EMPLOYMENT CONTRACT
By this Agreement, Xxxxxx Xxxxxx Holding Corporation (the
"Employer"), located at 00000 Xxxxx Xxxxxx, Xxxxxx, Xxxxx 00000, employs
Xxxxxxx X. Xxxxxx (the "Employee"), of X.X. Xxx 000000, Xxxxxx, XX 00000,
who accepts employment on the following terms and conditions:
ARTICLE 1: TERM OF EMPLOYMENT
1.01. Term. The term of this Agreement shall begin on April
7, 1997, and shall terminate on December 31, 1999. Unless the Employer
or the Employee gives written notice to the other of their intent not to
renew this Agreement on or before ninety (90) days before the end of the
then current term of this Agreement, this Agreement shall be deemed to be
automatically renewed for additional periods of three (3) years. During
the term of each such renewal, all of the terms and conditions of this
Agreement shall remain in full force and effect.
ARTICLE 2: DUTIES OF EMPLOYEE
2.01. Duties. The Employee shall serve as the Employer's
Chairman and Chief Executive Officer and shall perform all duties
commonly discharged by a person in such position and such other duties of
a similar nature as may be required from time to time by the Employer.
If the Employee is elected or appointed a director or an officer of the
Employer, the Employee shall serve in such capacity or capacities without
further compensation. Nothing shall be construed, however, to require
the Employee's election or appointment as a director or an officer.
2.02. Satisfactory Performance of Duties. The employment of
the Employee shall continue only as long as the services rendered by the
Employee are satisfactory to the Employer, regardless of any other
provision contained in this Agreement. The Employer shall be the sole
judge as to whether the services of the Employee are satisfactory.
ARTICLE 3: EMPLOYEE'S OBLIGATIONS OTHER THAN TO PERFORM SERVICES
3.01. Company Policy. The Employee agrees to perform his
duties under this Agreement in accordance with Employer's company policy
as such policy may be implemented or modified from time to time during
the term of this Agreement. Violation of any material provision of any
company policy shall constitute good cause for termination of the
services of the Employee under this Agreement.
3.02. Noncompetition By Employee. During the term of this
Agreement, the Employee shall not, directly or indirectly, either as an
employee, employer, consultant, agent, principal, partner, stockholder,
corporate officer, director, or in any other individual or representative
capacity, engage or participate in any business that is in competition in
any manner whatever with the business of the Employer. Violation of the
terms contained in this Paragraph shall constitute good cause for
termination of the services of the Employee under this Agreement.
3.03. Indemnification. The Employee shall indemnify and hold
harmless the Employer from all liability from loss, damage, or injury to
persons or property resulting from the negligence or misconduct of the
Employee committed in the scope of the Employee's employment.
ARTICLE 4: COMPENSATION
4.01. Basic Compensation. As base compensation for all services
rendered under this Agreement, the Employer shall pay to the Employee a
salary of $170,000 per year, payable in equal biweekly installments
during the period of employment, which shall be subject to withholding
and other applicable taxes. The amount paid is to be prorated for any
partial employment period. Each fiscal year thereafter, beginning July
1, 1998, at the sole discretion of Employer's Board of Directors,
Employee may receive a reasonable increase in his base salary
commensurate with Employee's performance and Employer's performance.
ARTICLE 5: EMPLOYEE BENEFITS AND BONUSES
5.01. Payment of Medical and Dental Insurance Premiums. The
Employer agrees to pay all of the Employee's insurance premiums
(including dependent coverage, if elected by Employee) and one-half of
the deductible for each individual covered under any hospital, surgical,
medical, and dental benefit plan adopted by the Employer.
5.02. Automobile. The Employer recognizes the Employee's need
for an automobile for business purposes. It shall therefore provide the
Employee with a monthly automobile allowance of $1,000 during the term of
this Agreement, in addition to the compensation set forth hereinabove.
The Employee agrees to furnish a properly registered automobile for all
of the Employee's transportation needs required for the performance of
the Employee's duties under this Agreement and to pay all expenses,
including all related maintenance, repairs, insurance, and other costs.
At all times during the term of this Agreement, the Employee shall keep
in full force and effect at the Employee's sole expense automobile
insurance on each such automobile owned by the Employee that is used at
any time to carry out any of the duties of employment. Each such policy
must be issued by an insurance company and with such minimum limits
acceptable to the Employer. Violation by Employee of the terms contained
in this Paragraph shall constitute good cause for termination of the
services of the Employee under this Agreement.
5.03. Death Benefit. If the Employee dies during the term of
this Agreement, the Employer shall pay to the Employee's estate the
compensation that would otherwise be payable to the Employee up to the
end of the month in which his death occurs. In addition, within thirty
(30) days of the Employee's death, the Employer shall pay an amount
equivalent to four (4) months of Employee's base salary to the Employee's
surviving spouse, or, if his spouse is not then living, to the Employee's
surviving children in equal shares, or, if there are no surviving
children, to the Employee's estate.
5.04. Nonstatutory Stock Option. Grant of Option. By
this Paragraph, the Employer agrees that it will cause to be granted to
the Employee an option (the "Option") to purchase 400,000 shares of
common stock of CRTM (or successor) ("Common Shares") at a purchase price
of seventy (70%) percent of the average trading price of the Common
Stock, as reported by NASDAQ, for the five (5) trading days immediately
preceding the date the Option is granted. Twenty-five (25%) percent of
the Option shall vest immediately upon the date of issuance to the
Employee and the remaining seventy-five (75%) percent of the Option shall
vest at the rate of twenty-five (25%) on each of the following dates
thereafter, during the term of employment under this Agreement: December
31, 1997; December 31, 1998; and December 31, 1999. Any vested portion
of the Option may be exercised in whole or in part at any time during the
term of employment under this Agreement. However, in the event the
employment term is terminated by the Employer for reasons other than for
cause, the Employee shall retain the right to exercise any unused vested
portion of the Option until the expiration date of the then current term
of this Agreement. It is agreed that the Employee shall not have any of
the rights of, nor be treated as, a shareholder with respect to the
shares subject to this Option until the Employee has exercised the
Option, delivery of the stock certificates for such shares has been made
to the Employee, and the Employee has become the shareholder of record of
such shares. Any vested portion of the Option shall not be transferable
otherwise than by will or the laws of descent and distribution, and any
vested portion of the Option may be exercised, during the lifetime of the
Employee, only by him. More particularly (but without limiting the
generality of the foregoing), any vested portion of the Option may not be
assigned, transferred (except as provided above), pledged, or
hypothecated in any way, shall not be assignable by operation of law, and
shall not be subject to execution, attachment, or similar process. Any
attempted assignment, transfer, pledge, hypothecation, or other
disposition of any vested portion of the Option contrary to the
provisions hereof, and the levy of any execution, attachment, or similar
process upon the Option, shall be null and void and without effect. Such
vested portion of the Option may be exercised by Employee only while he
is in the continuous employ of the Corporation or of a subsidiary of the
Corporation as provided hereinabove, or within three months after the
date he ceases to be so employed, except that in the event of his death
while so employed or within three months after the date he ceases to be
so employed, then such vested portion of the Option may be exercised by
his executors, administrators, or other legal representatives, heirs,
legatees, next of kin, or distributees within three months, but not later
than three months, after the date of the legal qualification of the
executors or administrators of his estate, provided diligent efforts are
made and such qualification is obtained within a reasonable time after
his death. Notwithstanding anything in this Agreement to the contrary,
any vested portion of the Option herein granted to Employee shall in no
event be exercisable after the expiration of five (5) years from the date
of this Agreement. In the event of any termination of this Agreement
that is either (a) for cause or (b) voluntary on the part of the Employee
and without the consent of his employing corporation or corporations, any
unvested portion of the Option shall immediately terminate. If, at any
time prior to the fifth anniversary of the date of this Agreement, CRTM
proposes to register any of its securities under the Securities Act
(other than by a registration on Form X-0, X-0 or any successor similar
forms or any other form not available for registering the Common Shares
underlying the Option for sale to the public), whether for sale for its
own account or other security holders, the Employer will, each such time,
at least 60 days prior to filing the registration statement, give written
notice to the Employee of CRTM's intention to do so. Upon the written
request of the Employee made within 45 days after the receipt of any such
notice (which request shall specify the underlying Common Shares intended
to be disposed of by the Employee), the Employer will use reasonable
efforts to cause to be filed a registration statement for the
registration under the Securities Act of all underlying Common Shares
which CRTM has been so requested to register by the Employee.
Method of exercising vested portion of the Option. Such Option
may be exercised, in whole at any time or in part from time to time, by
giving to the Employer and CRTM notice in writing to that effect. Within
30 days after the receipt by it of notice of exercise of such Option, the
Employer and CRTM shall cause certificates for the number of shares with
respect to which such Option is exercised to be issued in the name of
Employee or his executors, administrators, or other legal
representatives, heirs, legatees, next of kin, or distributees, or to be
properly endorsed or accompanied by separate stock powers duly executed,
and to be delivered to Employee or his executors, administrators, or
other legal representatives, heirs, legatees, next of kin, or
distributees. Payment of the purchase price for the shares with respect
to which such Option is exercised shall be made to CRTM upon the delivery
of such stock, together with revenue stamps or checks in an amount
sufficient to pay any stock transfer taxes required on such delivery.
The Employer shall give the person or persons entitled to the same at
least five (5) days' notice of the time and place for delivery and for
the payment of such purchase price.
Changes in capital structure If all or any portion of the Option
shall be exercised subsequent to any share dividend, split-up,
recapitalization, merger, consolidation, combination or exchange of
shares, separation, reorganization, or liquidation occurring after the
date hereof, as a result of which shares of any class shall be issued in
respect of outstanding Common Shares or Common Shares shall be changed
into the same or a different number of shares of the same or another
class or classes, the person or persons so exercising the Option shall
receive, for the aggregate price paid upon such exercise, the aggregate
number and class of shares which, if Common Shares (as authorized at the
date hereof) had been purchased at the date hereof for the same aggregate
price (on the basis of the price per share set forth above) and had not
been disposed of, such person or persons would be holding, at the time of
such exercise, as a result of such purchase and all such share dividends,
split-ups, recapitalizations, mergers, consolidations, combinations or
exchanges of shares, separations, reorganizations, or liquidations;
provided, however, that no fractional share shall be issued upon any such
exercise, and the aggregate price paid shall be appropriately reduced on
account of any fractional share not issued.
Representation as to investment intent. The exercise of such Option
and the delivery of the shares subject to it will be contingent upon CRTM
being furnished by Employee, his legal representatives, or other persons
entitled to exercise such Option a statement in writing that at the time
of such exercise it is his or their intention to acquire the shares being
purchased solely for investment purposes and not with a view to
distribution.
Nonstatutory Stock Option. The Option granted in this Paragraph
is intended not to qualify as an incentive stock Option within the
meaning of Section 422 of the Internal Revenue Code of 1986 and shall be
so construed.
5.05. Other Benefits. During the term of this Agreement
the Employee shall be entitled to participate in the Employer's 401(k)
Plan, any hospital, surgical, medical, disability, and dental benefit
plan adopted by the Employer, and shall be entitled to an annual vacation
leave, paid holidays, paid sick leave, and other benefits in accordance
with Employer's company policy. The Employee may be entitled to receive,
in the sole discretion of the Employer's Board of Directors, such other
benefits or bonuses as may from time to time be declared by the Board.
ARTICLE 6: REIMBURSEMENT OF EXPENSES INCURRED BY EMPLOYEE
6.01. Business Expenses. The Employee is authorized to incur
reasonable business expenses in performing his duties of employment and
for promoting the Employer's business, including expenses for
entertainment, travel, and similar items. The Employer will reimburse
the Employee for all such expenses upon the Employee's periodic
presentation of an itemized account of such expenditures and supporting
documentation.
ARTICLE 7: PROPERTY RIGHTS OF PARTIES
7.01. Trade Secrets. During the term of employment, the
Employee will have access to and become familiar with various trade
secrets, consisting of formulas, devices, secret inventions, processes,
and compilations of information, records, and specifications, owned by
the Employer and regularly used in the operation of the business of the
Employer. The Employee shall not disclose any such trade secrets,
directly or indirectly, nor use them in any way, either during the term
of this Agreement or at any time thereafter, except as required in the
course of his employment. All files, records, documents, drawings,
specifications, equipment, and similar items relating to the business of
the Employer, whether or not prepared by the Employee, shall remain the
exclusive property of the Employer and shall not be removed from the
premises of the Employer under any circumstances without the prior
written consent of the Employer. The Employee agrees that any violation
by the Employee of any of the terms of this Paragraph will result in
irreparable harm to the Employer and that the Employer shall be entitled
to an immediate Temporary Restraining Order and injunction against the
Employee to prevent any such violations by the Employee.
7.02. Return of Employer's Property. Except as otherwise
provided in this Agreement, on the termination of employment or whenever
requested by the Employer, the Employee shall immediately deliver to the
Employer in good condition, ordinary wear and tear excepted, all property
in the Employee's possession or under the Employee's control belonging to
the Employer.
ARTICLE 8: OBLIGATIONS OF EMPLOYER
8.01. Indemnification of Losses of Employee. Except for losses
arising from the Employee's negligence or misconduct, the Employer shall
indemnify the Employee for all losses sustained by the Employee as a
direct result of the discharge of his duties required by this Agreement.
8.02. Working Conditions. The Employer will provide the Employee
with a private office, secretarial and stenographic services, and any
other facilities and services as are suitable to the Employee's position
or required for the performance of his duties.
ARTICLE 9: TERMINATION
9.01. Termination by Either Party Without Cause. This
Agreement may be terminated by either party without cause by giving
thirty (30) days' written notice of termination to the other party. Such
termination shall not prejudice any remedy that the terminating party may
have at law or in equity. Such termination "without cause" shall include
(a) resignation of the Employee at the Employer's request at a time when
no cause for termination exists, and (b) termination by the Employee as a
result of a reduction in compensation or benefits (which is not a part of
a prorata reduction in executive compensation or benefits for the
Employer's senior executives) or as a result of a significant reduction
in the Employee's responsibilities, and such termination occurs within
sixty (60) days after such reduction. Upon any other voluntary
termination by the Employee, all unvested stock options and all other
benefits, including severance pay, which might otherwise accrue to the
Employee upon termination of this Agreement shall immediately terminate
and be of no further force or effect.
9.02. Severance Pay. On termination of employment by Employer
without cause, and in addition to other compensation that may be due to
the Employee as a result of such termination, the Employer shall make a
cash severance payment to the Employee in an amount equal to three (3)
month's base salary (less all amounts required to be withheld and
deducted.) The Employee shall receive additional severance pay under
this Paragraph based on the Employee's length of service and computed at
the rate of one month's pay for every year of service, which length of
service shall in no event extend beyond October 1, 1992.
9.03. Termination by Employer for Cause. The Employer may at its
option immediately terminate this Agreement "for cause," which shall
include resignation by the Employee at the Employer's request at a time
when cause for termination exists, without prejudice to any other remedy
to which the Employer may be entitled either at law, in equity, or under
this Agreement, by giving written notice of termination to the Employee,
if the Employee: (a) Willfully breaches or habitually neglects the
duties that the Employee is required to perform under the terms of this
Agreement; (b) Willfully violates reasonable and substantial rules
governing employee performance; (c) Refuses to obey reasonable orders in
a manner that amounts to insubordination; (d) Commits clearly dishonest
acts toward the Employer; (e) Engages in acts of disruption or violence
such as unprovoked fighting; (f) Engages in conduct which is materially
injurious to the Employer; or (g) Commits a felony or other offense
involving moral turpitude. Upon such termination, all unvested stock
options and all other benefits, including severance pay, which might
otherwise accrue to the Employee upon termination of this Agreement shall
immediately terminate and be of no further force or effect.
9.04. Termination Upon Sale or Change in Control of CRTM. For
purposes of this section, "change in control" means the acquisition by a
person or group, as defined in Section 13(d)(3) of the Securities
Exchange Act of 1934, of beneficial ownership of twenty percent (20%) or
more of CRTM's common stock (other than as a result of an issuance of
securities initiated by CRTM in the ordinary course of business), or as a
result of, or in connection with any cash tender or exchange offer,
merger, or other business combination, sale of assets, or contested
election, or any combination of the foregoing transactions, and the
persons who were directors of CRTM before such transactions shall cease
to constitute a majority of the Board of Directors of CRTM or any
successor to CRTM. Upon termination of this Agreement by Employer upon
the sale or change in control of CRTM, the Employer shall cause to be
granted, paid and delivered to Employee, in addition to other amounts
that may be due the Employee under this agreement, all of the following:
(a) cash compensation equal to Employee's annual base salary,
payable in biweekly installments over the twelve-month period
immediately following such termination, beginning on the Employee's
next regularly scheduled payday following the date of termination;
(b) cash compensation equal to Employee's annual car allowance
provided under this Agreement, payable in monthly installments over
the twelve-month period immediately following such termination,
beginning on the first of the month immediately following the date
of termination;
(c) a xxxx of sale to, and a transfer of the licenses for all
software residing upon, a laptop or a home desktop computer,
including all peripheral equipment used in connection therewith,
belonging to the Employer or CRTM which is in the possession of the
Employee which is then being used by the Employee in the course and
scope of his employment; in connection with such transfer, the
Employee shall certify to the Employer that all trade secrets and
other confidential or sensitive information of the Employer have
been removed from the hard drive and memory of such equipment;
(d) continued maintenance by Employer, for the benefit of the
Employee as if still employed, all employee benefits including group
medical and dental, health and accident, disability, and group life
insurance plans for the twelve-month period immediately following
such termination; provided, however, the Company's obligation to
continue participation in these plans ends on the last day of the
month in which the Employee becomes eligible to participate in such
benefits at any new place of employment. However, the Employer will
continue to provide benefit continuation to the extent required by
federal law;
(e) an assignment of any key man life insurance policy
covering Employee which was in effect at the change in control, with
the premium fully paid by the Employer for the twelve (12) month
period immediately following the date of termination of this
Agreement; and
(f) any unvested portion of any Option held by the Employee
shall immediately vest and, in addition to any other such Option
which may be held by the Employee, a further option (the "Option")
to purchase 400,000 shares of common stock of CRTM (or successor) at
a purchase price of seventy (70%) percent of the average trading
price of the Common Stock, as reported by NASDAQ, for the five (5)
trading days immediately preceding the date the Option is granted.
The Option granted hereunder shall vest immediately upon issuance to
the Employee and may be exercised in whole or in part by the
Employee at any time during a period of five (5) years following the
date of termination under this Agreement. The Employee shall not
have any of the rights of, nor be treated as, a shareholder with
respect to the shares subject to this Option until the Employee has
exercised the Option, delivery of the stock certificates for such
shares has been made to the Employee, and the Employee has become
the shareholder of record of such shares. The Option shall not be
transferable otherwise than by will or the laws of descent and
distribution, and the Option may be exercised, during the lifetime
of the Employee, only by him. More particularly (but without
limiting the generality of the foregoing), the Option may not be
assigned, transferred (except as provided above), pledged, or
hypothecated in any way, shall not be assignable by operation of
law, and shall not be subject to execution, attachment, or similar
process. Any attempted assignment, transfer, pledge, hypothecation,
or other disposition of the Option contrary to the provisions
hereof, and the levy of any execution, attachment, or similar
process upon the Option, shall be null and void and without effect.
Within 30 days after such termination the Employer will cause to be
filed a Registration Statement with the SEC for registration of the
Common Stock underlying all Options held by the Employee, and will
use its best efforts to have such Registration Statement declared
effective at the earliest possible date. The method of exercising
this Option, adjustment in the number of shares of Common Stock
underlying such Option upon a change in capital structure of CRTM
after the date of termination of this Agreement, and the Employee's
representation as to investment intent, shall be as described in
paragraph 5.04 above. The Option granted in this Paragraph is also
intended not to qualify as an incentive stock Option within the
meaning of Section 422 of the Internal Revenue Code of 1986 and
shall be so construed; and
(g) an additional amount necessary to put Employee in the same
after-tax position as if no excise taxes imposed by Section 4999 of
the Internal Revenue Code ("Section 4999") had been imposed on any
payments which are contingent on a change in control and which equal
or exceed three times Employee's average taxable compensation for
the prior five years or his period of employment.
9.05. Effect of Termination on Compensation. In the event of
the termination of this Agreement prior to the completion of the term of
employment specified in Article 1, the Employee shall be entitled to the
compensation earned by the Employee prior to the effective date of
termination as provided for in this Agreement, computed pro rata up to
and including that date. Except as otherwise provided in this Agreement,
the Employee shall be entitled to no further compensation after the date
of termination.
9.06. Monies owed to Employer. To the extent that the Employee
owes the Employer any monies at the time of termination of employment, or
to the extent that taxes are due on any of Employer's benefits, the
Employee authorizes the Employer to withhold such amounts from his final
paycheck or severance payment(s), or from reimbursements or any other
monies due to the Employee.
ARTICLE 10: GENERAL PROVISIONS
10.01. Notices. All notices or other communications required
under this Agreement may be effected either by personal delivery in
writing or by certified mail, return receipt requested. Notice shall be
deemed to have been given when delivered or mailed to the parties at
their respective addresses as set forth above or when mailed to the last
address provided in writing to the other party by the addressee.
10.02. Entirety of Agreement. Except for the Employee
Invention, Copyright and Secrecy Agreement heretofore executed by the
Employee, this Agreement constitutes the entire understanding between the
parties concerning the subject matter hereof. No agreements,
representations, or warranties other than those specifically set forth in
this Agreement shall be binding on any of the parties unless set forth in
writing and signed by both parties. This Agreement supersedes all other
prior agreements, either oral or in writing, between the parties with
respect to the employment of the Employee by the Employer and contains
all of the covenants and agreements between the parties with respect to
such employment in any manner. Each party to this Agreement acknowledges
that no inducements or promises, oral or otherwise, have been made by any
party, or anyone acting on behalf of any party, that are not embodied in
this Agreement.
10.03. Modification. This Agreement shall not be amended,
modified, or altered in any manner except in a writing signed by both
parties.
10.04. Failure to Enforce Not Waiver. Any failure or
delay on the part of either the Employer or the Employee to exercise any
remedy or right under this Agreement shall not operate as a waiver. The
failure of either party to require performance of any of the terms,
covenants, or provisions of this Agreement by the other party shall not
constitute a waiver of any of the rights under the Agreement. No
forbearance by either party to exercise any rights or privileges under
this Agreement shall be construed as a waiver, but all rights and
privileges shall continue in effect as if no forbearance had occurred.
No covenant or condition of this Agreement may be waived except by the
written consent of the waiving party. Any such written waiver of any
term of this Agreement shall be effective only in the specific instance
and for the specific purpose given.
10.05. Law Governing Agreement. This agreement shall be governed
exclusively by and construed in accordance with the laws of the State of
Texas.
10.06. Partial Invalidity. If any provision in this Agreement is
held by a court of competent jurisdiction to be invalid, void, or
unenforceable, the remaining provisions shall remain in full force and
effect, as if this Agreement had been executed without any such invalid
provisions having been included.
10.07. Assignment. The Employer and the Employee acknowledge
that the services to be rendered by the Employee under this Agreement are
unique and personal. Therefore, neither party may assign any rights or
delegate any duties under this Agreement, without the other party's prior
written consent. If either the Employer or the Employee obtains a
consent to an assignment of rights or delegation of duties, rights or
duties under this Agreement shall inure only to the benefit of the
assignee or delagee named in the written instrument, and such consent
shall not be deemed as a general consent to assignment or delegation.
Executed at Dallas, Texas, as of April 7, 1997.
EMPLOYER: Xxxxxx Xxxxxx Holding Corporation
By:__/s/ Xxxxx X. Robinson___________
Xxxxx X. Xxxxxxxx, Vice President
EMPLOYEE: ___/s/ Xxx Custer_________________
