally made know to the public or throughout the industry in which the
Company is engaged; (v) using or disclosing information which is disclosed to
the Executive after termination of his employment with the Company by a third
party who is under no duty or obligation not to disclose such information; or
(vi) disclosing information as required by law. If the Executive becomes legally
compelled to disclose any of the Confidential Information, he shall (i) provide
the Company with prior written notice of the need for such disclosure; (ii) if
disclosure is required, furnish only that portion of the Confidential
Information which, in the opinion of the Executive's counsel, is legally
required; and (iii) exercise reasonable efforts to obtain reliable assurances
that confidential treatment will be accorded to the Confidential Information.
5.3 Non Competition. During the Service Period and for a period of
eighteen (18) months after the Date of Termination, the Executive shall not,
unless he receives the prior written consent of the Company, directly or
indirectly, own an interest in, manage, operate, join, control, lend money or
render financial or other assistance to, participate in or be connected with, as
an officer, employee, partner, stockholder, consultant or otherwise, or engage
in any activity or capacity (collectively, the "Competitive Activities") with
respect to any individual, partnership, limited liability company, firm,
corporation or other business organization or entity (each, a "Person"), that is
engaged directly or indirectly in the provision of software offerings
substantially similar to those of the Company, provided that those offerings
represent at least 10% of the revenue of the Company including its direct or
indirect subsidiaries anywhere in the world; provided, however, that the
foregoing (a) shall not apply with respect to any line-of-business in which the
Company or its direct or indirect subsidiaries was not engaged on or before the
Date of Termination, and (b) shall not prohibit the Executive from (i) owning,
or otherwise having an interest in, less than three percent (3%) of any
publicly-owned entity or (ii) owning, or otherwise having an interest in, less
than five percent (5%) of any private equity fund or similar investment fund
that invests in companies engaged in Competitive Activities, or providing
consulting or advisory services with respect to any such fund, provided the
Executive has no active role with respect to any investment by such fund in any
Person referred to in this Section 5.3. Executive hereby acknowledges that the
scope of prohibited activities and the time duration of the provisions of this
Section 5.3 are reasonable and are no broader than are necessary to protect the
legitimate business interests of the Company. Executive acknowledges and agrees
that this noncompetition provision shall survive the termination of his
employment, and can only be revoked or modified by a writing signed by the
parties which specifically states an intent to revoke or modify this provision.
Executive
13
acknowledges that the Company would not employ him or provide him with access to
its Confidential Information but for his covenants or promises contained in this
Section.
5.4 Non-Solicitation. During the Service Period and for a period of
eighteen (18) months after the Date of Termination, the Executive shall not,
whether for his own account or for the account of any other Person (other than
the Company or its direct or indirect subsidiaries), intentionally solicit,
endeavor to entice away from the Company or its direct or indirect subsidiaries,
or otherwise interfere with the relationship of the Company or its direct or
indirect subsidiaries with, (a) any person who is employed by the Company or its
direct or indirect subsidiaries (including any independent sales representatives
or organizations), or (b) any client or customer of the Company or its direct or
indirect subsidiaries.
5.5 Assignment of Developments. If at any time or times during
Executive's employment, whether during work hours or off-duty hours, Executive
shall (either alone or with others) make, conceive, create, discover, invent or
reduce to practice any Development that (i) relates to the business of the
Company or any customer of or supplier to the Company or any of the products or
services being developed, manufactured or sold by the Company or which may be
used in relation therewith; or (ii) results from tasks assigned to Executive by
the Company; or (iii) results from the use of premises or personal property
(whether tangible or intangible) owned, leased or contracted for by the Company,
then all such Developments and the benefits thereof are and shall immediately
become the sole and absolute property of the Company and its assigns, as works
made for hire or otherwise. The term "Development" shall mean any invention,
modification, discovery, design, development, improvement, process, software
program, work of authorship, documentation, technique, know-how, trade secret or
intellectual property right whatsoever or any interest therein (whether or not
patentable or registrable under copyright, trademark or similar statutes or
subject to analogous protection). Executive shall promptly disclose to the
Company (or any persons designated by it) each such Development. Executive
hereby assign all rights (including, but not limited to, rights to inventions,
patentable subject matter, copyrights and trademarks) Executive may have or may
acquire in the Developments and all benefits and/or rights resulting therefrom
to the Company and its assigns without further compensation and shall
communicate, without cost or delay, and without disclosing to others the same,
all available information relating thereto (with all necessary plans and models)
to the Company.
5.6 Injunctive Relief. The Executive acknowledges that a breach of any
of the covenants contained in this Section 5 may result in material, irreparable
injury to the Company for which there is no adequate remedy at law, that it
shall not be possible to measure damages for such injuries precisely and that,
in the event of such a breach or threat of breach, the Company shall be entitled
to obtain a temporary restraining order and/or a preliminary or permanent
injunction restraining the Executive from engaging in activities prohibited by
this Section 5 or such other relief as may be required to specifically enforce
any of the covenants in this Section 5. The Executive agrees and consents that
injunctive relief may be sought in any state or federal court of record in the
State of Missouri, or in the state and county in which a violation may occur or
in any
14
other court having jurisdiction, at the election of the Company; to the extent
that the Company seeks a temporary restraining order (but not a preliminary or
permanent injunction), the Executive agrees that a temporary restraining order
may be obtained ex parte. The Executive agrees and submits to personal
jurisdiction before each and every court designated above for that purpose.
5.7 Blue-Pencilling. The parties consider the covenants and restrictions
contained in this Section 5 to be reasonable. However, if and when any such
covenant or restriction is found to be void or unenforceable and would have been
valid had some part of it been deleted or had its scope of application been
modified, such covenant or restriction shall be deemed to have been applied with
such modification as would be necessary and consistent with the intent of the
parties to have made it valid, enforceable and effective.
6. Miscellaneous.
6.1 Assignment; Successors; Binding Agreement. This Agreement may not be
assigned by either party, whether by operation of law or otherwise, without the
prior written consent of the other party, except that any right, title or
interest of the Company arising out of this Agreement may be assigned to any
corporation or entity controlling, controlled by, or under common control with
the Company, or succeeding to the business and substantially all of the assets
of the Company or any affiliates for which the Executive performs substantial
services. Subject to the foregoing, this Agreement shall be binding upon and
shall inure to the benefit of the parties and their respective heirs, legatees,
devisees, personal representatives, successors and assigns.
6.2 Modification and Waiver. No provision of this Agreement may be
modified, waived, or discharged unless such waiver, modification or discharge is
duly approved by the Board and is agreed to in writing by the Executive and such
officer(s) as may be specifically authorized by the Board to effect it. No
waiver by any party of any breach by any other party of, or of compliance with,
any term or condition of this Agreement to be performed by any other party, at
any time, shall constitute a waiver of similar or dissimilar terms or conditions
at that time or at any prior or subsequent time.
6.3 Entire Agreement. No agreement or representation, oral or otherwise,
express or implied, with respect to the subject matter of this Agreement, has
been made by either party which is not set forth expressly in this Agreement.
Further, the Executive's current employment agreement with Xxxxxx, dated October
7, 2002, as it have been amended, and any long-term incentive compensation
agreements, plans or other arrangements between the Executive and Xxxxxx are
terminated and superseded by this Agreement. This Agreement shall not affect the
validity or enforceability of the Indemnification Agreement or the Option
Agreement except as otherwise expressly provided in this Agreement.
6.4 Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Missouri other than the conflict of laws provision thereof.
15
6.5 Arbitration. In the event of any dispute, controversy or claim
between the Company and the Executive arising out of or relating to the
interpretation, application or enforcement of the provisions of Section 5, the
Company and the Executive agree and consent to the personal jurisdiction of the
Circuit Court in St. Louis County, Missouri and/or the United States District
Court for the Eastern District of Missouri for resolution of the dispute,
controversy or claim, and that those courts, and only those courts, shall have
exclusive jurisdiction to determine any dispute, controversy or claim related
to, arising under or in connection with Section 5 of this Agreement. The Company
and the Executive also agree that those courts are convenient forums for the
parties to any such dispute, controversy or claim and for any potential
witnesses and that process issued out of any such court or in accordance with
the rules of practice of that court may be served by mail or other forms of
substituted service to the Company at the address of its principal executive
offices and to the Executive at his or her last known address as reflected in
the Company's records. At the Executive's sole discretion, any dispute relating
to this Agreement, other than a dispute relating solely to Section 5, may be
submitted to binding arbitration. The arbitrator shall be selected by agreement
of the parties or, if the parties do not agree on an arbitrator within 30 days
after the Executive has notified the Company of his desire to have the question
settled by arbitration, then the arbitrator shall be selected pursuant to the
procedures of the American Arbitration Association (the "AAA") in St. Louis,
Missouri. The determination reached in such arbitration shall be final and
binding on all parties. Enforcement of the determination by such arbitrator may
be sought in any court of competent jurisdiction. Unless otherwise agreed by the
parties, any such arbitration shall take place in St. Louis, Missouri, and shall
be conducted in accordance with the Commercial Arbitration Rules of the AAA.
6.6 Resignation from Board. Upon a termination of the Executive's
service under this Agreement for any reason, the Executive shall, if requested
by the Company's Board, promptly resign as a member of the Board of Directors of
the Company or its direct or indirect subsidiaries.
6.7 Withholding of Taxes. The Company shall withhold from any amounts
payable under the Agreement all federal, state, local or other taxes as legally
shall be required to be withheld.
6.8 Notice. For the purposes of this Agreement, notices and all other
communications to either party provided for in this Agreement shall be furnished
in writing and shall be deemed to have been duly given when delivered or when
mailed if such mailing is by United States certified or registered mail, return
receipt requested, postage prepaid, addressed to such party (notices to the
Company being addressed to the Secretary of the Company) at the Company's
principal executive office, or at other address as either party shall have
designated by giving written notice of such change to the other party at anytime
hereafter.
6.9 Severability. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
16
6.10 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
6.11 Headings. The headings used in this Agreement are for convenience
only, do not constitute a part of the Agreement, and shall not be deemed to
limit, characterize, or affect in any way the provisions of the Agreement, and
all provisions of the Agreement shall be construed as if no headings had been
used in the Agreement.
6.12 Construction. As used in this Agreement, unless the context
otherwise requires: (a) the terms defined herein shall have the meanings set
forth herein for all purposes; (b) references to "Section" are to a section
hereof; (c) "include," "includes" and "including" are deemed to be followed by
"without limitation" whether or not they are in fact followed by such words or
words of like import; (d) "writing," "written" and comparable terms refer to
printing, typing, lithography and other means of reproducing words in a visible
form; (e) "hereof," "herein," "hereunder" and comparable terms refer to the
entirety of this Agreement and not to any particular section or other
subdivision hereof or attachment hereto; (f) references to any gender include
references to all genders; and (g) references to any agreement or other
instrument or statute or regulation are referred to as amended or supplemented
from time to time (and, in the case of a statute or regulation, to any successor
provision).
17
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
XXXXXX HOLDINGS, INC.
By: /s/ Xxxx Xxxxxx
-----------------------------------------
Name: Xxxx Xxxxxx
Title: Vice President & Secretary
EXECUTIVE
/s/ Xxxxxx Quick
-------------------------------------------
Name: Xxxxxx Quick
18
