Exhibit 10.2
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement"), dated as of 1st day
of September, 1998, by and between WebOne, Inc. (the "Company") a Delaware
corporation and Xxxxxxxxx X. Xxxxxx ("Employee").
PRELIMINARY RECITALS
A. The Company has been formed to execute a consolidation of a
group of firms in the business of providing high level consulting services for
businesses wishing to market through the internet (the "Business") and
contemporaneous initial public offering ("IPO") of its public stock (the
"Plan").
B. Employee has extensive knowledge and a unique understanding
of the Business.
C. The Company desires to employ Employee as its Chief
Executive Officer, and Employee desires to be employed by the Company as such
all under the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises, the mutual
covenants of the parties hereinafter set forth and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. EMPLOYMENT.
1.1 ENGAGEMENT OF EMPLOYEE. The Company agrees to employ
Employee as President and Chief Executive Officer of the Company, and Employee
agrees to accept such employment, all in accordance with the terms and
conditions of this Agreement, effective August 25, 1998.
1.2 DUTIES AND POWERS. At all times during the Employment
Period (as defined herein), the Company agrees that Employee will serve as
President and Chief Executive Officer of the Company. He shall have such other
responsibilities, duties and authorities. and will render such services for the
Company and its affiliates as the Board of Directors of the Company (the
"Board") shall from time to time reasonably direct; provided, however, such
duties and responsibilities shall be commensurate with his position in the
Company. The Employee agrees primarily to devote his time to the affairs of the
Company and to carry out his duties and responsibilities faithfully. It is
acknowledged that effective with the execution of this Agreement, the
stockholders of the Company have elected Employee to the Board of Directors. It
is the further understanding of the parties and a condition subsequent to
Employee's duty to perform, that upon the Closing of the IPO, currently expected
in the first quarter, 1999, Employee will be elected the Chairman of the Board.
1.3 EMPLOYMENT PERIOD. Employees employment under this
Agreement shall be for a period of three years, four months commencing September
1, 1998 (the "Initial Employment Period"). This Agreement shall automatically
renew for successive one-year periods (each one-
year period shall be referred to herein as a "Renewal Period") beginning January
1, 2002, unless either the Company or Employee. as the case may be, provides
written notice within ninety (90) days prior to the termination of any such
period, stating its/his desire to terminate this Agreement. The Initial
Employment Period and each successive Renewal Period shall be referred to herein
together as the "Employment Period." Notwithstanding anything to the contrary
contained herein, the Employment Period is subject to termination pursuant to
Section 1.4 below.
1.4 TERMINATION OF EMPLOYMENT
(a) TERMINATION BY THE COMPANY FOR CAUSE. The
Company has the right to terminate Employee's employment under this Agreement,
by notice to Employee in writing at any time, (i) for "Cause" or (ii) due to the
death or the Disability of Employee. In the case of a termination for
Disability, Company shall continue Employee's salary and insurance benefits for
a minimum period of six (6) months after termination. Any such termination shall
be effective upon the date of service of such notice pursuant to Section 7.7
hereof, except in the case of the death, in which such termination shall become
effective immediately upon the death of Employee.
"Cause," as used herein, means the occurrence of any of the
following events:
(i) final non-appealable conviction for, or plea of
nolo contendere to, a charge of commission of felony;
(ii) the good faith determination by the Board in the
exercise of its reasonable judgment that Employee has
committed an act or acts in the course of his employment
constituting fraud or dishonesty, provided Employee is given
an opportunity, with at least 20 business days notice, to
reasonably disprove the allegation; and
(iii) a determination pursuant to the provisions of
Section 6, below, that Employee has materially breached any of
the terms, conditions or covenants set forth in Section 3.2,
3.3, or 3.4 of this Agreement.
Employee shall be deemed to have a "Disability" for purposes
of this Agreement if he is unable to perform, by reason of physical or mental
incapacity, his material duties or obligations under this Agreement, for a total
period of 180 days in any 360-day period. The Board shall reasonably determine,
according to the facts then available, whether and when the Disability of the
Employee has occurred and how long it has lasted. Such determination shall not
be arbitrary or unreasonable and the Board will take into consideration the
expert medical opinion of a qualified physician chosen by the Company, after
such physician has completed an examination of Employee and issued a report to
both Employee and the Company. Employee agrees to make himself available for
such examination upon the reasonable request of the Company. At the request of
Employee the Company will retain a second qualified physician chosen by Employee
to render a second opinion, and the Board shall reasonably consider that opinion
as well as the opinion of the qualified physician of its selection.
(b) TERMINATION FOR GOOD REASON. Employee shall have the right
at any time to terminate
his employment with the Company for any reason. For purposes of this Agreement
and subject to the Company's opportunity to cure as provided in Section 1.4(c)
below, the Employee shall have "Good Reason" to terminate his employment
hereunder if:
(i) the Company materially breaches the compensation, benefit,
or any other material provision of this Agreement;
(ii) the Company undergoes a Change of Control,
(iii) if following the IPO the Company's offices are moved
more than thirty-five miles outside the Dallas, Texas metropolitan area;
(iv) if Employee's duties are diminished in scope to a level
not commensurate with his position in the Company as CEO and Chairman; provided,
Good Reason will not exist if someone other than Employee is elected Chairman
during the Employment Period with the written consent and approval of Employee.
(c) NOTICE AND OPPORTUNITY TO CURE. Notwithstanding the foregoing, it
shall be a condition precedent to the Company's right to terminate the
Employee's employment for "Cause" and the Employee's right to terminate for
"Good Reason" that (1) the party seeking the termination shall first have given
the other party written notice stating with specificity the reason for the
termination ("Breach") and (2) if such Breach is susceptible of cure or remedy,
a period of 30 days from and after the giving of such notice shall have elapsed
without the breaching party having effectively cured or remedied such breach
during such 30 day period, unless such Breach cannot be cured or remedied within
30 days, in which case the period for remedy or cure shall be extended for a
reasonable time (not to exceed an additional 30 days), provided the breaching
party has made and continues to make a diligent effort to effect such remedy or
cure and has so informed the other party with reasonable documentation of such
efforts.
2. COMPENSATION AND BENEFITS.
2.1 SALARY. In consideration of Employee performing his duties under
this Agreement, commencing on the earlier of January 1, 1999 or the Closing of
the IPO, the Company will pay Employee a base salary at a rate of $300,000 per
annum (the "Base Salary') payable in accordance with the Company's regular
payroll policy for salaried employees. The Base Salary may be increased (but not
decreased), from time to time during the Employment Period, as determined by the
Board, in its sole discretion. Following an increase, the "Base Salary" for
purposes of this Agreement shall be the increased amount. If the Employment
Period is terminated pursuant to Section 1.4(a) above, then the Base Salary for
any partial year will be prorated based on the number of days elapsed in such
year prior to the termination.
2.2 BONUS. Employee shall be entitled to an annual bonus equal to an
amount up to his Base Salary based upon performance measured against annual
objectives reasonably established by the Compensation Committee of the Board of
Directors. The determination of whether Employee merits a bonus shall be in the
sole reasonable discretion of and made by the Compensation Committee of the
Board of Directors.
2.3 STOCK OPTIONS. Subject to approval of the lead underwriter of the
IPO, which the Company shall use its best efforts to secure, as of the effective
date of the IPO Employee shall be granted options to purchase up to 5% of the
total outstanding shares of common stock of tile Company at the offering price
of the Company's common stock in the IPO. Twenty-five percent of the options
will vest upon the grant and twenty-five percent on each of the 1st, 2nd, and
3rd anniversaries of the IPO, provided he remains an employee of the Company, or
as otherwise provided in this Agreement.
2.4 BENEFITS. Commencing on the earlier of January 1, 1999 or the
Closing of the IPO, the Company agrees to provide to Employee such vacation and
life, health, disability, officer's and director's insurance benefits as are
generally provided, from time to time, to executive officers of the Company,
consistent with industry standards, at a level commensurate with the Employee's
responsibility and office.
2.5 RETIREMENT PLANS. Commencing on the earlier of January 1, 1999 or
the Closing of the IPO, Employee will be entitled to participate in any
retirement plans adopted by the Company, at a level commensurate with the
Employee's responsibility and office.
2.6 EXPENSES. The Company shall reimburse Employee for those reasonable
and necessary out-of-pocket expenses, which he incurs during the Employment
Period in connection with the rendering of services on behalf of it, including
reasonable attorney fees incurred since August 20, 1998, not to exceed $4,000.
Any reimbursement pursuant to this Section 2.6 shall be made following
submission of reasonable documentation of the expenses incurred.
2.7 COMPENSATION AFTER TERMINATION DURING EMPLOYMENT PERIOD.
(a) If the Company terminates Employee's employment during the
Employment Period for any reason (other than for "Cause" pursuant to
Section 1.4(a) of this Agreement) or Employee shall terminate his
employment for Good Reason, Employee shall be entitled to receive his
accrued benefits and as severance ("Severance Pay").
(i) the greater of (x) his Base Salary plus Bonus at the
maximum amount for the period of time which would have been remaining
in the Initial Employment Period or any Renewal Period and (y) a sum of
money equal to one times this Base Salary plus maximum bonus at the
time;
(ii) a continuation of the benefits provided under Section
2.4 for the greater of (x) the period of time, which would have been
remaining in the Initial Employment Period or any Renewal Period and
(y) one year;
(iii) immediate vesting of stock options granted pursuant
to Section 2.3 not yet vested,
(b) If the Company shall terminate Employee's employment
during the Employment Period for "Cause" pursuant to Section 1.4(a), the
Company shall have no further
obligations hereunder or otherwise with respect to Employee's employment from
and after the termination or expiration date (except payment of Employee's Base
Salary accrued through the date of termination or expiration and any other
obligations imposed by law or in equity, including statutorily required
continuation of insurance benefits), and the Company shall continue to have all
other rights available hereunder (including, without limitation, all rights
under Section 3 hereof at law or in equity).
3. COVENANTS.
3.1 EMPLOYEE'S ACKNOWLEDGMENT. Employee acknowledges that:
(a) the Company is and will be engaged in the Business during
the Employment Period and thereafter;
(b) Employee will occupy a position of trust and confidence
with the Company after the date of this Agreement, and during such period and
Employees employment under this Agreement, Employee will become familiar with
the Company's proprietary and confidential information concerning the Company
and the Business;
(c) the agreements and covenants contained in this Section 3
are essential to protect the Company and the goodwill of the Business and are a
condition precedent to the Company entering into this Agreement;
(d) Employee's employment with the Company has special, unique
and extraordinary value to the Company and the Company would be irreparably
damaged if Employee were to provide services to any person or entity in
violation of the provisions of this Agreement.
3.2 NON-COMPETE.
(a) Employee hereby agrees that during the Employment Period
(the "Restrictive Period"), he shall not, for any reason whatsoever, directly or
indirectly, for himself or on behalf of or in conjunction with any other person,
persons, company, partnership, corporation or business of whatever nature:
(i) engage, as an officer, director, shareholder,
owner, partner, joint venturer, or in a managerial capacity, whether as an
employee, independent contractor, consultant or advisor, in any business, which
competes with the Company ("Territory").
(ii) call upon any person who is, at that time,
within the Territory, an employee of the Company in a managerial capacity for
the purpose or with the intent of enticing such employee away from or out of the
employ of the Company; provided, that the Employee shall be permitted to call
upon and hire any member of his or her immediate family.
Notwithstanding the above, the foregoing covenant shall not be deemed to
prohibit the Employee from acquiring as an investment of not more than one (1%)
percent of the capital stock of a competing business whose stock is traded on a
national securities exchange or over-the-counter
so long as the Employee does not consult with or is not employed by such
competitor.
3.3 INTERFERENCE WITH RELATIONSHIPS. Other than in the performance of
his duties hereunder, during the Restrictive Period, Employee shall not.
directly or indirectly, as employee, agent, consultant, stockholder, director,
co-partner or in any other individual or representative capacity solicit or
encourage any present or future customer, supplier or other third party to
terminate or otherwise alter his, her or its relationship with the Company with
respect to the Business engaged in by the Company,
3.4 CONFIDENTIAL INFORMATION. Other than in the performance of his
duties hereunder, during the Restrictive Period and thereafter, Employee shall
keep secret and retain in strictest confidence, and shall not, without the prior
written consent of the Company, furnish, make available or disclose to any third
party or use for the benefit of himself or any third party, any Confidential
Information. As used in this Agreement, "Confidential Information" shall mean
any information relating to the business or affairs of the Company or the
Business, including, but not limited to, information relating to financial
statements, employees, suppliers, construction, manufacturing and servicing
methods, equipment, programs, strategies and information. analyses, profit
margins, or other proprietary information used by the Company or subsidiary of
the Company in connection with the Business to give Company a competitive
advantage, provided, however, that Confidential Information shall not include
any information which is in the public domain or becomes known in the industry
through no wrongful act on the part of Employee. Employee acknowledges that the
Confidential Information is vital, sensitive, confidential and proprietary to
the Company.
3.5 BLUE-PENCIL. If any court of competent jurisdiction shall at any
time deem the term of this Agreement or any particular Restrictive Covenant (as
defined) too lengthy or the territory too extensive, the other provisions of
this Section 3 shall nevertheless survive, the Restrictive Period herein shall
be deemed to be the longest period permissible by law under the circumstances
and the territory herein shall be deemed to comprise the largest territory
permissible by law under the circumstances. The court in each case shall reduce
the time period and/or territory to permissible duration or size.
3.6 REMEDIES. Employee acknowledges and agrees that the Covenants set
forth in this Section 3 (collectively, the "Restrictive Covenants") are
reasonable and necessary for the protection of the Company's business interests,
that irreparable injury will result to the Company if Employee breaches any of
the terms of said Restrictive Covenants, and that in the event Employee breaches
or threatens to breach any such Restrictive Covenants, the Company will have no
adequate remedy at law. Employee accordingly agrees that in the event Employee
breaches or threatens to breach any of the Restrictive Covenants, the Company
shall be entitled to pursue temporary injunctive and other equitable relief.
Nothing contained herein shall be construed as prohibiting the Company from
pursuing any other remedies available to it for such breach or the threat of
such a breach by Employee, including the recovery of any damages which it is
able to prove.
4. EFFECT OF TERMINATION.
4.1 FOR CAUSE OR VOLUNTARY QUITTING. If the Employee terminates
employee's
employment during the Employment Period other than for Good Reason as defined in
Section 1.4(b) or the Company terminates Employee's employment for Cause
pursuant to Sections 1.4(a) (not including Disability) then, notwithstanding
such termination, the provisions contained in Section 3 hereof shall remain in
full force and effect.
4.2 OTHER REASONS. If the Company terminates Employee's employment
during the Employment Period other than for Cause or Employee terminates his
employment for Good Reason during the Employment Period, then, INTER ALIA, the
provisions and covenants of Sections 3.2 and 3.3 shall have no effect and shall
be unenforceable. Furthermore, if Employee's employment is terminated pursuant
to this Section 4.2, the right to receive Severance Pay as defined above shall
be the exclusive remedy in any action arising out of Employee's employment and
grounded in contract, which seeks contractually based damages.
5. INCOME TAX TREATMENT. Employee and the Company acknowledge that it
is the intention of the Company to deduct all amounts paid under Section 2
hereof as ordinary and necessary business expenses for income tax purposes.
Employee agrees and represents that he will treat all such amounts as required
pursuant to all applicable tax laws and regulations, and should he fail to
report such amounts as required, he will indemnify and hold the Company harmless
from and against any and all taxes, penalties, interest, costs and expenses,
including reasonable attorneys' and accounting fees and costs, which are
incurred by Company directly or indirectly as a result thereof.
6. DISPUTES. All claims (pursuant to Federal or State statute or by.
common law), controversies, differences, or disputes between Company and
Employee arising out of or relating to this Agreement, the breach thereof, or
any aspect of the employment relationship, including the termination of such
relationship or the Company's business (a "Claim") shall be submitted to the
proper State or Federal court in the State of Texas, Dallas County. In the case
of a Claim brought by Employee following a Change of Control, the Company shall
pay Employee all reasonable, and necessary legal fees and expenses incurred by
Employee in reasonably contesting or disputing termination or in seeking to
obtain or enforce a right or benefit provided by this Agreement.
7. MISCELLANEOUS.
7. 1. DEFINITION. For purposes of this Agreement, the following terms
have the meanings referred to in this Section 7.1
"Affiliate" and "Associate" - mean the respective meanings ascribed
to such terms in Rule 12-2 of the of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended (the "Exchange Act") as in
effect on the date of this Agreement.
"Beneficial Ownership" - a Person shall be deemed to have Beneficial
Ownership of any securities which the Person or any or the Person's Affiliates
or Associates is deemed to beneficially own, directly or indirectly, within the
meaning of Rule 13d-3 of the General Rules and Regulations under the Exchange
Act as in effect on the date of this Agreement.
"Board" - means the Board of Directors of the Company.
"Change in Control" -- shall be deemed to have occurred upon the first
to occur of the following:
(a) The acquisition, other than from the Company, by any
individual, entity, or group (within the meaning of Section 13(d)(3) of
14(d)(2) of the Exchange Act) of Beneficial Ownership of thirty-five
(35%) percent or more of either (1) the then-outstanding shares of
common stork of the Company (the "Outstanding Company Common Stock") or
(2) 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");
(b) Individuals who, as of the date of the IPO, constitute the
Board cease for any reason to constitute at least a majority of the
Board; and
(c) Consummation of a reorganization, merger, or consolidation
of the Company (a "Business Combination"), in each case, unless,
following such Business Combination the individuals and entities who
were the Beneficial Owners of the Outstanding Company Common Stock
immediately prior to such Business Combination beneficially own,
directly or indirectly, more than fifty (50%) percent of the
Outstanding Company Common Stock.
7.2 ASSIGNMENT. No party hereto may assign or delegate any of its
rights or obligations hereunder without the prior written consent of the other
party hereto', provided, however, that the Company shall have the right to
assign all or any pan of its rights and obligations under this Agreement (i) to
any affiliate of the Company to which the Business of the Company is assigned at
any time, any subsidiary or affiliate of the Company or any surviving entity
following any merger or consolidation of any of those entities with any entity
other than the Company or (ii) in connection with the sale of the Business by
the Company. Except as otherwise expressly provided herein all covenants and
agreements contained in this Agreement by or on behalf of any of the parties
hereto shall bind and inure to the benefit of the respective legal
representatives, heirs, successors and assigns of the parties hereto whether so
expressed or not.
7.3 ENTIRE AGREEMENT. Except for the parties' agreement pursuant to
which Employee will be issued 10 shares of its common stock, implemented
simultaneously with the execution of this Agreement, or as otherwise expressly
set forth herein, this Agreement and all other agreements entered into by the
parties hereto on the date hereof set forth the entire understanding of the
parties, and supersede and preempt all prior oral or written understandings and
agreements, with respect to the subject matter hereof.
7.4 SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement, so long as said invalid provision does not deprive either
party of substantial rights under the Agreement.
7.5 AMENDMENT MODIFICATION. No amendment or modification of this
Agreement and no waiver by any party of the breach of any covenant contained
herein shall be binding unless executed in writing by the party against whom
enforcement of such amendment, modification or waiver is sought. No waiver shall
be deemed a continuing waiver or a waiver in respect of any subsequent breach or
default, either of a similar or different nature, unless expressly so stated in
writing.
7.6 GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Agreement shall be governed by, the laws
of the State of Texas, without giving effect to provisions thereof regarding
conflict of laws. To the extent that any provision of this Agreement is
inconsistent with the laws of the State of Texas the parties agree to be
governed and abide by the laws of the State of Texas.
7.7 NOTICES. All notices, demands or other communications to be given
or delivered hereunder or by reason of the provisions of this Agreement shall be
in writing and shall be deemed to have been properly served if (a) delivered
personally, (b) delivered by a recognized overnight courier service, (c) sent by
certified or registered mail, return receipt requested and first class postage
prepaid, or (d) sent by facsimile transmission followed by a confirmation copy
delivered by a recognized overnight courier service the next day. Such notices,
demands and other communications shall be sent to the addresses indicated below:
(a) If to Employee:
Xxxxxxxxx X. Xxxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
(b) If to the Company:
WebOne, Inc.
c/o Commonwealth Principals
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxx, XX 00000
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party. Date
of service of such notice shall be (i) the date such notice is personally
delivered or sent by facsimile transmission (with issuance by the transmitting
machine of a confirmation of successful transmission, (ii) three days after the
date of mailing if sent by certified or registered mail or (iii) one day after
date of delivery to the overnight courier if sent by overnight courier.
7.8 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same Agreement and shall become effective
when one or more counterparts have been executed by each of the parties hereto
and delivered to the other.
7.9 DESCRIPTIVE HEADINGS; INTERPRETATION. The descriptive headings in
this Agreement am inserted for convenience of reference only and are not
intended to be part of or to affect the meaning or interpretation of this
Agreement. The use of the word "including" in this Agreement shall be by way of
example rather than by limitation. The Preliminary Recitals set forth above are
incorporated by reference into this Agreement.
7.10 NO STRICT CONSTRUCTION. The language used in this Agreement will
be deemed to be the language chosen by the parties hereto to express their
mutual interest and no rule of strict construction will be applied against any
party hereto.
7.11 EXCISE TAX. If the total payments under this Agreement and any
other agreement, plan, or arrangement would be subject to the excise tax imposed
by Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code")
(or any successor provision) or any interest or penalties with respect to such
excise tax (which excise tax, together with any such interest and penalties, are
collectively referred to as the "Excise Tax"), then Employee shall be entitled
to receive an additional payment (a "Gross-up Payment") in an amount such that
after payment by Employee or withholding by Company of such Excise Tax,
including any Excise Tax imposed upon the Gross-up Payment, Employee shall be in
the same after-tax position under this Agreement that Employee would have been
in if Code Section 4999 (or any successor provision) did not apply.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
COMPANY:
WEBONE, INC.
By: /s/ J. Xxxxxxxx Xxxxxxx
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Its:
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EMPLOYEE:
/s/ Xxxxxxxxx X. Xxxxxx
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Xxxxxxxxx X. Xxxxxx
