Exhibit 10.2
CONFIDENTIAL TREATMENT REQUESTED
UNDER 17 C.F.R. SECTIONS 200.83 AND 230.496
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into on this 3rd
day of May, 2001, by and among Xxxxxx'x, Inc., a Delaware corporation (the
"Company") and Xxxxxxx X. Spain, a resident of Xxxxxx County, Texas (the
"Executive"), and the parties agree as follows:
1. RECITALS.
(a) Executive has been employed by the Company since 1990, and,
immediately prior to the execution of this Agreement, has
been serving as Chairman, Chief Executive Officer, and
President of the Company; and
(b) Executive and the Company have recruited and retained a new
Chief Executive Officer and President of the Company, the
employment of whom by the Company commences contemporaneously
with the execution of this Agreement; and
(c) The Executive and the Company desire that Executive continue
to serve the Company as its full time executive Chairman in
accordance with the terms of this Agreement; and
(d) Each of the Company and Executive acknowledges that each has
given and received, good, valuable, present and sufficient
consideration to support each of the obligations of the
parties under this Agreement.
2. RELATIONSHIP.
The Company hereby employs Executive to serve as an executive of
the Company, and Executive hereby agrees to such employment, upon the terms and
conditions set forth below.
3. SERVICES. During the time of his employment under this Agreement:
(a) Executive shall serve as the executive Chairman of the
Company, shall report to the Board of Directors of the
Company (the "Board") and shall perform such executive duties
and responsibilities commonly incident to such office as may
be prescribed from time to time by the Board; and
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(b) Subject to reasonable outside business and personal interests
that do not present a conflict of interest, Executive shall
devote his full time, attention and energy to the business of
the Company; and
(c) Subject to reasonable travel requirements, and the rights of
Executive under Section 5(e) below with respect to his
primary residence, a substantial portion of the services to
be provided by Executive to the Company shall be provided at
its offices in Austin, Texas.
4. TERM.
The term of this Agreement shall commence on May 22, 2001 (the
"Effective Date") and shall continue until terminated in accordance with Section
7 of this Agreement.
5. COMPENSATION AND BENEFITS.
During the Term of Executive's employment under this Agreement:
(a) subject to the adjustments provided for below, the Company
shall pay to Executive a salary at the annual rate of Three
Hundred Thousand and No/100 Dollars ($300,000.00), which
salary shall be paid in installments on the Company's
customary pay dates and shall be subject to all applicable
withholding required by state or federal law; provided, that
Executive's salary shall be subject to increase but not
decrease during the Term in the discretion of the Board; and
(b) the Company shall provide to Executive, at the expense of the
Company, such benefits as the Board or the Compensation
Committee of the Board, if any, in its sole discretion, from
time to time, determines to provide, which shall be the same
benefits, including health insurance and disability
insurance, as received by other senior executives of the
Company; and
(c) Executive shall be entitled to such other incentive
compensation and bonuses in any calendar year as the Board or
the Compensation Committee of the Board, if any, from time to
time, determines to provide in its sole discretion; and
(d) Executive shall be entitled to four (4) weeks of vacation per
calendar year, which shall accrue and accumulate in
accordance with the Company's vacation policies; and
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(e) Executive shall have the right at any time during the Term to
relocate his primary residence from Austin, Texas to another
location. In the event of such relocation, the Company shall
pay or reimburse the Executive for the reasonable travel
expenses incurred by him in traveling to and from his primary
residence to the Company's offices in Austin, Texas, as well
as his reasonable expenses while in Austin, Texas including,
reasonable hotel and/or apartment expenses. The Company also
acknowledges that it is practicable for the Executive to
perform certain of his duties for the Company from his city
of residence and the Company agrees that Executive will be
required to perform his duties in Austin, Texas only to the
extent they cannot reasonably be performed from the location
of his primary residence and the Company agrees to reimburse
Executive for the reasonable costs of keeping an office in
his city of residence, such costs not to exceed $500.00 per
month; and
(f) The Company will reimburse Executive for the reasonable cost
of his attorneys fees incurred in connection with the
drafting and negotiation of this Agreement, with the
aggregate amount of such reimbursement not to exceed
$6,000.00.
6. CONFIDENTIAL AND PROPRIETARY INFORMATION.
In consideration of Executive's employment by the Company, the Company's
promise to disclose to Executive its confidential and Proprietary Information
(as defined below), the compensation now and hereafter paid to Executive, and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, Executive hereby agrees with the Company as follows:
(a) Executive recognizes and acknowledges that he may have access
to certain Proprietary Information (defined below) of the
Company and its affiliates and that such information
constitutes valuable, special and unique property of the
Company; the Executive will not, during or after the term of
his employment, directly or indirectly divulge, disclose,
transmit, use, lecture upon, publish, or otherwise
communicate or make available any of such Proprietary
Information to any person or firm, corporation, association,
or other entity for any reason or purpose whatsoever, except
as may be required in connection with Executive's work for
the Company or if the Company's Board of Directors expressly
authorizes such in writing.
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(b) The term "Proprietary Information" shall mean trade secrets,
confidential knowledge, data, or any other proprietary
information of the Company and each of its subsidiaries or
affiliated companies. By way of illustration but not
limitation, "Proprietary Information" includes (a)
information regarding plans for research, development, new
products and services, marketing and selling, business plans,
budgets and unpublished financial statements, licenses,
prices and costs, suppliers, customer lists and customers
that were learned or discovered by Executive during the term
of his employment with the Company; (b) information regarding
the skills and compensation of other employees of the
Company; and (c) "Inventions," which consist of inventions,
discoveries, developments, improvements, trade secrets,
processes, formulas, data, lists, software programs and all
other works of authorship, mask works, ideas, concepts,
know-how, designs, and techniques, relating to the business
or proposed business of the Company, whether or not
patentable, copyrightable, or registrable under patent,
copyright, or similar statutes in the United States or
elsewhere, that were discovered, developed, created,
conceived, reduced to practice, made, learned, or written by
Executive, either alone or jointly with others, in the course
of his employment with the Company.
(c) Executive understands, in addition, that the Company may from
time to time receive from third parties confidential or
proprietary information ("Third Party Information") subject
to a duty on the Company's part to maintain the
confidentiality of such information and to use it only for
certain limited purposes. At all times during the term of
Executive's employment and thereafter, Executive will hold
Third Party Information in the strictest confidence and will
not disclose, discuss, transmit, use, lecture upon, or
publish any Third Party Information, except as such
disclosure, discussion, transmission, use, or publication may
be required in connection with Executive's work for the
Company, or unless the Board of Directors of the Company
expressly authorizes such in writing.
(d) Executive acknowledges and agrees that all data, listings,
charts, drawings, records, files, drafts, memoranda, devices,
documents, specifications and similar items, together with
all copies thereof, relating to the business of the Company
and its affiliates or their customers, and/or any other
material containing or disclosing any Proprietary
Information, Inventions, or Third Party Information whether
compiled by Executive, furnished to Executive by the Company
or its affiliates, or their customers or clients or otherwise
made accessible to Executive or coming into his possession,
while Executive is in the employ of the Company, and copies
of any such items, shall be and remain the sole and exclusive
property of the Company or its customers or clients, as the
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case may be, and none of such items shall be removed from the
Company's business premises by Executive without the prior
written consent of the Company, except as required in the
course of his employment and all of such items shall be
promptly returned to the Company by Executive upon the
termination of his employment with the Company for whatever
reason.
(e) Executive understands and agrees that he shall not use the
proprietary or confidential information of any former
employer or any other person or entity in connection with his
employment with the Company. During Executive's employment
with the Company, Executive will not improperly use or
disclose any confidential or proprietary information, if any,
of any former employer or any other person or entity to whom
Executive has an obligation of confidentiality, and he will
not bring onto the premises of the Company any unpublished
documents or any property belonging to any former employer or
any other person or entity to whom Executive has an
obligation of confidentiality unless consented to in writing
by that former employer, person, or entity.
(f) Executive acknowledges that any breach by Executive of this
Section 6 may result in irreparable harm to the Company with
respect to which no adequate remedy at law exists.
Accordingly, in addition to any other remedies available to
the Company with respect to any actual or threatened breach
of this Agreement, Executive consents to the entry of any
temporary and permanent injunctive relief to the extent
necessary to protect the Company from harm.
(g) This Section 6 shall survive the termination of this
Agreement, the Term and/or the Executive's employment with
the Company.
7. TERMINATION.
(a) The Company shall have the right to terminate the employment
of Executive under this Agreement at any time, and without
notice, for "Cause" as hereinafter defined. "Cause" for the
purpose of this Agreement shall mean any one or more of the
following:
(i) the breach or violation by Executive of this
Agreement or the failure of Executive to perform in
any material respect any of his obligations under
this Agreement for any reason other than death or
disability which breach or failure continues after
ten (10) days' written notice and opportunity to
cure;
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(ii) gross neglect of duties by Executive;
(iii) misappropriation of Company assets or willful breach
of fiduciary duty as an officer of the Company;
(iv) conviction of Executive of a felony; or
(v) the failure or refusal of Executive to follow a
lawful direction from the Board that is not
inconsistent with the duties of Executive or the
obligations of the Company under this Agreement and
that does not constitute grounds for termination by
Executive for Good Reason (as defined below).
(b) The Company shall have the right to terminate the employment
of Executive under this Agreement at any time without "Cause"
upon the giving to Executive of thirty (30) days written
notice of such termination; PROVIDED, HOWEVER, that during
any such thirty (30) day notice period, (i) the Company may
suspend, with no reduction in pay or benefits, Executive from
his duties as set forth herein (including, without
limitation, Executive's position as a representative and
agent of the Company), and (ii) the Executive shall have no
obligation to provide further services to the Company.
(c) Executive shall have the right to terminate his employment
under this Agreement for "Good Reason" (as defined below).
Termination by Executive for Good Reason includes:
(i) Assignment of duties materially inconsistent with the
scope of authority, duties and responsibilities
defined in this Agreement (which shall include the
removal of all duties from Executive) and such
assignment is not retracted in writing, within ten
(10) days after receipt of written notice of
Executive's objection to such assignment;
(ii) Failure to pay the Executive salary or benefits when
due, which breach continues after ten (10) days'
written notice and opportunity to cure;
(iii) More than fifty percent (50%) of the voting stock of
the Company is acquired, by any person or entity; or
(iv) One or more of the members of the Board of the
Company are persons other than those nominated by the
Board of Directors of the Company; or
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(v) Other material breach of this Agreement by the
Company, which breach continues after ten (10) days'
written notice and opportunity to cure.
(d) Executive shall have the right to terminate his employment
under this Agreement at any time without "Good Reason" upon
giving to the Company thirty (30) days written notice of such
termination; PROVIDED, HOWEVER, that the Company may waive
all or a portion of the thirty (30) days' notice and
accelerate the effective date of such termination.
(e) The employment of Executive under this Agreement shall
terminate automatically upon the death of Executive.
(f) The employment of Executive under this Agreement shall
terminate automatically upon the Disability of the Executive.
For purposes of this Agreement, Disability shall mean that
the Executive is unable for a period of ninety (90)
consecutive days because of a physical or mental illness or
condition to substantially render the services required
hereunder. In such event, the Executive's employment
hereunder can be terminated upon written notice from the
Company to the Executive.
(g) In the event of the termination of the employment of
Executive under any of subsections (a), (d), (e) or (f), the
Company shall have no liability or obligation to Executive
under this Agreement except for
(i) unpaid salary compensation and any unused accrued
vacation through, and any unpaid reimbursable
expenses outstanding as of, the date of termination;
and
(ii) all benefits, if any, that had accrued to the
Executive through the date of termination under the
plans and programs described in Section 5 above, or
any other applicable plans and programs in which he
participated as an employee of the Company, in the
manner and in accordance with the terms of such plans
and programs.
(h) In the event of a termination by Company without Cause, or
the termination by Executive for Good Reason at any time
following the execution of this Agreement (including
termination as described above prior to the Effective Date),
the Executive shall be entitled to the following:
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(i) as severance compensation, his then applicable salary
compensation paid semi monthly for a period of one
(1) year following the date of termination of
Executive's employment (and, during the period in
which Executive is entitled to receive severance
compensation the Executive shall be under no
obligation to mitigate his/her damages or seek other
employment or to provide any services to the
Company);
(ii) any unpaid reimbursable expenses outstanding, and any
unused accrued vacation, as of the date of
termination;
(iii) all benefits, if any, that had accrued to the
Executive through the date of termination under the
plans and programs described in Section 5 above
(other than the office expenses as described in
paragraph 5(e)), or any other applicable benefit
plans and programs in which he participated as an
employee of the Company, in the manner and in
accordance with the terms of such plans and programs;
and
(iv) continued participation on the same basis (including
without limitation, cost contributions) as the other
senior executives of the Company in all medical,
dental, disability and life insurance coverage (such
benefits collectively called the "CONTINUED PLANS")
in which he was participating on the date of
termination (as such Continued Plans are from time to
time in effect at the Company) until the earlier
of(x) the end of the period that he receives
severance compensation payments under clause (i) of
this Section 7(h) or (y) the date, or dates, on which
he is entitled to receive coverage and benefits under
the same type of plan of a subsequent employer;
provided, however, (1) if the Executive is precluded
from continuing his participation in any Continued
Plan, then the Company will be obligated to pay him
the economic equivalent of the benefits provided
under the Continued Plan in which he is unable to
participate, for the period specified above, plus an
amount equal to the tax, if any, payable by him
thereon, it being understood that the economic
equivalent of a benefit foregone shall be deemed the
lowest cost in the State of Texas that would be
incurred by the Executive in obtaining such benefit
himself on an individual basis, and payment of such
after-tax economic benefit shall be made quarterly in
advance, and (2) the Company shall pay the premiums
for Executive's medical insurance under COBRA for so
long as Executive or Executive's family is eligible
for COBRA benefits and not covered under the medical
plan of any subsequent employer.
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(i) The termination of Executive's employment with the Company
shall not affect or terminate the service of Executive as a
member of the Board of the Company.
8. NONCOMPETITION.
The Executive expressly agrees, confirms, represents and covenants for
the benefit of the Company, as follows:
(a) For the period set forth below (the "Non-Compete Period") the
Executive shall not engage either directly or indirectly in
competition with the Company, or any of its successors or
affiliates, within the Applicable Territory (defined below),
and in particular, the Executive shall not, as owner,
operator, manager, Executive, consultant, independent
contractor, agent, salesperson, officer, director,
shareholder, investor, guarantor, partner or member of a
joint venture, or otherwise, directly or indirectly, engage
in any manner in the Business (defined below) within the
Applicable Territory. For purposes of this Agreement, the
term "Applicable Territory" shall mean and include all of the
United States of America, Western Europe and Canada and any
other country in which the Company is engaged in Business
during the term hereof, and the term "Business" shall mean
any enterprise whose primary business is selling information
about companies, people and industries to other businesses in
direct competition with Company, including but not limited to
[*], as well as any new entities (including entities that
Executive may found), that are actively engaged in the
provision of business information to users on a paid,
subscription basis; provided that in order to enforce this
non-competition restriction as against such an additional
entity, the Company shall have given notice to Executive of
the inclusion of such additional entity to the restricted
employer list at least thirty (30) days prior to the date on
which Executive was terminated; provided that if the
existence of such new company does not become generally known
within the business community until after Executive's
------------------------
[*] Indicates that material has been omitted and confidential treatment
requested therefor. All such material has been filed separately with the
Commission pursuant to Rule 406.
9
termination, the Company shall have thirty (30) days from the
earlier of the date on which it became aware of the existence
of such entity, or the date on which it should reasonably
have become aware of the existence of such entity based on
publicly available information, to inform Executive of the
application of this provision to such entity, and any other
business engaged in by the Company or any of its subsidiaries
or affiliates during the Term other than any business
incidental to the operations of the Company or any of its
subsidiaries taken together as a whole;
(b) The "Noncompete Period" shall begin on the date of this
Agreement and ends twelve (12) months after the termination
of the Executive's employment with the Company for any reason
whatsoever;
(c) During the Non-Compete Period, the Executive shall not
contact or solicit or encourage any employee, supplier,
distributor or customer of the Company to discontinue his,
her or its relationship with the Company;
(d) Notwithstanding anything set forth in this Agreement to the
contrary, it shall not be a violation of this Agreement for
the Executive to own, in the aggregate, less than two percent
(2%) of any publicly traded entity competitive with the
Company, if and only if the Executive does not provide
services or information to that entity directly or
indirectly, and does not act as officer, director, Executive,
consultant or contractor, nor receive any economic benefit
from such competitive business other than as a result of his
ownership interest, and then only to the extent that the
other owners receive the same economic benefit;
(e) The covenants and agreements of the Executive set forth in
this Section 8 are ancillary to an otherwise enforceable
agreement and supported by independent valuable consideration
and are necessary to enforce the confidentiality provisions
hereof, and the limitations as to time, geographic area and
scope of activity to be restrained are reasonable and
acceptable to the Executive and do not impose any greater
restraint than is reasonably necessary to protect the
goodwill and other business interests of the Company;
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(f) If, at some later date, a court of competent jurisdiction or
any arbitrator determines that any of the provisions set
forth in this Agreement do not meet the criteria for
enforceability under applicable law, the Executive agrees
that this Agreement may be reformed by such court or
arbitrator pursuant to, and enforced to the maximum extent
permitted by, applicable law; and
(g) The Executive acknowledges that any breach by him of this
Agreement may result in irreparable harm to the Company with
respect to which no adequate remedy at law shall exist.
Accordingly, in addition to any other remedies available to
the Company with respect to any actual or threatened breach
of this Agreement, the Executive consents to the entry of any
temporary and permanent injunctive relief, to the extent
necessary to protect the Company from harm.
(h) This Section 8 shall survive the termination of this
Agreement, the Term and/or the Executive's employment with
the Company.
9. OPTIONS.
(a) The Company and Executive agree and confirm that, as of the
date of this Agreement, the Company has granted to Executive
the stock options discussed in Exhibit A to this Agreement
and that such options remain in full force and effect in
accordance with the terms of the stock option plans and
agreements pursuant to which they have been issued;
(b) The Company and Executive agree to enter into the following
agreements with respective to Executive's currently issued
stock options, as well as the options granted pursuant to
subparagraph c below:
a. With respect to those options that have an
exercise price that is equal to or greater than
the closing price of the Company's common stock
on the NASDAQ National Market System on the
Effective Date (the "Effective Date Closing
Price"), the Company will amend the option
agreement for such options as of the Effective
Date to provide that: (i) any unvested options
will fully vest as of the Effective Date; and
(ii) Executive will have a period equal to the
lesser of two years or the balance of time
remaining prior to the expiration of such option
in which to exercise such option following the
cessation of Service of Executive with the
Company, as defined in such option agreement(s).
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b. In the event of a termination by Company without
Cause, or the termination by Executive for Good
Reason, the Company shall, at Employee's
request, extend a loan to the Executive for the
express purpose of providing Executive with
sufficient funds to exercise all of Executive's
options which have an exercise price that is
less than the Effective Date Closing Price. Such
loan shall: (i) bear interest at the prime rate
of interest as published by Imperial Bank, or
its successor; (ii) shall be a full recourse
loan secured by the shares acquired by Executive
pursuant to such option exercise; and (iii)
shall be repaid within two (2) years. Executive
shall also issue a personal guaranty in a form
reasonably satisfactory to the Company.
c. As of the Effective Date, the Company will grant
Executive an option to acquire 50,000 shares of
common stock under the Company's 1999 Stock
Incentive Plan (the "Plan"), pursuant to the
Company's standard stock option agreement. Such
option will vest quarterly over a period of four
(4) years, commencing August 22, 2001, with an
exercise price equal to the Effective Date
Closing Price. Upon cessation of Executive's
Service with the Company, as defined in the
Plan, vesting of such option will cease and the
option will terminate in accordance with the
Plan.
10. NONTRANSFERABILITY.
Neither this Agreement nor any rights or obligations hereunder may
be assigned by the Executive without the prior written consent of
the Company.
11. WAIVER.
The parties acknowledge and agree that the failure of either party
to enforce any provision of this Employment Agreement shall not
constitute a waiver of that particular provision, or of any other
provisions of this Employment Agreement.
12. NOTICE.
Any notice required or permitted to be given hereunder shall be in
writing and delivered personally or mailed by prepaid registered mail to the
party to be notified at the following addresses (or such other addresses as one
party may notify the other of:
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(a) To the Company at:
0000 Xx Xxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: General Counsel
After May 15, 2001:
0000 Xxxxxxx Xxxx.
Xxxxxx, Xxxxx 00000
Attention: General Counsel
(b) To the Executive at:
Xxxxxxx X. Spain
[*]
[*]
Any notice mailed as aforesaid shall be deemed to have been received on
the third day following the mailing thereof.
-----------------------------
[*] Indicates that material has been omitted and
confidential treatment requested therefor. All such material has been filed
separately with the Commission pursuant to Rule 406.
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13. GOVERNING LAW; FORUM FOR DISPUTES; EXPENSES.
This Agreement shall be interpreted in accordance with the laws
of the State of Texas. The parties agree that any dispute arising
hereunder shall be subject to final and binding arbitration
conducted pursuant to the rules of the American Arbitration
Association and the arbitration shall take place in Austin, Texas;
provided that following a Change of Control, either party may, at
their discretion, seek to resolve a dispute arising hereunder
through arbitration, as described above, or by filing suit subject
to the jurisdiction and venue provisions described below. The
parties agree that any dispute arising hereunder which are not
subject to final and binding arbitration or to enforce the results
of such arbitration shall be submitted to a court of competent
jurisdiction in Xxxxxx County, Texas. The Executive and the Company
acknowledge that a material portion of the business of the Company
is conducted in Texas, and consent to the jurisdiction of, and
service of process by, such court. The parties further agree that
in the event of any lawsuit or other legal proceeding with respect
to this Agreement, the prevailing party in connection with such
suit or proceeding shall be entitled to recover from the
nonprevailing party, in addition to any other relief to which such
prevailing party shall be entitled, all of the expenses of such
prevailing party in connection with such suit or proceeding,
including, without limitation, attorneys fees and expenses, and
expert witness fees.
14. FINAL AGREEMENT.
Both parties acknowledge and agree that this Agreement constitutes
the complete and entire agreement between the parties with respect
to the subject matter hereof; that the parties have executed this
Agreement based upon the express terms and provisions set forth
herein; that the parties have not relied on any representations,
oral or written, which are not set forth in this Agreement; that no
previous agreement, either oral or written, shall have any effect
on the terms or provisions of this Agreement; and, that all
previous employment agreements, either oral or written, are
expressly superseded and revoked by this Agreement.
15. MODIFICATION.
Both parties acknowledge and agree that the covenants and/or
provisions of this Agreement may not be modified by any subsequent
agreement unless the modifying agreement (i) is in writing, (ii)
contains an express provision referencing this Agreement and (iii)
is signed by the Company and the Executive.
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16. BINDING EFFECT.
This Agreement shall enure to the benefit of and be binding upon
the parties hereto and their respective heirs, executors,
administrators, successors and permitted assigns.
17. LEGAL CONSULTATION.
The Executive and the Company acknowledge and agree that both
parties have been accorded a reasonable opportunity to review this
Agreement with legal counsel prior to the execution of this
Agreement.
IN WITNESS WHEREOF the parties hereto have executed this Agreement.
"COMPANY"
XXXXXX'X, INC., a Delaware corporation
By: /s/ Xxxx Xxx
Name: Xxxx Xxx
Title: Vice President and General Counsel
"EXECUTIVE"
/s/ Xxxxxxx X. Spain
XXXXXXX X. SPAIN
SOCIAL SECURITY #: [*]
----------------
-------------------
[*] Indicates that material has been omitted and confidential treatment
requested therefor. All such material has been filed separately with
the Commission pursuant to Rule 406.
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EXHIBIT A
---------
OPTION HOLDINGS
EXERCISE PERCENT VESTED
GRANT DATE NUMBER PRICE AS OF 5/3/01
---------- ------ ----- ------------
10/28/92 9,750 $ 1.00 100%
02/03/93 75,000 $ 1.00 100%
06/27/95 105,000 $ 1.00 100%
06/03/96 40,950 $ 2.00 100%
05/09/97 82,500 $ 3.67 100%
06/24/98 75,000 $ 4.33 50%
06/08/99 112,500 $14.00 25%
06/05/00 100,000 $ 7.4375 0%
12/21/00 100,000 $ 1.5625 0%
All options expire ten (10) years from the date of grant.
