EXHIBIT 10.1
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement ("Agreement") is dated as of March 3,
1997 and is entered into by and between Xxx Xxxxx ("Executive") and CyNet, Inc.,
a Texas corporation ("CyNet").
RECITALS
CyNet considers it essential to the best interest of CyNet and its
shareholders that Executive be encouraged to remain with CyNet and continue to
devote full attention to CyNet's business notwithstanding the possibility,
threat or occurrence of a change in Control (as defined below) of CyNet. CyNet
believes that it is the best interest of CyNet and its shareholders to reinforce
and encourage the continued attention and dedication of Executive and to
diminish inevitable distractions arising from the possibility of a Change in
Control of CyNet. Accordingly, to assure CyNet that it will have Executive's
undivided attention and services notwithstanding the possibility, threat or
occurrence of a Change in Control of CyNet, and to induce Executive to remain in
the employ of CyNet, and for other good and valuable consideration, the Board of
Directors of CyNet has caused CyNet to enter into this Agreement.
TERMS AND CONDITIONS
Executive and CyNet hereby agree to the following terms and conditions:
1. TERM OF AGREEMENT. This Agreement shall be effective as of the date
first indicated above and shall expire on the third anniversary of such date;
provided however that on such third anniversary and on the anniversary of such
date in each year thereafter, such expiration date shall be extended for one
additional year, unless, at least 60 days prior to such expiration date, CyNet
shall have delivered to Executive or Executive shall have delivered to CyNet
written notice that such expiration date shall not be so extended.
2. EFFECTIVE DATE. The "Effective Date" shall mean the first date during
the term of this Agreement on which a Change of Control (as defined in Section
3) occurs; provided, however, that if a Change of Control occurs and if
Executive's employment with CyNet is terminated prior to the date on which the
Change of Control occurs, and if it is reasonably demonstrated by Executive that
such termination of employment (a) was at the request of a third party who has
taken steps reasonably calculated to effect a Change of Control or (b) otherwise
arose in connection with or anticipation of a Change of Control, then for all
purposes of this Agreement the "Effective Date" shall mean the date immediately
prior to the date of such termination of employment.
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3. CHANGE OF CONTROL. For the purpose of this Agreement, a "Change of
Control" of CyNet shall mean the following:
(a) Approval by the stockholders of CyNet of the dissolution or
liquidation of CyNet;
(b) Approval by the stockholders of CyNet of an agreement to merge
or consolidate, or otherwise reorganize, with or into one or more entities
which are not subsidiaries, as a result of which less than 50% of the
outstanding voting securities of the surviving, purchasing or resulting
entity are, or are to be, owned by former stockholders of CyNet (excluding
from the term "former stockholders" a stockholder who is, or as a result
of the transaction in question becomes, an "affiliate", as that term is
used in the Securities and Exchange Act of 1934 and the Rules promulgated
thereunder, of any party to such merger, consolidation or reorganization);
(c) Approval by the stockholders of CyNet of the sale of
substantially all of CyNet's business and/or assets to a person or entity
which is not a subsidiary; or
(d) A Change in Control as defined in CyNet's By-Laws as of the date
first written above or as subsequently defined therein.
4. EMPLOYMENT PERIOD. CyNet hereby agrees to continue Executive in its
employ, and Executive hereby agrees to remain in the employ of CyNet subject to
the terms and conditions of this Agreement, for the period commencing on the
Effective Date and ending on the date which is the latest of the following:
(a) The date which is 15 days after the first anniversary of a
Change in Control;
(b) The date which is 15 days after the first anniversary of the
effective date of any merger, the approval of which constituted a Change
in Control; and
(c) December 31, 2006;
Such period shall hereinafter be referred to as the "Employment Period."
5. TERMS OF EMPLOYMENT.
(a) POSITION AND DUTIES. During the Employment
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Period, (i) Executive's position (including status, offices, titles and
reporting requirements), authority, duties and responsibilities shall be
at least commensurate in all material respects with the most significant
of those held, exercised and assigned at any time during the 120-day
waiting period immediately preceding the Effective Date; and (ii)
Executive's services shall be performed at the location where Executive
was employed immediately preceding the Effective Date or any office or
location which is less than 35 miles further away from Executive's place
of residence.
(b) COMPENSATION AND BENEFITS. During the Employment Period, CyNet
shall pay Executive an annual base salary ("Annual Base Salary"), payable
in semi-monthly installments, which shall initially be at least equal to
twelve times the highest monthly base salary paid or payable, including
any base salary which has been earned but deferred, to Executive by CyNet
during the twelve-month period immediately preceding the month in which
the Effective Date occurs. CyNet may, in its discretion, periodically
increase Executives base salary. The term "Annual Base Salary" as used in
this Agreement shall refer to Annual Base Salary as so increased. CyNet
may not, however, reduce Executive's base salary during the Employment
Period. Executive shall be provided with incentives (annual and
long-term), retirement benefits, welfare benefits and fringe benefits no
less favorable in the aggregate than those in effect for Executive at any
time during the 120-day waiting period immediately preceding the Effective
Date, except for any reductions in benefits which apply generally to all
executives of CyNet. Executive shall receive a $50,000 signing bonus upon
execution of this agreement.
6. TERMINATION OF EMPLOYMENT.
(a) DEATH OR DISABILITY. Executive's employment shall terminate
automatically upon Executive's death during the Employment Period. If
CyNet determines in good faith that the Disability of Executive has
occurred during the employment period (pursuant to the definition of
Disability set forth below), it may give to Executive written notice in
accordance with Section 17 of this Agreement of its intention to terminate
Executive's employment with CyNet. Executive's employment with CyNet shall
terminate effective on the 30th day after receipt of such notice by
Executive (the "Disability Effective Date"), provided that, within the 30
days after such receipt, Executive shall not have returned to full-time
performance of Executive's duties.
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For purposes of this Agreement, "Disability" shall mean the absence of
Executive from Executive's duties with CyNet on a full-time basis for 180
consecutive business days as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a
physician selected by CyNet or its insurers and acceptable to Executive or
Executive's legal representative.
(b) CAUSE. CyNet may terminate Executive's employment during the
Employment Period for cause. For purposes of this Agreement, "Cause" shall
mean:
(i) The willful and continued failure of Executive to perform
substantially Executive's duties with CyNet or one of its affiliates
(other than any such failure resulting from incapacity due to
physical or mental illness), after a written demand for substantial
performance is delivered to Executive by the Board or the Chief
Executive Officer of CyNet which specifically identifies the manner
in which the Board or Chief Executive Officer believes that
Executive has not substantially performed Executive's duties, or
(ii) The willful engaging by Executive in illegal conduct or
gross misconduct which materially and demonstrably injures CyNet.
(c) GOOD REASON. Executive's employment may be terminated by
Executive for Good Reason. For purposes of this Agreement, "Good Reason"
shall mean:
(i) The assignment to Executive of any duties inconsistent in
any respect with Executive's position (including status, offices,
titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 5(a) of this Agreement,
or any other action by CyNet which results in a diminution in such
position, authority, duties or responsibilities, excluding for this
purpose an isolated, insubstantial and inadvertent action not taken
in bad faith and which is remedied by CyNet after receipt of notice
thereof given by Executive;
(ii) Any failure by CyNet to comply with any of the provisions
of Section 5(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and
which is remedied by CyNet promptly after receipt of notice from
Executive;
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(iii) CyNet's requiring Executive to be based at any office or
location other than as provided in Section 5(a) hereof;
(iv) Any purported termination by CyNet of Executive's
employment otherwise than as expressly permitted by this Agreement;
or
(v) Any failure by CyNet to comply with and satisfy Section
12(c) of this Agreement.
For purposes of this Section 6(c), any good faith determination of "Good
Reason" made by Executive shall be conclusive. Anything in this Agreement
to the contrary notwithstanding, a termination by Executive for any reason
pursuant to a Notice of Termination delivered during the 15-day period
immediately following the latest of (i) the first anniversary of a Change
in Control, (ii) the first anniversary of the effective date of any merger
the approval of which constituted a Change in Control, or (iii) March 31,
1997 shall be deemed to be a termination for Good Reason for all purposes
of this Agreement, provided that Executive has given notice to CyNet
pursuant to Section 17 hereof at least 30 days prior to such termination.
(d) NOTICE OF TERMINATION. Any termination by CyNet for Cause, or by
Executive for Good Reason, shall be communicated by Notice of Termination
to the other party hereto given in accordance with Section 17 of this
Agreement. For purposes of this Agreement, a "Notice of Termination" means
a written notice which (i) indicates the specific termination provision in
this Agreement relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a basis
for termination of Executive's employment under the provision so indicated
and (iii) subject to Section 6(c) (iii) and the last sentence of Section
6(c), if the Date of Termination (as defined below) is other than the date
of receipt of such notice, specifies the termination date (which date
shall be not more than thirty days after the giving of such notice). The
failure by Executive or CyNet to set forth in the Notice of Termination
any fact or circumstance which contributes to a showing of Good Reason or
Cause shall not waive any right of Executive or CyNet, respectively,
hereunder or preclude Executive or CyNet, respectively, from asserting
such fact or circumstance in enforcing Executive's or CyNet's rights
hereunder.
(e) DATE OF TERMINATION. "Date of Termination" means
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(i) if Executive's employment is terminated by CyNet for Cause, or by
Executive for Good Reason, the date of receipt of the Notice of
Termination or any later date specified therein, as the case may be, (ii)
if Executive's employment is terminated by CyNet other than for Cause or
Disability, the Date of Termination shall be the date on which CyNet
notifies Executive of such termination and (iii) if Executive's employment
is terminated by reason of death or Disability, the Date of Termination
shall be the date of death of Executive or the Disability Effective Date,
as the case may be.
7. OBLIGATIONS OF CYNET UPON TERMINATION.
(a) GOOD REASON; OTHER THAN FOR CAUSE OR DISABILITY. If CyNet shall
terminate Executive's employment other than for Cause or Disability during
the Employment Period or Executive shall terminate employment for Good
Reason pursuant to a Notice of Termination delivered during the Employment
Period, CyNet agrees to make the payments and provide the benefits
described below.
(i) CyNet shall pay to Executive in a lump sum in cash within
10 days after the Date of Termination an amount equal to the product
of (1) and (2), where (1) is three and (2) is the sum of Executive's
Annual Base Salary and the average of the last three annual
incentive bonuses actually paid to Executive by CyNet for any
calendar year before the Date of Termination (the "Average Annual
Bonus"); and
(ii) Upon Executive's Date of Termination, Executive shall be
100% vested in the amounts credited to any Qualified Plan in which
he is a participant.
(iii) Upon Executive's Date of Termination, Executive's awards
under any stock-based plan under which the Executive has been
granted stock or options to purchase such shall be accelerated as
follows:
(A) Each option and each related stock appreciation
right shall become immediately exercisable to the extent
theretofore not exercisable;
(B) Restricted stock shall immediately vest free of
restrictions; and
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(C) The number of shares covered by each performance
share award shall be issued to Executive;
provided, however, that awards shall not, in any event, be so
accelerated to a date less than one year after the date of grant or
award date if prohibited by the terms of the applicable Plan.
Acceleration of awards shall comply with applicable regulatory
requirements, including without limitation, Section 422 of the Code
and Rule 16b-3 promulgated by the Securities and Exchange Commission
pursuant to the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934.
(iv) For one year after Executive's Date of Termination, or
such longer period as may be provided by the terms of the
appropriate plan, program, practice or policy, CyNet shall continue
to provide welfare benefits and fringe benefits and other
perquisites to Executive and/or Executive's family at least equal to
those which would have been provided to them if Executive's
employment had not been terminated in accordance with the most
favorable plans, practices, programs or policies of CyNet and its
affiliated companies applicable generally to other peer executives
and their families immediately preceding the Date of Termination;
provided, however that if Executive becomes reemployed with another
employer and is eligible to receive medical or other welfare
benefits under another employer-provided plan, the medical and other
welfare benefits described herein shall be secondary to those
provoked under such other plan during such applicable period of
eligibility. For purposes of determining eligibility (but not the
time of commencement of benefits) of Executive for retiree benefits
pursuant to such plans, practices, programs and policies, Executive
shall be considered to have remained employed until one year after
the Date of Termination and to have retired on the last day of such
period.
(v) The sum of (A) the Executive's Annual Base Salary through
the Date of Termination to the extent due for services rendered but
not theretofore paid, (B) with respect to any Performance Period
under the CyNet, Inc. Long-Term Incentive Plan which has not been
completed as of the Date of Termination, an amount equal to (1)
multiplied by (2), where (1) is 150% of
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the Value (as defined in such plan) of the Participant's accrued
benefits on the Participant's Date of Termination, and (2) is a
fraction, the numerator of which is the number of full months
between the beginning of such Performance Period and the
Participant's Date of Termination and the denominator of which is
the total number of months in the Performance Period, and (C) any
compensation previously deferred by the Executive (together with any
accrued earnings or interest thereon) and any accrued vacation pay,
in each case to the extent not theretofore paid (the amount referred
to in clauses (A), (B) and (C) above being referred to as "Accrued
Obligations").
(vi) To the extent not theretofore paid or provided, CyNet
shall timely pay or provide Executive any other amounts or benefits
required to be paid or provided or which Executive is eligible to
receive under any plan, program, policy, practice, contract or
agreement of CyNet and its affiliated companies (such other amounts
and benefits being hereinafter referred to as "Other Benefits") in
accordance with the terms of such plan, program, policy, practice,
contract or agreement.
(b) DEATH. If the Executive's employment is terminated by reason of
the Executive's death during the Employment Period, this Agreement shall
terminate without further obligations to the Executive's legal
representatives under this Agreement, other than for payment of Accrued
Obligations and the timely payment or provision of Other Benefits. Accrued
Obligations shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within 10 days of the Date of
Termination.
(c) DISABILITY. If the Executive's employment is terminated by
reason of the Executive's Disability during the Employment Period, this
Agreement shall terminate without further obligations to the Executive,
other than for payment of Accrued Obligations and the timely payment or
provision of Other Benefits. Accrued Obligations shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of Termination.
(d) CAUSE; OTHER THAN FOR GOOD REASON. If Executive's employment
shall be terminated for Cause during the Employment Period or, if
Executive voluntarily terminates employment during the Employment Period,
excluding a termination for Good Reason, this Agreement shall terminate
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without further obligations to Executive (other than the obligation to pay
to Executive his Annual Base Salary earned through the Date of Termination
and any benefits payable to Executive under a plan policy, practice, etc.,
referred to in Section 8 below).
8. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or
limit Executive's continuing or future participation in any plan, program,
policy or practice provided by CyNet or any of its affiliated companies and for
which Executive may qualify, nor, subject to Section 21, shall anything herein
limit or otherwise affect such rights as Executive may have under any contract
or agreement with CyNet or any of its affiliated companies. Amounts which are
vested benefits or which Executive is otherwise entitled to receive under any
plan, policy, practice or program of or any contract or agreement with CyNet or
any of its affiliated companies at or subsequent to the Date of Termination
shall be payable in accordance with such plan, policy, practice or program or
contract or agreement except as explicitly modified by this Agreement.
9. FULL SETTLEMENT. CyNet's obligation to make the payments provided for
in this Agreement and otherwise to perform its obligations hereunder shall not
be affected by any set-off, counterclaim, recoupment, defense or other claim,
right or action which CyNet may have against Executive or others. In no event
shall Executive be obligated to seek other employment or take any other action
by way of litigation of the amount payable to Executive under any of the
provisions of this Agreement and, except as provided in Section 7(a)(v), such
amounts shall not be reduced whether or not Executive obtains other employment.
CyNet agrees to pay, to the full extent permitted by law, all legal fees and
expenses which Executive may reasonably incur as a result of any contest
(regardless of the outcome thereof) by CyNet, Executive or others of the
validity or enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof (including as a result of any
contest by Executive about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment at the applicable
Federal rate provided for in Section 7872 (f)(2)(A) of the Internal Revenue Code
of 1986, as amended (the "Code"). Notwithstanding the foregoing, CyNet shall not
be obligated to pay any legal fees or expenses of Executive in any contest by
Executive about the amount of any payment under this Agreement if it is
determined that CyNet did not breach this Agreement and Executive's claim was
not made in good faith.
10. CERTAIN ADDITIONAL PAYMENTS BY CYNET.
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(a) In the event that any payment or distribution by CyNet to or for
the benefit of Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this
Section 10(a)) ("Payment") is determined to be subject to the excise tax
imposed by Section 4999 of the Code or any interest or penalties are
incurred by Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then CyNet shall pay to
Executive an additional payment (a "Gross-Up Payment") in an amount such
that after payment by Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including, without
limitation, any income taxes (any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 10(c), all determinations
required to be made under this Section 10, including whether and when a
Gross-Up payment is required and the amount of such Gross-Up payment and
the assumptions to be utilized in arriving at such determination, shall be
made by I-NET'S Certified Public Accountant or such other certified public
accounting firm as may be designated by Executive and which is
satisfactory to CyNet (the "Accounting Firm"), which shall provide
detailed supporting calculations both to CyNet and Executive within 15
business days of the receipt of request from Executive or CyNet. All fees
and expenses of the Accounting Firm shall be borne solely by CyNet. Any
Gross-Up Payment, as determined pursuant to this Section 10(b), shall be
paid by CyNet to Executive within five days of the receipt of the
Accounting Firm's determination. No such determination that a Gross-Up
Payment is required shall be made unless the Accounting Firm furnishes
CyNet with a written opinion that there is no reasonable basis for not
paying the Excise Tax. As a result of the uncertainty in the application
of Section 4999 of the code at the time of the initial determination by
the Accounting Firm hereunder, it is possible that Gross-Up Payments which
will not have been made by CyNet should have been made ("Underpayment"),
consistent with the calculations required to be made hereunder. In the
event that CyNet exhausts its remedies pursuant to Section 10(c) and
Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly paid by CyNet to or
for the benefit of Executive.
(c) Executive shall notify CyNet in writing of any claim by the
Internal Revenue Service that, if successful, would
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require the payment by CyNet of the Gross-Up Payment. Such notification
shall be given as soon as practicable but no later than ten business days
after Executive is informed in writing of such claim and shall apprise
CyNet of the nature of such claim and the date on which such claim is
requested to be paid. Executive shall not pay such claim prior to the
expiration of the 30-day period following the date on which it gives such
notice to CyNet (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If CyNet notifies
Executive in writing prior to the expiration of such period that it
desires to contest such claim, Executive shall:
(i) Give CyNet any information reasonably requested by CyNet
relating to such claim,
(ii) Take such action in connection with contesting such claim
as CyNet shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by CyNet,
(iii) Cooperate with CyNet in good faith in order to contest
such claim effectively, and
(iv) Permit CyNet to participate in any proceedings relating
to such claim;
provided, however, that CyNet shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold Executive
harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto) imposed as a
result of such representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this Section 10(c), CyNet shall
control all proceedings taken in connection with such contest and , at its
sole option, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect
of such claim and may, at its sole option, either direct Executive to pay
the tax claimed and xxx for a refund or contest the claim in any
permissible manner, and Executive agrees to prosecute such contest to a
determination before any administration tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as CyNet shall
determine; provided, however, that if CyNet directs Executive to pay such
claim and xxx for a refund, CyNet shall advance the amount of such payment
to Executive, on an interest-free basis and shall indemnify and hold
Executive harmless, on an after-tax
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basis, from any Excise Tax or income tax (including interest or penalties
with respect thereto) imposed with respect to such advance or with respect
to any imputed income with respect to such advance; and further provided
that any extension of the statute of limitations relating to payment of
taxes for the taxable year of Executive with respect to which such
contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, CyNet's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder
and Executive shall be entitled to settle or contest, as the case may be,
any other issue raised by the Internal Revenue Service or any other taxing
authority.
(d) If, after the receipt by Executive of an amount advanced by
CyNet pursuant to Section 10(c), Executive becomes entitled to receive any
refund with respect to such claim, Executive shall (subject to CyNet's
complying with the requirements of Section 10(c)) promptly pay to CyNet
the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by
Executive of an amount advanced by CyNet pursuant to Section 10(c), a
determination is made that Executive shall not be entitled to any refund
with respect to such claim and CyNet does not notify Executive in writing
of its intent to contest such denial of refund prior to the expiration of
30 days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall
offset, to the extent thereof, the amount of Gross-Up Payment required to
be paid.
11. CONFIDENTIAL INFORMATION. Executive shall hold in fiduciary capacity
for the benefit of CyNet all secret or confidential information, knowledge or
data relating to CyNet or any of its affiliated companies, and their respective
businesses, which shall have been obtained by Executive during Executive's
employment by CyNet or any of its affiliated companies and which shall not be or
become public knowledge (other than by acts by Executive or representatives of
Executive in violation of this Agreement). After termination of Executive's
employment with CyNet, Executive shall not, without the prior written consent of
CyNet or as may otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other than CyNet and
those designated by it. In no event shall an asserted violation of the
provisions of this Section 11 constitute a basis for deferring or withholding
any amounts otherwise payable to Executive under this Agreement.
12. SUCCESSORS.
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(a) This Agreement is personal to Executive and without the prior
written consent of CyNet shall not be assignable by Executive otherwise
than by will or the laws of descent and distribution. This Agreement shall
inure to the benefit of and be enforceable by Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
CyNet and its successors and assigns.
(c) CyNet will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all
of the business and/or assets of CyNet to assume expressly and agree to
perform this Agreement in the same manner and to the same extent that
CyNet would be required to perform it if no such succession had taken
place. As used in this Agreement, "CyNet" shall mean CyNet as hereinbefore
defined and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law, or
otherwise.
13. ARBITRATION.
(a) The Executive Officers Compensation and Development Committee of
the Board of Directors of CyNet (the "Administrator") shall administer
this Agreement. The Administrator (either directly or through its
designees) will have power and authority to interpret, construe, and
administer this Agreement; provided that, the Administrator's authority to
interpret this Agreement shall not cause the Administrator's decisions in
this regard to be entitled to a deferential standard of review in the
event that Executive seeks review of the Administrator's decision as
described below.
(b) Neither the Administrator nor its designee, shall be liable to
any person for any action taken or omitted in connection with the
interpretation and administration of this Agreement.
(c) Because it is agreed that time will be of the essence in
determining whether any payments are due to Executive under this
Agreement, Executive may, if he desires, submit any claim for payment
under this Agreement or dispute regarding the interpretation of this
Agreement to arbitration. This right to select arbitration shall be solely
that of Executive, and Executive may decide whether or not to arbitrate in
his discretion. The "right to select arbitration" is not mandatory on
Executive, and Executive may choose in lieu thereof to bring an action in
an appropriate civil court. Once an arbitration is
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commenced, however, it may not be discontinued without the mutual consent
of both parties to the arbitration procedure set forth in this section.
(d) Any claim for arbitration may be submitted as follows: If
Executive disagrees with the Administrator regarding the interpretation of
this Agreement and the claim is finally denied by the Administrator in
whole or in part, such claim may be filed in writing with an arbitrator of
Executive's choice who is selected by the method described in the next
three sentences. The first step of the selection shall consist of
Executive's submitting a list of five potential arbitrators to the
Administrator. Each of the five arbitrators must be either (1) a member of
the National Academy of Arbitrators located in the State of Texas or (2) a
retired Texas District Court or Appellate Court judge. Within one week
after receipt of the list, the Administrator shall select one of the five
arbitrators as the arbitrator for the dispute in question. If the
Administrator fails to select an arbitrator in a timely manner, Executive
shall then designate one of the five arbitrators as the arbitrator for the
dispute in question.
(e) The arbitration hearing shall be held within seven days (or as
soon thereafter as possible) after the picking of the arbitrator. No
continuance of said hearing shall be allowed without the mutual consent of
Executive and Administrator. Absence from or nonparticipation at the
hearing by either party shall not prevent the issuance of an award.
Hearing procedures which will expedite the hearing may be ordered at the
arbitrator's discretion, and the arbitrator may close the hearing in his
or her sole discretion when he or she decides he or she has heard
sufficient evidence to satisfy issuance of an award.
(f) The arbitrator's award shall be rendered as expeditiously as
possible and in no event later than one week after the close of the
hearing. In the event the arbitrator finds that CyNet has breached this
Agreement, he or she shall order CyNet to immediately take the necessary
steps to remedy the breach. In addition, he or she shall order CyNet to
pay Executive an additional amount equal to 10% of the amount actually in
dispute. This additional amount shall constitute damages and not a
penalty. The award of the arbitrator shall be final and binding upon the
parties. The award may be enforced in any appropriate court as soon as
possible after its rendition. If an action is brought to confirm the
award, both CyNet and Executive\e agree that no appeal shall be taken by
either party from any decision rendered in such action.
(g) The Administrator will be considered the
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prevailing party in a dispute if the arbitrator determines (1) that CyNet
has not breached this Agreement and (2) the claim by Executive was not
made in good faith. Otherwise, Executive will be considered the prevailing
party. In the event that CyNet is the prevailing party, the fee of the
arbitrator and all necessary expenses of the hearing (excluding any
attorney's fees incurred by CyNet) including stenographic reporter, if
employed, shall be paid by the Executive. In the event that Executive is
the prevailing party, the fee of the arbitrator and all necessary expenses
of the hearing (including all attorneys' fees incurred by the Executive in
pursuing his claim), including the fees of a stenographic reporter if
employed, shall be paid by CyNet.
14. GOVERNING LAW. The laws of Texas shall govern the validity and
interpretation of this Agreement, with regard to conflicts of laws.
15. CAPTIONS. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect.
16. AMENDMENT. This Agreement may not be amended or modified otherwise
than by a written agreement executed by the parties hereto or their respective
successors and legal representatives.
17. NOTICES. All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to Executive:
Xxx Xxxxx
00000 Xxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
If to CyNet:
CyNet, Inc.
00000 Xxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
18. SEVERABILITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
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19. WITHHOLDING TAXES. CyNet may withhold from any amounts payable under
this Agreement such Federal, state, local or foreign taxes as shall be required
to be withheld pursuant to any applicable law or regulation.
20. NO WAIVER. Executive's or CyNet's failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right Executive or CyNet may have hereunder, including, without limitation, the
right of Executive to terminate employment for Good Reason pursuant to Section
6(c) of this Agreement, shall not be deemed to be a waiver of such provision or
right of this Agreement.
21. AT-WILL EMPLOYMENT. Executive and CyNet acknowledge that, except as
may otherwise be provided under any other written agreement between Executive by
CyNet prior to the Effective Date is "at will" and, prior to the Effective Date,
Executive's employment may be terminated by either Executive or CyNet at any
time, in which case Executive shall have no further rights under this Agreement.
From and after the Effective Date this Agreement shall supersede any other
agreement between the parties with respect to the subject matter hereof.
22. COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
shall together constitute one and the same Agreement.
23. NO PROHIBITED PAYMENTS. Notwithstanding anything contained in this
Agreement to the contrary, CyNet shall not make any payment to Executive which,
according to the opinion of CyNet's outside counsel, would violate Section
2523(k) of the Comprehensive Thrift and Bank Fraud Prosecution and Taxpayer
Recovery Act of 1990 (codified at 12 U.S.C. 1828 (k)), or any rules or
regulations promulgated thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first written above in
Houston, Texas.
EXECUTED: March 5, 1997
CyNet, INC.
By: /s/ XXX XXXXX By: /s/ XXX XXXXX
Xxx Xxxxx, President Xxx Xxxxx, Executive
By: /s/ XXXX XXXXXXXX By: /s/ XXXXXXX STONE
Xxxx Xxxxxxxx, Executive VP Witness
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