EXHIBIT 10.4
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of the
12/th/ day of February, 1998 (the "Effective Date"), by and between XXXXXXX.XXX,
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INC, a Delaware corporation (the "Employer") and XXXXX X. XXXXXXXXXXXX (the
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"Employee").
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The Employer desires to employ the Employee, and Employee desires to be
employed by the Employer, in accordance with the terms and conditions set forth
herein.
1. Employment. The Employer hereby employs Employee for the Employment
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Period specified in Section 2 below as Vice President, Finance and Chief
Financial Officer of the Employer, or in such other capacity as the parties may
agree from time to time. The Employee hereby accepts such employment upon the
terms and conditions set forth herein and agrees to devote his full business
time and efforts to the performance of his duties hereunder.
2. Employment Period. The period of the Employee's employment under this
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Agreement (the "Employment Period") shall commence on the Effective Date and
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shall end upon the earlier of the fourth anniversary of this Agreement or the
termination of this Agreement as contemplated by Section 9 below. Employee will
commence his services hereunder on or about March 1, 1998.
3. Duties. Employee shall have those duties and responsibilities which
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are assigned to him by the Chief Executive Officer or the board of directors of
the Employer during the Employment Period, Employee agrees to perform faithfully
the duties assigned to him to the best of his ability.
4. Compensation. As compensation for all services rendered and to be
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rendered pursuant to this Agreement, the Employer agrees to pay the Employee an
annual salary (the "Base Salary") of not less than $175,000. The Base Salary
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shall accrue and be payable in accordance with the payroll practices of the
Employer as in effect from time to time. Employer will pay Employee a bonus of
$5,000 upon the date Employee commences his services hereunder. In addition,
Employee shall be entitled to participate in the Employer's management incentive
compensation plan as may be in effect from time to time and shall be eligible
for incentive compensation thereunder of up to 50% of Employees then current
Base Salary. The Employer shall have the right to deduct from any compensation
paid to Employee hereunder all taxes and other amounts which may be required to
be deducted or withheld by law (including, but not limited to, income tax
withholding and social security payments), whether such laws are not in effect
or become effective after the date of this Agreement.
5. Stock Option. As additional consideration for services rendered or to
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be rendered hereunder or otherwise and for Employee's execution and delivery of
this Agreement, the Employer shall grant to Employee the right and option to
purchase from the Employer all or any part of an aggregate of 150,000 shares of
the Common Stock, $0.1 par value, of the Employer at an exercise
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price of $3.00 per share, upon the terms and subject to the conditions set forth
in a Stock Option Agreement to be entered into between the Employer and
Employee.
6. Expenses. The Employer shall promptly reimburse the Employee for all
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reasonable expenses incurred by the Employee on behalf of the Employer or in
connection with the Employee's performance of his duties hereunder.
7. Relocation Expenses. Employer will reimburse Employee on a "tax
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gross-up" basis for all reasonable and documented moving and relocation
expenses, including real estate commissions and closing costs relating to
Employee's move from Lake Oswego, Oregon and the Austin, Texas area. In
addition, between the Effective Date and the date Employee's family relocates to
the Austin, Texas area (in no event longer than September 30, 1998). Employer
will reimburse Employee for temporary housing costs and for the cost of
Employee's airfare for weekly trips between Austin, Texas and Lake Oswego,
Oregon. In the event Employee relocates to the Austin, Texas area prior to the
date Employee sells his current residence in Oswego, Oregon, and as a result
Employee is responsible for two mortgage payments each month, Employer will
reimburse Employee on a "tax gross-up" basis for the lower of the two mortgage
payments for a period of up to six months following the date of Employee's
relocation.
8. Employment Benefits. During the Employment Period, Employee shall be
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entitled to such other benefits as are customarily accorded to the employees of
the Employer, including, but not limited to, the right to participate in
employee benefit programs maintained by the Employer such as group health, life,
and disability insurance.
9. Termination.
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(a) This Agreement may be terminated by written notice prior to the
expiration of the Employment Period by the Employer or the Employee at any
time. If such termination is by Employer with Cause (as such term is
hereinafter defined) or by Employee for reasons other than due to a Change
of Control (as such term is hereinafter defined), all of the Employee's
rights to compensation and benefits under Sections 4 and 8 above shall
terminate upon such termination, except amounts accrued in respect of
periods prior to such termination. If such termination is by the Employer
without Cause or is by Employee as a result of a Change of Control, the
Employer shall (i) continue to pay to the Employee a monthly amount equal
to one-twelfth of the then current Base Salary for six months following the
effective date of such termination and (ii) continue to provide to Employee
the employee benefits (through COBRA or otherwise) as provided in Section 8
above during such six month period. A "Change of Control" shall be deemed
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to have occurred if (i) any person, other than stockholders of the Employer
as of the commencement of the Employment Period, becomes the beneficial
owner of securities of the Employer representing fifty percent or more of
the combined voting power of the Employer's then outstanding securities,
(ii) in a merger or consolidation, the Employer is not the surviving
entity, or (iii) the Employer sells all or substantially all of its assets
to a person other than an affiliate or associate of the
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Employer. Purposes of this subsection, the term "person" or "persons"
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shall mean individuals, groups, corporations, partnerships, or other
entities. The term "Cause" shall mean (i) failure by Employee to perform
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his duties as Vice President, Finance and Chief Financial Officer in a
manner consistent with such position and responsibilities, (ii) a material
breach by Employee of any of his obligations under this Agreement, (iii)
fraud or willful misconduct on the part of the Employee, or (iv)
conviction of the Employee for fraud, misappropriation, embezzlement, or
any felony.
(b) If the Employee shall die during the Employment Period, this
Agreement shall terminate, and no further compensation shall be payable to
Employee hereunder.
(c) If the Employee is unable to discharge his duties hereunder for a
period of six consecutive months by reason of physical or mental illness,
injury, or incapacity, the Employer may, by written notice to the Employee,
terminate this Agreement and no further compensation shall be payable to
Employee hereunder.
10. Proprietary Information and Restrictive Covenants.
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(a) As used herein the term "Proprietary Information" means
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information, knowledge or data not generally known in the relevant trade or
industry that was disclosed to or known by Employee as a consequence of or
through Employee's employment with the Employer (including, without
limitation, information conceived or developed by Employee during the
course of his employment by Employer), whether before or after the date of
this Agreement, about:
(i) The Employer's activities, services, products, formulas,
computer programs and systems, trade secrets, manufacturers,
compositions, Inventions, discoveries, customer records, processes,
information relating to research, development, inventions, work
performed or to be performed for Customers (as such term is
hereinafter defined), contractual agreements, lists of past, current
or prospective Customers, lists of employees and salary information,
marketing plans, strategies, and forecasts;
(ii) Customers' activities, plans, products, processes, and
services including, without limitation, information relating to
business operations, employee relations, finance, and product or
service marketing.
(iii) Vendors' (as such term is hereinafter defined) activities,
plans, services, products and processes including, without limitation,
information relating to business operations, employee relations,
finance, and product or service marketing; and
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(iv) All information which Employee has a reasonable basis to
know was created, modified or used and held secret by the Employer or
that was accepted by the Employer from any third party under an
obligation of confidentiality.
As used herein the term "Customer" means any person or entity for
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whom the Employer provided services or products on or within 12 months
prior to the termination of the Employment Period. As used herein the term
"Vendor" means any third party selling or licensing a product or service to
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a Customer or to the Employer on or within 12 months prior to termination
of the Employment Period.
(b) Employee acknowledges that the Employer has spent significant
time, effort, and money to develop the Proprietary Information, which the
Employer considers vital to its business and goodwill. Employee also
acknowledges that the Proprietary Information has been or will be
communicated to or acquired by Employee in the course of his training by
and employment with the Employer (whether before or after the date of this
Agreement), and the Employer desires to have the services of Employee only
if, in doing so, it can protect its Proprietary Information and goodwill.
(c) Employee agrees to hold all Proprietary Information in strict
confidence and trust and that he shall not, at any time, disclose any
Proprietary Information to any person or entity, except in the course of
Employee's duties on behalf of the Employer, and shall not copy, publish,
or use any Proprietary Information for the benefit of anyone or any entity
other than the Employer.
(d) In consideration, among other things, of the disclosure of the
Proprietary Information by Employer to Employee, Employee covenants and
agrees that he shall not (personally, nor will he direct any third party to
do so), during his employment by Employer, regardless of whether such
employment is during or subsequent to the Employment Period, and for an
additional period of two years immediately following termination of his
employment by Employer, regardless of whether such termination is during or
subsequent to the Employment Period, (the "Restriction Period"), (i)
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provide or offer to provide to any Customer any product or service similar
to that offered by the Employer at the time of such termination of
employment, or (ii) induce or attempt to induce any Customer to withdraw,
curtail or cancel its business with the Employer or in any manner modify or
fail to enter into any actual or potential business relationship with the
Employer.
(e) In consideration, among other things, of the disclosure of the
Proprietary Information by Employer to Employee, Employee covenants and
agrees that he shall not (personally, nor will he direct any third party to
do so), during the Restriction Period, recruit or otherwise solicit or
induce any person or entity who is, at the time of such termination of
Employee's employment or thereafter, an employee or Vendor of the Employer
to terminate their employment with, or otherwise cease their relationship
with the Employer.
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(f) In consideration, among other things, of the disclosure of the
Proprietary Information by Employer to Employee, Employee covenants and agrees
that he shall not, during the Restriction Period, working alone or in
conjunction with one or more other persons or entities, for compensation or not,
permit Employee's name to be used by or engage in or carry on, directly or
indirectly, either for himself or as a member of a partnership or other entity
or as a stockholder, investor (other than as the holder of 1% or less of the
voting capital stock of any corporation with a class of equity securities
registered under Section 12 (b) or 12(g) of the Securities Exchange Act of 1934,
as amemded) in any business providing electronic commerce technology and
services to computer manufacturers, distributors, corporate resellers, or
retailers to facilitate the purchase and sale of their information technology
products, but only for as long as such business is carried on by (i) the
Employer or (ii) any person, corporation, partnership, trust or other
organization or entity deriving title from the Employer to the assets and
goodwill of the business being carried on by the Employer immediately prior to
such termination of Employee's employment by Employer, in any county of any
state of the United States, or in any country or political subdivision of the
world. The parties intend that the covenants contained in this Section 10(f)
shall be deemed to be a series of separate covenants, one for each county in
each state of the United States and for each country and political subdivision
of the world, and except for geographic coverage, each such separate covenant
shall be identical in terms to the covenant contained in this Section 10(f).
(g) If Employee violates any covenant contained in paragraphs (d), (e) or
(f) of this Section 10, then the term of such violated covenant shall be tolled
for the period commencing on the commencement of such violation and ending upon
the earlier of (i) such time as such violation shall be cured by Employee to the
reasonable satisfaction of the Employer or (ii) final adjudication (including
appeals) of any action filed for injunctive relief or damages arising out of
such violation.
(h) If, in any judicial proceeding, the court shall refuse to enforce any
of the separate covenants contained in paragraphs (d), (e) or (f) of this
Section 10 because the time limit is too long, it is expressly understood and
agreed between the parties hereto that for purposes of such proceeding such time
limitation shall be deemed reduced to the extent necessary to permit enforcement
of such covenants. If, in any judicial proceeding, the court shall refuse to
enforce any of the separate covenants contained in paragraphs (d, (c) or (f) of
this Section 10 because they are more extensive than necessary to protect the
business and goodwill of the Employer, it is expressly understood and agreed
between the parties hereto that for purposes of such proceeding such provisions
shall be deemed reduced to the extent necessary to permit enforcement of such
covenants.
(i) Employee acknowledges that a breach of this Section 10 would cause
irreparable damage to the Employer, and in the event of Employee's actual or
threatened breach of the provisions of this Section 10, the Employer shall be
entitled to a temporary restraining order and injuction restraining Employee
from breaching such covenants without the necessity
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of posting bond or proving irreparable harm, such being conclusively
admitted by Employee. Nothing herein shall be construed as prohibiting the
Employer from pursuing any other available remedies for such breach,
including the recovery of damages from Employee. Employee acknowledges that
the restrictions set forth in this Section 10 are ancillary to an otherwise
enforceable agreement and are reasonable in scope and duration, given the
nature of the business of the Employer, Employee agrees that issuance of an
injunction will not pose an unreasonable restriction on Employee's ability
to obtain employment or other work following termination of Employee's
employment by Employer.
11. Representations by Employee. Employee hereby represents and warrants
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to the Employer that (i) the Employee's execution and delivery of this Agreement
and his performance of his duties and obligations hereunder will not conflict
with, or cause a default under, or give any party a right to damages under, or
to terminate, any other agreement to which Employee is a party or by which he is
bound, and (ii) there are no agreements or understandings that would make
unlawful Employee's execution or delivery of this Agreement or his employment
hereunder.
12. Notices. All notices, requests, demands and other communications
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required or permitted hereunder shall be in writing and shall be deemed to have
been duly given, made, and received only when personally delivered, sent by
electronically confirmed facsimile transmission, delivered by Federal Express or
other nationally recognized courier service, or two days after having been
deposited in the United States mail, certified mail, postage prepaid, return
receipt requested, addressed as set forth below:
in the case of the Employer at:
xxXxxxx.xxx, Inc.
0000 Xxxx Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: President
and, in case of the Employee, at his residence at:
Xxxxx X. Xxxxxxxxxxxx
00000 Xxxxx Xxxx Xxxxx
Xxxx Xxxxxx, XX 00000
Either party may designate a different address by giving notice of change of
address in the manner provide above.
13. Waiver. No waiver or modification in whole or in part of this
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Agreement, or any term or condition hereof, shall be effective against any party
unless in writing and duly signed by the party sought to be bound. Any waiver or
any breach of any provisions hereof or any right or power by any
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party on one occasion shall not be construed as a waiver of, or a bar to, the
exercise of such right or power on any other occasion or as a waiver of any
subsequent breach.
14. Binding Effect; Successors. This Agreement shall be binding upon and
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shall inure to the benefit of the Employer and its successors and assigns, and
shall inure to the benefit of and be binding upon the Employee and his
executors, administrators, heirs, and legal representatives. This Agreement may
not be transferred, sold or assigned by the Employer. Because the Employee's
duties and services hereunder are special, personal, and unique in nature, the
Employee may not transfer, sell or otherwise assign his rights, obligations, or
benefits under this Agreement.
15. Controlling Law. This Agreement shall be governed by and construed in
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accordance with the laws of the State of Texas applicable to contracts made and
to be performed therein, exclusive of the conflict of laws provisions thereof.
16. Severability. If any provision of this Agreement shall be held to be
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invalid or unenforceable, such invalidity or unenforceability shall not affect
or impair the validity or enforceability of the remaining provisions of this
Agreement, which shall remain in full force and effect and the parties hereto
shall continue to be bound thereby.
17. Entire Agreement. This Agreement contains the entire agreement between
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the parties relating to the subject matter hereof and shall supersede all
previous agreements between the parties, whether written or oral, with respect
to the subject matter hereof. This Agreement cannot be modified, altered, or
amended except by a writing signed by each of the parties hereto.
IN WITNESS WHEREOF, the Employer and the Employee have executed this
Agreement as of the Effective Date.
EMPLOYER: EMPLOYEE:
XXXXXXX.XXX, INC. /s/ Xxxxx X. Xxxxxxxxxxxx 2/6/98
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Xxxxx X. Xxxxxxxxxxxx
By: /s/ Xxxxxxxxx X. Xxxxx,
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Xxxxxxxxx X. Xxxxx, President
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