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EXHIBIT 10.17
SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT
SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT entered into
as of the 1st day of August, 1999, by and among XXXXXXX.XXX, INC., a Nevada
corporation (the "Company"), and XXXXXX X. XXXXXX ("Xxxxxx").
RECITALS
A. The Company and Xxxxxx entered into an Employment Agreement dated
February 23, 1999 and an Amended and Restated Employment Agreement dated May 10,
1999 (collectively, the "Employment Agreement") whereby the Company agreed to
employ Xxxxxx and Xxxxxx accepted employment with the Company.
B. The Company and Xxxxxx desire to amend and restate the Employment
Agreement in its entirety.
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree that the Employment Agreement is hereby amended and restated as follows:
1. EMPLOYMENT. The Company hereby employs Xxxxxx and Xxxxxx hereby
accepts employment with the Company as its Senior Vice President, Strategy and
Operations and Assistant Secretary upon the terms and conditions hereinafter set
forth. Xxxxxx'x employment shall not be deemed an "at will" employment.
2. DUTIES. Xxxxxx will serve the Company as its Senior Vice President,
Strategy and Operations and Assistant Secretary and will faithfully and
diligently perform the services and functions relating to such offices and
positions or otherwise reasonably incident to such offices and positions,
provided that all such services and functions will be reasonable and within
Xxxxxx'x areas of expertise. Xxxxxx'x specific duties shall include those
related to (i) organizational development and growth management; (ii) strategic
operations planning and execution; (iii) strategy review and execution; (iv)
supervision and management of Vice President, Business Development, Vice
President, Marketing, Vice President, Sales and Vice President, Product
Development; (v) [INCLUDE ASST SECRETARY DUTIES] and (vi) such other duties as
the Company may reasonably direct. Xxxxxx will, during the term of this
Agreement (or any extension thereof), devote his time, attention, skills and
best efforts as a full-time employee to the promotion of the business of the
Company. Xxxxxx will report directly to the Company's Chief Executive Officer.
3. TERM. This Agreement and Xxxxxx'x employment shall commence on the
8th day of March, 1999 (the "Effective Date"), and shall continue for a term of
three years (the "Initial Term") unless terminated earlier in accordance with
this Agreement. The term of this Agreement may be extended by mutual agreement
among the Company and Xxxxxx.
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4. COMPENSATION. As compensation for the services rendered to the
Company under this Agreement, effective August 1, 1999, Xxxxxx will be paid a
base salary of $150,000 per year, payable in accordance with the then current
payroll policies of the Company or as otherwise agreed to by the parties (the
"Salary"). At any time and from time to time, the Salary may be increased if so
determined by the Board of Directors of the Company (the "Board") after a review
of Xxxxxx'x performance of his duties hereunder.
5. TERMINATION. This Agreement shall terminate upon the occurrence of
any of the following events:
a. The death of Xxxxxx;
b. The "Total Disability" (as hereinafter defined) of Xxxxxx;
c. Written notice to Xxxxxx from the Company of termination for
"Cause" (as hereinafter defined);
d. The voluntary termination of this Agreement by Xxxxxx upon 30
days prior written notice;
e. The later of three years from the Effective Date of this
Agreement or the date to which this Agreement is extended in
accordance with Section 3 above; or
f. 30 days prior written notice to Xxxxxx from the Company for any
reason without "Cause."
"Total Disability" means physical or mental disability, or both,
determined to be (or reasonably expected to be, based upon then available
medical information) of not less than twelve months duration or more where
Xxxxxx is unable to reasonably perform the duties he was performing for the
Company immediately prior to such disability. The determination shall rest upon
the opinion of the physician regularly attending Xxxxxx. If the Company
disagrees with said physician's opinion, the Company may engage at their own
expense a physician to examine the Xxxxxx, and Xxxxxx hereby consents to such
examination and to waive, if applicable any privilege between the physician and
Xxxxxx that may arise as a result of said examination. If after conferring, the
two physicians cannot concur on a final opinion, they shall choose a third
consulting physician whose opinion shall control. The expense of the third
consulting physician shall be borne equally by the Xxxxxx and the Company.
"Cause" means (i) Xxxxxx has failed to substantially perform his duties
as reasonably determined by the Board, (ii) Xxxxxx engages in poor performance
that is not cured within thirty days after counseling by the Company, (iii)
Xxxxxx has failed to comply with the reasonable directives and policies of the
Board, or (iv) Xxxxxx breaches his fiduciary duty to the Company or commits any
dishonest, unethical, fraudulent, or felonious act in respect to Xxxxxx'x duties
to the Company.
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6. TERMINATION PAYMENT. In the event Xxxxxx'x employment by the Company
is terminated without "Cause," the Company shall pay Xxxxxx xxxxxxxxx of $75,000
immediately upon the occurrence of such termination.
7. STOCK OPTIONS. Subject to the approval of the Board, Xxxxxx shall be
granted options to purchase 150,000 shares of the Company's common stock (the
"Options") pursuant to the Company's Amended and Restated 1998 Stock Option Plan
(the "Plan"), 60,000 of which Options shall be exercisable at $8.00 per share
(the "$8.00 Options"), 40,000 of which Options shall be exercisable at $10.00
per share (the "$10.00 Options") and 50,000 of which Options shall be
exercisable at $13.75 per share (the "$13.75 Options"). The Options shall vest
according to the following schedule:
a. 50,000 of the $8.00 Options shall vest on the Effective Date;
b. 20,000 of the $13.75 Options shall vest on August 1, 1999;
c. 10,000 of the $8.00 Options and 6,666 of the $10.00 Options
shall vest on March 8, 2000;
d. 10,000 of the $13.75 Options shall vest on August 1, 2000;
e. 16,667 of the $10.00 Options shall vest on March 8, 2001;
f. 10,000 of the $13.75 Options shall vest on August 1, 2001;
g. 16,667 of the $10.00 Options shall vest on March 8, 2002; and
h. 10,000 of the $13.75 Options shall vest on August 1, 2002.
In the event Xxxxxx'x employment is terminated by the Company for any
reason other for "Cause," then all unexercised Options shall be automatically
accelerated so that they will vest and be exercisable as to all shares covered
thereby upon such termination and shall be exercisable for a period of ten years
from the date of grant, notwithstanding anything to the contrary in this Section
6 or other provisions of this Agreement. In the event a transaction occurs
constituting a Change of Control (as defined below), all unexercised Options
shall be automatically accelerated so that they will vest and be exercisable as
to all shares covered thereby immediately and without further action,
notwithstanding anything to the contrary in this Section 6 or other provisions
of this Agreement. A "Change of Control" is a transaction constituting (i) a
sale of all or substantially all of the assets of the Company or (ii) a merger,
acquisition, consolidation or other transaction involving the transfer or
issuance of at least 30% of the outstanding voting stock of the Company. Except
as otherwise specifically set forth herein, the Options shall be subject to the
terms and conditions of the Plan.
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8. LOAN. The Company will loan to Xxxxxx $20,000 (the "Loan"), to be
disbursed on the Effective Date. The Loan shall be evidenced by a promissory
note (the "Note") with interest payable at 10% per annum and with all principal
and accrued but unpaid interest due one year from the Effective Date, if not
sooner paid. The Company agrees that if Xxxxxx has been employed by the Company
for six continuous months from the Effective Date, 50% of the principal balance
and accrued but unpaid interest shall be forgiven and, if Xxxxxx has been
employed by the Company for twelve continuous months, 100% of the remaining
principal and accrued but unpaid interest shall be forgiven by the Company and
the Note evidencing the Loan shall be canceled and deemed paid in full.
9. BENEFITS. Xxxxxx shall be entitled to participate in any Company
benefits as they become available, if at all, and which are normal and customary
Company benefits for executives of the Company. In addition, Xxxxxx shall be
entitled to the following benefits:
(a) full coverage health insurance to be paid by the Company with
a maximum premium not to exceed $350 per month;
(b) at reasonable times and upon prior Company approval, Xxxxxx
shall be entitled to three weeks paid vacation per annum for
each year employed during the term of this Agreement;
(c) the Company will provide Xxxxxx with a moving allowance of
$15,000 to cover moving and related expenses in conjunction
with relocation from his current residence to Phoenix,
Arizona;
(d) the Company will pay the temporary housing incurred by Xxxxxx
for a term not to exceed 90 days from the Effective Date;
(e) the Company will reimburse Xxxxxx for airfare and ground
transportation costs incurred by either Xxxxxx or his spouse
(if Xxxxxx remains in Phoenix over the weekend) in commuting
from Chicago to Phoenix for a period not to exceed 90 days
from the Effective Date; and
(f) the Company will provide Xxxxxx with a monthly car allowance
equal to $500.
10. EXPENSES. Xxxxxx is authorized to incur reasonable expenses for
promoting the business of the Company, including expenses for entertainment,
travel and similar items. The Company shall reimburse Xxxxxx for all such
expenses on the presentation by Xxxxxx of itemized accounts of such expenditures
in accordance with guidelines set forth by the Company and the Internal Revenue
Service.
11. NON-COMPETITION AND CONFIDENTIALITY.
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a. Non-Competition. The Company and Xxxxxx acknowledge and agree
that Xxxxxx'x services are of a special and unusual character which have a
unique value to the Company, the loss of which cannot be adequately compensated
by damages in an action at law and if used in competition with the Company,
could cause serious harm to the Company. Accordingly, Xxxxxx agrees that during
the term of this Agreement and either (a) for a period of two years in the event
Xxxxxx'x employment is terminated for "Cause" or (b) for a period of six months
in the event Xxxxxx'x employment is terminated without "Cause," Xxxxxx will not
(i) enter into any agreement with or directly or indirectly solicit or attempt
to solicit any employee or other representatives of the Company for the purpose
of causing them to leave the Company to take employment with any other business
entity, or (ii) compete, directly or indirectly, with the Company in any way and
that Xxxxxx will not act as an officer, director, employee, consultant,
shareholder, lender or agent of any entity engaged in any business of the same
nature as, or in competition with, the business in which the Company is now
engaged, was engaged during Xxxxxx'x employment or is engaged at the time of
Xxxxxx'x termination of employment, except for the ownership of less than 5% of
the outstanding capital stock of a publicly traded company.
b. Confidentiality.
(1) Xxxxxx acknowledges that in Xxxxxx'x employment hereunder,
Xxxxxx will be making use of, acquiring and adding to the Company's trade
secrets and its confidential and proprietary information of a special and unique
nature and value relating to such matters as, but not limited to, the Company's
business operations, internal structure, financial affairs, programs, software
systems, procedures, manuals, confidential reports, lists of clients and
prospective clients and sales and marketing methods, as well as the amount,
nature and type of services, equipment and methods used and preferred by the
Company's clients and the fees paid by such clients, all of which shall be
deemed to be confidential information. Xxxxxx acknowledges that such
confidential information has been and will continue to be of central importance
to the business of the Company and that disclosure of it to or its use by others
could cause substantial loss to the Company. In consideration of employment by
the Company, Xxxxxx agrees that during the Initial Term and any renewal term of
this Agreement and upon and after leaving the employ of the Company for any
reason whatsoever, Xxxxxx shall not, for any purpose whatsoever, directly or
indirectly, divulge or disclose to any person or entity any of such confidential
information which was obtained by Xxxxxx as a result of the Xxxxxx'x employment
with the Company or any trade secrets of the Company, but shall hold all of the
same confidential and inviolate.
(2) All contracts, agreements, financial books, records,
instruments and documents; client lists; memoranda; data; reports; programs;
software, tapes; Rolodexes; telephone and address books; letters; research; card
decks; listings; programming; and any other instruments, records or documents
relating or pertaining to clients serviced by the Company or Xxxxxx, the
services rendered by Xxxxxx, or the business of the Company (collectively, the
"Records") shall at all times be and remain the property of the Company. Upon
termination of this Agreement and Xxxxxx'x employment under this Agreement for
any reason whatsoever, Xxxxxx shall return to the
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Company all Records (whether furnished by the Company or prepared by Xxxxxx),
and Xxxxxx shall neither make nor retain any copies of any of such Records after
such termination.
(3) All inventions and other creations, whether or not
patentable or copyrightable, and all ideas, reports and other creative works,
including, without limitation, computer programs, manuals and related materials,
made or conceived in whole or in part by Xxxxxx while employed by the Company
and within one year thereafter, which relate in any manner whatsoever to the
business, existing or proposed, of the Company or any other business or research
or development effort in which the Company or any of its subsidiaries or
affiliates engages during Xxxxxx'x employment by the Company will be disclosed
promptly by Xxxxxx to the Company and shall be the sole and exclusive property
of the Company. All copyrightable works created by Xxxxxx and covered by this
Section 11b(3) shall be deemed to be works for hire. Xxxxxx shall cooperate with
the Company in patenting or copyrighting all such inventions, ideas, reports and
other creative works, shall execute, acknowledge, seal and deliver all documents
tendered by the Company to evidence its ownership thereof through the world, and
shall cooperate with the Company obtaining, defending and enforcing its rights
therein.
c. Certain Claims Upon Termination. Xxxxxx understands that if
within one year prior to the termination of Xxxxxx'x employment with the
Company, Xxxxxx has either (i) committed an act of theft, dishonesty, gross
dereliction of duty, fraud, embezzlement, misappropriation, or breach of
fiduciary duty against the Company or any other act of comparable misconduct
against the Company; or (ii) breached any of his obligations under this
Agreement, then the Company shall have the right to purchase any or all shares
of Common Stock of the Company owned by Xxxxxx at the time of such termination
for a purchase price equal to the amount that Xxxxxx paid for such shares,
together with interest thereon at a rate of 10% per annum. If the Company
desires to exercise such right, it shall notify Xxxxxx within 60 days after the
date of such termination and Xxxxxx shall tender the shares being purchased by
the Company at the time and place designated in such notice from the Company
upon receipt of the purchase price for such shares. If Xxxxxx fails to tender
such shares, the shares shall be deemed to be canceled as of the date the
Company tenders payment of the purchase price thereof.
d. Enforceability. In the event of the breach of the covenants
contained in this Section 11, it is understood that damages will be difficult to
ascertain and the Company may petition a court of law or equity for injunctive
relief in addition to any other relief which the Company may have under the law,
this Agreement or any other agreement executed in connection herewith. In
connection with the bringing of any legal or equitable action for the
enforcement of this Agreement, the Company shall be entitled to recover, whether
the Company seeks equitable relief, and regardless of what relief is afforded,
such reasonable attorneys' fees and expenses as the Company may incur in
prosecution of the Company's claim for breach hereof.
It is hereby agreed that the provisions of this Section 11 are separate
and independent from the other provisions of this Agreement, that these
provisions are specifically enforceable by the
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Company notwithstanding any claim by Xxxxxx that the Company has violated or
breached this Agreement or any claim that Xxxxxx is entitled to any offset or
compensation.
To induce the Company to enter into this Agreement, Xxxxxx represents
and warrants to the Company that Section 11 of this Agreement is enforceable by
the Company in accordance with its terms.
The parties hereto agree that to the extent that any provision or
portion of Section 11 of this Agreement shall be held, found or deemed to be
unreasonable, unlawful or unenforceable by a court of competent jurisdiction,
then any such provision or portion thereof shall be deemed to be modified to the
extent necessary in order that any such provision or portion thereof shall be
legally enforceable to the fullest extent permitted by applicable law; and the
parties hereto do further agree that any court of competent jurisdiction shall,
and the parties hereto do hereby expressly authorize, request and empower any
court of competent jurisdiction to, enforce any such provision or portion
thereof or to modify any such provision or portion thereof in order that any
such provision or portion thereof shall be enforced by such court to the fullest
extent permitted by applicable law.
12. WAIVER OF BREACH. The waiver by any party hereto of a breach of any
provision of this Agreement will not operate or be construed as a waiver of any
subsequent breach by any party.
13. NOTICES. Any notices, consents, demands, request, approvals and
other communications to be given under this Agreement by either party to the
other will be deemed to have been duly given if given in writing and personally
delivered, faxed or if sent by mail, registered or certified, postage prepaid
with return receipt requested, as follows:
If to the Company: xxxxxxx.xxx, inc.
One Arizona Center
000 X. Xxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxx
If to Xxxxxx: Xxxxxx X. Xxxxxx
One Arizona Center
000 X. Xxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Notices delivered personally will be deemed communicated as of actual
receipt, notices by fax shall be deemed delivered when such notices are faxed to
recipient's fax number and notices by mail shall be deemed delivered when
mailed.
14. ENTIRE AGREEMENT. This Agreement and the agreements contemplated
hereby constitute the entire agreement of the parties regarding the subject
matter hereof, and supersede all
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prior agreements and understanding, both written and oral, among the parties, or
any of them, with respect to the subject matter hereof.
15. SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future laws effective during
this Agreement, such provision will be fully severable and this Agreement will
be construed and enforced as if such illegal, invalid or unenforceable provision
never comprised a part hereof; and the remaining provisions hereof will remain
in full force and effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom. Furthermore, in lieu of
such illegal, invalid or unenforceable provision, there will be added
automatically, as part of this Agreement, a provision as similar in its terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
16. GOVERNING LAW. To the extent permitted by applicable law, this
Agreement and the rights and obligations of the parties will be governed by and
construed and enforced exclusively in accordance with the substantive laws (but
not the rules governing conflicts of laws) of the State of Arizona and the State
of Arizona shall have exclusive jurisdiction regarding any legal actions
relating to this Agreement.
17. CAPTIONS. The captions in this Agreement are for convenience of
reference only and will not limit or otherwise affect any of the terms or
provisions hereof.
18. GENDER AND NUMBER. When the context requires, the gender of all
words used herein will include the masculine, feminine and neuter, and the
number of all words will include the singular and plural.
19. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which will
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
THE COMPANY:
xxxxxxx.xxx, inc.
By: /s/ Xxxx X. Xxxxxxxx
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Xxxx X. Xxxxxxxx, Chairman/Chief Executive
Officer
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XXXXXX:
/s/ Xxxxxx X. Xxxxxx
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