Exhibit 10.6
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of June 30,
1999 (the "Effective Date") by and between The XxxXxx.xxx, Inc., a Florida
corporation (the "Company"), and Xxxx X. Xxxxxxx (the "Executive") under the
following terms and conditions:
RECITALS:
WHEREAS, the Company and Executive desire to set forth the terms and
conditions on which (i) the Company shall employ Executive, (ii) Executive shall
render services to the Company, and (iii) the Company shall compensate Executive
for such services; and
WHEREAS, in connection with the employment of Executive by the Company, the
Company desires to restrict Executive's rights to compete with the business of
the Company;
WHEREAS, the parties acknowledge that the Executive's abilities and
services are unique and essential to the prospects of the Company; and
WHEREAS, in light of the foregoing, the Company desires to employ the
Executive as Vice President of Sales and Marketing and the Executive desires to
accept such employment.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements hereinafter set forth, the parties hereto agree as follows:
1. EMPLOYMENT.
The Company hereby employs Executive and Executive hereby accepts
employment with the Company upon the terms and conditions hereinafter set forth.
2. TERM.
2.1 The term of this Agreement (the "Term") shall be for a period
commencing on the Effective Date of this Agreement and shall continue for a
period of twenty-four (24) months from the date thereof, unless sooner
terminated as provided in Paragraph 6. This two (2) year period, as the same may
be extended or terminated pursuant hereto, is hereinafter referred to as the
"Term".
2.2 For purposes of extending the Term of the relationship between the
Company and Executive, the parties agree to enter into good faith negotiations
within sixty (60) days prior to the end of the Term. In the event that the
parties are unable to reach an agreement by the end of the Term, this Agreement
shall be automatically terminated twenty-four (24) months from the Effective
Date.
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3. COMPENSATION.
3.1 For all services rendered by Executive under this Agreement, the
Company shall pay Executive a base salary of One Hundred Seventy-Five Thousand
Dollars ($175,000) per annum in equal semi-monthly installments on the 15th and
last day of each month (the "Base Salary"). The amount of the Base Salary shall
be reviewed on an annual basis by the Compensation Committee of the Company. No
such change shall in any way abrogate, alter, terminate or otherwise effect the
other terms of this Agreement.
3.2 In addition to the Base Salary, Executive shall be eligible for an
annual incentive bonus ("Incentive Bonus") in an amount not to exceed fifty
percent (50%) of the Base Salary. The Incentive Bonus shall be based upon goals
mutually agreed upon by the Chief Operating Officer and the Executive, within
thirty (30) days of the Effective Date. The Incentive Bonus shall be paid, if
earned, within thirty (30) days after the Company's year-end operating results
have been determined by the Company's accountants. Executive will also be
eligible for discretionary bonuses as dictated and approved by the Board of
Directors.
3.3 In addition to the Base Salary, the Company shall grant to Executive
an option to purchase 150,000 shares of the Company's common stock at an
exercise price to be determined by the Board of Directors or Compensation
Committee of the Board. The option shall vest over a period of thirty-six
months (36) months, with one-third vesting on the first anniversary of the date
of grant and the remaining two-thirds vesting as to one-twenty-fourth (1/24th)
per month each month thereafter for the next two years. The option shall vest
in full immediately upon a merger, sale or change of control (as defined in the
option plan). The option shall have a term of ten (10) years. The option shall
be subject to the terms and conditions of the Company's 1999 Stock Incentive
Plan (the "Plan") established by or to be established by the Company's Board of
Directors and the Stock Option Agreement to be entered into by Executive and the
Company. The option shall be qualified to the extent permissible under the Plan
and the Internal Revenue Code, and unqualified as to the balance.
3.4 In addition to the Base Salary, Executive shall be entitled to all
other benefits of employment provided to the other employees of the Company
holding comparable positions within the Company, including but not limited to
paid vacation, paid health insurance for the Executive, spouse and dependents,
paid life insurance to a maximum of base salary, paid mobile telephone expense
for business use, and participation in retirement and investment programs as
instituted by the Company.
3.5 Executive shall be reimbursed for all reasonable "out-of-pocket"
business expenses for business travel and business entertainment incurred in
connection with the performance of his or her duties under this Agreement (i) so
long as such expenses constitute business deductions from taxable income for the
Company and are excludable from taxable income to the Executive under the
governing laws and regulations of the Internal Revenue Code and (ii) to the
extent such expenses do not exceed the amounts allocable for such expenses in
budgets that are approved from time to
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time by the Company. The reimbursement of Executive's business expenses shall be
upon monthly presentation to and approval by the Company of valid receipts and
other appropriate documentation for such expenses.
3.6 All compensation shall be subject to customary withholding tax and
other employment taxes as are required with respect to compensation paid by a
corporation to an employee.
4. DUTIES AND RESPONSIBILITIES.
4.1 Executive shall, during the Term of this Agreement, devote
substantially all his attention and expend his best efforts, energies, and
skills, on a full-time basis, to the business of the Company and any corporation
controlled by or affiliated with the Company. For purposes of this Agreement,
the term the "Company" shall mean the Company and all Subsidiaries. Executive
shall not, during the term of this Agreement, be engaged in any other
substantial business activity without the prior consent of the Board of
Directors of the Company; provided, however, that this restriction shall not be
construed as preventing Executive from investing his personal assets in passive
investments in business entities which are not in competition with the Company
or its affiliates. From time to time Executive may be required to work with
affiliated companies.
4.2 During the Term of this Agreement, Executive shall serve as the Vice
President of Sales and Marketing of the Company and in such other capacity as
determined by the Chief Operating Officer. In the performance of all of his
responsibilities hereunder, Executive shall be subject to all of the Company's
policies, rules, and regulations applicable to its employees of comparable
status and shall report directly to, and shall be subject to, the direction and
control of the Chief Operating Officer and shall perform such duties as shall be
assigned to him by the Chief Operating Officer. In performing such duties,
Executive will be subject to and abide by, and will use his best efforts to
cause other employees of the Company to be subject to and abide by, all policies
and procedures developed by the Company's Executive Officers, Board of Directors
or its Executive Committee.
4.3 Executive hereby agrees to promote and develop all business
opportunities that come to his attention relating to current or anticipated
future business of the Company, in a manner consistent with the best interests
of the Company and with his duties under this Agreement. Should Executive
discover a business opportunity that does not relate to the current or
anticipated future business of the Company, he shall first offer such
opportunity to the Company. Should the Board of Directors of the Company not
exercise its right to pursue this business opportunity within a reasonable
period of time, not to exceed sixty (60) days, then Executive with the consent
of the Board of Directors may develop the business opportunity for himself;
provided, however, that such development may in no way conflict or interfere
with the duties owed by Executive to the Company under this Agreement. Further,
Executive may develop such business opportunities only on his own time, and may
not use any service, personnel, equipment, supplies, facility, or trade secrets
of the Company in their development. As used herein, the term "business
opportunity" shall not include
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business opportunities involving investment in publicly traded stocks, bonds or
other securities, or other investments of a personal nature.
4.4 Without first obtaining the written permission of the Board of
Directors of the Company, Executive will not authorize or permit the Company to
engage the services of, or engage in any business activity with, or provide any
financial or other benefit to, any affiliate of Executive. The phrase "affiliate
of Executive" as used in this Paragraph shall mean and include Executive's
family by blood or marriage (including, without limitation, parents, spouse,
siblings, children and in-laws), and any business or business entity which is
directly or indirectly owned or controlled by Executive or any member of the
Executive's family or in which Executive or any member of the Executive's family
has any direct or indirect financial interest whatsoever.
4.5 To induce the Company to enter into this Agreement, the Executive
represents and warrants to the Company that except as set forth on Schedule 4.5
(a) the Executive is not a party or subject to any employment agreement or
arrangement with any other person, firm, company, corporation or other business
entity, (b) the Executive is subject to no restraint, limitation or restriction
by virtue of any agreement or arrangement, or by virtue of any law or rule of
law or otherwise which would impair the Executive's right or ability (i) to
enter the employ of the Company, or (ii) to perform fully his duties and
obligations pursuant to this Agreement, and (c) to the best of Executive's
knowledge no material litigation is pending or threatened against any business
or business entity owned or controlled or formerly owned or controlled by
Executive.
4.6 During each year, Executive in the performance of his duties under
this Agreement shall comply or cause compliance with the applicable Annual Plan
and shall not (except for emergency expenditures or special circumstances
requiring an unanticipated expenditure) deviate materially from any budget
category set forth in the Annual Plan, incur any material additional expense or
change materially the manner of operation of the Company without the approval of
the Board of Directors.
5. RESTRICTIVE COVENANTS.
5.1 Executive acknowledges that (i) he has a major responsibility for the
operation, administration, development and growth of the Company's business,
(ii) his work for the Company has brought him and will continue to bring him
into close contact with confidential information of the Company and its
customers, and (iii) the agreements and covenants contained in this Paragraph 5
are essential to protect the business interest of the Company and that the
Company will not enter into this Agreement but for such agreements and
covenants. Accordingly, the Executive covenants and agrees as follows:
5.1(a) Except as otherwise provided for in this Agreement, during the
Term of this Agreement and, if this Agreement is terminated for any reason
during the Term, for twenty-four (24) months following such date of termination
(the "Termination Period"), the Executive shall not, directly or indirectly,
compete with respect to any services or products of the Company which are
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either offered or are being developed by the Company; or, without limiting the
generality of the foregoing, be or become, or agree to be or become, interested
in or associated with, in any capacity (whether as a partner, shareholder,
owner, officer, director, Executive, principal, agent, creditor, trustee,
consultant, co-venturer or otherwise) with any individual, corporation, firm,
association, partnership, joint venture or other business entity, which competes
with respect to any services or products of the Company which are either offered
or are being developed by the Company; provided, however, that the Executive may
own, solely as an investment, not more than five percent (5%) of any class of
securities of any publicly held corporation in competition with the Company
whose securities are traded on any national securities exchange in the United
States of America, and may retain his ownership interest in those entities
referred to in Subparagraph 4.1.
5.1(b) During the term of this Agreement and, if applicable, during
the Termination Period, the Executive shall not, directly or indirectly, (i)
induce or attempt to influence any employee of the Company to leave its employ,
(ii) aid or agree to aid any competitor, customer or supplier of the Company in
any attempt to hire any person who shall have been employed by the Company
within the one (1) year period preceding such requested aid, or (iii) induce or
attempt to influence any person or business entity who was a customer or
supplier of the Company during any portion of said period to transact business
with a competitor of the Company in Company's business.
5.1(c) During the Term of this Agreement, the Termination Period, if
applicable, and thereafter, the Executive shall not other than in the
performance of his duties disclose to anyone any information about the affairs
of the Company, including, without limitation, trade secrets, trade "know-how",
inventions, customer lists, business plans, operational methods, pricing
policies, marketing plans, sales plans, identity of suppliers or customers,
sales, profits or other financial information, which is confidential to the
Company or is not generally known in the relevant trade, nor shall the Executive
make use of any such information for his own benefit. Any technique, method,
process or technology used by the Company shall be considered a "trade secret"
for the purposes of this Agreement.
5.1(d) Executive hereby agrees that all know-how, documents, reports,
plans, proposals, marketing and sales plans, client lists, client files and
materials made by him or by the Company are the property of the Company and
shall not be used by him in any way adverse to the Company's interests.
Executive shall not deliver, reproduce or in any way allow such documents or
things to be delivered or used by any third party without specific direction or
consent of the Board of Directors of the Company. Executive hereby assigns to
the Company any rights which he may have in any such trade secret or proprietary
information.
5.2 If any of the Restrictive Covenants, or any part thereof, is held to
be invalid or unenforceable, the same shall not affect the remainder of the
covenant or covenants, which shall be given full effect, without regard to the
invalid or unenforceable portions. Without limiting the generality of the
foregoing, if any of the Restrictive Covenants, or any part thereof, is held to
be unenforceable because of the duration of such provision or the area covered
thereby, the parties hereto agree that the court making such termination shall
have the power to reduce the duration and/or area of such provision and, in its
reduced form, such provision shall then be enforceable.
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5.3 The parties hereto intend to and hereby confer jurisdiction to enforce
the Restrictive Covenants upon the courts of any jurisdiction within the
geographical scope of such Restrictive Covenants. In the event that the courts
of any one or more of such jurisdictions shall hold such Restrictive Covenants
wholly unenforceable by reason of the breadth of such scope or otherwise, it is
the intention of the parties hereto that such determination not bar or in any
way affect the Company's right to the relief provided above in the courts of any
other jurisdictions within the geographical scope of such Restrictive Covenants,
as to breaches of such covenants in such other respective jurisdictions, the
above covenants as they relate to each jurisdiction being, for this purpose,
severable into diverse and independent covenants.
6. TERMINATION.
6.1 The Company may terminate the Executive's employment under this
Agreement at any time for Cause. "Cause" shall exist for such termination if
Executive (i) is adjudicated guilty of a felony by a court of competent
jurisdiction, (ii) commits any act of fraud or intentional misrepresentation in
connection with his employment by the Company, (iii) has, in the reasonable
judgment of, and after a good faith investigation by, the Company, (a) engaged
in serious and willful misconduct, which conduct has, or would if generally
known, materially adversely affect the goodwill or reputation of the Company and
which conduct the Executive has not cured or altered to the satisfaction of the
Chief Operating Officer within ten (10) days following written notice by the
Chief Operating Officer to the Executive regarding such conduct, or (b)
willfully and intentionally failed to perform his duties as specified to him by
the Chief Operating Officer, which failure the Executive has not cured or
rectified to the satisfaction of the Chief Operating Officer within ten (10)
days following written notice by the Chief Operating Officer, or (iv) has made
any material misrepresentation to the Company under Paragraphs 4 and 5 hereof.
6.2 If the Company terminates the Executive's employment under this
Agreement pursuant to the provisions of Paragraph 6.1 hereof, the Executive
shall not be entitled to receive any compensation following the date of such
termination.
6.3 This Agreement shall automatically terminate on the last day of the
month in which Executive dies or becomes permanently incapacitated. "Permanently
incapacitated" as used herein shall mean mental or physical incapacity, or both,
reasonably determined by the Company's Board of Directors based upon a
certification of such incapacity by, in the discretion of the Company's Board of
Directors, either Executive's regularly attending physician or a duly licensed
physician selected by the Company's Board of Directors, rendering Executive
unable to perform substantially all of his or her duties hereunder and which
appears reasonably certain to continue for at least six (6) consecutive months
without substantial improvement. Executive shall be deemed to have "become
permanently incapacitated" on the date the Company's Board of Directors has
determined that Executive is permanently incapacitated and so notifies
Executive.
6.4 If Executive's employment is terminated for any reason (whether by
Executive or the Company) within thirty (30) days following a "Change in Control
of the Company" (as defined
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below), Executive shall be entitled to the benefits provided in Section 6.5
below. For purposes of this Agreement, a "Change in Control of the Company"
shall mean, at such time as the Company's Board of Directors becomes fully
constituted (e.g., the number of directors reaches five (5)), a cumulative
change in the identity of a majority of the members of the Company's first fully
constituted Board of Directors (provided, however, that the appointment of a new
director upon the death or resignation of a director by the remaining directors
then in office shall not constitute a change in identity with respect to such
departed director).
6.5 Executive's employment may be terminated by the Company "without
cause" (for any reason or no reason at all) at any time by giving Executive
sixty (60) days prior written notice of termination, which termination shall be
effective on the 60th day following such notice. If Executive's employment under
this Agreement is so terminated, the Company shall make a lump sum cash payment
to Executive on the date of termination of an amount equal to (i) the greater of
(a) the remaining Base Salary payable through the remaining term, or (b) twenty-
four (24) months Base Salary, plus (ii) a pro rata portion of any Incentive
Compensation, if any, earned for the year in which termination occurs prorated
to the date of termination, plus (ii) any unreimbursed expenses accruing to the
date of termination. The Company shall also continue Executive's benefits
through the remainder of the Term.
6.6 Executive may terminate his or her employment hereunder by giving the
Company sixty (60) days prior written notice, which termination shall be
effective on the 60th day following such notice. Voluntary termination shall not
entitle the Executive to receive any compensation following the date of
termination.
6.7 At the Company's option, Executive shall immediately leave the
Company's premises on the date notice of termination is given by either
Executive or the Company. If the Company requests Executive to leave the Company
following notice under Paragraph 6.6, it shall fully compensate Executive
(salary and benefits) through the 60th day following the date of Executive's
notice.
7. MISCELLANEOUS.
7.1 The Company may, from time to time, apply for and take out, in its own
name and at its own expense, life, health, accident, disability or other
insurance upon the Executive in any sum or sums that it may deem necessary to
protect its interests, and the Executive agrees to aid and cooperate in all
reasonable respects with the Company in procuring any and all such insurance,
including without limitation, submitting to the usual and customary medical
examinations, and by filling out, executing and delivering such applications and
other instruments in writing as may be reasonably required by an insurance
company or companies to which an application or applications for such insurance
may be made by or for the Company. In order to induce the Company to enter this
Agreement, the Executive represents and warrants to the Company that to the best
of his knowledge the Executive is insurable at standard (non-rated) premiums.
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7.2 This Agreement is a personal contract, and the rights and interests of
the Executive hereunder may not be sold, transferred, assigned, pledged or
hypothecated except as otherwise expressly permitted by the provisions of this
Agreement. The Executive shall not under any circumstances have any option or
right to require payment hereunder otherwise than in accordance with the terms
hereof. Except as otherwise expressly provided herein, the Executive shall not
have any power of anticipation, alienation or assignment of payments
contemplated hereunder, and all rights and benefits of the Executive shall be
for the sole personal benefit of the Executive, and no other person shall
acquire any right, title or interest hereunder by reason of any sale,
assignment, transfer, claim or judgment or bankruptcy proceedings against the
Executive; provided, however, that in the event of the Executive's death, the
Executive's estate, legal representative or beneficiaries (as the case may be)
shall have the right to receive all of the benefit that accrued to the Executive
pursuant to, and in accordance with, the terms of this Agreement.
7.3 The Company shall have the right to assign this Agreement to any
successor of substantially all of its business or assets, and any such successor
shall be bound by all of the provisions hereof.
8. NOTICES.
All notices, requests, demands and other communications provided for
by this Agreement shall be in writing and (unless otherwise specifically
provided herein) shall be deemed to have been given at the time when mailed in
any general or branch United States Post Office, enclosed in a registered or
certified postpaid envelope, addressed to the parties stated below or to such
changed address as such party may have fixed by notice:
To the COMPANY: The XxxXxx.xxx, Inc.
0000 Xxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxx 00000
Attn: Chief Operating Officer
Executive: Xxxx X. Xxxxxxx
0000 Xxx Xxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Facsimile: 000-000-0000
9. ENTIRE AGREEMENT.
This Agreement supersedes any and all Agreements, whether oral or
written, between the parties hereto, with respect to the employment of Executive
by the Company and contains all of the covenants and Agreements between the
parties with respect to the rendering of such services in any manner whatsoever.
Each party to this Agreement acknowledges that no representations,
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inducements, promises or agreements, orally or otherwise, have been made by any
party, or anyone acting on behalf of any party, which are not embodied herein,
and that no other agreement, statement or promise with respect to such
employment not contained in this Agreement shall be valid or binding. Any
modification of this Agreement will be effective only if it is in writing and
signed by the parties hereto.
10. PARTIAL INVALIDITY.
If any provision in this Agreement is held by a court of competent
jurisdiction to be invalid, void, or unenforceable, the remaining provisions
shall nevertheless continue in full force and effect without being impaired or
invalidated in any way.
11. ATTORNEYS' FEES.
Should any litigation or arbitration be commenced between the parties
hereto or their personal representatives concerning any provision of this
Agreement or the rights and duties of any person in relation thereto, the party
prevailing in such litigation or arbitration shall be entitled, in addition to
such other relief as may be granted, to a reasonable sum as and for its or their
attorneys' fees in such litigation or arbitration which shall be determined by
the court or arbitration board.
12. ARBITRATION.
The parties agree that any disputes arising under this Agreement shall
be resolved in as expeditious a manner as possible through binding arbitration
administered by the American Arbitration Association in the County of Orange,
California, or such other place which is mutually agreed upon by the parties.
Further, the parties hereby waive any objection based on personal jurisdiction,
venue or forum non conveniens in any arbitration or action brought under this
paragraph. The decision and award rendered by the arbitrators shall be final and
binding. Judgment upon the award may be entered in any court having jurisdiction
thereof.
Notwithstanding the first paragraph of this paragraph, any dispute
involving an amount that is less than or equal to the maximum jurisdictional
amount for small claims court, as may be amended, shall be brought in the small
claims court for the County of Orange, State of California, or such other place
which is mutually agreed upon by the parties.
13. GOVERNING LAW.
This Agreement will be governed by and construed in accordance with
the laws of the State of California.
14. BINDING NATURE.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective representatives, heirs, successors and
assigns.
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15. WAIVER.
No waiver of any of the provisions of this Agreement shall be deemed,
or shall constitute a waiver of any other provision, whether or not similar, nor
shall any waiver constitute a continuing waiver. No waiver shall be binding
unless executed in writing by the party making the waiver.
16. CORPORATE APPROVALS.
The Company represents and warrants that the execution of this
Agreement by its corporate officer named below has been duly authorized by the
Board of Directors of the Company, is not in conflict with any Bylaw or other
agreement and will be a binding obligation of the Company, enforceable in
accordance with its terms.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date above written.
THE COMPANY: THE XXXXXX.XXX, INC.
By: /s/ Xxxxx X. Xxxxx
--------------------------
Name: Xxxxx X. Xxxxx
Its: Chairman of the Board
EXECUTIVE:
/s/ Xxxx X. Xxxxxxx
-------------------
Xxxx X. Xxxxxxx
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SCHEDULE 4.5(a)
Employee: Xxxx X. Xxxxxxx
1) Pending lawsuit between Icomworld, Inc. and Xxxxxxxx.xxx, Inc.
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