EXHIBIT 10.6
EMPLOYMENT AGREEMENT
This agreement is made as of this 1st day of May, 1998, by and between
Microtel International, Inc., a Delaware corporation with offices at 0000 X.
Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx, 00000-0000 (the "Employer" or the
"Company"), and Xxxxxx Xxxxxxxxx, who resides at 0 Xxxxxxxxx Xxxxx, Xxx Xxxxxx,
Xxxxx, XX0 0XX, Xxxxxx Xxxxxxx, (the "Employee").
WITNESSETH
WHEREAS, the Employee desires to be employed by the Employer, and the
Employer desires to employ the Employee upon the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises, covenants and agreements hereinafter contained the parties hereto
agree as follows:
I. EMPLOYMENT
1.1 EMPLOYMENT. Subject to the provisions for termination as hereinafter
provided, the terms of this agreement shall begin on the date first written
above and shall terminate on May 1, 2000 (the "Employment Period").
1.2 RENEWAL. Subject to the provisions for termination as hereinafter
provided, this agreement shall be automatically renewed for two (2) successive
one (1) year terms commencing on May 1, 2000, (the "Renewal Periods") unless,
during the following periods, either party to this Agreement shall notify the
other party in writing of its desire not to renew this Agreement; provided,
however, any action required to be taken with respect to this Employment
Agreement by the Employer shall only be taken after the Executive Compensation
and Management Development Committee of the Board of Directors of the Employer
approves such action. The required notice periods in order to prevent an
automatic renewal of this Agreement shall be as follows:
Period During Which Notice Of
Non-Renewal Must Be Given Renewal Period
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3/1/99 to 5/1/99 5/1/00 to 5/1/01
3/1/00 to 5/1/00 5/1/01 to 5/1/02
1.3 DUTIES. Subject to Section 1.4, the Employee hereby promises to perform
and discharge well and favorably the duties of Managing Director of XCEL
Corporation, Ltd., headquartered in the United Kingdom, and to perform services
in such additional capacities as may be directed by the Chairman and Chief
Executive Officer, Microtel International, Inc., and concurred in by the
company's Board of Directors (the "Board") in accordance herewith. As Managing
Director, the Employee's duties shall consist of the usual and customary duties
of his position and he shall be subject to the direction and control of the
Chairman and Chief Executive Officer, and shall at all times have the authority
as shall reasonably be required to enable him to discharge such duties in an
efficient manner.
1.4 REDESIGNATION. The Chairman and Chief Executive Officer may, in his
discretion, with the concurrence of the Board, elect or appoint the Employee to
offices or positions other than, or in addition to, Managing Director
(hereinafter the "Redesignation") by providing the Employee with prompt written
notice of the Redesignation. If any Redesignation and related addition to and/or
reduction of Employee's duties results in a substantial net change in the scope
of the Employee's responsibilities, the Employee may elect, in his sole
discretion, not to accept such Redesignation and to resign upon providing
written notice of his resignation to the Employer not less than thirty (30) days
after the Employee has been provided with written notice of the Redesignation.
In such event, if such Redesignation occurs during the Employment Period, the
Employer shall pay the Employee his annual salary, as provided herein, for one
(1) year following the effective date of such resignation or until May 1, 2000,
whichever is the longer period. In the event that the Redesignation shall occur
at any time after the Employment Period, and during one of the Renewal Periods,
the Employer shall pay the Employee his annual salary, as provided herein, for
one (1) year following the effective date of such resignation. All sums owing
hereunder in the event of a Redesignation and a subsequent resignation by the
Employee shall be due and payable within thirty (30) days of the effective date
of such resignation.
1.5 OTHER BUSINESS ACTIVITIES. The Employee shall devote his full time,
attention and energies to the business of the Company and shall not, so long as
he remains in the employ of the Company, be engaged in any other employment or
business of substantial nature, whether or not such business activity is pursued
for gain and profit, without the written consent of the Company. Nothing
contained herein, however, shall be construed as preventing the Employee from
(i) making passive investments of his assets in such form or manner as he
desires, providing such investments: (a) do not require the Employee to render
services in the operations or affairs of the firms, corporations or other
entities in which such investments are made, and (b) are not made in any
business directly or indirectly competing with the Employer or its subsidiaries
or affiliated corporations, if any,
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unless the stock of such company is listed on a national stock exchange and the
Employee owns less than three percent (3%) of the outstanding voting securities,
or (ii) becoming a member of the Board of Directors of any other corporation
that the Employee desires, provided that the corporation upon whose Board the
Employee is a member of is not, in the sole discretion of the Employer's Board
of Directors, in competition with the business of the Employer.
The Company shall provide the Employee with adequate office and support
staff to accomplish the objectives for which he is employed and in order to
perform the duties as set forth herein.
II. COMPENSATION
2.1 ANNUAL SALARY. The Employer shall pay to the Employee in compensation
for Employee's services hereunder, a base salary at an annual rate of 63,000
English pounds in equal periodic installments in accordance with the customary
payroll policy of the Employer. The Employee shall also be eligible to receive
merit or promotional increases in accordance with the Employer's annual review,
or other general review of its officer compensation.
2.2 EXPENSES. The Employer agrees to reimburse the Employee against his
receipts for all reasonable business expenses incurred by him during the
Employment Period or Renewal Periods in connection with the performances of his
services hereunder.
2.3 BONUSES. The Employer agrees that the Employee will be entitled to
partici- xxxx in any bonus or similar plan approved by the Employer's Board of
Directors.
2.4 STOCK OPTIONS AND OTHER INCENTIVE PLANS. The Employee shall continue to
be eligible to participate in any Incentive Stock Option or Non-Qualified Stock
Option Plan or other incentive plans duly approved by the Board of Directors for
implementation within the Company.
2.5 ADDITIONAL BENEFITS. The Employee shall be entitled to the customary
and usual vacation, medical insurance, and other fringe benefits made available
to the Employer's employees generally, and specifically within the United
Kingdom..
III. TERMINATION
3.1 TERMINATION DUE TO DEATH. If during the Employment Period or Renewals
thereof, Employee shall die, this Agreement shall terminate, except that the
compensation or other amounts payable hereunder, to or for the benefit of
Employee shall be paid for one (1) year following the death of the Employee to
such person or persons as Employee may designate by notice to the Employer from
time to time or, in the absence of such designation, to his legal
representatives.
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3.2 TERMINATION DUE TO DISABILITY. If during the Employment Period, or
Renewals thereof, Employee shall become physically or mentally disabled, whether
totally or partially, so that he is unable substantially to perform his services
hereunder (i) for a period of 180 consecutive days, or (ii) for shorter periods
aggregating 180 days during any period of eighteen consecutive months , the
Employer may at any time after the last day of the 180 consecutive days of
disability or the day on which the shorter periods of disability shall have
equalled an aggregate of 180 days, by 10 days written notice to Employee (but
before Employee has recovered from such disability), terminate this Agreement.
Notwithstanding such disability, the Employer shall continue to pay Employee
compensation or other amounts payable hereunder, to or for the benefit of
Employee up to and including the date one (1) year after the effective date of
such termination.
3.3 TERMINATION FOR CAUSE. The Employer may at any time during the
Employment Period and any Renewals thereof, by notice, terminate this Agreement
and discharge the Employee for cause, whereupon the Employer's obligation to pay
any compensation, severance allowance, or other amounts payable hereunder to or
for the benefit of Employee shall terminate on the date of such discharge,
notwithstanding anything herein contained to the contrary. As used herein, the
term "for cause" shall be deemed to mean and include chronic alcoholism, drug
addiction; misappropriation of any money or other assets or properties of the
Employer or its subsidiaries; wilful violation of specific and lawful written
directions from his superiors or from the Board of Directors of the Employer;
failure or refusal to perform the services required of Employee under this
Agreement; wilful disclosure of trade secrets or other confidential information
resulting in substantial detriment to the Company as documented by the Employer
under oath or affirmation; conviction in a court of competent jurisdiction of
any crime involving the funds or assets of the Company including, but not
limited to, embezzlement and larceny; any civil or criminal conduct or personal
misbehavior which is detrimental to the image, reputation, welfare or security
of the Employer where such misconduct or misbehavior and judgment have been
documented by the Employer under oath or affirmation; and any other acts or
omissions that constitute grounds for cause under the laws of the States of
Delaware, California, Massachusetts or Illinois, or such other States or
locations wherein the Company may have operations.
3.4 TERMINATION WITHOUT CAUSE. The Employer may terminate this Agreement
without cause at any time upon sixty (60) days written notice to the Employee.
In the event the Employer does terminate this Agreement without it being "for
cause", the Employee, if requested in writing by the Employer, shall continue to
render services at full compensation until the effective date of such
termination. Thereafter, during the Employment Period, Employee shall be paid
his annual salary for one (1) year following the effective date of such
termination, or until May 1, 2000, whichever is the longer
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period. In the event such termination pursuant to this Section 3.4 occurs
during any of the Renewal Periods, the Employee shall be paid his Annual
Salary through the expiration of the particular Renewal Term to which the
Company is obligated under Section 1.2, as well as all other amounts payable
hereunder. Termination "without cause" shall include the ceasing of
operations due to bankrupcy and/or the general inability of the Employer to
meet the Employer's obligations as they become due.
3.5 TERMINATION WITHOUT CAUSE FOLLOWING A CHANGE IN CONTROL. This Agreement
may be terminated by Employer, or successor to Employer, upon thirty (30) days
written notice to Employee upon the happening of any of the following events:
a. Sale by Employer of substantially all of its assets;
b. Sale, exchange or other disposition of two-thirds or more of the
outstand-ing capital stock of the Employer;
c. Merger or reorganization in which shareholders of the
Employer immed- iately prior to such merger or
reorganization receive less than fifty percent (50%) of
the outstanding voting shares of the successor
corporation.
In the event that the Employee's employment is terminated without cause within
two years following a change of control, the Employer or successor to Employer
shall:
a. Pay to Employee, in a lump sum within thirty (30) days from
date of termination, or, at Employee's election, in installments,
the Employee's Annual Salary and all other amounts payable
hereunder for one and one- half (1 1/2) years following the
effective date of such termination or until May 1, 2000,
whichever is the longer period.
b. In the event such termination occurs during any of the
Renewal Periods, pay to Employee his Annual Salary to
the expiration of that particular Renewal Period, his
Annual Salary for a period of one year following the
end of such Renewal Period, plus all other amounts
payable hereunder
c. Pay to Employee the average of the Annual Executive
Bonuses awarded to him in the three years preceding his
termination over the same time span and under the same
conditions as Annual Salary.
d. Pay to Employee any Executive Bonus awarded but not yet paid.
e. Continue Employee's coverage in all benefit programs in which he
was participating on the date of his termination of employment
until the earlier of (1) the end of the Employment Period or
Renewal Period,
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or (2) the date he receives equivalent coverage and benefits under
plans and programs of a subsequent employer.
IV. COVENANTS NOT TO COMPETE
4.1 The Employee agrees that (i) during the Employment Period and any
Renewals thereof, or in the event of a termination pursuant to Section 3.3 and,
thereafter for a period of two (2) years or (ii) in the event of a termination
pursuant to Sections 3.4 or 3.5 and for the period from the effective date of
such termination until the expiration of a period of twelve months following his
resignation upon Redesignation for the Interim Period as defined in Section 1.4,
he will not act as a principal, agent, employee, employer, consultant, control
person, stockholder, director or co-partner of any person, firm, business entity
other than the Employer, or in any individual representative capacity
whatsoever, directly or indirectly, without the express consent of the Employer:
(a) engage or participate or be employed in any business whose products or
services are competitive with those of the Employer in the world; provided,
however, that the ownership by the Employee of not more than three percent (3%)
of a corporation or similar business venture shall not be deemed to be a
violation of this covenant as long as the Employee does not become a controlling
person or actively involved in the management of such corporation or business
venture;
(b) approach, solicit business from, or otherwise do business or deal with
any customer of the Employer in connection with any product or service
competitive with any provided by the Employer; provided, however, the Employee
may approach, solicit business from, or otherwise do business or deal with any
subsidiary or division of any customer of the Employer provided that such
customer's division or subsidiary does not provide a product or service
competitive with any provided by the Employer.
(c) approach, counsel, solicit, assist to solicit or attempt to induce any
person who is then in the employ of the Employer, its affiliates or subsidiaries
to leave the employ of the Employer, or employ, or attempt to employ on behalf
of any person or entity any such person or persons who at any time during the
preceding six months was in the employ of the Employer;
(d) aid or counsel any other person, firm, corporation or business entity
to do any of the above.
For purposes of this Section 4.1, the term "customer" shall mean (i) any
person or entity who was a customer of the Employer at any time during the last
two months of the Employee's employment by the Employer; (ii) any prospective
customer to
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whom the Employer had made a presentation, or similar offering of product(s)
during the last year of the Employee's employment by the Employer.
The Employee acknowledges (i) that his position with the Employer requires
performance of services which are special, unique, extraordinary and
intellectual in character and places him in a position of confidence and trust
with the customers and employees of the Employer, through which, among other
things, he shall obtain knowledge of such organization's "technical information"
and "know how" and become acquainted with their customers, in which matters such
organizations have substantial proprietary interests, (ii) that the restrictive
covenants set forth above are necessary in order to protect and maintain such
proprietary interests and other legitimate business interests of the Company,
and (iii) that the Employer would not have entered into this agreement unless
such covenants were included herein.
The Employee also acknowledges that the business of the Employer presently
extends throughout the world, that he has personally supervised or engaged in
such business on behalf of the Employer, or will do so pursuant to the terms of
this Agreement, and, accordingly, it is reasonable that the restrictive
covenants set forth above are not more limited as to geographic area than is set
forth therein. The Employee also represents to the Employer that the enforcement
of such covenants will not prevent the Employee from earning a livelihood.
If any of the provisions of this Section, or any part thereof, is
hereinafter construed to be invalid or unenforceable, the same shall not affect
the remainder of such provision or provisions, which shall be given full effect,
without regard to the invalid portions. If any of the provisions of this
Section, or any part thereof, is held to be unenforceable because of the
duration of such provision, the area covered thereby or the type of conduct
restricted therein, the parties agree that the court making such determina- tion
shall have the power to modify the duration, geographic area and/or other terms
of such provision and, as so modified, said provision shall then be enforceable.
In the event that the courts of any one or more jurisdictions shall hold such
provisions wholly or partially unenforceable by reason of the scope thereof or
otherwise, it is the intention of the parties hereto that such determination not
bar or in any way affect the Employer's right to the relief provided for herein
in the courts of any other jurisdictions as to breaches or threatened breaches
of such provisions in such other jurisdictions, the above provisions as they
relate to each jurisdiction being, for this purpose, severable into diverse and
independent covenants.
V. CONFIDENTIAL INFORMATION
5.1 DISCLOSURE OF INFORMATION. The Employee recognizes and acknowledges
that the financial information, trade secrets, technical information, and
confidential or proprietary information of the Employer, including such
information as may exist from
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time to time, and information as to the identity of customers or prospective
customers of the Employer and other similar items, are valuable, special and
unique assets of the Employer's business, access to and knowledge of which are
essential to the performance of the duties of the Employee hereunder. The
Employee will not, during or after the term hereof, in whole or in part,
disclose such secrets or confidential, technical or proprietary information to
any person, firm, corporation, association or other entity for any reason or
purpose whatsoever, nor shall the Employee make use of any such property or
information for his own purpose or for the benefit of any person, firm,
corporation or other entity (except the Employer) under any circumstances,
during or after the term hereof, provided that after the term hereof these
restrictions shall not apply to such secrets or information which are then in
the public domain (provided that the Employee was not responsible, directly or
indirectly, for such secrets or information entering the public domain without
the consent of the Employer).
5.2 OWNERSHIP OF INVENTIONS. All of the Employee's right, title and
interest in all developments or improvements devised or conceived by the
Employee, alone or with others, during his working hours, as well as in all
developments or improvements devised or conceived by the Employee, alone or with
others, which relate to any business in which the Employer is then engaged or
contemplating engaging in, regardless of when devised or conceived, is the
exclusive property of the Employer. The Employee shall promptly disclose all
such developments and improvements to the Employer. The Employee shall not use
or disclose any such developments or improvements, other than in furtherance of
the Employer's business, without the Employer's prior written consent
5.3 RETURN MEMORANDA. Employee hereby agrees to deliver promptly to the
Employer on termination of his employment, or at any other time the Employer may
so request, all memoranda, notes, records, reports, manuals, drawings and other
documents (and all copies thereof) relating to the Employer's business and all
property associated therewith, which he may then possess or have under his
control.
VI. INJUNCTIVE RELIEF
6.1 The Employee acknowledges that the remedy at law for any breach
or threatened breach of Articles IVand V hereof by the Employee will be
inadequate, and that, accordingly, the Employer shall, in addition to all other
available remedies (including without limitation , seeking such damages as it
can be shown it has sustained by reason of such breach), be entitled to
injunctive relief without being required to post bond or other security, and
without having to prove the inadequacy of the available remedies at law. The
Employee agrees not to plead or defend on grounds of adequate remedy at law or
any similar defense in any action by the Employer against him, or injunctive
relief, or for specific performance of any of his obligations pursuant to
Articles IV and V hereof. Nothing herein shall be construed as prohibiting the
Employer from pursuing any other remedies for such breach or threatened breach.
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VII. MISCELLANEOUS PROVISIONS
7.1 NOTICES AND COMMUNICATIONS. All notices and communications hereunder
shall be in writing and shall be hand-delivered or sent postage prepaid by
registered or certified mail, return receipt requested, to the address first
above written or to such other address of which notice shall have been given in
the manner herein provided.
7.2 ENTIRE AGREEMENT. All prior or contemporaneous agreements and under-
standings between the parties with respect to the subject matter of this
Agreement are superseded by this Agreement, and this Agreement constitutes the
entire understanding between the parties. This Agreement may not be modified,
amended, changed or discharged except by a writing signed by both parties
hereto, and then only to the extent therein set forth.
7.3 ASSIGNMENT. This Agreement may be assigned by the Employer and shall be
binding upon and inure to the benefit of the Employer's assigns and successors.
The services to be performed by the Employee pursuant to this Agreement may not
be assigned by the Employee.
7.4 WAIVER. No waiver of any breach of this Agreement or of any objection
to any act or omission connected herewith shall be implied or claimed by any
party, or be deemed to constitute a consent to any continuation of such breach,
act or omission, unless in a writing signed by the party against whom
enforcement of such waiver or consent is sought, and then only to the extent
therein set forth.
7.5 INDEMNIFICATION. The Employer will indemnify Employee, to the maximum
extent permitted by applicable law and the By-laws of the Company, against all
costs, charges and expenses incurred or sustained by him in connection with any
action, suit or other reason of his being an officer, director or employee of
the Employer or any subsidiary or affiliate thereof.
7.6 SECTION HEADINGS. The Section headings of this Agreement are solely for
the purpose of convenience and shall neither be deemed a part of this Agreement
nor used in any interpretation thereof.
7.7 GOVERNING LAW. This Agreement and the relationship of the parties shall
be governed by, and construed in accordance with, the laws of the state of
Delaware, or until such time as the Company's state of incorporation may be
changed to another state within the United States, at which point the
relationship of the parties would then be governed by, and construed in
accordance with, the laws of the new state of incorporation.
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IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement as of
the day and year first above written.
MICROTEL INTERNATIONAL, INC.
Dated: 3/15/98 By: /s/Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx, Chairman, President and Chief
Executive Officer
Dated: 3/1/98 By: /s/Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, Chairman, Executive Compensation and
Management Development Committee, Board of Directors
Dated: 3/5/98 By: /s/Xxxxxx Xxxxxxxxx
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Xxxxxx Xxxxxxxxx, Employee
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