EXHIBIT 10.2
Employment Agreement with Xxxx X. Xxxxxx
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made and entered into as of October
1, 1999, by and between CBQ, Inc., a Colorado corporation (the "Company"), and
Xxxx X. Xxxxxx (the "Employee").
The parties agree as follows:
1. Engagement and Term of Employment. The Company employs Employee and Employee
accepts employment for an initial term of six (6) months beginning the date
first set forth above, unless sooner terminated as provided subsequently in this
Agreement. This Agreement will be extended for additional six (6) month terms
unless either the Company or the Employee elect to terminate this Agreement by
giving 30 day's written notice prior to lapse of the initial or any subsequent
six (6) month term.
2. Title, Responsibility and Location. Employee shall serve as Chief Executive
Officer and Chairman of the Board of Directors of the Company ("Board") and of
certain of its subsidiaries, those being, at present, CBQ, Inc., a Texas
corporation, Priority One Electronics Corporation, a Pennsylvania corporation,
JAB Consulting, and Cyberquest, Inc., Texas and Colorado corporations, and shall
report directly to the Board. Subject to applicable law and the overall policy
directives of the Board, the Employee shall have complete autonomy with respect
to the day-to-day management of the business and affairs of the Company and
shall have all executive powers and authority which are necessary to enable him
to discharge his duties as an officer of the Company.
3. Compensation and Benefits. The Company shall pay and/or provide the following
compensation and benefits to the Employee during the term hereof, and the
Employee shall accept the same as payment in full for all services rendered by
the Employee to or for the benefit of the Company:
3.1 Base Salary. A salary of $85,000 per annum during the initial term, and
any subsequent six (6) month extension, of this Agreement shall be paid to
the Employee by or on behalf of the Company (the "Base Salary"). The Base
Salary shall be subject to review from time to time (not less frequently
than at the end of each fiscal year of the Company) and, as a result, may
be decreased or increased at the discretion of the Board in agreement with
the Employee. The Base Salary shall accrue in equal monthly installments in
arrears and shall be payable in accordance with the payroll practices of
the Company in effect from time to time.
3.2 Bonus. In addition to the Base Salary, the Company shall pay to
Employee a bonus in accordance with the sole and unconditioned discretion
of the Board.
3.3 Stock Option and Stock Award Plan. The Employee shall be entitled to
participate in the 1999 Stock Option and Stock Award Plan of the Company
dated August 30, 1999, attached hereto as Exhibit A (the "Stock Option and
Stock Award Plan"). The Employee shall receive, effective on execution of
this Agreement, an option to acquire 25,000 shares of the Company's common
stock. This option shall be automatically exercised by the Employee
effective January 1, 2000, in lieu of a bonus under Section 3.2 of this
Agreement for the year ended December 31, 1999. The option price shall be
$2.125 per share, the market price for the common stock on the date of this
Agreement. The price shall be paid through the delivery of services by the
Employee to the Company for the period beginning October 1, 1999, and
ending December 31, 1999. This option shall best on the Employee completing
the initial three (3) month term of this Agreement without being terminated
for cause, as set forth below. The Employee shall also receive, effective
on execution of this Agreement, an option to acquire 500,000 shares of the
Company's common stock during a five year period beginning April 1, 2000,
and ending March 31, 2005, at a price of $2.125 per share, that being the
"market price" for such stock on the effective date of this Agreement. This
option shall vest on the Employee completing the initial six (6) month term
of this Agreement without being terminated for cause, as set forth below.
The shares to be issued under these two options shall be registered with
the Securities and Exchange Commission under the Stock Option and Award
Plan.
3.4 Other Benefit Plans. In addition to the Stock Option and Stock Award
Plan, the Employee shall be entitled to participate in all of the Company's
incentive and benefit plans and arrangements, including, without
limitation, all such plans or arrangements made available in the future by
the Company to its senior executives, subject to and an a basis consistent
with the terms, conditions and overall administration of such plans and
arrangements, but on a basis no less favorable than that afforded to any
other director, officer or employee of the Company.
3.5 Life and Disability Insurance. The Company shall provide to Employee
such life and disability insurance as may be subsequently negotiated and
agreed between the Company and the Employee.
3.6 Health Insurance and Medical Reimbursement Plan. The Company shall
provide to Employee at the Company's expense complete health insurance
(including, without limitation, medical, dental, hospital and optical) for
Employee and Employee's spouse and dependents. The Company shall also
provide to Employee at the Company's expense a medical reimbursement plan
for Employee and Employee's spouse and dependents covering all medical,
dental, hospital, optical and other costs not covered by the aforementioned
health insurance.
3.7 Vacation. Employee shall be entitled to the number of paid vacation
days in each calendar year determined by the Board from time to time for
the Company's senior executive officers, but not less than fifteen (15)
business days in any calendar year. Employee shall also be entitled to all
paid holidays given to the Company's senior executive officers.
3.8 Automobile. During the term hereof the Company shall give Employee an
allowance of $500 per month for the purpose of purchasing or leasing an
automobile and the Company shall reimburse Employee for all charges
incurred by him in connection with the use thereof, including, without
limitation, insurance premiums and the costs of gasoline, oil and
maintenance.
3.9 Reimbursement of Expenses. The Company shall reimburse Employee for all
expenses (including, without limitation, travel, meals, lodging and
entertainment) incurred by Employee in connection with his performance of
his duties hereunder. All such reimbursements shall be made by the Company
immediately following presentation by Employee to the Company of
appropriate documentation evidencing such expenses.
3.10 Withholding and Other Deductions. All compensation payable to Employee
hereunder shall be subject to such deductions as the Company is from time
to time required to make pursuant to all applicable laws, rules,
regulations and orders of any federal, state or local governmental
authority.
4. Representations and Warranties. Employee represents and warrants to the
Company that he is under no contractual or other restriction or obligation which
is inconsistent with his execution, delivery and performance of this Agreement.
The Company represents and warrants to Employee that the execution, delivery and
performance of this Agreement by the Company have been duly authorized by the
Board and no further corporate action on the part of the Company is necessary
and that this Agreement constitutes the valid and binding obligation of the
Company, enforceable by Employee against the company strictly in accordance with
its terms (subject to laws in affect with respect to creditors, rights generally
and applicable principles relating to equitable remedies).
5. Insurance and Indemnification. Employee shall be entitled to the following
additional benefits:
5.1 "Key-Man" Insurance. The Company shall have the right to purchase
"key-man" life insurance covering employee, in the name and for the benefit
of the Company and at the Company's expense, in any amount then obtainable.
The Employee shall cooperate in all reasonable respects with the Company's
efforts to obtain such insurance and shall submit to any required medical
or other examination; provided; however, that if such medical or other
examination cannot be conducted by the Employee's personal physician, then
the Employee shall have the right to have his personal physician attend the
examination.
5.2 Insurance Covering Employee. The Company shall at the Company's expense
provide insurance coverage to Employee to the same extent as other senior
executives and directors of the Company with respect to (i) director's and
officer's liability, (ii) errors and omissions and (iii) general liability.
5.3 Indemnification. The Company shall indemnify the Employee and hold him
harmless from and against any and all costs, expenses, losses, claims,
damages, obligations and liabilities (including, without limitation, actual
attorneys fees) arising out of or relating to any acts or omissions to act
by Employee on behalf of or in the course of performing services for the
Company and its subsidiaries, to the full extent permitted by any charter
documents or bylaws of the Company or its subsidiaries as in effect on the
date of this Agreement, or, if greater, as permitted by applicable law,
provided that the indemnity afforded by any charter documents or bylaws of
the Company or its subsidiaries shall never be greater than that permitted
by applicable law. To the extent a change in applicable law permits greater
indemnification than is now afforded by any charter documents or bylaws of
the Company or its subsidiaries and a corresponding amendment shall not be
made in said charter documents or bylaws, it is the intent of the parties
hereto that the Employee shall enjoy the greater benefits so afforded by
such change. If any claim, action, suit or proceeding is brought, or claim
relating thereto is made, against the Employee with respect to which
indemnity may be sought against the Company pursuant to the foregoing the
Employee shall notify the Company in writing, and the Company shall have
the right to participate in, and to the extent that it shall desire, in its
discretion, assume and control the defense thereof, with counsel
satisfactory to the Employee.
5.4 Rights Not Exclusive. The foregoing rights conferred on the Employee
shall not be exclusive of any other right which the Employee may have or
hereafter acquire under any statute, provision of the Articles of
Incorporation or Bylaws, agreement, vote of shareholders or disinterested
directors or otherwise, and such provisions shall survive the termination
or expiration of this Agreement for any reason whatsoever.
6. Termination. This Agreement may be terminated as follows:
6.1 Death or Total Disability of Employee. If the Employee dies, the
Employee's employment shall automatically terminate. If the Employee
becomes "totally disabled" during the term hereof, this Agreement may be
terminated at the option of the Company. For purposes of this Agreement,
the Employee shall be deemed "totally disabled" if the Employee becomes
physically or mentally incapacitated or disabled or otherwise unable to
discharge the Employee's duties for a period of one hundred twenty (120)
consecutive calendar days or for one hundred fifty (150) calendar days
(whether or not consecutive) in any one hundred eighty (180) calendar day
period. Prior to termination of this Agreement as a result of disability,
and notwithstanding any failure or inability of Employee to render services
hereunder, the Company shall continue to pay and/or provide to the Employee
all of the compensation and benefits provided for in this Agreement.
6.2 Termination by the Company for Just Cause. (a) The Company may
terminate the employment of the Employee for "Just Cause" on written notice
by the Company to the Employee to such affect. For purposes of this
Agreement, "Just Cause" means a determination by the Board in the exercise
of its reasonable judgment that any of the following has occurred: (i) the
willful and continued failure by the Employee to perform his duties and
responsibilities for the Company and its subsidiaries under this Agreement
(other than any such failure resulting from his incapacity due to physical
or mental illness or disability); (ii) the engaging by the Employee in any
act which is intended to be, and is, materially injurious to the Company,
financially or otherwise; (iii) the conviction of the Employee of a
criminal offense involving fraud, dishonesty or other moral turpitude; or
(iv) the engaging by the Employee in any intentional act of dishonesty
resulting or intending to result, directly or indirectly, in personal gain
to Employee at the Company's expense. (b) On termination of the Employee's
employment for Just Cause, the Employee shall not be entitled to any
severance, termination or other compensation payment other than
compensation and other benefits to which the Employee is entitled to the
date of termination of employment.
6.3 Termination Without Just Cause for Good Reason. (a) The Company may
terminate the employment of the Employee at any time without Just Cause on
written notice by the Company to Employee. In addition, the Employee may
terminate his employment for "Good Reason" on written notice by the
Employee to the Company to such effect. For purposes of this Agreement,
"Good Reason" shall mean (i) a substantial adverse alteration in the nature
or status of the Employee's responsibilities with the Company; (ii) any
transfer of 25% or more of the voting stock of the Company, any merger or
consolidation of the Company into or with another entity or any sale of all
or substantially all of the assets of the Company; or (iii) any purported
termination of the Employee's employment which is not affected in
accordance with this Agreement (which purported termination shall not be
effective). Employee's right to terminate his employment for Good Reason
shall not be affected by his incapacity due to physical or mental illness
or disability. Employee's continued employment shall not constitute consent
to, or a waiver of rights with respect to, any circumstance constituting
Good Reason hereunder. (b) On termination of the Employee's employment
without Just Cause or for Good Reason, the Company shall have the following
obligations: (i) if not theretofore paid, the Company shall pay to or to
the order of Employee within ten (10) days after the date of termination of
Employee's employment an amount equal to the product of $42,500 times a
fraction, the numerator of which is equal to the number of months remaining
in the term hereof beginning from the date the Employee receives written
notice from the Company or gives written notice to the Company, as the case
may be, and counting any fraction of a month as a whole month, and the
denominator of which is six; (ii) the Company shall pay to the Employee all
outstanding and accrued vacation pay and other benefits to the date of
termination; and (iii) all outstanding options which are not then vested
shall immediately vest and become exerciseable.
6.4 No Mitigation. The Employee shall have no duty or obligation to
mitigate damages, and if the Employee does choose to accept employment
elsewhere after any breach or improper termination of this Agreement by the
Company, then any income and other employment benefits received by the
Employee by virtue of his employment by, or rendition of services for or on
behalf of, any individual or entity other than the Company after such
breach or improper termination shall not reduce the Company's obligation to
make payments and afford benefits hereunder.
6.5 No Offset. The Company shall have no right to offset against any
payments or other benefits due to the Employee under this Agreement the
amount of any claims it may have against Employee by reason of any breach
or alleged breach of this Agreement by the Employee; provided, however,
that the Company shall have the right to offset any amounts due the Company
from Employee pursuant to any judgment (after exhaustion of all appeals)
rendered by a court of competent jurisdiction in connection with any breach
or alleged breach of this Agreement by the Employee.
7. SEC Filings. The Company or its counsel engaged to advise the Company with
respect to filings with the United States Securities and Exchange Commission
(the "SEC") shall give timely notice and advice to the Employee to the extent
the Company has or is given information that should indicate to the Company or
its counsel of any requirement that the Employee make filings with the SEC.
8. General Relationship. The Employee shall be considered an employee of the
Company within the meaning of all federal, state and local laws, rules and
regulations including, without limitation, laws, rules and regulations governing
unemployment insurance, workers' compensation, industrial accident, labor and
taxes.
9. Miscellaneous:
9.1 Entire Agreement. This Agreement (including Exhibit A, which is
incorporated by this reference) sets forth the entire understanding of the
parties with respect to the subject matter of this Agreement, supersedes
all existing agreements between them concerning that subject matter, and
may be modified only by a written instrument duly executed by each party.
9.2 No Assignment. This Agreement may not be assigned by any party without
the prior written consent of the other party (which consent may be granted
or withheld by such other party in the exercise of his or its sole and
absolute discretion) , and any attempt to assign rights and duties without
such written consent shall be null and void and of no force and effect.
Subject to the preceding sentence, this Agreement shall inure to the
benefit of and be binding on the parties and their respective permitted
successors and assigns.
9.3 Survival. The covenants, agreements, representations and warranties
contained in or made pursuant to this Agreement shall survive the
termination of this Agreement for any reason or no reason whatsoever for a
period of three (3) years.
9.4 Party Beneficiaries. This Agreement does not create, and shall not be
construed as creating, any rights enforceable by any individual or entity
not a party to this Agreement.
9.5 Waiver. The failure of a party at any time to enforce performance by
the other party of any provision of this Agreement shall in no way affect
that party's rights to subsequently enforce the same or any other
provision, nor shall the waiver by any party of any breach of any provision
of this Agreement be deemed to be a waiver by that party of any other
breach of the same or any other provision of this Agreement.
9.6 Headings. Headings contained in this Agreement are inserted solely for
the convenience of the parties and are not a part, and are not intended to
govern, limit or aid in the construction, of any term or provision in this
Agreement.
9.7 Notices. All notices and other communications required or permitted
under this Agreement shall be in writing, served personally on, telecopier,
sent by courier or other express private mail service, or mailed by
certified, registered or express United States mail postage prepaid, and
shall be deemed given upon receipt if delivered personally, telecopier, or
sent by courier or other express private mail service, or if mailed when
actually received as shown on the return receipt. Notices shall be
addressed as set forth below or to such other address of which notice is so
given.
If to the Company, to: CBQ, Inc
0000 Xxxxxx Xxxxxxx, Xxx. 000
Xxxxxxx XX 00000
With a copy to: Xxxxxxx X. Xxxxxxxx III
0000 X. Xxxxx Xxx Xx.
Xxxxxxxx XX 00000
If to Employee, to: Xxxx X. Xxxxxx
X.X. Xxx 000000
Xxxxx XX 00000
9.8 Severability. All provisions contained in this Agreement are severable,
and in the event any one or more of them are held to be invalid by any
court of competent jurisdiction, this Agreement shall be interpreted as if
such invalid provision or provisions were not contained in this Agreement.
9.9 Applicable Law and Jurisdiction. This Agreement is made with reference
to the laws of the State of Texas, is governed by and construed in
accordance with those laws, and any action brought under or arising out of
this Agreement must be brought in any competent court within the State of
Texas, County of Dallas.
9.10 Attorneys' Fees. If any legal action or other proceeding is brought
for the enforcement of this Agreement, or because of any alleged dispute,
breach, default or misrepresentation in connection with this Agreement, the
successful or prevailing party shall be entitled to recover from the other
party all costs and expenses (including, without limitation, attorneys'
fees) incurred by the successful or prevailing party in that action or
proceeding, in addition to any other relief to which the successful or
prevailing party may be entitled.
9.11 Gender. Where the context so requires, the use of the masculine gender
shall include the feminine and/or neuter genders and the singular shall
include the plural, and vice versa
9.12 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
The parties have caused this Agreement to be duly executed and delivered as of
the date first set forth above.
CBQ, Inc.
By: /s/ Xxxx Xxxxx
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Xxxx Xxxxx, President
/s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
EXHIBIT A TO EMPLOYMENT AGREEMENT
See attached 1999 Incentive Stock Option Plan (the "ISOP")
