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Exhibit 10.25
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of the
21st day of December, 2000, by and between Xxxxxxx X. Xxxx (hereinafter
"Executive") and NEON Systems, Inc. ("Neon" or "Employer").
1. Employment. Subject to the terms and conditions set forth in this
Agreement, Employer shall employ Executive, and Executive hereby accepts such
employment with Employer.
2. Duties of Executive.
(a) Executive shall serve in the capacity of President, Chief Operating
Officer, Chief Financial Officer and member of the Board of Directors of Neon,
and shall be subject to supervision by the Board of Directors of Neon ("the
Board") and the Chief Executive Officer ("CEO") (collectively, "Supervising
Parties"). In such capacity, Executive shall have all necessary powers to
discharge his duties and responsibilities, which include general oversight of
the affairs of Neon; consultation as needed with officers, managers, employees
and other personnel of Neon; and such other duties as the Supervising Parties
may reasonably assign, consistent with duties typically assigned to employees
who hold positions similar to that of Executive.
(b) During the term of this Agreement and except as provided below,
Executive shall perform to the best of his abilities the duties assigned to him
hereunder, shall devote his primary business time, attention and effort to the
affairs of Neon and shall use his reasonable best efforts to promote the
interests of Neon. Notwithstanding the foregoing or anything else in this
Agreement, Executive may engage in reasonable charitable, civic or community
activities and, with prior approval of the Board, may serve as a director of any
business corporation, partnership or other business entity, provided that such
activities or service do not interfere with his duties hereunder. Executive's
principal office for the performance of his duties under this Agreement shall be
located within the greater metropolitan areas of Houston, Texas.
3. Term. The term of this Agreement (the "Term") shall commence as of
October 1, 2000 (the "Effective Date"), and shall continue until terminated by
either party in accordance with the terms and conditions hereinafter set forth.
4. Salary. Commencing on the Effective Date, Employer shall pay Executive
a minimum annual base salary of $275,000.00, or $22,916.67 per month, which
shall be payable in accordance with Employer's standard payroll practice, but in
any event, not less frequently than monthly. Additionally, the Executive shall
be provided a car allowance of $1,250 per month.
5. Bonus Compensation. In addition to the Salary set forth above, Employer
shall pay Executive an incentive bonus of $34,375.00 per quarter, to be based
upon achievement of corporate operating results, the precise milestones and
operating goals to be mutually established within thirty days from the Effective
Date.
6. Compensation Review. No later than 12 months after the Effective Date,
the Board will review the Executive's overall compensation and establish new
compensation and benefits for the Executive. In no event will such new
compensation and benefits be less than compensation and benefits included in
this Agreement.
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7. Grant of Restricted Stock and Non-Qualified Stock Options. As
consideration for the services provided by Executive pursuant to this Agreement,
and pursuant to Employer's 1999 Long Term Incentive Plan, Employer shall award
to Executive 100,000 restricted shares of Common Stock of Employer (the
"Restricted Stock Grant"), and incentive stock options to acquire 200,000 shares
of Employer's Common Stock ("Option Grant"). The Restricted Stock and incentive
Stock Options will be granted on the date this Agreement is executed. The
Restricted Stock will be granted at no charge to the Executive. The exercise
price for the Option Grant will be the closing price of the Company's common
stock per the Nasdaq exchange on the date of granting. The terms of the
Restricted Stock Grant and the Option Grant will be reflected in grant
agreements pursuant to the terms of the 1999 Long Term Incentive Plan. The
Restricted Stock Grant and Option Grant will be vested in accordance with
Schedule A attached hereto.
8. Accelerated Vesting of Stock Options and Restricted Stock in Event of
Change of Control. If at any time there occurs a Change in Control, as defined
herein, of Neon ("the Corporation"), all unvested stock options and restricted
Common Stock conferred upon Executive shall vest immediately. For purposes of
this Agreement, a "Change in Control" will be deemed to occur in the following
events:
(i) The acquisition in one or more transactions by any "Person"
(as the term person is used for purposes of Section 13(d) or
14(d) of the Securities Exchange Act of 1934, as amended (the
"1934 Act")), of "Beneficial Ownership" (within the meaning of
Rule 13d-3 promulgated under the 0000 Xxx) of a majority of
the combined voting power of the Corporation's then
outstanding voting securities (the "Voting Securities").
(ii) Approval by stockholders of the Corporation of (A) a merger or
consolidation involving the Corporation if the stockholders of
the Corporation immediately before such merger or
consolidation do not own, directly or indirectly immediately
following such merger or consolidation, at least a majority of
the combined voting power of the outstanding voting securities
of the corporation resulting from such merger or consolidation
in substantially the same proportion as their ownership of the
Voting Securities immediately before such merger or
consolidation or (B) a complete liquidation or dissolution of
the Corporation or an agreement for the sale or other
disposition of all or substantially all of the assets of the
Corporation.
Notwithstanding the foregoing, a Change in Control shall not be deemed to
occur solely because a majority or more of the then outstanding Voting
Securities is acquired by (i) a trustee or other fiduciary holding
securities under one or more employee benefit plans maintained by the
Corporation or any of its subsidiaries; (ii) any corporation that,
immediately prior to such acquisition, is owned directly or indirectly by
the stockholders of the Corporation in the same proportion as their
ownership of stock in the Corporation immediately prior to such
acquisition; or (iii) a Permitted Person. For purposes of the preceding
sentence, a "Permitted Person" is (x) any Person or group of Related
Persons who, as of the date of this Agreement, owns more than twenty
percent (20%) of the issued and outstanding Common Stock of the Corporation
or (y) any corporation, partnership, limited liability company or other
entity the majority of the outstanding equity interests in which are owned
by such Person or group of Related Persons. The term "Related Persons," as
used in the preceding sentence, shall mean and include each person who is a
member of the family of another person, any trust established for the
benefit of any one or more of the foregoing persons and any entity the
majority of the outstanding equity interests in which are owned by any one
or more of the foregoing persons.
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If the acceleration of vesting under this provision results in an additional tax
liability to the Executive under section 280g of the Internal Revenue Code, Neon
shall compensate the Executive in an amount equal to the additional tax plus the
tax effect of such payment.
9. Employee Benefits. During the term of this Agreement, Employer shall
provide Executive with all benefits made available from time to time by Employer
and/or its organizational predecessors to employees and/or officers generally
and to employees who hold positions similar to that of Executive (including
benefits granted to other officers and/or directors of Employer and/or its
organizational predecessors), as per company policy. Specifically, Executive's
benefits shall include, without limit, participation in any and all
Employer-sponsored medical, dental and vision plans or programs (providing
coverage for Executive's immediate family); disability insurance; life insurance
payable to Executive's designated beneficiary; participation in any and all
Employer-sponsored retirement plans and/or 401(k) plans; and paid vacation (up
to four weeks). In the event that Executive's employment with Employer is for
any reason involuntarily terminated by Employer, Employer agrees to provide the
Executive and his dependents with health and dental benefits equivalent to those
previously provided for a period of twelve (12) months from the effective date
of termination.
Additionally, the Executive, solely at his discretion, may choose to relocate
his residence. It is herein agreed that the Employer will reimburse Executive
for all reasonable costs incurred for said relocation.
10. Not used.
11. Severance Payment. Independent of, and in addition to, the various
items of compensation and benefits set forth in Sections 4 through 10 of this
Agreement, Employer agrees to pay Executive an additional lump sum payment equal
to six months total compensation ("Severance Payment"), payable at the time of
termination if termination is without Cause, the result of an Executive
Termination Event (as defined in Section 13), or due to a Change in Control, as
defined in Section 8. "Cause," for purposes of this Agreement, shall be defined
as (i) theft, destruction, misappropriation of Employer's Company property; (ii)
conviction of a felony; (iii) willful and material disregard of reasonable
directives from Neon's Board of Directors, provided that the Board shall provide
Executive with written notice that such event shall have occurred ("Notice of
Disregard") and shall further allow Executive 30 days in which to cure such
disregard, and provided further that the Board shall provide an opportunity for
the Executive to be heard if there is no cure within 30 days of the Notice of
Disregard; and (iv) Breach of Fiduciary Duty, provided that the Board shall
provide Executive with written notice that such event shall have occurred
("Notice of Breach of Fiduciary Duty") and shall further allow Executive 30 days
in which to cure such Breach of Fiduciary Duty, and provided further that the
Board shall allow an opportunity for Executive to be heard if there is no cure
within 30 days of the Notice of Breach of Fiduciary Duty.
12. Death or Disability. In the event that Executive dies or becomes unable
to perform his duties and responsibilities under this Agreement as a result of
an illness, injury or impairment that continues for 90 consecutive days or more
("Disability"), this Agreement may be terminated (which termination shall be
effective immediately and without notice in the event of Executive's death and
upon written notice by Employer in the event of Executive's Disability), and the
following shall be applicable upon any such termination:
(a) All stock options and restricted stock conferred upon Executive by
Employer as referenced in Section 7 of this Agreement, shall immediately vest
and may be exercised either by Executive or his estate;
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(b) Employer shall pay to Executive (or his estate, heirs and/or
assigns, as appropriate) all salary owed to Executive by Employer pursuant to
Section 4 of this Agreement; any bonus owed to Executive as of the date of said
death or Disability, pursuant to Section 5 of this Agreement; and the Severance
Payment referenced in Section 11 of this Agreement; and
(c) Employer shall, for a period of 12 months after such Death or
Disability, provide employee benefits for the Executive and his dependents,
pursuant to Section 9 of this Agreement at no cost to the Executive or his
estate.
13. Early Termination Upon Executive Termination Event.
(a) Executive may terminate his employment under this Agreement upon
the occurrence of an Executive Termination Event. If such termination occurs
after December 31, 2000 and before March 31, 2001, Executive shall be entitled
to all stock options and restricted stock vested as of the date of termination
plus an acceleration of vesting of stock options and restricted stock equal to
the number of stock options and restricted shares of Common Stock that would
have vested to the Executive had he remained employed for the twelve (12) months
following the termination date. If such termination occurs after March 31, 2001,
Executive shall be entitled to all stock options and restricted stock vested as
of the date of termination plus an acceleration of vesting of 50% of the stock
options and restricted shares of Common Stock unvested as of that date.
Executive shall be entitled to immediate payment of all salary owed to Executive
by Employer, any bonus owed to Executive as of the date of said termination, the
Severance Payment referenced in Section 11 of this Agreement, and will provide
employee benefits, pursuant to Section 9 of this Agreement at no cost to the
Executive.
(b) For purposes of this Section 13, "Executive Termination Event"
shall be defined as: (i) a significant reduction in the duties or
responsibilities of Executive from those set forth in this Agreement; (ii) a
change in job title of Executive that is reflective of a reduction in duties,
responsibilities and/or stature; (iii) a change or reduction in Executive's
total remuneration (including salary, bonus, qualified retirement benefits,
welfare benefits, stock option and restricted stock benefits and any other
employee benefits) from that provided in this Agreement; (iv) a change in
Executive's direct reporting relationship such that Executive is no longer
reporting directly to the Board and CEO; (v) a change by Employer in the
location of Executive's principal place of employment, which moves said
principal place of business more than 35 miles from the location specified in
this Agreement; (vi) failure by Employer to provide directors and officers
liability insurance covering Executive; and (vii) a Material Disagreement, as
hereinafter defined.
14. Early Termination by Executive Due to Material Disagreement. The
parties agree and acknowledge that Executive and the Board and/or CEO may not be
able to agree as to the proper course or direction of Employer's business
("Material Disagreement"). Executive, in his sole discretion and acting in good
faith, shall determine whether there is a Material Disagreement between
Executive and the Board and/or the CEO.
15. Termination By Employer for Cause. At any time during the Term,
Employer may terminate Executive's employment hereunder for Cause. If Employer
terminates Executive for Cause, then Employer will pay Executive his accrued and
unpaid base salary through the termination date at the rate in effect at the
time notice of termination is given. Thereafter, Employer shall have no further
obligations to Executive, provided, however, that any such termination shall not
adversely affect or alter Executive's rights under any employee benefit plan of
Employer in which Executive, at the date of termination, has a vested interest,
including without limitation any then vested portion of the Option Grant or
Restricted Stock Grant, unless otherwise provided in such employee benefit plan
or any agreement or other instrument attendant thereto. Notwithstanding the
foregoing and in addition to whatever rights or remedies Employer may have at
law or
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in equity, all unvested stock options and unvested restricted Common Stock under
the Restricted Stock Grant held by Executive shall immediately expire on the
date of such termination of employment if Executive's employment is terminated
by Employer for Cause pursuant to this Section 15.
16. Termination by Employer without Cause. At any time during the Term,
Employer may terminate Executive's employment hereunder without Cause. If the
Employer terminates Executive without Cause prior to March 31, 2001, Executive
shall be entitled to all stock options and restricted Common Stock vested as of
the date of termination plus an acceleration of vesting of stock options and
restricted stock equal to the number of stock options and restricted shares of
Common Stock that would have vested to the Executive had he remained employed
for the twelve (12) months following the termination date. If such termination
occurs after March 31, 2001, Executive shall be entitled to all stock options
and restricted Common Stock vested as of the date of termination plus an
acceleration of vesting of 50% of the stock options and restricted stock
unvested as of the termination date. Executive shall be entitled to immediate
payment of all salary owed to Executive by Employer and any bonus owed to
Executive as of the date of said termination, the Severance Payment referenced
in Section 11 of this Agreement; and medical and dental benefits, pursuant to
Section 9 of this Agreement, at no cost to the Executive.
17. Non-Disclosure. Executive acknowledges that in the course of his
employment with Employer, he will be allowed to become acquainted with the
Employer's business affairs, information, trade secrets, and other matters which
are of a proprietary or confidential nature, including but not limited to the
Employer's business opportunities, price and cost information, finance, customer
information, business plans, various sales techniques, manuals, letters,
notebooks, procedures, reports, products, processes, services, technology and
other confidential information and knowledge concerning Employer's business
(collectively, the "Confidential Information"). Executive understands and
acknowledges that such Confidential Information is confidential, and he agrees
not to disclose such Confidential Information to anyone outside Employer except
as he reasonably deems necessary or appropriate in connection with performing
his duties on behalf of Employer. Executive further agrees that he will not
during the Term hereof and/or at any time thereafter use such Confidential
Information in competing, directly or indirectly, with Employer. For purposes of
the preceding provisions of this Section 17, the term "Employer" shall include
any and all subsidiaries of Employer. At such time as Executive shall cease to
be employed by Employer, he will immediately turn over to Employer all
Confidential Information, including papers, documents, writings, electronically
stored information, other property, and all copies of them provided to or
created by him during the course of his employment with Employer. The provisions
of this Section 17 shall be binding upon Executive and Executive's heirs,
successors, and legal representatives and shall survive the termination of this
Agreement for any reason.
18. Notice Provision. Any notice, demand or request required or permitted
to be given or made under this Agreement shall be in writing and shall be deemed
given or made when delivered in person, when sent by United States registered or
certified mail, or postage prepaid, or when telecopied to a party at its address
or telecopy number specified below:
If to Employer:
NEON Systems, Inc.
________________________________
________________________________
Attn:
Telecopy number: (___) ___-____
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If to Executive:
Xxxxxxx X. Xxxx
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The parties to this Agreement may change their addresses for notice by notifying
the other parties in the manner provided in this Section 18.
19. Headings Non-Binding. All section titles and captions in this Agreement
are for convenience only, shall not be deemed part of this Agreement, and in no
way shall define, limit, extend or describe the scope or intent of any
provisions hereof.
20. Words to have Contextual Meaning. Whenever the context may require, any
pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice versa. Additionally, the words "and" and "or"
shall be given their contextual meaning and not be interpreted blindly as being
solely conjunctive or disjunctive, as the case may be.
21. Execution of Agreement. The parties shall execute all documents,
provide all information and take or refrain from taking all actions as may be
reasonably necessary or appropriate to achieve the purposes of this Agreement.
22. Limitation of Benefits Clause. None of the provisions of this Agreement
shall be for the benefit of or enforceable by any creditors of the parties,
except as otherwise expressly provided herein.
23. Non-waiver Provision. No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute waiver of any such breach or any other covenant, duty, agreement or
condition.
24. Multiple Originals. This Agreement may be executed in counterparts, all
of which together shall constitute one agreement binding on all the parties
hereto, notwithstanding that all such parties are not signatories to the
original or the same counterpart.
25. CHOICE OF LAWS. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO THE PRINCIPLES
OF CONFLICTS OF LAW.
26. Severability and Reformation. If any provision of this Agreement is
declared or found to be illegal, unenforceable, or void, in whole or in part,
then the parties shall be relieved of all obligations arising under such
provision, but only to the extent that it is illegal, unenforceable or void, it
being the intent and agreement of the parties that this Agreement shall be
deemed amended by modifying such provision to the extent necessary to make it
legal and enforceable while preserving its intent or, if that is not possible,
by substituting therefor another provision that is legal and enforceable and
achieves the same objectives.
27. Entire Agreement. This Agreement, and the agreements in the forms of
exhibits attached hereto, constitute the entire agreement and understanding
between the parties with respect to the subject matter
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hereof and supersede and preempt any prior understandings, agreements or
representations by or between the parties, written or oral, which may have
related in any manner to the subject matter hereof.
28. Written Amendments Provision. No supplement, modification or amendment
of this agreement or waiver of any provision of this Agreement shall be binding
unless executed in writing by all parties to this Agreement. No waiver of any of
the provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provision of this Agreement (regardless of whether similar), nor shall
any such waiver constitute a continuing wavier unless otherwise expressly
provided.
29. Written Consent for Assignment. No party may assign this Agreement or
any rights or benefits thereunder without the written consent of the other
parties to this Agreement.
30. Arbitration. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration in Houston,
Texas, 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. Notwithstanding the above, Employer shall be entitled to seek a
restraining order or injunction in any court of competent jurisdiction to
prevent any continuation of any violation of Section 17 hereof. Furthermore,
should a dispute occur concerning Executive's mental or physical capacity as
described in Section 12, a doctor selected by Executive and a doctor selected by
Employer shall be entitled to examine Executive. If the opinion of Employer's
doctor and Executive's doctor conflict, Employer's doctor and Executive's doctor
shall together agree upon a third doctor, whose opinion shall be binding.
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EXECUTED as of the date first above written.
NEON Systems, Inc
By: /s/ XXXX XXXXXX
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and
EXECUTIVE
/s/ XXXXXXX X. XXXX
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Xxxxxxx X. Xxxx
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