EMPLOYMENT AGREEMENT
AGREEMENT made as of January 1, 2000, by and between
XxxxxxxXxxxxxxxxxx.xxx Inc., a corporation incorporated under the laws of the
state of Delaware, with its principal place of business at One Dallas Center,
000 X. Xx. Xxxx, Xxxxx 000, Xxxxxx, Xxxxx, 00000 (the "Company"), and Xxxxxxx
X. Xxxxx residing at the address set forth at the end of this Agreement (the
"Executive").
WITNESSETH:
WHEREAS, the Company and the Executive desire to set forth the terms
and conditions of the Executive's employment by the Company;
NOW, THEREFORE, the parties hereto agree as follows:
1. TERM OF EMPLOYMENT. The Executive's employment under this
Agreement shall be for a term commencing on January 1, 2000 and terminating on
December 31, 2002, subject to earlier termination as provided in section 5
hereof (the "Term of Employment"). Each year of the Term of Employment is
referred to herein as a "Contract Year."
2. EMPLOYMENT
2.1 During the Term of Employment, the Company shall
employ the Executive as its Executive Vice-President, and the Executive shall
serve in such position, perform such services and have such authority,
functions, duties, powers and responsibilities as ordinarily are associated
with such title and as shall be designated by the President and/or CEO of the
Company. The Executive shall faithfully and diligently serve the Company and
shall devote all of his business time, attention, skill and efforts thereto;
provided, that the Executive may manage his passive investments, act as a
non-executive director of companies in which Executive has an investment and
be involved in charitable interests so long as they do not interfere or
conflict with the performance of the Executive's duties hereunder. The parties
also recognize the Executive will maintain a relationship with the firm of
Kane, Russell, Xxxxxxx &
Xxxxx, P.C. as "Of Counsel", and will continue to perform services on a
part-time basis to such firm for the purpose of finalizing matters to which
the Executive has previously devoted time and effort at such firm.
3. COMPENSATION AND OTHER REMUNERATION.
3.1 BASE SALARY. The Company shall pay to the Executive
during the Term of Employment base salary at the annual rate of Two Hundred
Fifty Thousand Dollars ($250,000); provided that Executive's base salary may
be increased at such time as the Company completes an initial public offering,
to a level to be negotiated in good faith at that time. Base salary will be
paid in accordance with the customary payroll practices of the Company and
shall be subject to required payroll deductions and withholdings. The
compensation due to Executive hereunder shall be due and payable
notwithstanding any compensation which Executive may earn from any other
entity or outside source.
3.2 BONUS. The Executive shall be eligible to receive a
bonus in respect of each Contract Year in such amount, if any, as may be
determined by the Company's board of directors.
3.3 VACATION. The Executive shall be entitled to a
reasonable number of days of vacation during each Contract Year, scheduled in
advance with the Company to avoid excessive disruption of the Company's
operations.
3.4 STOCK OPTIONS.
3.4.1. Pursuant to one or more stock option
agreements (hereafter referred to as the "Stock Option Agreement") dated the
date hereof, the Company shall grant to Executive stock options, under and
pursuant to the Company's 1999 Stock Option Plan, to purchase one thousand
(1,000) shares of the Company's common xxxxx, x.X0 par value ("Common Stock"),
at the price of Three Thousand One Hundred Fifty Dollars ($3,150) per share.
Twenty five percent (25%) of these options will vest immediately upon grant,
and the balance will vest in thirds on the last day of the first, second and
third Contract Year, provided Executive is employed on such
dates, except as otherwise provided in the last sentence hereof. The Stock
Option Agreement will provide that the maximum number of options which may be
issued in the form of incentive stock options pursuant to Section 422 of the
Internal Revenue Code will be so issued, with the balance of the options
granted pursuant hereto to be issued as non-qualified options. The Stock
Option Agreement will further provide that if the Executive dies during the
Term of Employment or if the Company terminates this Agreement due to his
disability (as described below) or without "Cause" (as defined below), or the
Executive terminates this Agreement for "Good Reason" (as defined below), all
unvested options shall immediately become exercisable.
3.4.2. All vested options will be exercisable for
a period of ten (10) years from the date of grant, regardless of whether this
Agreement has terminated. Any options granted in the form of incentive stock
options which are not exercised within three (3) months of the termination of
employment (other than due to death or disability) or twelve (12) month in the
event of termination due to disability automatically shall be converted into
non-qualified options.
4. BENEFITS; REIMBURSEMENT OF BUSINESS EXPENSES.
4.1 BENEFITS. The Executive shall participate in all
benefit plans of the Company generally available to its employees and/or to
any senior executive of the Company, whether now existing or hereafter
established (collectively, the "Benefit Plans"). The extent of Executive's
participation in the Benefit Plans shall be at the same level as the most
senior executives of the Company.
4.2 REIMBURSEMENT OF BUSINESS EXPENSES. Business
expenses incurred by the Executive in accordance with the Company's policies
will be reimbursed upon the presentation of receipts. Business-related air
travel shall be such class as is determined by Executive in his reasonable
discretion.
4.3 INSURANCE. During any period that the Executive is
rendering any services hereunder, the Company agrees to cause Executive to be
named as an insured under a director and officer liability insurance policy
which the Company shall obtain.
5. TERMINATION.
5.1 TERMINATION FOR CAUSE.
5.1.1 The Company may terminate this Agreement
and all of the Company's obligations hereunder, other than its obligations set
forth below in this section 5.1, for "Cause." "Cause" shall mean that the
Executive (i) is convicted of a felony, or any misdemeanor involving fraud or
theft, (ii) engages in dishonest behavior which materially adversely affects
the Company, (iii) commits a willful and intentional act having the effect of
materially injuring the reputation or business of the Company, including,
without limitation, habitual use of illegal drugs or alcohol or (iv)
materially breaches this Agreement and, after having been given written notice
thereof by the Company, fails to correct such breach within ten (10) days
after receipt of such notice.
5.1.2 In the event of termination by the Company
for Cause, the Company shall have no further obligations to the Executive
other than to pay (i) base salary accrued through the effective date of
termination; and (ii) all other benefits and amounts which may be then due the
Executive under the general provisions then in effect of any Benefit Plan ((i)
and (ii) collectively, the "Termination Entitlements").
5.2 TERMINATION DUE TO DEATH. This Agreement shall
terminate upon the Executive's death, and in such event the Company shall have
no further obligations hereunder, other than to pay to the Executive's estate
the Termination Entitlements.
5.3 TERMINATION DUE TO DISABILITY. If, during the Term
of Employment, the Executive shall become physically or mentally disabled,
whether totally or partially, so that he is unable to perform the material
functions of his position for periods aggregating one hundred thirty five
(135) days in any twelve (12) month period, the Company shall be entitled to
terminate this Agreement upon written notice to the Executive given at any
time thereafter during which the Executive is still so disabled. Upon such
termination, the Term of Employment shall end, and the Company shall have no
further obligations hereunder other than to pay to the
Executive the Termination Entitlements.
5.4 TERMINATION FOR GOOD REASON. "Good Reason" shall
mean any of the following: (i) a material breach by the Company of this
Agreement, (ii) a material diminution of Executive's authority, duties or
responsibilities with the Company or (iii) the assignment to Executive of
duties materially inconsistent with Executive's position with the Company,
unless otherwise approved by the Executive. If there exists an event or
condition that constitutes Good Reason, and such event or condition is not
cured within ten (10) days following Executive's giving the Company notice
thereof, Executive at any time thereafter shall have the right to terminate,
this Agreement by giving the Company written notice of such termination, and
upon his doing so, the provisions of sections 3.4.1, 3.4.2, and 5.5 and all
other relevant provisions hereof shall apply.
5.5 TERMINATION WITHOUT CAUSE OR FOR GOOD REASON. If
the Company terminates this Agreement without Cause (as defined in section 5.1
hereof), or if the Executive terminates this Agreement for Good Reason (as
defined in section 5.4 hereof), in addition to the Termination Entitlements,
the Executive shall be entitled to receive all base salary due for the balance
of the Term of Employment in a lump sum within thirty (30) days of the date of
termination.
5.6 STOCK OPTION VESTING. The impact of the termination
of this Agreement on the stock options referred to in section 3 hereof, shall
be as described in section 3 and in the Stock Option Agreements under which
such options shall be issued.
6. PROTECTION OF CONFIDENTIAL INFORMATION. The Executive
acknowledges that employment by the Company will bring the Executive into
close contact with the confidential affairs of the Company and its affiliates.
In recognition of the foregoing, the Executive covenants and agrees that the
Executive will keep secret all confidential matters of the Company and its
affiliates, including, without limitation, the terms and provisions of this
Agreement, and will not use for his own benefit or intentionally disclose such
matters to anyone outside of the Company,
either during or after the Term of Employment, except with the Company's
consent, provided that (i) the Executive shall have no such obligation to the
extent such matters are or become publicly known other than as a result of the
Executive's breach of his obligations hereunder; (ii) the Executive may
disclose such matters to the extent required by applicable laws or
governmental regulations or judicial or regulatory process; and (iii) the
Executive may disclose the terms of this Agreement to his attorney(s),
accountant(s) and/or financial advisor(s).
7. OWNERSHIP OF WORK PRODUCT. The Executive acknowledges that
in the course of employment hereunder, he may conceive of, discover, or create
inventions or new contributions relating to the subject matter of his
employment (all of the foregoing being collectively referred to herein as
"Work Product"). The Executive acknowledges that, unless the Company otherwise
agrees, all of such Work Product shall be owned by and belong exclusively to
the Company. The Executive shall further, unless the Company otherwise agrees
in writing, (i) promptly disclose any such Work Product to the Company; (ii)
assign to the Company, upon request, the entire rights to such Work Product to
the extent not otherwise owned at law by the Company; and (iii) sign all
papers reasonably necessary to carry out the foregoing.
8. REPRESENTATIONS. Both Executive and Company represent and
warrant that each is not a party to any agreements or understandings which
would prevent the fulfillment by such party of the terms of this Agreement or
which would be violated by entering into this Agreement and performing such
party's obligations hereunder.
9. NOTICES. All notices, requests, consents and other
communications required or permitted to be given hereunder shall be in writing
and shall be deemed to have been duly given if delivered personally or three
days after being mailed first-class, postage prepaid, by registered or
certified mail, to the address of the recipient given herein (or such other
address of which notice is given or, in the case of notice to the Executive,
to the most recent address set forth on the records of the Company).
10. INDEMNIFICATION. The Company shall indemnify Executive
against any and all
judgments, fines, amounts paid in settlement and reasonable expenses,
including attorneys' fees, incurred in connection with any action or
proceeding, whether civil, criminal, judicial, legislative, administrative or
investigative, or in connection with an appeal therein, by reason of the fact
that Executive is or was a director, officer, employee, representative or
agent of the Company; provided, however, that no such indemnification shall be
made to Executive if an adverse judgment or other final adjudication
establishes that the acts of Executive were committed in bad faith or were the
result of active and deliberate dishonesty and, in either case, were material
to the cause of action so adjudicated. Without limiting the foregoing,
Executive shall also be entitled to indemnification by the Company against any
liability or damage, including attorney's fees and liabilities under federal
and state securities laws, arising from any act or omission by Executive
provided such act or omission was reasonably believed to be within the scope
of Executive's authority or was taken upon advice of the accountants or legal
counsel for the Company. The indemnification of Executive provided by this
section 10 shall continue after Executive has ceased to be a director,
officer, employee, representative or agent of the Company and shall inure to
the benefit of Executive's heirs, executors, administrators and legal
representatives.
11. GENERAL.
11.1 GOVERNING LAW. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the state of the
State of Texas applicable to agreements made and to be wholly performed
therein.
11.2 CAPTIONS. The section headings contained herein are
for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
11.3 ENTIRE AGREEMENT; NO OTHER REPRESENTATIONS. The
parties expressly acknowledge, represent and agree that this Agreement is
fully integrated and contains and constitutes the complete and entire
agreement and understanding of the parties with respect to the subject matters
hereof and supersedes any and all agreements, understandings and discussions,
whether written or oral, between the parties with respect to the subject
matters hereof, other than the Proprietary Rights and Information Agreement
being entered into simultaneously herewith. The parties further acknowledge,
represent, and agree that neither has made any representations, promises or
statements to induce the other party to enter into this Agreement, and each
party specifically disclaims reliance, and represents that there has been no
reliance, on any such representations, promises or statements.
11.4 ASSIGNABILITV. This Agreement and the parties'
rights and obligations hereunder may not be assigned by Executive or the
Company without the other's prior written consent.
11.5 AMENDMENTS: WAIVERS. This Agreement may be amended,
modified, superseded, canceled, renewed or extended, and the terms and
covenants hereof may be waived, only by written instrument executed by both of
the parties hereto, or in the case of a waiver, by the party waiving
compliance. The failure of either party at any time or times to require
performance of any provisions hereof shall in no manner affect such party's
right at a later time to enforce the same. No waiver by either party of the
breach of any term or covenant contained in this Agreement, whether by conduct
or otherwise, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any such breach, or a waiver
of the breach of any other term or covenant contained in this Agreement.
11.6 CONSTRUCTION. No presumption will be made or
inference drawn because the attorneys for one of the parties drafted this
Agreement or because of its drafting history.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
XxxxxxxXxxxxxxxxxx.xxx Inc.
By: /s/ Xxxxxxx Xxxxx
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Its: President
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Signature:/s/ Xxxxxxx X. Xxxxx
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Address: 0000 Xxxxxx
Xxxxxx, Xxxxx 00000
