EXHIBIT 10.3
Employment Agreement
Xxxxxxx X. Xxxxx
President, Chief Executive Officer, Director
1 January 2009
This Employment Agreement is made to be effective 1 January 2009 by and between
Xxxxxxxxxxx Corporation ("Xxxxxxxxxxx Corporation" or the "Company") and
Xxxxxxx X. Xxxxx ("Xxxxx" or the "Employee")
and, except as specifically set forth in this Agreement, supersedes the previous
Employment Agreement between the parties, a copy of which is attached as Exhibit
A.
WHEREAS, Xxxxxxxxxxx Corporation and Xxxxx currently have an employer-employee
relationship which expired on 31 December 2008; and,
WHEREAS, Xxxxxxxxxxx Corporation and Xxxxx mutually desire to enter into this
new written Employment Agreement ("Agreement") upon the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, Xxxxxxxxxxx Corporation and Xxxxx hereby agree as follows:
POSITION
Title. The Company hereby appoints Xxxxx, and Xxxxx hereby accepts the
Company's senior management position as President and Chief Executive Officer
reporting only to the Board of Directors of the Company.
Duties. In the performance of his duties Xxxxx agrees to comply with all
existing and future regulations applicable to the Company's business. Xxxxx
agrees to faithfully and diligently perform the duties commensurate with his
position as set forth in the Company's Bylaws together with such other duties as
the Board of Directors may reasonably designate from time to time.
Exclusive Services. Xxxxx will devote substantially all of his professional
time to the responsibilities of his position as President and Chief Executive
Officer of the Company. It is understood and agreed that Xxxxx may not engage in
any other business activity during the Term, whether or not for profit or other
remuneration, without the prior written consent of the Company; provided,
however, that the Employee may make personal financial investments which do not
involve any material active participation on his part, and may engage in
charitable, philanthropic, education, religious, civic and similar types of
activities to the extent that such activities do not hinder or otherwise
interfere with the business of the Company, or the performance of his duties
under this Agreement. The Company acknowledges that Xxxxx is actively involved
in other philanthropic, civic, charitable, service, political and personal
interests including but not limited to serving as a Trustee of the VMI
Foundation; Austin Midnight Basketball, the VMI Alumni Association Centex
Chapter, and other organizations. Notwithstanding the foregoing, during the
Term, Xxxxx shall not directly or indirectly acquire any stock (with the
exception of publicly held companies) or interest in any corporation,
partnership, or other business entity that competes, directly or indirectly,
with the business of the Company, without obtaining the prior written consent of
the Company.
Director. The Company agrees to nominate Xxxxx annually as a Director of
the Company during the Term of this Agreement. Xxxxx agrees to serve as a
Director of the Company during the Term of this Agreement, if elected. Xxxxx
will receive no additional compensation for his service as a Director of the
Company.
COMPENSATION & BENEFITS
Salary. The Company will pay to Xxxxx, in accordance with the customary
payroll practices of the Company, a Salary of $20,000.00 monthly, which equates
to $240,000.00 annually. Salary will be reviewed annually by the Board of
Directors, using whatever objective criteria they shall decide upon, on or
before 31 December of each calendar year.
Deferred Compensation.
The Company will create a "Deferred Compensation" account for the
benefit of Xxxxx and shall deposit into this account monthly Deferred
Compensation in the amount of $2,000 per month. In addition, Xxxxx may designate
any amount up to $50,000 annually of his Salary to be deposited into this
Deferred Compensation account.
The Deferred Compensation account will be a stock brokerage account
held at Xxxxxxx Xxxxxx in Austin, Texas and Xxxxx will have the sole authority
to make trades in the account (not including any margin or option trading).
During the Term of this Agreement, the Deferred Compensation account
will be an asset of the Company and will be liable to claims of creditors as a
Company asset. The Deferred Compensation account will be delivered to Xxxxx upon
the termination of his employment with the Company; or, at such earlier date at
the complete discretion of the Board of Directors.
Discretionary Performance Bonus. The Board of Directors will present an
annual written performance appraisal of the performance of Xxxxx in the
discharge of his duties during the prior fiscal year. This annual performance
appraisal will be the basis, in part, for the consideration by the Board of
Directors of whether to award Xxxxx a discretionary performance bonus, and if
so, in what amount. The annual performance appraisal will take place within
fifteen (15) days following the filing of the Company's Form 10K with the
Securities and Exchange Commission, and any discretionary performance bonus
awarded will be paid in the second quarter. For any partial year of performance,
the Board of Directors may within its sole discretion elect to award Xxxxx a
pro-rated performance bonus.
Stock Options.
At the first meeting of the Board of Directors Compensation Committee
that takes place after the execution of this Agreement, Xxxxx shall be granted
an option to purchase up to 900,000 shares of common stock at a purchase price
of 110% of the fair market value of the Company's common stock on the date of
grant (determined according to 110% of the closing market price of the
Company's, common stock on the OTCBB on the date of grant), vesting in
accordance with the following schedule.
Amount: options to purchase 900,000 shares of common stock
Vesting: Options for 300,000 shares - 31 December 2009
Options for 300,000 shares - 31 December 2010
Options for 300,000 shares - 31 December 2011
The options shall expire if not exercised on or before 5:00 p.m.,
Austin, Texas, time, on 31 December 2018.
The stock options granted would be based upon the Company having
approximately 17,937,600 shares outstanding of an authorized 40,000,000 shares.
In the event that the Company should issue more shares (i.e. more shares are
"outstanding"), then the amount of the stock award (both vested and unvested
shares) shall be proportionately increased to maintain the same relationship as
900,000 bears to 17,937,600.
In the event that the Employee is terminated for Cause under Section
0 or the Employee voluntarily terminates this Agreement under Section 0, all
options granted under this Section which have not yet vested shall terminate
immediately.
The form of option agreement to be entered between the Employee and
Company is attached to this Agreement and incorporated herein by reference as
Exhibit B.
Benefits. Xxxxx will be entitled to receive the same benefits as all
Company employees who are similarly situated with the exception of vacation
benefits. Xxxxx shall be entitled to take up to 25 paid vacation days per year.
Vacation will be taken only at times which will not disrupt the normal business
activities of the Company. Unused vacation will not carry over to the following
year and will not be paid upon separation from employment.
Expense Reimbursement.
The Company will reimburse Xxxxx for all reasonable, necessary
and appropriate business expenses incurred on behalf of the Company upon
presentation of proper expense statements or vouchers or such other written
supporting documents as the Company may reasonably require. In addition, the
Company will provide Xxxxx with an American Express credit card to be used by
him solely for legitimate Company expenses.
In addition, the Company shall reimburse Xxxxx for any business
related travel in his personal airplane by paying the prorated cost of fuel,
routine maintenance (oil changes and annual inspection but not including any
replacement of aircraft systems), insurance and hanger fees. .
Xxxxx shall be entitled to make unlimited personal phone calls during
and after business hours.
Executive Assistant. The Company will employ an executive assistant who
reports to Xxxxx whose duties shall include providing administrative support to
Xxxxx in the discharge of his duties for the Company, in his civic and
philanthropic activities, as well as in the management of his individual
financial and business affairs. At all times this employee shall be an employee
of Xxxxxxxxxxx Corporation.
TERM & TERMINATION
Term. The "Term" of this Agreement will commence on 1 January 2009 and will
automatically terminate on 31 December 2011 unless extended or terminated sooner
as provided for herein. This Agreement shall be automatically extended during
any time period in which its provisions are being renegotiated.
Termination of Xxxxx for "Cause." The Company may immediately terminate
this Agreement for "Cause" upon a vote by the majority of the Board of
Directors. "Cause" for termination shall exist upon:
Employee's willful and continued failure after written notice to
substantially perform his duties with the Company (other than such failure
resulting from his incapacity due to physical or mental illness or disability);
Employee's willful engagement in misconduct, as reasonably determined
by a majority vote of the Board of Directors, which is materially injurious to
the Company; or,
Employee's conviction of either a felony or an act of fraud against
the Company or its affiliates.
Upon termination for Cause, Xxxxx shall not be eligible for the
"Severance Package" (defined in Section 0).
Termination of Xxxxx Without Cause. The Company may terminate this
Agreement without Cause upon a vote by the majority of the Board of Directors
and ninety (90) days written notice of such termination. Upon termination
without Cause, Xxxxx will receive the Severance Package.
Termination by Xxxxx. Xxxxx may terminate this Agreement on or after 31
December 2009, in his sole and absolute discretion, by delivering to the
Chairman of the Board of Directors a ninety (90) day written notice. Upon
termination by Xxxxx, Xxxxx will not receive the Severance Package.
Termination for Good Reason. Employee may terminate his employment for
"Good Reason" within sixty (60) days after Employee has actual knowledge of the
occurrence, without the written consent of Employee, of the Company's requiring
the Employee to be based at any office or location more than fifty (50) miles
away from that at which the Employee is based as of the date of this Agreement;
provided, however, the Company may require travel in the performance of the
Employee's responsibilities; a material and adverse diminution of Employee's
authority or duties with respect to his current position (other than such
diminution as a result of his incapacity due to physical, mental illness or
Disability); a decrease in Employee's compensation below the Base Salary. Upon
termination for Good Reason, Employee will receive the Severance Package.
Change of Control.
In the event that the Company undergoes a "Change of Control," this
Agreement shall automatically terminate and Xxxxx shall receive the Severance
Package. A "Change of Control" occurs if:
there is a consummation of a merger or sale in which the
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Company's then current stockholders do not retain at least 50% of the
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surviving entity's stock;
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there is an acquisition of more than 50% of the voting stock by
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a single stockholder or multiple shareholders acting in concert;
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There is an acquisition by any one party, or by one or more
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affiliated parties, as defined in Rule 12b-2 under the Securities Exchange
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Act of 1934, of more than 50% of the outstanding voting stock of the
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Company;
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there is a consummation of a sale of more than fifty percent
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(50%) of the Company's assets; or
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there is a finalization of the Company's liquidation.
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If the Change of Control will result in the selling shareholders
receiving consideration in any form equal to or greater than $2.25 per share,
the Company will issue 500,000 shares of common stock to Xxxxx (or such other
party as he may designate) prior to the consummation of the transaction.
Death or Disability. In the event of the death or "Disability" of Xxxxx,
this Agreement shall automatically terminate and Xxxxx shall be eligible for the
Severance Package. A "Disability" occurs when Xxxxx shall be unable by reason of
physical or mental illness to continue the proper performance of his duties
hereunder for a period of 180 consecutive days. Upon death, any and all payments
due under this Agreement shall be made to:
Tempe X. Xxxxx
0000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Effect of Termination.
In the event of termination of Xxxxx'x employment, regardless of
circumstances, the Company shall pay Xxxxx:
his then current Salary, accrued as of his last date of
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employment;
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all monies, if any, in the Deferred Compensation account; and
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any properly documented business expenses not yet reimbursed.
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In addition, if the circumstances of the termination make Xxxxx
eligible for a Severance Package, then Xxxxx shall receive a "Severance Package"
to include:
Twelve (12) months of his then current monthly Base Salary plus
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all Company benefits included in this Agreement payable in cash, less
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applicable payroll deductions;
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The value of Xxxxx'x Deferred Compensation Account or the
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securities and cash held in the Deferred Compensation Account; and
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All unvested stock options promised or granted to Xxxxx shall
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become fully vested.
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Termination of employment shall not excuse the performance of any
obligation which is required hereunder to be performed after termination, and
any such obligation shall survive the termination of employment and this
Agreement.
Return of Property. Upon termination of employment, and at the request of
the Company, Xxxxx agrees to promptly deliver to the Company all memoranda,
notes, records, reports, manuals, drawings, designs, computer files in any
media, and other documents (including extracts and copies thereof) relating to
the Company,, and Xxxxx expressly agrees that Company may withhold from any sums
due to him, any personal expenses charged to the Company.
CONFIDENTIALITY & RESTRICTIVE COVENANTS
Detrimental Statements. For so long as this Agreement remains in effect and
for a period of 12 months after the date of termination or expiration of this
Agreement, whether with or without cause or for any reason (the "Applicable
Period"), Employee will not, directly or indirectly, in any individual or
representative capacity whatsoever, make any statement, oral or written, or
perform any act or omission which is or could be detrimental in any material
respect to the goodwill of Company, and the Company will not, directly or
indirectly, in any individual or representative capacity whatsoever, make any
statement, oral or written, or perform any act or omission which is or could be
detrimental in any material respect to the goodwill of Employee.
Confidential information.
Covenant of Confidentiality.
The Company promises to provide, and Employee recognizes and
acknowledges that he will be provided, confidential information and trade
secrets of Company relating to research, development, manufacturing,
marketing, financial, and other business-related activities or may
discover, conceive, perfect, or develop, solely or jointly with others,
discoveries, improvements, know-how, or other technical, manufacturing,
marketing, customer, and/or financial data and information, including,
without limitation, access to information regarding the upgrading of
current Company products and services and the development of new products
and services (hereinafter "Confidential Information").
Confidential Information includes not only written information,
but information transferred orally, visually, electronically or by any
other means, but does not include information which (i) is or was already
in the possession of Employee prior to its disclosure to Employee by the
Company, (ii) is or becomes generally available to the public other than as
a result of disclosure in breach of this Agreement by Employee, or (iii) is
or becomes available to Employee on a non-confidential basis from a source
other than the Company or any of its representatives, provided that such
information is not known by the Employee to be subject to another
confidentiality agreement or other legal obligation of secrecy.
Such Confidential Information constitutes valuable, special,
and unique property of Company. In consideration of the Company's provision
of such Confidential Information, Employee will not, during or for one year
after the term of his employment by Company, make any use of, or disclose
any of such Confidential Information to any person or firm, corporation,
association, or other entity for any reason or purpose whatsoever, except
as is generally available to the public or as specifically allowed in
writing by an authorized representative of Company.
Ownership. Employee acknowledges and agrees that all writing or works
of authorship, including material developed by Employee either individually or
jointly with other Company employees during the course of Employee's employment
by the Company, together with any copyrights in those writings or works of
authorship, will be works made for hire and the property of the Company. To the
extent that any such writings or works of authorship which apply to the business
of the Company may not, by operation of law, be works made for hire, this
agreement constitutes an irrevocable assignment by Employee to the Company of
all of his rights, title and interest in and to, including all rights of
copyright and patent in, such writings or works of authorship. Employee agrees
that the Company will have the right to obtain and hold in its own name rights
of copyright, copyright registrations, patents and similar protections which may
be available in the writings or works of authorship. Employee agrees to give the
Company or its designee(s) all assistance reasonably required to perfect such
rights at the Company's expense.
Return of Confidential Information. Upon the expiration of the term
or termination of this Agreement for any reason, Employee will surrender to
Company all tangible Confidential Information in the possession of, or under the
control of, Employee, including, but without limitation, the originals and all
copies of all software, drawings, manuals, letters, reports, and all other media
(except for the Employee's personal notebooks), material, and records of any
kind, and all copies thereof pertaining to Confidential Information acquired or
developed by Employee during the term of Employee's employment (including the
period preceding the Effective Date).
Non-Solicitation. During the term of this Agreement and throughout the
Applicable Period Employee shall not, individually or on behalf of another
person, company, or other entity, directly or indirectly, solicit or encourage
any employee of the Company or any affiliate of the Company to terminate his or
her employment with the Company.
Restrictions; Non-Competition. The restrictions on use of confidential
information, competition with the Company, and solicitation of employees on the
part of Xxxxx, contained in the Section of the Employment Agreement effective as
of January 1, 2005 (attached for reference purposes only as Exhibit A), shall
not be affected by the entry of this agreement but shall continue in full force
and effect.
Remedies. Employee agrees that Company shall be entitled as a manner of
right to an injunction, out of any court of competent jurisdiction restraining
any violation or further violation of such agreements by Employee; such right to
an injunction, however, shall be cumulative and in addition to whatever other
remedies Company may have. The terms and agreements set forth in Article 4 shall
survive the expiration of the term or termination of this Agreement for any
reason. The existence of any claim of Employee, whether predicated on this
Agreement or otherwise, shall not constitute a defense to the enforcement by
Company of the agreements contained in Article 4. The prevailing party in
arbitration will be awarded attorneys' fees, all costs and expenses of
arbitration, the arbitration filing fee and the cost and expenses of the
arbitrator. No consequential, exemplary or punitive damages shall be awarded.
DISPUTE RESOLUTION
Xxxxx and the Company mutually consent to the resolution by binding
arbitration of any and all disputes between them during the Term of this
Agreement and any applicable period thereafter. Such arbitration shall be before
a single arbitrator to be mutually selected by the parties or, if they are
unable to agree upon a single arbitrator, by the American Arbitration
Association. The arbitration shall be conducted in accordance with the
then-current rules of the American Arbitration Association (the "AAA"). The
arbitrator shall abide by applicable substantive law, shall have the authority
to grant summary judgment, and shall issue a written decision and award stating
the supporting reasons. The decision and award shall be final, unappealable and
binding on both parties, their heirs, executors, administrators, successors, and
assigns. The arbitration filing fee and the costs and expenses of the arbitrator
shall be borne equally by the parties. The prevailing party in arbitration will
be awarded attorney's fees, all costs and expenses of arbitration, the
arbitration filing fee and the cost and expenses of the arbitrator but no
consequential or punitive damages shall be awarded.
GENERAL PROVISIONS
Entire Agreement. This Agreement is the entire agreement between the
Company and Xxxxx and supersedes all prior agreements between the parties,
except for the restrictions on use of confidential information, competition with
the Company, and solicitation of employees on the part of Xxxxx, contained in
Exhibit A, which remain in effect. This Agreement may not be changed, modified
or amended in any manner except by an instrument in writing signed by Xxxxx and
the Company.
Assignment. This Agreement may not be assigned by the Company or Xxxxx.
This Agreement shall be binding upon and inure to the benefit of the parties
only and their respective successors, heirs and legal representatives.
Governing law. This Agreement will be governed by the laws of the State of
Texas.
Notices. Notices will be considered delivered when hand delivered or three
(3) business days after being deposited in the United States mail Registered
Return Receipt Requested addressed to the following:
Xxxxxxxxxxx Corporation Xxxxxxx X Xxxxx
0000 Xxxxx Xxxxx Xxxxxxxxx 0000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000 Xxxxxx, Xxxxx 00000
Severability. If one or more of the provisions of this Agreement are deemed
voided or otherwise unenforceable by law, then the remaining provisions will
continue in full force and effect.
Indemnification. The Company will unconditionally and irrevocably indemnify
and hold harmless Xxxxx, to the maximum extent permissible by law, from any and
all costs or expenses, as incurred, from any actions or omissions by him in the
course of his employment by Xxxxxxxxxxx Corporation including the payment of any
sums guaranteed by Xxxxx to third parties.
Time. In all matters related to this Agreement, time is of the essence.
IN WITNESS WHEREOF, Xxxxxxxxxxx Corporation and Xxxxxxx X Xxxxx have executed
this Agreement to be effective as of 1 January 2009.
XXXXXXXXXXX CORPORATION XXXXXXX X. XXXXX
/s/ Xxxxxxx Xxxxxxxx, Xx. /s/ Xxxxxxx X. Xxxxx
Chairman of the Board
Xxxxxxxxxxx Corporation
Date:__________, 2009 Date:__________, 2009
