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EXHIBIT 10.5
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), effective as of June 29, 1999 (the
"Effective Date"), is between MSI HOLDINGS, INC., a Utah corporation (the
"Company"), and XXXXXX X. XXXXX ("Xxxxx"). The Company and Xxxxx are
collectively referred to in this Agreement as the "Parties."
Background
The Company wishes to employ Xxxxx as its President and Chief Executive Officer,
and the Parties desire to provide for the employment of Xxxxx commencing on the
Effective Date in accordance with the terms of this Agreement.
Terms of Agreement
The Parties agree as follows:
1. EMPLOYMENT. The Company hereby employs Xxxxx to devote his personal
services to the business and affairs of the Company, and Xxxxx hereby accepts
such employment, on the terms and conditions stated in this Agreement.
1.1. Duties. Xxxxx' title and position shall be President and Chief
Executive Officer of the Company. Xxxxx' duties will be those customarily
performed by persons acting in that capacity and those that may be
designated by the Board of Directors of the Company consistent with the
titles and positions of President and Chief Executive Officer of the
Company. Xxxxx shall report directly to the Board of Directors of the
Company. Xxxxx shall also serve, upon request and without additional
compensation, as a director of the Company or as an officer or a director,
or both, of any subsidiary, division, or affiliate of the Company or any
other entity in which the Company holds an equity interest or which it
sponsors.
1.2. Full-Time Employee. Xxxxx shall devote his full time (except for
reasonable vacation time and absence for any disability), attention, and
best efforts to the performance of his duties described in Article 1.1.
2. TERM. The term of Xxxxx' employment under this Agreement (the "Term") shall
be as follows:
2.1. Initial Term. The initial term shall commence on the date of this
Agreement and shall expire at 11:59:59 p.m., Central Time, on the day
preceding the second anniversary of the date of this Agreement, unless
terminated earlier pursuant to Article 5.
2.2. Extended Term. At or about the date that is six (6) months before the
end of the two (2) year term described in Article 2.1, the Parties shall
meet to determine whether
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Xxxxx' employment under this Agreement shall be extended for an additional
two (2)-year period. If the Parties are unable to agree on provisions for
such an extension of the Term, then the Term shall expire in accordance
with Article 2.1. If the Parties are able to agree on provisions for such
an extension of the Term, the Term will not extend beyond 11:59:59 p.m.,
Central Time, on the day preceding the fourth anniversary of the date of
this Agreement.
3. COMPENSATION. As compensation for the services rendered by Xxxxx under this
Agreement, the Company shall, during the Term, pay or provide Xxxxx during the
Term the following:
3.1. Base Salary. The Company shall pay Xxxxx during the Term an annual
base salary equal to One Hundred Fifty Thousand Dollars ($150,000.00)
during the first year of the Term and equal to Two Hundred Forty Thousand
Dollars ($240,000.00) during the second year of the Term (beginning on the
first anniversary of the Effective Date) and (if the Term is extended)
during each subsequent year, unless the Parties otherwise agree. The annual
amount of base salary in effect at the time (depending on the year of the
Term) is referred to in this Agreement as "Base Salary." The Base Salary
shall be paid in equal installments every two weeks, in arrears, at the
Company's regular and routine payroll dates, or at such intervals as may
otherwise be agreed upon by the Parties, and in accordance with any other
payroll procedures of the Company. The Base Salary shall be prorated (on a
daily basis) for any partial payroll period of employment under this
Agreement.
3.2. Annual Bonus Opportunity. During the Term, Xxxxx shall be eligible to
earn and receive from the Company an annual incentive bonus based upon
satisfaction of the performance or financial goals stated below, or as
otherwise described below, in this Article 3.2. During the first year of
the Term, the bonus opportunity will be an amount equal to 1.5% of the net
proceeds actually received by the Company resulting from any amount raised
as equity in the Company with a maximum bonus of One Hundred Seventy
Thousand Dollars ($170,000.00). The bonus payable to Xxxxx for an Offering
(if any) shall be paid by the Company within ten (10) business days after
the Company's actual receipt of the net proceeds during the first year.
Provided, however that Xxxxx will not be entitled to a bonus as a result of
proceeds received from the Company through the exercise of warrants or
options to purchase securities of the Company outstanding as of the
Effective Date. Xxxxx shall also be eligible to earn during the first year
of the Term an additional bonus of up to Fifty Thousand Dollars
($50,000.00) at the discretion of the Board of Directors of the Company
(the "Board"); the Board's evaluation based upon Xxxxx' best efforts to
effectuate a public secondary equity offering. During the second year of
the Term, the bonus opportunity will be equal to a percentage of Base
Salary, where the percentage is equal to the result (expressed as a
percentage) of the excess, if any, of the dollar amount of the average
daily total market capitalization of outstanding shares of Common and
Preferred Stock during the last thirty (30) trading days in the second year
of the Term minus Five Hundred Million Dollars ($500,000,000)(the "Base
Capitalization"), divided by the Base Capitalization. Such bonus would be
payable to
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Xxxxx within thirty (30) days after the end of the second year of the Term.
Unless otherwise determined by the Compensation Committee of the Board, no
annual incentive bonus shall be payable to Xxxxx unless he is employed by
the Company under this Agreement on the last day of the bonus period (or if
the bonus is based on an Offering, on the date on which the Company
receives the net proceeds of that Offering) except that if the Company
terminates Xxxxx' employment without cause, the bonus for the second year
of the Term shall be determined on a pro rata basis for that amount of time
Xxxxx was employed during the second year of employment, the same to be
paid to Xxxxx within thirty (30) days after the end of the second year. In
the event Xxxxx is terminated without cause during the second year, the
thirty (30) trading days immediately prior to the date of termination will
be used to determine the pro-rata bonus paid.
3.3. Stock Option. Xxxxx shall be eligible to participate in any stock
option, performance share, phantom stock, or similar long-term stock-based
incentive plan adopted by the Company for its employees in effect during
the Term, including the Company's 1998 Incentive Stock Option Plan (the
"Option Plan"). Except as described in the next sentence, the extent to
which Xxxxx shall participate in any such plan will be determined by the
Board or the Compensation Committee of the Board. On or as of the Effective
Date, Xxxxx shall receive a non-qualified stock option granting Xxxxx the
right to purchase up to One Million Three Hundred Sixty-Two Thousand Nine
Hundred Fifty (1,362,950) shares of Common Stock in accordance with the
Option Plan and the Stock Option Agreement attached hereto as Exhibit "A".
3.4. Savings and Retirement Plans. Xxxxx shall be eligible to participate
in any long-term bonus, savings, deferred compensation, retirement or
pension, or death benefit plan adopted by the Company for its employees
generally in effect during the Term.
3.5. Welfare Benefit Plans. Xxxxx shall be eligible to participate in any
life insurance, medical, dental, and hospitalization insurance, disability
insurance benefit, or other similar employee welfare benefit plan or
program adopted by the Company covering its employees generally in effect
during the Term.
3.6. Vacation. Xxxxx shall be entitled to fifteen (15) days of paid
vacation per fiscal year. Such vacation time shall, however, be prorated in
any fiscal year during which Xxxxx is employed under this Agreement for
less than the entire fiscal year, in accordance with the number of days in
that fiscal year during which Xxxxx is so employed. Such vacation time
shall be in addition to any paid time off ("PTO") to which Xxxxx may be
entitled under the Company's PTO policy in effect during the Term.
3.7. Transportation Allowance. During the Term, the Company shall pay Xxxxx
a transportation allowance equal to Eight Hundred Dollars ($800.00) per
month ("Transportation Allowance"). The Transportation Allowance shall be
payable in equal installments together with the payments of Base Salary.
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3.8. Loan. On the Effective Date, the Company shall make a personal loan to
Xxxxx in the amount of One Hundred Thousand Dollars ($100,000.00)(the
"Loan"). The Loan shall bear interest at the prime rate as stated in the
"Money Rates" section (or any successor section) of The Wall Street Journal
on the date of the Loan. Xxxxx' obligation to repay the Loan, with
interest, shall be in accordance with and evidenced by a promissory note in
favor of the Company in the form of Exhibit "B" to this Agreement (the
"Note").
3.9. Tax Withholding. The Company may deduct from any compensation or other
amount payable to Xxxxx under this Agreement (including under Article 5)
social security (FICA) taxes and all federal, state, municipal, and other
taxes or governmental charges as may, in the Company's judgment, be
required. The Company will consult with Xxxxx as to amounts to be withheld
in this regard.
3.10. Participation in Compensation and Benefit Plans. Xxxxx' participation
during the Term in any or all of the plans or programs adopted by the
Company described in Articles 3.4 through 3.6 ("Compensation and Benefit
Plans") will be subject to the terms and conditions of those Compensation
and Benefit Plans as they now exist or may hereafter be adopted, amended,
restated, or discontinued by the Company, including the satisfaction of all
applicable eligibility requirements and vesting provisions of those
Compensation and Benefit Plans. The Company shall have no obligation under
this Agreement to continue any or all of the Compensation and Benefit Plans
that now exist or are hereafter adopted. To the extent that Xxxxx is
eligible to participate in any Compensation and Benefit Plan existing on
the date of this Agreement for which a plan description or plan materials
are available, the Company has provided to Xxxxx.
4. EXPENSE REIMBURSEMENT. During the Term, Xxxxx may incur, and shall be
reimbursed by the Company for, reasonable, ordinary and necessary, and
documented business expenses to the extent that Xxxxx complies with, and
reimbursement is permitted by, the Company's policies, practices, and
procedures.
5. EMPLOYMENT TERMINATION. Either Party may terminate Xxxxx' employment under
this Agreement by giving written notice of termination to the other Party. If
the Company is terminating, it shall include in that notice a statement whether
the termination is because of Disability or for Cause or without Cause. The
Parties' respective rights and obligations upon the termination of Xxxxx'
employment under this Agreement are as follows:
5.1. Termination Generally. Upon any termination of Xxxxx' employment under
this Agreement, the Company shall pay or provide Xxxxx the following:
5.1.a. Any amount of Base Salary and Transportation Allowance
earned by, but not yet paid to, Xxxxx through the effective date of
termination of employment, as further described below (the
"Termination Date");
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5.1.b. All benefits that have been earned by or vested in, and
are payable to, Xxxxx under, and subject to the terms (including all
eligibility requirements) of, the Compensation and Benefit Plans in
which Xxxxx participated through the Termination Date;
5.1.c. All reimbursable expenses due, but not yet paid, to Xxxxx
as of the Termination Date under Article 4; and
5.1.d. An amount equal to all accrued and unused PTO, calculated
in accordance with the Company's PTO policies, practices, and
procedures (including authorized deductions and the deductions
required by law), through the Termination Date.
The amount of Base Salary and Transportation Allowance due under Section
5.1.a shall be paid no later than thirty (30) business days after the
Termination Date; the amounts or benefits due under Section 5.1.b shall be
paid or provided in accordance with the terms of the Compensation and
Benefit Plans under which such amounts or benefits are due to Xxxxx; and
the amounts due under Sections 5.1.c and 5.1.d shall be paid in accordance
with the terms of the Company's policies, practices, and procedures
regarding reimbursable expenses and PTO, respectively. Except as expressly
provided below in this Article 5, upon paying or providing Xxxxx the
preceding amounts or benefits, the Company shall have no further obligation
or liability under this Agreement for Base Salary or any other cash
compensation or for any benefits under any of the Compensation and Benefit
Plans. Upon termination of Xxxxx' employment, Xxxxx shall be deemed to have
resigned from any position as a director of the Company or as an officer or
director, or both, of any subsidiary, division, or affiliate of the Company
or any other entity in which the Company holds an equity interest or which
it sponsors that Xxxxx then holds; no written resignation need be given or
delivered to the Company.
In this Agreement, the Termination Date shall be (i) the date of Xxxxx'
death, (ii) the third business day after the date on which the Company
gives notice of termination because of Disability, or (iii) the date of
termination specified in any other notice of termination, or if not
specified in the notice of termination, the date that notice of termination
is given.
In this Agreement, "Disability" means Xxxxx' permanent and total
disability, which shall be deemed to exist if he is unable reasonably to
perform his duties under this Agreement because of any medically
determinable physical or mental impairment which can be expected to result
in death or which has lasted or can be expected to last for at least ninety
(90) consecutive days. Any Disability shall be determined by the Board or
an authorized committee or representative thereof ("Representative"), in
its sole and absolute discretion, upon receipt of competent medical advice
from a qualified physician selected by or acceptable to the Board or its
Representative. Xxxxx shall, if there is any question about his Disability,
submit to a physical examination by a qualified physician selected by the
Board or its Representative.
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In this Agreement, "Cause" means any of the following: (i) Xxxxx' failure
to substantially perform his duties under this Agreement, other than any
such failure resulting from his incapacity due to physical or mental
illness or Disability; (ii) Xxxxx' engaging in any action which, or
omitting to engage in any action the omission of which, has been, is, or is
reasonably expected to be substantially injurious (monetarily or otherwise)
to the Company or its business or reputation; (iii) Xxxxx' performance of
any act or omission constituting dishonesty that results, directly or
indirectly, in significant gain or enrichment of Xxxxx or his family or
affiliates at the expense of the Company; or (iv) any breach by Xxxxx of
any obligation under any of Articles 6, 7, 8, and 9. Whether an event or
circumstance constituting Cause exists will be determined in good faith by
the Board or its Representative. If the Company believes that Cause for
termination exists under clause (i) above in this paragraph, the Company
shall notify Xxxxx of that belief, and that notice shall describe the event
or circumstance believed to constitute Cause for termination. If that event
or circumstance may reasonably be remedied or corrected, Xxxxx shall have
thirty (30) days to effect that correction or remedy. If not corrected or
remedied within that thirty (30) day period, Cause for termination shall
immediately be deemed to exist, and Xxxxx' employment shall be deemed
terminated. If the Company believes that Cause for termination exists under
any of clauses (ii), (iii), and (iv) above in this paragraph, the Company
shall notify Xxxxx of that belief, and that notice shall constitute
immediate termination of Xxxxx' employment.
Xxxxx may voluntarily terminate his employment under this Agreement only by
giving at least thirty (30) days' prior written notice to the Company.
Xxxxx shall not be liable to the Company for breach of this Agreement
because of his termination of employment in accordance with the preceding
sentence.
5.2. Termination Without Cause or Upon Death or Disability. If Xxxxx'
employment is terminated by death or by the Company because of Disability
or without Cause, Xxxxx (or his legal representative, estate, or heirs)
shall be entitled to receive from the Company (except if waived by Xxxxx in
accordance with Article 7), as liquidated damages:
5.2.a. The payment of a total Two Hundred Forty Thousand Dollars
($240,000.00), in twenty-four (24) equal installments, and
Transportation Allowance for twelve (12) consecutive months following
the Termination Date, except that if any such termination described
above in this Article 5.2 occurs during the first ninety (90) days of
his employment under this Agreement (the "Probationary Period"), those
payments shall be only until the day preceding the first anniversary
of the date of this Agreement (such payments, regardless of time, the
"Severance Payments"); and
5.2.b. if Xxxxx elects and maintains continued coverage under the
Consolidated Omnibus Benefits Reconciliation Act of 1985 and
corresponding regulations ("COBRA"), then for up to the twelve (12)
consecutive months immediately after the Termination Date (or if the
termination is during the Probationary Period, for as long as the day
preceding the first anniversary of the date of this Agreement),
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payments in an amount equal to the difference between (i) the premiums
paid or payable by Xxxxx for coverage under COBRA for himself and his
dependents (if any) and (ii) the premiums that he would have paid for
comparable coverage under the Company's then current group insurance
plan or plans if his employment under this Agreement had not ceased
(the "Insurance Payments"); except that the Insurance Payments shall
expire or terminate immediately upon Xxxxx' becoming eligible for
coverage under another employer's plan or policy.
In addition, if the termination described above is effective before the
Loan must be repaid in accordance with the Note, then (unless waived by
Xxxxx in accordance with Article 7) the Company shall forgive the
indebtedness evidenced by the Note and shall xxxx the Note paid and deliver
it to Xxxxx (or his legal representative, estate, or heirs). The Severance
Payments (if not waived) shall be paid at the dates on which Base Salary
would have been payable if his employment under this Agreement had not been
terminated. The Company will commence the Severance Payments and the
Insurance Payments (if not waived) within ten (10) business days after the
first business day on which the release executed and delivered in
accordance with Section 5.3.a becomes irrevocable by Xxxxx (or his legal
representative, estate, or heirs). The Company's obligations for the
Insurance Payments are not intended to negate or impair any obligation of
the Company or right of Xxxxx under COBRA. The Severance Payments and the
Insurance Payments, and (if applicable) the forgiveness of the indebtedness
evidenced by the Note, shall be in addition to the amounts or benefits to
which Xxxxx is entitled under Article 5.1. Any Severance Payments or
Insurance Payments (or both) under this Article 5.2 shall not be deemed the
continuation of Xxxxx' employment for any purpose.
5.3. Conditions to Severance Benefits. Except as provided in Section 5.2.b
and below in this Article 5.3, none of the Severance Payments and the
Insurance Payments under Article 5.2 will be subject to reduction as the
result of future compensation earned or received by Xxxxx (including by
self-employment), and Xxxxx shall have no duty to mitigate his damages. The
Severance Payments and the Insurance Payments, and (if applicable) the
forgiveness of the indebtedness evidenced by the Note, shall, however, be
conditioned upon:
5.3.a. The Company's receipt of a Settlement Agreement,
General Release, and Covenant Not to Xxx executed and performed
by Xxxxx (or his legal representative, estate, or heirs) in
substantially the form of Exhibit "C" to this Agreement (the
"Release Agreement"); and
5.3.b. the compliance by Xxxxx (or his legal representative,
estate, or heirs) with Articles 6, 7, 8, and 9 after the
Termination Date as specified in those Articles, as well as with
the Release Agreement.
The Company may cease or reduce the Severance Payments or the Insurance
Payments (or both), and (if the indebtedness evidenced by the Note has been
forgiven) may reinstate the indebtedness evidenced by the Note with the
same effect as if it had not been forgiven,
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if, and shall be entitled to payment under the Note to the extent that,
there is or has been any material violation by Xxxxx (or his legal
representatives, estate, or heirs) of any of Articles 6, 7, 8, and 9 or of
the Release Agreement. Upon such event, Xxxxx shall be released from any
obligations pursuant to Article 7.
5.4. Termination for Cause or by Xxxxx. If Xxxxx' employment is terminated
by the Company for Cause or is voluntarily terminated by Xxxxx, then Xxxxx
shall not be entitled to any payments under this Agreement other than the
amounts or benefits to which he is entitled under Article 5.1, except that
if Xxxxx voluntarily terminates during the Probationary Period, the Company
shall also forgive the indebtedness evidenced by the Note and shall xxxx
the Note paid and deliver it to Xxxxx.
5.5 Failure to Extend Beyond Two Years. If the Parties cannot agree on
provisions for an extension of the Term beyond the two (2)-year period
mentioned in Article 2.1, then Xxxxx shall continue to perform under this
Agreement until the expiration of the Term and shall then be entitled to
continued payment of the Base Salary then in effect for an additional six
(6) months after the expiration date. The obligation of the Company to make
such payments under this Article 5.5 shall be subject to the same
conditions, and shall have the same effect, as Severance Payments under
this Agreement.
5.6. Post-Termination Survival. The provisions of this Article 5 shall
survive the termination of Xxxxx' employment by the Company and its
subsidiaries to the extent necessary to effect the post-termination
payments or benefits to which Xxxxx is entitled under the terms of this
Article 5.
6. CONFIDENTIAL INFORMATION. The Company shall provide to Xxxxx, during the
Term, access to various trade secrets, confidential information, and proprietary
information of the Company (which, in this Article 6 as well as in Articles 7,
8, and 9, shall include the Company's subsidiaries and affiliates) which are
valuable and unique to the Company ("Confidential Information"). Confidential
Information includes the Company's plans, policies, and procedures relating to
its BBN Certification as well as the terms of, and the Company's plans,
policies, and procedures relating to, the Company's relationships with GTE,
Southwestern Xxxx Telephone Company, Siemens-Nixdorf Information Systems, Inc.,
and other persons having relationships that are material to the Company's
business and affairs. Xxxxx shall not, either while in the employ of the Company
or at any time thereafter, (i) use any of the Confidential Information, or (ii)
disclose any of the Confidential Information to any person not an employee of
the Company or not engaged to render services to the Company, except (in either
case) to perform his duties under this Agreement or otherwise with the Company's
prior written consent. Nothing in this Article 6 shall preclude Xxxxx from the
use or disclosure of information generally known to the public or not considered
confidential by the
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Company or from any disclosure to the extent required by law or court order
(though Xxxxx must give the Company prior notice of any such required disclosure
and must cooperate with any reasonable requests of the Company to obtain a
protective order regarding, or to narrow the scope of, the Confidential
Information required to be disclosed). All files, records, documents,
information, data, and similar items relating to the business or affairs of the
Company, whether prepared by Xxxxx or otherwise coming into his possession,
shall remain the exclusive property of the Company and shall not be removed from
the premises from the Company, except in the ordinary course of business as part
of Xxxxx' performance of his duties under this Agreement, and (in any event)
shall be promptly returned or delivered to the Company (without Xxxxx' retaining
any copies) upon the termination of employment under this Agreement.
7. NONCOMPETITION. Xxxxx acknowledges that, in addition to his access to and
possession of Confidential Information, during the Term he will acquire valuable
experience and special training regarding the Company's business and that the
knowledge, experience, and training he will acquire would enable him to injure
the Company if he were to engage in any business that is competitive with the
business of the Company. Therefore, Xxxxx shall not, at any time during the Term
and for the twelve (12) consecutive months immediately after the Termination
Date, directly or indirectly (as an employee, employer, consultant, agent,
principal, partner, shareholder, officer, director, or manager or in any other
individual or representative capacity), engage, invest, or participate in any
business in direct competition with the business of the Company within a fifty
(50)-mile radius of each location, or set or group of locations, (i) at, from,
or to which the Company conducts or has conducted business or renders, provides,
or delivers, or has rendered, provided, or delivered, services or products
during the Measurement Period (as defined below) or (ii) that is or has been,
during the Measurement Period, the subject of a Proposal (as defined below) to
conduct business or render, provide, or deliver services or products thereat,
therefrom, or thereto. "Measurement Period" means, with respect to Xxxxx'
activity (A) at any time during the Term, the Term and (B) at any time on or
after the Termination Date, the six (6) consecutive months preceding, and
including, the Termination Date. "Proposal" means a written or formal proposal,
bid, arrangement, understanding, or agreement by the Company to or with another
person that reflects or contains negotiated or substantive terms, but does not
include any marketing contact by the Company where the other person has not
solicited that contact or indicated any interest in doing business with the
Company. (Xxxxx shall not be prohibited, however, from owning, as a passive
investor, less than five percent (5%) of the publicly traded stock or other
securities of any entity engaged in a business competitive with that of the
Company.) Xxxxx represents and agrees that (x) the Company has agreed to provide
him, and he will receive from the Company, special experience and knowledge,
including Confidential Information, (y) because the Confidential Information is
valuable to the Company, its protection (particularly from any competitive
business) constitutes a legitimate interest to be protected by the Company by
enforcement of the restriction in this Article 7, and (z) the enforcement of the
restriction in this Article 7 would not be unduly burdensome to Xxxxx and that,
in order to induce the Company to enter into this Agreement (which contains
various benefits to Xxxxx and obligations of the Company with respect to Xxxxx'
employment), Xxxxx is willing and able to engage, invest, or participate in
business after the Termination Date so as not to violate this Article 7. The
Parties agree that the restrictions in this Article 7 regarding scope of
activity, duration, and geographic area are reasonable; however, if any court
should determine that any of
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those restrictions is unenforceable, that restriction shall not thereby be
terminated, but shall be deemed amended to the extent required to render it
enforceable. The post-Termination Date restrictions in this Article 7 will not
apply, however, if Xxxxx' employment is terminated by the Company without Cause
under Article 5.2. Except further, that in the event Xxxxx' employment is
terminated by the Company without cause, Xxxxx shall not be bound to the
restrictions stated within this Article if he waives all right to the remaining
severance benefits provided within this Agreement, and he repays the amount of
money equivalent to the loan forgiveness (including interest up to the date of
termination).
8. NONSOLICITATION. Xxxxx shall not, at any time within the twelve (12)
consecutive months immediately after the Termination Date, either directly or
indirectly:
8.1. Disclose Contact Information. Make known to any person
the names and addresses, or other contact information, of any of
the customers, suppliers, or other persons having significant
business relationships with the Company within the information
technology industry, so that such person could affect, or attempt
to affect, any of those relationships to the detriment of the
Company; or
8.2. Solicit Employees. Solicit, recruit, or hire, or
attempt to solicit, recruit, or hire, any employee or consultant
of the Company, or in any other manner attempt to induce any
employee or consultant of the Company to leave the employ of the
Company or cease his or her consulting or similar business
relationship with the Company. References in this Article 8.2 to
"any employee or consultant" shall include any person who was an
employee or consultant of the Company at any time within the six
(6) consecutive months preceding, and including, the Termination
Date.
9. DEVELOPMENTS. Xxxxx shall promptly disclose to the Company all inventions,
discoveries, improvements, processes, formulas, ideas, know-how, methods,
research, compositions, and other developments, whether or not patentable or
copyrightable, that Xxxxx, by himself or in conjunction with any other person,
conceives, makes, develops, or acquires during the Term which (i) are or relate
to the properties, assets, or existing or contemplated business or research
activities of the Company, (ii) are suggested by, arise out of, or result from,
directly or indirectly, Xxxxx' association with the Company, or (iii) arise out
of or result from, directly or indirectly, the use of the Company's time, labor,
materials, facilities, or other resources ("Developments").
Xxxxx hereby assigns, transfers, and conveys to the Company, and hereby agrees
to assign, transfer, and convey to the Company during or after the Term, all of
his right and title to and interest in all Developments. Xxxxx shall, from time
to time upon the request of the Company during or after the Term, execute and
deliver any and all instruments and documents and take any and all other actions
which, in the judgment of the Company or its counsel, are or may be necessary or
desirable to document any such assignment, transfer, and conveyance to the
Company or to enable the Company to file and process applications for, and to
acquire, maintain, and enforce, any and all patents, trademarks, registrations,
or copyrights with respect to any of
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the Developments, or to obtain any extension, validation, re-issue, continuance,
or renewal of any such patent, trademark, registration, or copyright. The
Company will be responsible for the preparation of any such instrument or
document and for the implementation of any such proceedings and will reimburse
Xxxxx for all reasonable expenses incurred by him in complying with this Article
9.
10. INDEMNIFICATION. To the extent Xxxxx is an officer or director of the
Company, the Company shall include Xxxxx under any existing or future (i)
directors' and officers' liability insurance policy that the Company obtains and
maintains or (ii) indemnification agreements between the Company and other
executives of the Company. Subject to the foregoing sentence, the Company will
indemnify Xxxxx to the fullest extent permitted by the laws of the Company's
state of incorporation in effect at that time or by the articles or certificate
of incorporation and by-laws of the Company, whichever affords the greater
protection to Xxxxx.
11. CERTAIN REMEDIES. Any breach or violation by Xxxxx of any of Articles 6, 7,
8, and 9 shall entitle the Company, as a matter of right, to an injunction
issued by any court of competent jurisdiction, restraining any further or
continued breach or violation, or to specific performance requiring the
compliance with Xxxxx' covenants. This right to an injunction or other equitable
relief shall be in addition to, and not in lieu of, any other remedies to which
the Company may be entitled. The existence of any claim or cause of action of
Xxxxx against the Company, or any subsidiary or affiliate of the Company,
whether based on this Agreement or otherwise, shall not constitute a defense to
the enforcement by the Company of Xxxxx' covenants in any of Articles 6, 7, 8,
and 9. The covenants in Articles 6, 7, 8, and 9 and in this Article 11 shall
survive the termination of Xxxxx' employment under this Agreement.
12. BINDING AGREEMENT; SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon, and shall inure to the benefit of, the Company and Xxxxx and their
respective legal representatives, heirs, executors, administrators, and
successors and assigns (as permitted by this Article 12), including any
successor to the Company by merger, consolidation, or reorganization and any
other person that acquires all or substantially all of the business and assets
of the Company. The Company shall have the right, without the need for any
consent from Xxxxx, to assign its rights, benefits, remedies, and obligations
under this Agreement to one or more other persons. The rights, benefits,
remedies, and obligations of Xxxxx under this Agreement are personal to Xxxxx,
however, and may not be assigned or delegated by him; except that this shall not
preclude (i) Xxxxx from designating one or more beneficiaries to receive any
amount or benefit that may be paid or provided after Xxxxx' death or (ii) the
legal representative of Xxxxx' estate from assigning any right or benefit under
this Agreement to the person or persons entitled thereto under Xxxxx' will or
the laws of intestacy applicable to Xxxxx' estate, as the case may be.
13. SEVERABILITY. If any provision of this Agreement is found to be invalid or
unenforceable for any reason, then (i) that provision shall be severed from this
Agreement, (ii) this Agreement shall be construed and enforced as if that
invalid or unenforceable provision never constituted a part of this Agreement,
and (iii) the remaining provisions of this Agreement shall be unaffected thereby
and shall remain in full force and effect to the fullest extent permitted by
applicable law. Further, in lieu of that invalid or unenforceable provision,
there shall be added to
EMPLOYMENT AGREEMENT - XXXXXX X. XXXXX Page 11
12
this Agreement a provision as similar in its terms to that invalid or
unenforceable provision as may be possible and be valid and enforceable.
14. NOTICES. Any notice, request, or other communication to be given by either
Party under this Agreement by to the other shall be in writing and either (i)
delivered in person, (ii) delivered by prepaid same-day or overnight courier
service, (iii) sent by certified mail, postage prepaid with return receipt
requested, or (iv) transmitted by facsimile, in any case addressed to the other
Party as follows:
To the Company: MSI Holdings, Inc.
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Chairman of the Board
with a copy (which shall not constitute notice) to:
Gardere & Xxxxx, L.L.P.
3000 Thanksgiving Tower
0000 Xxx Xxxxxx
Xxxxxx, Xxxxx 00000-0000
Facsimile: (000) 000-0000
Attention: I. Xxxxx Xxxxxxxx, Esq.
To Xxxxx: Xxxxxx X. Xxxxx
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or to such other address or facsimile number as the Party to be notified may
have designated by notice previously given in accordance with this Article 14.
Communications delivered in person or by courier service or transmitted by
facsimile shall be deemed given and received as of actual receipt (or refusal)
by the addressee. Communications mailed as described above in this Article 14
shall be deemed given and received three (3) business days after mailing or upon
actual receipt, whichever is earlier.
15. CERTAIN DEFINED TERMS. In this Agreement, (i) "person" means an individual
or any corporation, partnership, trust, unincorporated association, limited
liability company, or other legal entity, whether acting in an individual,
fiduciary, or other capacity, and any government, court, or governmental agency,
(ii) "include" and "including" do not signify any limitation, (iii) "Article"
and "Section" means any Article and any Section, respectively, of this
Agreement, unless otherwise indicated, (iv) an "affiliate" of a person means any
other person controlling, controlled by, or under common control with that
person, and (v) "business day" means any Monday through Friday, other than any
such weekday on which the executive offices of the
EMPLOYMENT AGREEMENT - XXXXXX X. XXXXX Page 12
13
Company are closed. In addition, the use in this Agreement of "year," "annual,"
"month," or "monthly" (or similar terms) to indicate a measurement period shall
not itself be deemed to grant rights to Xxxxx for employment or compensation for
that period.
16. ENTIRE AGREEMENT. This Agreement, with Exhibits "A", "B" and "C",
constitutes the entire agreement between the Company and Xxxxx with respect to
the subject matter hereof and supersedes any prior agreement between the Company
and Xxxxx with respect to the same subject matter.
17. MODIFICATION AND WAIVER. No amendment to or modification of this Agreement,
or waiver of any term, provision, or condition of this Agreement, will be
binding upon a Party unless the amendment, modification, or waiver is in writing
and signed by the Party to be bound. Any waiver by a Party of a breach or
violation of any provision of this Agreement by the other Party shall not be
deemed a waiver of any other provision or of any subsequent breach or violation.
18. GENDER. Whenever the context requires in this Agreement, words denoting
gender in this Agreement include the masculine, feminine, and neuter.
19. GOVERNING LAW; VENUE. This Agreement, and the rights, remedies,
obligations, and duties of the Parties under this Agreement, shall be governed
by, construed in accordance with, and enforced under the laws of the State of
Texas. The exclusive venue of any action or proceeding relating to this
Agreement or its subject matter shall be in Xxxxxx County, Texas.
20. COUNTERPARTS. This Agreement may be executed in counterparts, each of which
constitutes an original, but all of which constitute one and the same document.
EMPLOYMENT AGREEMENT - XXXXXX X. XXXXX Page 13
14
The Parties have executed this Agreement to be effective as of the date stated
in the first paragraph.
THE COMPANY:
MSI HOLDINGS, INC.,
a Utah corporation
By:
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EMPLOYMENT AGREEMENT - XXXXXX X. XXXXX Page 14
15
EXHIBIT "A"
Stock Option Agreement
16
EXHIBIT "B"
Promissory Note
17
EXHIBIT "C"
Settlement Agreement, General Release, and Covenant Not to Xxx
