EXHIBIT 10.26
[XXXXXX'X LOGO]
July 22, 2002
CONFIDENTIAL
Re: Severance Agreement
Dear :
The following letter (the "Severance Agreement") sets forth certain benefits
and obligations relating to your employment with Xxxxxx'x, Inc. (the "Company"),
including severance benefits to which you would be entitled under certain
circumstances in the event of the termination of your employment as of the
Company.
1. SEVERANCE PAYMENTS. In the event of a Termination Upon Change of Control (as
defined below), you will receive a total payment equal to twelve
(12) months' salary at your then current rate, payable over twelve
(12) months in accordance with the Company's regular payroll schedule. The
applicable period of time of severance payments set forth in this Section 1
shall be referred to herein as the "Severance Payment Period." This
Section 1 contains the only set of circumstances upon which you would be
entitled to severance payments upon your termination of employment,
regardless of reason.
2. TAX PAYMENTS. In the event that any payment or distribution by the Company
to or for the benefit of you as a result of a Termination Upon Change of
Control (whether paid or payable or distributed or distributable pursuant to
the terms of this Severance Agreement or otherwise) (a "Payment") is
determined by the Company or its designated auditors or accountants to be
subject to the excise tax imposed by Section 4999 of the Internal Revenue
Code, or any interest or penalties are incurred by you with respect to such
excise tax (such excise tax, together with any such interest and penalties,
are hereinafter collectively referred to as the "Excise Tax"), then the
Company shall pay to you an additional payment (a "Gross-Up Payment") in an
amount such that after payment by you of all taxes (including any interest
or penalties imposed with respect thereto) and Excise Tax imposed upon the
Gross-Up Payment, you retain an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon such Payments.
3. ADDITIONAL EMPLOYEE BENEFITS. In addition to the severance payments
described in Section 1 above, upon a Termination Upon Change of Control, you
will be eligible for the following:
a. If after termination you elect COBRA continuation coverage for health
insurance, the Company will pay the difference in premiums between what
you paid while employed at the Company and the actual cost of the COBRA
premiums, until the earlier of the date you are no longer eligible for
COBRA or the conclusion of the Severance Payment Period.
b. Bonus Payment: You will also be entitled to receive the pro rata portion
of your bonus for the then-current fiscal year, calculated by determining
the maximum bonus for which you would be eligible for such full fiscal
year and multiplying such amount by the number of days in such fiscal
year through the date of termination divided by 365. For purposes of
determining the maximum bonus for which you would be eligible, such
maximum bonus is currently set at fifty percent (50%) of your base salary
for the fiscal year ending March 31, 2003; in the event that at any point
in a subsequent fiscal year, the Company has not yet specified a bonus
plan for you, then the maximum bonus to which you were entitled in the
previous fiscal year will apply for the purposes of this Section.
4. EMPLOYEE RESTRICTIONS. We each recognize that due to the nature of your
employment, and your relationship with the Company, you have and will
continue to have access to, will continue to acquire, and will continue to
assist in developing, Proprietary Information (as defined below) and
additional confidential information with respect to its present and
prospective services, technologies, systems, clients, customers, agents, and
sales and marketing methods. You acknowledge that such information is of
central importance to the Company's business and that disclosure of it to or
its use by others could cause substantial loss to the Company. We each also
recognize that an important part of your duties will be to develop good will
for the Company through your personal contact with the Company's clients,
and that there is a danger that this good will, a proprietary asset of the
Company, may follow if and when your relationship with the Company is
terminated.
a. NONDISCLOSURE.
i. You agree that throughout your employment with the Company, the
Company has provided you with Proprietary Information, and that
during the term of your employment with the Company and at any time
thereafter, you will not disclose any Proprietary Information of the
Company without the prior written consent of the President or Board
of Directors of the Company, which may be withheld in their sole and
absolute discretion, except in connection with your duties to the
Company.
ii. You also acknowledge that during the course of your continued
employment with the Company, the Company will provide you with
additional Proprietary Information. When and if the Company
discloses additional Proprietary Information to you during your
employment, you agree that an enforceable nondisclosure agreement,
in addition to the nondisclosure agreement in Section (i) above,
will be created at the time the Proprietary Information is actually
provided to you ("Nondisclosure Agreement"). You agree that during
your employment and thereafter, pursuant to such Nondisclosure
Agreement, you will not disclose any Proprietary Information of the
Company without the prior written consent of the President or Board
of Directors of the Company, which may be withheld in their sole
and absolute discretion, except in connection with your duties to
the Company. You also agree that as of the time the Nondisclosure
Agreement is formed, you will also be bound by the provisions of
Sections 4(c)(i)-4(c)(ii) below.
You acknowledge that the Nondisclosure Agreement and the agreements
not to compete contained in Sections 4(c)(i)-4(c)(ii) below will be
made and entered into when the Company provides you with additional
Proprietary Information. You further acknowledge and agree that the
Company's conduct in providing you with Proprietary Information in
exchange for your Nondisclosure Agreement gives rise to the
Company's interest in restraining you from competing against the
Company as set forth in Section 4(c)(i)-4(c)(ii) below (the
"Non-Compete Agreement"), and that your agreement to the
Non-Compete Agreement is designed to enforce your Nondisclosure
Agreement.
iii. You further acknowledge that all Records (as defined below) are and
shall remain the exclusive property of the Company, and agree that
upon termination of your employment with the Company you shall
return all Records in your possession.
b. During your employment with the Company, you will not, directly or
indirectly, participate in the ownership, management, operation,
financing or control of, or be employed by or consult for or otherwise
render services to, any person, corporation, firm, or other entity that
competes with the Company in the state of Texas, or in any other state in
the United States, or in any country in the world, in the conduct of the
business of the Company as conducted or as proposed to be conducted, nor
shall you engage in any other activities that conflict with my
obligations to the Company. Notwithstanding the foregoing, you are
permitted to own up to 1% of any class of securities of any corporation
in competition with the Company that is traded on a national securities
exchange or through Nasdaq.
c. You agree that for 12 months following the termination of your
employment for any reason:
i. You will not directly or indirectly, in any jurisdiction where the
Company is operating as of the date of your termination, whether as
a partner, proprietor, employee, consultant, agent or otherwise,
participate or engage in any business with any of the following
companies without the prior written consent of the Company:
a. OneSource
b. Factiva
c. Multex/MarketGuide
ii. You will be restricted from employment with the units of Bloomberg,
Dun & Bradstreet, Reuters, Xxxx-Elsevier, Thomson, InfoUSA, Dow
Xxxxx or Yahoo, as well as any new entities, that are actively
engaged in the provision of business information to users on a
paid, subscription basis; provided that in order to enforce this
non-competition restriction as against any additional entity other
than those set forth in Sections (c)(i) above or this paragraph (an
"Additional Entity"), the Company shall have given notice to you of
the inclusion of such Additional Entity to the restricted employer
list at least thirty (30) days prior to the date on which you were
terminated; provided that if the existence of such new company does
not become generally known within the business community until
within 30 days of the date of your
termination, the Company shall have thirty (30) days from the
earlier of the date on which it became aware of the existence of
such entity, or the date on which it should reasonably have become
aware of the existence of such entity based on publicly available
information, to inform you of the application of this provision to
such entity.
d. You agree that for 12 months following the termination of your
employment for any reason, you shall not, directly or indirectly:
i. For your own account, or for the account of others, interfere with,
solicit, or accept for yourself, or for the benefit of anyone other
than the Company, as measured at the time of your termination, any
of the clients or customers of the Company, or perform any services
of any competitive nature in connection with said clients or
customers for anyone other than the Company. The restrictions will
not prohibit you from soliciting clients or customers of the Company
with respect to the provision of products or services that are in no
way competitive with any products and/or services offered by the
Company at such time.
ii. Urge any client or customer of the Company to discontinue business,
in whole or in part, or not do business, with the Company.
iii. Solicit, hire or arrange to hire any person who at the time of such
hire or within three (3) months prior to the time of such hire was
an employee of the Company, for yourself or for any business entity
with which you may be, or may be planning to be, affiliated or
associated with, or otherwise interfere with the retention of
employees that the Company desires to retain as such.
e. You expressly acknowledge and agree (i) that the restrictions set forth
in this entire Section 4 are reasonable, in terms of scope, duration,
geographic area, and otherwise, (ii) that the protections afforded to the
Company hereunder are necessary to protect its legitimate business
interests, and (iii) that the agreement to observe such restrictions
form a material part of the consideration for this Severance Agreement.
5. DEFINITIONS.
a. "Cause" is defined as any of the following, if they occur during the
period of your employment with the Company:
i. You have been or are guilty of (i) a criminal offense involving
moral turpitude, (ii) criminal or dishonest conduct pertaining to
the business or affairs of the Company (including, without
limitation, fraud and misappropriation), (iii) any act or omission
the intended or likely consequence of which is material injury to
the Company's business, property or reputation, and (iv) gross
negligence or willful misconduct which continues uncured for a
period of ten (10) days after you have received written notice
from the Company;
ii. You persist, for a period of ten (10) days after written notice
from the Company, in a course of conduct reasonably determined by
the Company to
be in material violation of your duties to the Company, including
without limitation duties of care, loyalty and/or fiduciary duties;
iii. Your death; or
iv. The continuous and uninterrupted inability to perform your duties
on behalf of the Company, by reason of accident, illness, or
disease, for a period of sixty (60) days from the first day of such
inability to perform his duties.
b. "Change of Control" is defined as follows:
i. The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 50% or more of either (A) the
then-outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (B) the combined voting power
of the then-outstanding voting securities of the Company entitled to
vote generally in the election of directors (the "Outstanding
Company Voting Securities"); provided, however, that, for purposes
of this Section, the following acquisitions shall not constitute a
Change of Control: (i) any acquisition directly from the Company,
(ii) any acquisition by the Company, or (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by
the Company or any affiliated company.
ii. Individuals who, as of the date hereof, constitute the Board (the
Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual
becoming a director subsequent to the date hereof whose election,
or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for
this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or
other actual or threatened solicitation of proxies or consents by
or on behalf of a person other than the Board.
iii. Consummation of (x) a reorganization, merger or consolidation of
the Company with or into another corporation, or (y) or the sale or
other disposition of all or substantially all of the assets of the
Company to another corporation (any event in (x) or (y) being a
"Business Combination"), in each case, unless, immediately
following such Business Combination, (A) all or substantially all
of the individuals and entities that were the beneficial owners of
the Outstanding Company Common Stock and the Outstanding Company
Voting Securities immediately prior to such Business Combination
beneficially own directly or indirectly, more than 60% of the
then-outstanding shares of common stock and the combined voting
power of the then-outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the
corporation resulting from such
Business Combination (including, without limitation, a corporation
that, as a result of such transaction, owns the Company or all or
substantially all of the Company's assets either directly or
through one or more subsidiaries) in substantially the same
proportions as their ownership immediately prior to such Business
Combination of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities, as the case may be, (B) no
person (excluding any corporation resulting from such Business
Combination or any employee benefit plan (or related trust) of the
Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more
of, respectively, the then-outstanding shares of common stock of
the corporation resulting from such Business Combination or the
combined voting power of the then-outstanding voting securities of
such corporation, except to the extent that such ownership existed
prior to the Business Combination, and (C) at least a majority of
the members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent Board
at the time of the execution of the initial agreement or of the
action of the Board providing for such Business Combination; or
iv. Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
c. "Termination Upon Change of Control" is defined as any of the following,
if they occur within eighteen (18) months following a Change of Control:
i. The Company terminates your employment without Cause;
ii. The Company reduces your base salary from its current level and you
resign within 30 days of such action; or
iii. The Company relocates your office more than fifty (50) miles from
your current office and you resign within 30 days of such action.
d. "Record" is defined as the Company's assets, including its:
i. files, accounts, records, customer lists, logbook, documents,
drawings, models, plans, specifications, manuals, books, forms,
notes, reports, memoranda, studies, surveys, software, flow charts,
data, computer programs, listing of source code, calculations,
recordings, catalogues, compilations of information, correspondence,
confidential data of customers and all copies, abstracts or
summaries of the foregoing in any storage medium, as well as
computers, computer equipment, laptops, instruments, tools, storage
devices, disks, equipment and all other physical items related to
the business of the Company (other than merely personal items of a
general professional nature), whether of a public nature or not, and
whether prepared by the employee or not.
e. "Proprietary Information" is defined as follows: any confidential
business or technical information or trade secrets of the Company which
an employee acquires while employed by the Company, whether or not
conceived of, developed or prepared by the employee or at his direction
and includes:
i. Any information or compilation of information concerning the
Company's financial position, financing, purchasing, accounting,
marketing, merchandising, sales, salaries, pricing, investments,
costs, profits, plans for future development, employees, prospective
employees, research, development, formulae, patterns, strategy,
inventions, plans, specifications, devices, products, procedures,
processes, operations, techniques, software, computer programs or
data;
ii. Any information or compilation of information concerning the
identity, plans, requirements, preferences, practices and methods
of doing business on specific customers, suppliers, prospective
customers and prospective suppliers of the Company;
iii. Any other information or "know how" which is related to any
product, process, service, business or research of the Company; and
iv. Any information which the Company acquires from another party and
treats as its proprietary information or designates as
"Confidential," whether or not owned or developed by the Company.
v. The identity, skills and compensation of employees, contractors, and
consultants.
vi. Information related to inventions owned by the Company or licensed
from third parties.
Notwithstanding the foregoing, "Proprietary Information" does not
include any of the following:
1. Information which is publicly known or which is generally
employed by the trade, whether on or after the date that an
employee first acquires the information;
2. General information or knowledge which an employee would have
learned in the course of similar work elsewhere in the trade; or
3. Information which an employee can prove was known by the
employee before the commencement of the employee's engagement by
the Company.
6. CHOICE OF LAW; ARBITRATION--This Severance Agreement shall be governed by
the laws of the State of Texas. Any disputes arising hereunder or otherwise
related to your employment shall be resolved via arbitration pursuant to the
rules of the American Arbitration Association to be held in Austin, Texas.
7. SEVERABILITY.
a. Both parties acknowledge and agree that each agreement and covenant set
forth herein constitutes a separate agreement independently supported by
good and adequate consideration and that each such agreement shall be
severable from the other provisions of this Agreement and shall survive
this Agreement.
b. You specifically agree that the Non-Compete Agreement is to be enforced
to the fullest extent permitted by law. Accordingly, if a court of
competent jurisdiction determines that the scope and/or operation of any
provision of the Non-Compete Agreement is too broad to be enforced as
written, the Company and you intend that the court should reform such
provision to such narrower scope and/or operation as it determines to be
enforceable, provided, however, that such reformation applies only with
respect to the operation of such provision in the particular jurisdiction
with respect to which such determination was made. If, however, any
provision of the Non-Compete Agreement is held to be illegal, invalid, or
unenforceable under present or future law, and not subject to
reformation, then (i) such provision shall be fully severable, (ii) this
Agreement shall be construed and enforced as if such provision was never
a part of this Agreement, and (iii) the remaining provisions of this
Agreement shall remain in full force and effect and shall not be affected
by the illegal, invalid, or unenforceable provision or by its severance.
8. GENERAL. This Severance Agreement is entered into in consideration of your
continued employment with the Company, the Company's current and continued
disclosure to you of Proprietary Information, the specialized training that
you are receiving as a result of your employment with the Company, and the
restrictions described in Section 4. The severance arrangements described
herein are the sole benefits to which you may be entitled to in the event of
the termination of your employment, and this Severance Agreement supersedes
any prior oral or written communications with respect thereto. Each of the
Company's obligations to provide payments and benefits upon severance
described herein are conditioned upon your execution and return of a release
of any and all claims that you may have against the Company arising out of
your employment. This Severance Agreement does not create any right to
continuing employment with the Company, and your employment relationship
shall continue to be on an at-will basis.
, the Board of Directors and I appreciate you service to
Xxxxxx'x and look forward to your continuing contribution to our success. Please
sign where indicated below to indicate your agreement to the terms of this
Severance Agreement.
Very truly yours,
Xxxxxxx X. Xxxx
Chairman and CEO
ACCEPTED AND AGREED
_____________________________
