EXHIBIT 10.29
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement ("Agreement"), dated as of
November 1, 1996 (the "Effective Date"), is executed by and between Irata, Inc.,
a Texas corporation with offices at 0000 Xxxx Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx
00000 (the "Company"), and Xxxxx X. Xxxxxx, residing at 00000 Xxx Xxxxx Xxxxx,
Xxxxxx, Xxxxx 00000 ("Executive").
The Company desires to retain Executive as President, Chief Executive
Officer and Chairman of the Board of Directors ("Board") of the Company and to
perform executive management services for the Company, and Executive desires to
assume such offices and perform such services, on the terms and conditions
hereinafter set forth.
1. Term. The Company agrees to employ Executive, and Executive agrees
to serve in the capacity described in Section 2 below, on the terms
and conditions set forth in this Agreement, for an initial period
of two (2) years commencing upon the Effective Date and from month
to month thereafter until terminated in accordance with the
provisions herein contained (the "Employment Period"). Either the
Company or the Executive may terminate this Agreement after the
expiration of the first twenty-four months of employment by written
notice to the other party in accordance with provisions hereof at
least sixty days prior to the date fixed for termination by such
notice.
2. Duties and Services. During the Employment Period, Executive shall
be employed in the business of the Company as its President, Chief
Executive Officer and Chairman of the Board. The Board shall
nominate Executive to serve as a member of the Board at each
election of Board members occurring during the term of this
Agreement. The failure of the shareholders of the Company to elect
Executive as a member of the Board shall not result in a
termination of this Agreement. In performance of his duties,
Executive shall be subject to the direction of the Board, and
Executive agrees to his employment as described in this Section 2.
Excepting disabilities, illness, and vacation as provided as in
Section 3(e) below, Executive agrees to devote such time necessary
or desirable to perform his duties under this Agreement and to
achieve the Company's plans and goals as established by the Board
with Executive from time to time ("Company's Business Plan"). In
performing his duties to the Company hereunder, Executive shall be
available for reasonable travel as the needs of the business
require. Provided that Executive is performing in full and in a
timely manner the material aspects of his duties and
responsibilities to the Company, Executive shall have the right to
devote time to Executive's business known as Xxxxxx Associates,
Inc.
3. Compensation and Other Benefits.
(a) Annual Base Salary. As compensation for his services hereunder,
the Company shall pay to Executive, during the Employment
Period, an annual base salary ("Annual Base Salary") equal to
One Hundred Thirty-Five Thousand Dollars ("$135,000.00).
Executive's Annual Base salary shall be payable every two weeks
in twenty-six (26) equal installments.
(b) Incentive Compensation. In order to provide an incentive to
Executive to render his very best efforts on behalf of the
Company and to achieve the goals for the Company contained in
its Business Plan, the Company shall establish a bonus pool for
the benefit of Executive in the sum of no less than Forty
Thousand Dollars ($40,000.00) (the "Incentive Pool") per each
year of the Employment Period. The Board shall establish an
"Incentive Award Program" to award to Executive annually
incentive compensation ("Incentive Compensation") in the sum of
no less than Forty Thousand Dollars ($40,000.00) from the
Incentive Pool based on Executive's performance and achievement
of the Company's Business Plan. Incentive Compensation, as
earned and paid under the Incentive Award Program, shall be
deemed fully vested upon award.
(c) Additional Bonuses/Incentive Programs. Executive shall have the
right to participate in such other bonus or incentive programs
established by the Company from time to time as an incentive to
its senior executives, managers and key employees ("Other Bonus
Plans"). Such participation shall be on the terms and
conditions set forth in such Other Bonus Plans.
(d) Other Benefits. Executive shall be entitled to participate in
all group health and insurance programs and all other fringe
benefit or retirement plans or additional compensation which
the Company may hereafter, in its sole and absolute discretion,
elect to make available to its senior executives, managers, and
key employees generally, provided Executive meets the general
qualifications therefor as established for such benefit.
Nothing in this Subsection (d) shall obligate the Company to
establish any such programs or plans just for Executive.
(e) Vacation. Executive shall be entitled to three (3) weeks of
paid vacation per year during the Employment Period.
(f) Directors and Officers Liability Insurance. The Company shall
take out and maintain directors and officers liability
insurance with coverage in an amount of not less than Two
Million Dollars ($2,000,000.00) and providing for reimbursement
of attorneys' fees and costs in the sum of not less than Three
Hundred Thousand Dollars ($300,000.00). Proof of such insurance
shall be provided to Executive prior to the commencement of the
Employment Period. If such insurance has not been obtained
prior to the commencement of the Employment Period, Executive
shall have the right to terminate this Agreement immediately
upon written notice to the Company or may elect to commence the
Employment Period if such insurance is forthcoming within a
reasonable period of time and will relate back to the
commencement of the Employment Period. If such insurance is not
obtained after the Employment Period commences, Executive may
at any time give ten (10) days prior written notice of his
intent to terminate this Agreement. Upon such notice of
termination, this Agreement shall be null and void and neither
party shall have any further rights or obligations hereunder
except as otherwise provided in this Agreement.
(g) Stock Option. Contemporaneously with the commencement of the
Employment Period and subject to the vesting schedule set forth
below, the Company shall grant to Executive pursuant to the
Company's Employee Stock Option Plan an option ("Option") to
acquire Three Hundred Thousand (300,000) shares of the
Company's common stock, $.10 par value ("Company's Stock"), at
a purchase price equal to 50 cents per share. Executive's
Option shall be deemed fully vested and shall become
exercisable as follows:
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(i) On the Effective Date Executive shall be vested with
respect to 50,000 shares and shall be vested with an
additional 41,667 shares after each ninety days
thereafter until the Executive is fully vested with
respect to the Options.
(ii) On August 1, 1997, Executive's Option shall be
exercisable as to the One Hundred Seventy-five Thousand
and One (175,001) shares that are then fully vested;
(iii) Thereafter, an additional twenty-four thousand (24,000)
shares shall become exercisable on October 30, 1997, an
additional fifty-nine thousand, three hundred thirty
three (59,333) shares shall become exercisable on January
28, 1998 and the final Forty-one Thousand, Six Hundred
Sixty six (41,666) shares shall become exercisable on
April 28, 1998 when all unexercised shares shall be
deemed fully vested and exercisable.
The Company will use best efforts to register Executive's Option as part of
or at the same time as Company registers Company's Employee Stock Option Plan.
If such registration has not been filed with the applicable regulatory
authorities on or about August 1, 1997, then Executive shall have the right
thereafter to demand registration of Executive's Option. Any registration shall
be at the Company's cost and expense.
(h) Change in Control. In the event of a "change in control" (as
defined in Exhibit "A" hereto): (i) Executive's Option shall be
deemed fully vested as to all Three Hundred Thousand (300,000)
shares of Company's Stock notwithstanding any vesting schedule
set forth in Section 3(g) above, (ii) Executive's Option shall
be fully exercisable on the later of the date of change of
control or August 1, 1997 and (iii) Executive's right to
receive any unpaid portion of his Annual Base Salary for the
initial twenty-four month term or any unpaid Incentive
Compensation shall survive any termination of his employment by
reason of such change in control.
(i) Review of Compensation and Benefits. No later than sixty (60)
days prior to the expiration of the first twelve (12) month
period of the Employment Period, the parties shall meet to
discuss the current terms and conditions of Executive's
employment. The parties shall negotiate in good faith
Executive's Annual Base Compensation, Incentive Compensation
and other benefits. In no event shall Executive's Annual Base
Compensation and minimum Incentive Compensation increase for
the second twelve months by less than five percent (5%). Any
changes to this Agreement shall be set forth in writing and
signed by the parties. In the event that the parties are unable
to agree on new or different terms and conditions of
employment, the Agreement shall continue in full force and
effect on the same terms and conditions as then otherwise in
effect except during the second twelve months the Base
Compensation and minimum Incentive compensation shall increase
by 5%.
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4. Expenses.
(a) General Business Expenses. In performing his duties to the Company
hereunder, Executive shall be available for reasonable travel. The
Executive shall be entitled to reimbursement for all reasonable
travel and other out-of-pocket expenses necessarily incurred in
the performance of his duties hereunder upon submission and
approval of written statements and bills in accordance with the
then-regular procedures of the Company.
(b) Commuting and Living Expenses. In addition to the foregoing
general business expense reimbursements, Executive shall be
entitled to commuting and local living expenses in an amount not
to exceed Three Thousand Dollars ($3,000.00) per month to
reimburse Executive dollar-for-dollar for his out-of-pocket costs
for commuting between Houston, Texas, and Dallas, Texas. Such
expenses shall include hotel, car rental, meals, parking,
telephone and laundry. Such expenses shall be reimbursed no less
than twice monthly, based on such receipts provided by Executive.
Expenditures in an amount less than Twenty-Five Dollars ($25.00)
shall not require a receipt.
(c) Legal Fees. Upon execution of this Agreement, the Company shall
reimburse Executive for his legal fees up to the sum of Two
Thousand Five Hundred Dollars ($2,500.00) incurred in connection
with the negotiation, documentation and consummation of this
Agreement.
5. Representations and Warranties of Executive. Executive represents and
warrants to the Company that (a) Executive is under no contractual or
other restriction or obligation which is inconsistent with the
execution of this Agreement, the performance of his duties hereunder,
or the other rights of the Company hereunder and (b) Executive is under
no physical or mental disability that would hinder his performance of
duties under this Agreement.
6. Non-Competition. In view of the unique and valuable service it is
expected Executive will render to the Company, Executive's knowledge of
the customers, trade secrets, and other proprietary information
relating to the business of the Company and its customers and suppliers
and similar knowledge regarding the Company it is expected Executive
will obtain, and in consideration of the compensation to be received
hereunder and of the shares of Company's Stock being sold to Executive,
Executive agrees that he will not during the Employment Period and for
a period of two years thereafter, "Participate in" (hereinafter defined
in this Section 6) any other business or organization, if such business
or organization is now or shall then be competing with or of a nature
similar to the business of the Company. The provisions of this
Section 6 will not be deemed breached merely because Executive owns not
more than five percent (5%) of the outstanding common stock of a
competing corporation if, at the time of its acquisition by Executive,
such stock is listed on the New York Stock Exchange or the American
Stock Exchange or a regional securities exchange, is reported on NASDAQ
or NMS, or is regularly traded in the over-the-counter market by a
member of a national securities exchange. The term "Participate in"
shall mean: "directly or indirectly, for his own benefit or for, with,
or through any other person, firm, or corporation, own, manage,
operate, control, loan money to, or participate in the ownership,
management, operation, or control of, or be connected as a director,
officer, employee, partner, consultant, agent, independent contractor,
or otherwise with, or acquiesce in the use of his name in connection
with a competing business or
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organization." During the Employment Period and two years thereafter,
Executive will not directly or indirectly reveal the name of, solicit
or interfere with, or endeavor to entice away from the Company any of
its suppliers, customers, or employees. For a two (2) year period after
the termination of this Agreement, with the exception of Xxxx
Xxxxxxxxx, Executive will not directly or indirectly employ any person
who was an employee of the Company within a period of one (1) year
after such person leaves the employ of the Company.
All parties recognize that the services to be rendered under this Agreement
by each Executive are special, unique, and of extraordinary character, and that
in the event of the breach by Executive of the terms and conditions of this
Agreement to be performed by him, that the Company shall be entitled, if it so
elects, to institute and prosecute proceedings in any court of competent
jurisdiction, either in law or in equity to obtain damages for any breach of the
covenants herein contained, or to enforce a specific performance thereof by
Executive, but nothing herein contained shall be construed to prevent such
remedy in the courts, in case of any breach of this Agreement by Executive, as
the Company may elect to invoke. Executive agrees to waive and hereby waives
any requirement for the securing of any bond in connection with the obtaining of
such injunction or other equitable relief.
All parties recognize that the covenant not to compete required by the
Company of the Executive constitutes a restraint of the future employment,
business and trade rights of such Executive and as such, is enforceable only to
the extent necessary to protect and preserve to the Company the valuable
goodwill and proprietary rights of the Company as they now exist and as they may
be developed in the future by Executive and others on behalf of the Company.
The Parties, in preparing this Agreement, and Executive, in considering its
terms and conditions, recognize that the business of the Company and thus its
protectable and valuable good will and proprietary rights are not restricted to
a single geographical area but extend to many different markets. Many Employees
of the Company will have responsibilities restricting their activities on behalf
of the Company to the single small geographical market area surrounding their
place of employment. The Company and Executive have entered into the employment
or consulting relationship with the expectation that as the skills and
responsibilities of Executive increase, such Executive may develop relationships
in other markets which will constitute a part of the growing goodwill of the
Company. The obligation of Executive not to compete has been limited to those
markets of the Company where Executive has had some contact with the product,
process of service offered by the Company in that market. The restriction or
restraint on such Executive's business activities is similarly limited in time
to the expiration of two years after termination of the employment relationship
with the Company. Accordingly, the Company and Executive agree that the
restrictive covenant not to compete is limited to that necessary to protect the
goodwill and proprietary rights of the Company. Executive agrees that the
restrictions contained herein will not, in all likelihood, constitute a serious
hardship in securing future employment. The Company agrees that in the event of
an unexpected undue hardship to Executive resulting from application of the
provisions hereof, it shall make every reasonable effort to minimize the
inconvenience to Executive as far as is consistent with the protection of the
goodwill and proprietary rights of the Company.
In the event any court shall finally hold that any provision stated in this
Agreement constitute unreasonable restrictions upon Executive, the parties
hereby agree that the provisions hereof shall not be rendered void, but shall
apply as to time and territory or to such other extent as such court may
judicially indicate constitutes a reasonable restriction under the
circumstances. In so holding, if the court shall fail to indicate an
alternative restriction of time or territory, then the parties hereby expressly
agree to submit this matter to arbitration with the American Arbitration
Association, for the purposes of determining a reasonable restriction under the
circumstances as will protect the goodwill of the Company and will not
unreasonable restrict
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Executive.
7. Patents, etc. Any interest in patents, patent applications, inventions,
technological innovations, copyrights, copyrightable works,
developments, discoveries, designs and processes which Executive now or
hereafter, during the period he is employed by the Company under this
Agreement or otherwise, and for six (6) months thereafter may own,
conceive of, or develop and either relating to the fields in which the
Company may then be engaged or contemplates (as demonstrated by the
records of the Company) being engaged or conceived of or developed
utilizing the time, material, facilities, or information of the Company
("Such Inventions") shall belong to the Company. As soon as Executive
owns, conceives of, or develops any Such Inventions, he agrees
immediately to communicate such fact in writing to the Secretary of the
Company, and without further compensation, but at the Company's
expense, forthwith upon request of the Company, Executive shall execute
all such assignments and other documents (including applications for
patents, copyrights, trademarks, and assignments thereof) and take all
such other action as the Company may reasonably request in order (a) to
vest in the Company all Executive's right, title and interest in and to
Such Inventions, free and clear of liens, mortgages, security
interests, pledges, charges and encumbrances arising from the acts of
Executive ("Liens") (Executive to take such action, at his expense, as
is necessary to remove all such Liens if caused by Executive's acts and
not operation of law) and (b) if patentable or copyrightable, to obtain
patents or copyrights (including extensions and renewals) therefor in
any and all countries in such name as the Company shall determine.
8. Confidential Information. All confidential information which Executive
may now possess, may obtain during or after the Employment Period, or
may create prior to the end of the period he is employed by the Company
under this Agreement or otherwise relating to the business of the
Company or of any customer or supplier of the Company shall not be
published, disclosed, or made accessible by him to any other person,
firm, or corporation either during or after the termination of his
employment or used by him except during the Employment Period in the
business and for the benefit of the Company. Executive shall return all
physical evidence of such confidential information to the Company prior
to or at the termination of his employment. As used in this Section 8,
"confidential information" shall mean any information except that
information available to competitors or which is generally available to
the public or which was in the possession of Executive prior to the
Employment Period.
9. Life Insurance. If requested by the Company, Executive shall submit to
such physical examinations and otherwise take such actions and execute
and deliver such documents as may be reasonably necessary to enable the
Company, at its expense and for its own benefit, to obtain life
insurance on the life of the Executive.
10. Termination. Notwithstanding anything herein contained, if on or after
the Commencement Date and prior to the end of the Employment Period:
(a) Grounds for Termination. Either (i) Executive shall be physically
or mentally incapacitated or disabled or otherwise unable fully to
discharge his duties hereunder for a period of three (3) months, as
mutually determined by the Board of Directors and Executive's
attending physician(s), (ii) Executive shall be convicted of a
crime of moral turpitude or a felony, (iii) Executive shall breach
any fiduciary duty to the Company, or (iv) Executive shall breach
any material term of this Agreement and fail to correct such breach
within ten (10)
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days after notice by the Company to Executive of his commission of
the same, then, and in each such case, the Company shall have the
right to give notice of termination of Executive's services
hereunder as of a date (not earlier than ten (10) days from such
notice) to be specified in such notice, and this Agreement shall
terminate on the date so specified and shall be deemed terminated
for "Cause." Nothing contained in this Section 10 shall be deemed
to limit any other right the Company may have to terminate
Executive's employment hereunder upon any ground permitted by law.
(b) Termination on Death. If Executive shall die, then this Agreement
shall terminate on the date of Executive's death, whereupon his
estate shall be entitled to receive his Annual Base Salary,
prorated to the date on which termination shall take effect, and
all Incentive Compensation awarded under Paragraph 3.6 in full.
Furthermore, Executive's Option shall vest in full as of the date
of death. If this Agreement is terminated as a result of
Executive's death, and if the Company shall not, at the date of
such death, be providing life insurance coverage for the benefit of
Executive's estate, Executive's estate shall also be entitled to
receive a payment in the amount of six (6) installments of Annual
Base Salary.
(c) Effect on Compensation. In the event of termination of Executive's
employment during the first twenty-four months of employment
hereunder for all other reasons other than voluntary termination by
the Executive, by reason of death or "for cause" (as defined
herein), (i) Executive shall be entitled to receive as severance
compensation in one lump sum payment any unpaid portion of his
total Annual Base Salary for the entire first twenty-four months of
the Employment Period and the full amount of any unpaid Incentive
Compensation awarded under Section 3(b) above; and (ii) Executive's
Option shall be deemed fully vested. All other compensation and
benefits upon termination shall be paid to Executive in accordance
with such Company plans and policies governing such compensation
and benefits.
(d) Effect on Compensation on Termination for Cause or Voluntary
Termination. In the event of termination "for cause," or voluntary
termination by Executive, the Executive shall be entitled to
receive his Annual Base Salary, prorated through the effective date
of such termination, plus any unpaid Incentive Compensation already
awarded and any portion of Executive's Option vested to date. Any
portion of Executive's Option not fully vested by the termination
date shall be deemed terminated, null and void as to the portion
not so vested. All other compensation and benefits shall be paid to
Executive in accordance with such Company plans and policies
governing such compensation and benefits. For the purposes of this
Agreement, termination "for cause" shall mean termination pursuant
to the grounds specified in Sections 10(a)(ii), (iii) and (iv)
above.
11. Survival. The covenants, agreements, representations, and warranties
contained in or made pursuant to this Agreement shall survive
Executive's termination of employment as provided herein.
12. Entire Agreement; Modification. This Agreement sets forth the entire
understanding of the parties with respect to the subject matter
hereof, supersedes all existing agreements between them concerning
such subject matter, and may be modified only by a written instrument
duly executed by each party.
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13. Notice. All notices and other communications provided for in this
Agreement shall be in writing and shall be deemed to have been duly
given when: (i) delivered personally and evidenced by a signed receipt
for such delivery; (ii) mailed by United States registered mail or
certified mail, return receipt requested, postage prepaid, addressed as
set forth below; or (iii) mailed by a nationally recognized courier
service (e.g., Federal Express, DHL, etc.) and addressed as st forth
below. Notice shall be deemed given when indicated as received or
refused on the applicable receipt. Any address set forth below may be
changed by a party by written notice given in accordance with this
Section.
If to Executive: Xxxxx X. Xxxxxx
00000 Xxx Xxxxx Xxxxx
Xxxxxx, Xxxxx 00000
If to Company: Irata, Inc.
0000 Xxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Xxx Xxxx, Corporate Secretary
14. Waiver. Any waiver by either party of a breach of any provision of this
Agreement shall not operate as or be construed to be a waiver of any
other breach of such provision or of any breach of any other provision
of this Agreement. The failure of a party to insist upon strict
adherence to any term of this Agreement on one or more occasions shall
not be considered a waiver or deprive that party of the right
thereafter to insist upon strict adherence to that term or any other
term of this Agreement. Any waiver must be in writing, signed by both
parties.
15. Binding Effect. Executive's rights and obligations under this Agreement
shall not be transferable by assignment or otherwise. Such rights shall
not be subject to commutation, encumbrance, or the claims of
Executive's creditors, and any attempt to do any of the foregoing shall
be void. The provisions of this Agreement shall be binding upon and
inure to the benefit of Executive and his heirs and personal
representatives, and shall be binding upon and inure to the benefit of
the Company and its successors and assigns.
16. No Third-Party Beneficiaries. This Agreement does not create, and shall
not be construed as creating, any rights enforceable by any person not
a party to this Agreement.
17. Headings. The headings in this Agreement are solely for the convenience
of reference and shall be given no effect in the construction or
interpretation of this Agreement.
18. Counterparts; Governing Law. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument. It
shall be governed by and construed in accordance with the laws of the
State of Texas, without giving effect to the conflict of laws.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
Effective Date.
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IRATA, INC., a Texas corporation
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
---------------------------------------
Xxxxx X. Xxxxxx
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EXHIBIT "A"
CHANGE IN CONTROL
A "Change in Control" shall be deemed to have occurred if at any time
during the Employment Period any of the following events occur:
(a) The Company is merged, consolidated or reorganized into or with
another person or legal entity ("Acquiring Entity") and as a
result of such merger, consolidation or reorganization less than
fifty-one percent (51%) of the combined voting power of the then-
outstanding securities of the Acquiring Entity immediately after
such transaction are held in the aggregate by the holders of the
voting securities of the Company immediately prior to such
transaction; or
(b) The Company sells all or substantially all of its assets or all of
its outstanding securities to an Acquiring Entity in whom less
than fifty-one percent (51%) of the combined voting power of the
then-outstanding voting securities are held in the aggregate by
the holders of the voting securities of the Company immediately
prior to such sale; or
(c) The Company files a report on Schedule 13D or Schedule 14D-1 (or
any successor schedule, form or report), each as promulgated
pursuant to the Securities Exchange Act of 1934 (the "Exchange
Act"), disclosing that any person (as the term "person" is used in
Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) has
become the beneficial owner (as the term "beneficial owner" is
defined under Rule 13d-3 or any successor rule or regulation
promulgated under the Exchange Act) of securities representing ten
percent (10%) or more of the outstanding stock of the Company; or
(d) The Company files a report or proxy statement with the Securities
and Exchange Commission pursuant to the Exchange Act disclosing in
response to Item 1 of Form 8-K thereunder or Item 5(f) of
Schedule 14A thereunder (or any successor schedule, form or report
or item therein) that a change in control of the Company has or
may have occurred or will or may occur in the future pursuant to
any then-existing contract or transaction; or
(e) There is a significant adverse change in the nature or scope of
the authorities, powers, functions or duties attached to the
position of Executive; or
(f) The Company files for bankruptcy protection.
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