EXHIBIT 10.37
EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into as of the 1st day of May, 2002, by and
between Xxxxxx X. Xxxxx (the "Executive") and Brightstar Information Technology
Group, Inc. (the "Company").
SECTION 1. TERM OF EMPLOYMENT
(a) Basic Rule. The Company agrees to continue the Executive's employment,
and the Executive agrees to remain in employment with the Company, from
May 1, 2002, until the earliest of:
(1) The date of the Executive's death;
(2) April 30, 2004; or
(3) The date when the Executive's employment terminates pursuant
to Subsection (b), (c), (d) or (e) below.
(b) Early Termination or Resignation. The Company may terminate the
Executive's employment at any time and for any reason by giving the
Executive 30 days' advance notice in writing or 30 days payment of Base
Compensation in lieu of notice. The Executive may terminate the
Executive's employment for any reason by giving the Company not less
than 30 days' advance notice in writing.
(c) Termination for Cause. The Company may terminate the Executive's
employment at any time for Cause shown. For all purposes under this
Agreement, "Cause" shall mean (1) a failure by the Executive to
substantially perform the Executive's duties under this Agreement,
other than a failure resulting from the Executive's complete or partial
incapacity due to physical or mental illness or impairment, (2) an
intentional act by the Executive that constitutes gross misconduct and
that is materially injurious to the Company, (3) a breach by the
Executive of a material provision of this Agreement or (4) a material
violation of a federal or state law or regulation applicable to the
business of the Company that is materially and demonstrably injurious
to the Company. No act, or failure to act, by the Executive shall be
considered "intentional" unless committed without good faith and
without a reasonable belief that the act or omission was in the
Company's best interest.
(d) Termination for Disability. The Company may terminate the Executive's
employment for Disability by giving the Executive written notice. For
all purposes under this Agreement, "Disability" shall mean that the
Executive, at the time the notice is given, has
been unable to perform the Executive's duties under this Agreement for
a period of not less than three consecutive months as a result of the
Executive's incapacity due to physical or mental illness. In the event
that the Executive resumes the performance of substantially all of the
Executive's duties under this Agreement before the termination of the
Executive's employment under this Section becomes effective, the notice
of termination shall automatically be deemed to have been revoked.
(e) Termination of Agreement. Unless this agreement has been extended prior
to October 31, 2003, this Agreement shall expire on the earlier of
April 30, 2004 or when all obligations of the parties hereunder have
been satisfied. In addition, either the Company or the Executive may
terminate this Agreement for any reason, and without affecting the
Executive's status as an Executive, by giving the other party
one-year's advance notice in writing. A termination of this Agreement
pursuant to the preceding sentence shall be effective for all purposes,
except that such termination shall not affect the payment or provision
of compensation or benefits under this Agreement on account of a
termination of employment occurring prior to the termination of this
Agreement.
SECTION 2. DUTIES AND SCOPE OF EMPLOYMENT
(a) Position. The Company and each of its subsidiaries agree to employ the
Executive for the term of employment under this Agreement in the
position of President and Chief Executive Officer. Executive shall be
given such duties, responsibilities and authorities as are appropriate
to his position.
(b) Obligations. During the term of employment under this Agreement, the
Executive shall devote the Executive's full business efforts and time
to the business and affairs of the Company as needed to carry out his
duties and responsibilities hereunder subject to the overall
supervision of the Company's Board of Directors. The foregoing shall
not preclude the Executive from engaging in appropriate civic,
charitable or religious activities or from devoting a reasonable amount
of time to private investments or from serving on the boards of
directors of other entities, as long as such activities and service do
not interfere or conflict with the Executive's responsibilities to the
Company.
(c) Board of Directors. During the term of employment under this Agreement,
the Executive shall also be appointed to and serve on the Board of
Directors of the Company.
SECTION 3. COMPENSATION
(a) Base Compensation. During the term of employment under this Agreement,
the Company agrees to pay the Executive as compensation for services a
base salary at the annual rate of $300,000 for the first year of
employment and $350,000 for the second year of employment. Such salary
shall be payable in accordance with the standard payroll procedures of
the Company. Once the Company's Compensation/Option Committee of the
Board of Directors has increased such salary, it thereafter shall not
be reduced; provided, however, that if a Change in Control has not
occurred, such salary (including any increases) may be reduced by the
Company if (1) the Executive commits an act or omission that meets the
definition of Cause, as defined in Section 1 (c), or
2
(2) the Executive and all other executive officers of the Company who
are parties to written employment agreements containing substantially
the same provisions as this Agreement have their salaries (including
any increases) reduced by the same percentage amount for the same time
period. The annual compensation specified in this Section 3, together
with any increases in such compensation that the Compensation/Option
Committee of the Board of Directors may grant from time to time, and
together with any reductions made in accordance with this Section 3, is
referred to in this Agreement as "Base Compensation."
(b) Bonus Compensation. During the term of employment under this Agreement,
the Executive shall receive annual bonus payments of 0 to 200% of Base
Compensation. For the calendar year of employment hereunder ending
12/31/02, the bonus will be at the complete discretion of the board.
For the calendar year of employment hereunder ending 12/31/03, the
bonus will be based upon such Metrics as may be agreed upon with the
Executive. Bonus Compensation shall be paid not later March 31 of the
year following the year for which the bonus was awarded.
SECTION 4. COMPANY STOCK AND STOCK OPTIONS
(a) Up-Front Stock Grant. Executive received seven hundred fifty thousand
(750,000) restricted shares of common stock in the Company effective
February 15, 2002, a pro rata portion of which shall vest monthly over
the succeeding 24 month period or immediately upon death, disability,
termination without cause or a change of control.
(b) Future Grant of Stock or Options. The Executive may be awarded
restricted stock or stock options as incentive compensation in the
future at the complete discretion of the board.
SECTION 5. EXECUTIVE BENEFITS
In General. During the term of employment under this Agreement, the Executive
shall be eligible to participate in the executive benefit plans and executive
compensation programs maintained by the Company, including (without limitation)
savings or profit-sharing plans, deferred compensation plans, stock option,
incentive or other bonus plans, life, disability, health, accident and other
insurance programs, five weeks of paid vacation per annum, and similar plans or
programs, subject in each case to the generally applicable terms and conditions
of the plan or program in question and to the discretion and determinations of
any person, committee or entity administering such plan or program.
SECTION 6. BUSINESS EXPENSES AND TRAVEL
During the term of employment under this Agreement, the Executive shall be
authorized to incur necessary and reasonable travel, entertainment and other
business expenses in connection with the Executive's duties hereunder. The
Company shall reimburse the Executive for such expenses upon presentation of an
itemized account and appropriate supporting documentation, all in accordance
with generally applicable policies.
3
SECTION 7. INVOLUNTARY ACTUAL OR CONSTRUCTIVE TERMINATION WITHOUT CAUSE OR
DISABILITY
In the event that, during the term of this Agreement, the Executive's employment
terminates in a Qualifying Termination, as defined in Subsection (a), then,
after executing the release of claims described in Section 7(d), the Executive
shall be entitled to receive the payments and rights described in Subsections
(b), (c) and (d).
(a) Qualifying Termination. A Qualifying Termination occurs if:
(1) The Company terminates the Executive's employment for any
reason other than Cause or Disability; or
(2) The Executive resigns from employment with the Company as a
result of a "Constructive Termination." For the purposes of
this Agreement, a Constructive Termination means that the
Executive resigns from the Company within 60 days of any of
the following events that occur without his written consent:
(i) the Executive's responsibilities are materially
diminished; (ii) the Executive ceases to be CEO of the
Company; ( (iii) the Executive is removed from the Board of
Directors, (iv) the Executive's office is relocated more than
35 miles from his current office location; or (vi) the
Executive's Base Salary or Target Bonus is reduced by more
than 10%.
(b) Severance. For a period of 12 months following the date of the
Qualifying Termination, the Executive shall receive, in accordance with
standard payroll procedures, an amount equal to the Executive's monthly
Base Compensation in effect on the date of the employment termination.
(c) Continued Vesting of Stock Options. If the Qualifying Termination does
not occur within the 365-day period following a Change of Control,
then, for a period of 12 months following the date of the Qualifying
Termination, the Executive shall continue to vest, subject to Section
4(a) above, in any outstanding restricted stock or options to purchase
stock in the Company. Nothing in this Agreement shall give the
Executive the right to receive grants of new options to purchase stock
in the Company following a Qualifying Termination.
(d) Immediate Vesting of Stock Options. If the Qualifying Termination
occurs within the 365-day period following a Change of Control, then
the Executive shall be vested immediately in all unvested shares of
restricted stock or options to purchase stock in the Company.
(e) Release of Claims. As a condition to the receipt of the payments and
benefits described in this Section 7, the Executive shall be required
to execute a release of all claims arising out of the Executive's
employment or the termination thereof including, but not limited to,
any claim of discrimination under state or federal law, but excluding
claims for indemnification from the Company under any indemnification
agreement with the Company, its certificate of incorporation and
by-laws or applicable law or claims for directors and officers'
insurance coverage.
4
(f) No Mitigation. The Executive shall not be required to mitigate the
amount of any payment or benefit contemplated by this Section 7, nor
shall any such payment or benefit be reduced by any earnings or
benefits that the Executive may receive from any other source.
(g) Conditions to Receipt of Payments and Benefits. In view of Executive's
position and his access to Confidential Information, as a condition to
the receipt of payments and benefits described in this Section 7, the
Executive shall not, without the Company's written consent, directly or
indirectly, alone or as a partner, joint venturer, officer, director,
Executive, consultant, agent or stockholder (other than a less than 5%
stockholder of a publicly traded company) (i) solicit any of the
Company's Executives, consultants or customers, (iii) hire any of the
Company's Executives or consultants in an unlawful manner or actively
encourage Executives or consultants to leave the Company, or (iv)
otherwise breach his Confidential Information obligations.
SECTION 8. DEFINITION OF CHANGE IN CONTROL
For all purposes under this Agreement, "Change in Control" shall mean means the
occurrence of any of the following:
(i) The consummation of a merger or consolidation of the Company
with or into another entity or any other corporate
reorganization, if more than 50% of the combined voting power
of the continuing or surviving entity's securities outstanding
immediately after such merger, consolidation or other
reorganization is owned by persons who were not stockholders
of the Company immediately prior to such merger, consolidation
or other reorganization;
(ii) The sale, transfer or other disposition of all or
substantially all of the Company's assets;
(iii) A change in the composition of the Board after April 30, 2002,
as a result of which fewer that one-half of the incumbent
directors are directors who either (i) had been directors of
the Company on the date 12 months prior to the date of the
event that may constitute a Change in Control (the "original
directors") or (ii) were elected, or nominated for election,
to the Board with the affirmative votes of at least a majority
of the aggregate of the original directors who were still in
office at the time of the election or nomination and the
directors whose election or nomination was previously so
approved;
(iv) Any transaction after April 30, 2002 as a result of which any
person becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing at least 20% of the
total voting power represented by the Company's then
outstanding voting securities. For purposes of this
5
Paragraph (iii), the term "person" shall have the same meaning
as when used in sections 13(d) and 14(d) of the Exchange Act
but shall exclude:
(A) A trustee or other fiduciary holding securities under
an employee benefit plan of the Company or a
subsidiary of the Company;
(B) A corporation owned directly or indirectly by the
stockholders of the Company in substantially the same
proportions as their ownership of the common stock of
the Company; and
(C) The Company; or
(v) A complete liquidation or dissolution of the Company.
SECTION 9. CONFIDENTIAL INFORMATION
(a) Acknowledgement. The Company and the Executive acknowledge that the
services to be performed by the Executive under this Agreement are
unique and extraordinary and that, as a result of the Executive's
employment, the Executive will be in a relationship of confidence and
trust with the Company and will come into possession of "Confidential
Information" (1) owned or controlled by the Company, (2) in the
possession of the Company and belonging to third parties or (3)
conceived, originated, discovered or developed, in whole or in part, by
the Executive. As used herein "Confidential Information" includes trade
secrets and other confidential or proprietary business, technical,
personnel or financial information, whether or not the Executive's work
product, in written, graphic, oral or other tangible or intangible
forms, including but not limited to specifications, samples, records,
data, computer programs, drawings, diagrams, models, customer names,
ID's or e-mail addresses, business or marketing plans, studies,
analyses, projections and reports, communications by or to attorneys
(including attorney-client privileged communications), memos and other
materials prepared by attorneys or under their direction (including
attorney work product), and software systems and processes. Any
information that is not readily available to the public shall be
considered to be a trade secret and confidential and proprietary, even
if it is not specifically marked as such, unless the Company advises
the Executive otherwise in writing.
(b) Nondisclosure. The Executive agrees that the Executive will not,
without the prior written consent of the Company, directly or
indirectly use or disclose Confidential Information to any person,
during or after the Executive's employment, except as may be necessary
in the ordinary course of performing the Executive's duties under this
Agreement. The Executive will keep the Confidential Information in
strictest confidence and trust. This Section 9 shall apply
indefinitely, both during and after the term of this Agreement.
(c) Surrender Upon Termination. The Executive agrees that in the event of
the termination of the Executive's employment for any reason, the
Executive will immediately deliver to the Company all property
belonging to the Company, including all documents and materials of any
nature pertaining to the Executive's work with the Company, and will
not take with the Executive any documents or materials of any
description, or any
6
reproduction thereof of any description, containing or pertaining to
any Confidential Information. It is understood that the Executive is
free to use information that is in the public domain (not as a result
of a breach of this Agreement).
SECTION 10. SUCCESSORS
(a) Company's Successors. The Company shall require any successor (whether
direct or indirect and whether by purchase, lease, merger,
consolidation, liquidation or otherwise) to all or substantially all of
the Company's business and/or assets, by an agreement in substance and
form satisfactory to the Executive, to assume this Agreement and to
agree expressly to perform this Agreement in the same manner and to the
same extent as the Company would be required to perform it in the
absence of a succession. The Company's failure to obtain such agreement
prior to the effectiveness of a succession shall be a breach of this
Agreement and shall entitle the Executive to all of the compensation
and benefits to which the Executive would have been entitled hereunder
if the Company had involuntarily terminated the Executive's employment
without Cause or Disability, on the date when such succession becomes
effective. For all purposes under this Agreement, the term "Company"
shall include any successor to the Company's business and/or assets
that executes and delivers the assumption agreement described in this
Subsection (a) or that becomes bound by this Agreement by operation of
law.
(b) Executive's Successors. This Agreement and all rights of the Executive
hereunder shall inure to the benefit of, and be enforceable by, the
Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
SECTION 11. MISCELLANEOUS PROVISIONS
(a) Waiver. No provision of this Agreement shall be modified, waived or
discharged unless the modification, waiver or discharge is agreed to in
writing and signed by the Executive and by an authorized officer of the
Company (other than the Executive). No waiver by either party of any
breach of, or of compliance with, any condition or provision of this
Agreement by the other party shall be considered a waiver of any other
condition or provision or of the same condition or provision at another
time.
(b) Whole Agreement. No agreements, representations or understandings
(whether oral or written and whether express or implied) that are not
expressly set forth in this Agreement have been made or entered into by
either party with respect to the subject matter hereof. In addition,
the Executive hereby acknowledges and agrees that this Agreement
supersedes in its entirety any employment agreement between the
Executive and the Company in effect immediately prior to the effective
date of this Agreement. As of the effective date of this Agreement,
such employment agreement shall terminate without any further
obligation by either party thereto, and the Executive hereby
relinquishes any further rights that the Executive may have had under
such prior employment agreement.
(c) Notice. Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered or
7
when mailed by U.S. registered or certified mail, return receipt
requested and postage prepaid. In the case of the Executive, mailed
notices shall be addressed to the Executive at the home address that
the Executive most recently communicated to the Company in writing. In
the case of the Company, mailed notices shall be addressed to its
corporate headquarters, and all notices shall be directed to the
attention of its Chief Executive Officer.
(d) Choice of Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the
State of California, irrespective of California's choice-of-law
principles.
(e) Severability. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in
full force and effect.
(f) Arbitration. Except as otherwise provided in Section 14 and in the
enforcement of Section 15, any dispute or controversy arising out of
the Executive's employment or the termination thereof, including, but
not limited to, any claim of discrimination under state or federal law,
shall be settled exclusively by arbitration in San Francisco,
California, in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's
award in any court having jurisdiction.
(g) No Assignment of Benefits. The rights of any person to payments or
benefits under this Agreement shall not be made subject to option or
assignment, either by voluntary or involuntary assignment or by
operation of law, including (without limitation) bankruptcy,
garnishment, attachment or other creditor's process, and any action in
violation of this Subsection (i) shall be void.
(h) Employment at Will; Limitation of Remedies. The Company and the
Executive acknowledge that the Executive's employment is at will, as
defined under applicable law. If the Executive's employment terminates
for any reason, the Executive shall not be entitled to any payments,
benefits, damages, awards or compensation other than as provided by
this Agreement.
(i) Employment Taxes. All payments made pursuant to this Agreement shall be
subject to withholding of applicable taxes.
(j) Benefit Coverage Non-Additive. In the event that the Executive is
entitled to life insurance and health plan coverage under more than one
provision hereunder, only one provision shall apply, and neither the
periods of coverage nor the amounts of benefits shall be additive.
8
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case
of the Company by its duly authorized officer, as of the day and year first
above written. Executive has consulted (or has had the opportunity to consult)
with his own counsel (who is other than the Company's counsel) prior to
execution of this Agreement.
---------------------------------------------
Xxxxxx X. Xxxxx
BrightStar Information Technology Group, Inc.
By the Compensation Committee of the Board
---------------------------------------------
---------------------------------------------
---------------------------------------------
9
