Exhibit 10.20
EMPLOYMENT AGREEMENT
This Employment Agreement is entered into as of the 29th day of
May, 1997, by and between Xxxxxxx Xxxxxx Inc. (the "Employer") and Xxxxx X.
Xxxxxx (the "Employee").
R E C I T A L S
A. The Employer and the Employee desire to enter into an
employment relationship in which Employee will serve as Employer's
President and Chief Executive Officer.
B. The Employer recognizes the unique services that will be provided
by Employee to the Employer.
C. The Employer possesses and will possess certain confidential
information regarding the conduct of its business and the industry in which such
business operates, all of which information will provide the Employer certain
competitive advantages in the marketplace in which it competes.
D. During the course of his employment, Employee will receive
access to certain confidential information regarding the conduct of the
Employer's business operations.
A G R E E M E N T
In consideration of the premises and the mutual promises herein
made, the parties hereto agree as follows:
1. Definitions.
1.1 "Business" means the business owned and/or
operated by the Employer from time to time.
1.2 "Cause" means any of the following:
1.2.1 Employee's willful or negligent
failure to perform his duties of employment.
1.2.2 Employee's commission of any
acts of willful misconduct or negligence deemed by the Board (or a duly
appointed committee thereof) to adversely affect the business of the Employer.
1.2.3 Employee's commission of a
felony or crime of moral turpitude.
1.2.4 Employee's breach of any
material terms of this Agreement.
1.2.5 Employee's deliberate
violation of an Employer's rule, the violation of which is deemed by the Board
(or a duly appointed committee thereof) to adversely affect the business of the
Employer.
1.2.6 Employee's willful disregard
of the duties, interests and obligations of the Employer, the willful
disregard of which is deemed by the Board (or a duly appointed committee
thereof) to adversely affect the business of the Employer.
1.3 "Company Information" means any and all
Confidential Information, Copyrightable Material, Trade Secrets and Proprietary
Information of the Employer.
1.4 "Confidential Information" means any and all
data and information relating to the operation, production and marketing of the
Business which is, has been or will be disclosed to Employee or of which
Employee has become or will become aware as a consequence of his relationship
with the Employer and which has value to the Employer and is not generally known
by its competitors.
1.5 "Copyrightable Material" means any material
1.5.1 developed by the Employer or by
the Employee while employed by or working with the Employer; and
1.5.2 that is protected or is
protectable by the copyright laws of the United States, including, without
limitation, brochures and other printed advertisements, billboard contents,
photographs, television advertisements, and recordings, whether on an electronic
medium or otherwise.
1.6 "Proprietary Information" means all of the
following materials and information, to which Employee receives or has received
access or which Employee develops or has developed, in whole or in part, as a
direct or indirect result of his employment with the Employer or in the course
of his employment with the Employer or through the use of any of the Employer's
facilities or resources:
1.6.1 Production processes, marketing
techniques, financial information, names, requirements, data and other
materials or information relating to the Business and/or the manner in which the
Employer does business;
1.6.2 Discoveries, concepts and
ideas, and the embodiment thereof, whether or not patentable or subject to
protection by a copyright, including, without limitation, the Hewtax interactive
software package and other processes, techniques and "know-how."
1.6.3 Any other materials or
information related to the Business of the Employer which are not generally
known to others engaged in similar activities, including, without limitation,
operating principles, documentation, drawings, programs and performance
specifications and results.
1.7 "Trade Secrets" means the whole or any
portion or phase of any data or information developed, owned or licensed from
a third party by the Employer, including any formula, pattern, compilation,
program, device, method, technique, improvement, or process that falls within
the definition of "Trade Secret" under the laws of the Commonwealth of Virginia.
2. Terms of Engagement; Duties of Employee; Rights of Employer.
2.1 Employer agrees to employ Employee, for
the term of this Agreement, as President and Chief Executive Officer.
Employee agrees to accept such employment on the terms and conditions set forth
in this Agreement.
2.2 Employee recognizes and agrees that he shall
during the term of this Agreement:
2.2.1 devote all of his time,
energy and skill during regular business hours exclusively to faithfully
and industriously performing the duties assigned to him by the Employer
(reasonable vacations and reasonable absences due to illness excepted),
including, but not limited to, supervising the business and affairs of the
Employer;
2.2.2 work exclusively for the
Employer except as described and otherwise provided in this Agreement, and
accept no other employment for remuneration other than that addressed by this
Agreement during its effective term.
2.2.3 diligently follow and implement
all management policies and decisions communicated to him by the Board or its
designee;
2.2.4 timely prepare and forward to
the Board or its designee all reports and accountings as may be requested of
Employee so as to protect and enhance the Employer's investments and business;
2.2.5 prepare for and punctually
attend all meetings that require Employee's attendance;
2.2.6 refrain from any activity or
behavior during or after business hours that is unbecoming to him that could
reflect negatively on the Employer; and
2.2.7 promptly notify the Board in
the event that Employee joins, is appointed to, or otherwise becomes
affiliated with the Board of Directors or Board of Trustees of another
corporation or other business entity, excluding those of charitable,
not-for-profit entities, or as otherwise provided in this Agreement;
Nothing contained in this Section 2 shall be construed to limit Employee's right
to hold, make or sell passive investments, and serve as a board member on
various corporations' Boards of Directors.
3. Term. Except in the case of early termination, as specifically
provided in Section 11 of this Agreement, the term of this Agreement shall run
from the date of execution of this Agreement through June 18, 1999, and can be
extended by the mutual agreement of Employer and Employee.
4. Compensation. Except as otherwise provided in this Agreement,
Employer shall pay to Employee an annual rate of $250,000 for performance of his
duties during the term of this Agreement. The salary shall be paid in equal
bi-weekly installments. Employer shall deduct from the salary all state and
federal income taxes, social security taxes, and such other payroll deductions
as the law now or hereafter in force may from time to time require or as
Employee may additionally direct in writing. Employee may receive an additional
bonus of up to $137,500 on June 18, 1998 (with respect to the 1998 fiscal year)
and on June 18, 1999 (with respect to the 1999 fiscal year) in accordance with
annual senior management bonus plans that are approved by the disinterested
members of the Company's board of directors. Employee shall at all times during
this Agreement be eligible to participate in all employee benefit plans offered
by Employer to its Executive Officers.
5. Reimbursement for Expenses. The parties recognize that in the
course of performing his duties hereunder, Employee may incur expenses in
connection with his duties for such items as entertainment, travel, hotels,
gifts and similar items. In addition, Employer shall lease, insure, and maintain
an automobile that is equivalent in price to a Buick Xxxxxx or Park Avenue on
behalf of Employee. Subject to the Employer's expense reimbursement policy,
Employee will be entitled to reimbursement for all reasonable expenses,
including those related to the automobile referred in the preceding sentence, so
incurred by him in the performance of his duties hereunder upon submission of
documentation to Employer verifying such expenses.
6. Life Insurance. Employer may, in its discretion, at any time
after execution of this Agreement, apply for and procure, as owner and for its
own benefit, insurance on the life of Employee, in such amounts and in such form
or forms as Employer may choose. Employee shall have no interest whatsoever in
such policy or policies, but he shall, at the request of Employer, submit to
such medical examinations, supply such information, and execute such documents
as may be required by the insurance company or companies to whom Employer has
applied for such insurance.
7. Ownership of Company Information. Employee agrees that the
Company Information, and all physical embodiments thereof are and shall at all
times remain the sole and exclusive property of the Employer and that any of the
Company Information produced by him shall be considered work for hire. Employee
agrees and acknowledges:
7.1 that all Company Information developed in
whole or part by him during his employment with the Employer shall be deemed,
immediately upon creation, to be the property of the Employer;
7.2 that he shall, at the request and expense
of the Employer, assign to the Employer any right, title or interest he may
have in such Company Information; and
7.3 that he shall, at the request and
expense of the Employer, do all things and sign all documents or
instruments reasonably necessary in the opinion of the Employer to eliminate any
ambiguity as to the rights of the Employer in such Company Information,
including, without limitation, providing to the Employer his full cooperation in
any litigation, registrations or other proceedings to establish, protect or
obtain such rights.
8. Non-Disclosure of Trade Secrets and Copyrightable Material.
During his employment with the Employer and at any and all times following the
termination (for whatever reason) of such employment, Employee agrees not to
use, reveal, report, publish, disclose or transfer, directly or indirectly, any
Trade Secret or Copyrightable Material for any purpose except in the course of
performing duties assigned to him by the Employer.
9. Non-Disclosure of Confidential Information or Proprietary
Information. During his employment with the Employer and for a period of three
(3) years after the termination of such employment, whenever and however such
termination is effected, whether by Employee or Employer, with or without Cause,
Employee agrees not to use, reveal, report, publish, disclose or transfer,
directly or indirectly, any Confidential Information or Proprietary Information
for any purpose except in the course of performing duties specifically assigned
to him by the Employer.
10. Ownership of Work Product and Other Tangible Information. All
(i) notes, data, reference materials, advertising materials, memoranda and
records in any way relating to any of the Company Information and (ii) other
physical embodiments of the Company Information shall belong exclusively to the
Employer and Employee agrees to turn over to the Employer the originals and all
copies of such materials in his possession at the request of the Employer or in
the absence of such a request, upon the termination (for whatever reason) of
Employee's employment with the Employer.
11. Early Termination and Events Upon Termination. This
Agreement may only be terminated upon the following terms and conditions:
11.1 Employer and Employee may mutually
terminate this Agreement at any time in writing, the effective date and terms
of such termination to be determined and agreed upon by both parties. For
purposes of this Section 11.1, however, Employer shall be entitled in its sole
and absolute discretion to withhold its consent to any such termination.
11.2 Employer may terminate this Agreement, with
or without notice, for Cause. If Employer terminates Employee for Cause, it
shall notify Employee of its basis for doing so promptly in writing, but in no
event longer than thirty (30) days thereafter. Upon termination for Cause as
provided in this Section 11.2, Employee shall not receive further compensation
pursuant to this Agreement. In the event of termination pursuant to this Section
11.2, Employee will not be eligible for any bonus.
11.3 Employer may terminate this Agreement at
any time, or for any reason and without Cause. Upon termination as provided
in this Section 11.3, Employee shall not receive his compensation through the
balance of this Agreement, but will receive severance payments equal to one full
year's base salary ($250,000), commencing upon termination, to be paid in equal
bi-weekly installments for a period of one year, consistent with the withholding
provisions of Section 4. Under these circumstances, Employee shall not be
entitled to the payment of any bonus. In addition, notwithstanding the terms of
Employee's Stock Option Award Agreement dated June 18, 1996, upon a termination
without Cause under this Section 11.3, Employee shall be automatically entitled
to not only exercise his then-vested options during the post-termination period
allowed under the 1994 Long Term Incentive Plan (the "Plan"), but also the
tranche of option shares that would vest, but for the not for Cause termination,
on the succeeding June 18. By way of example, should Employee be terminated
without Cause on July 1, 1997, he would be entitled to exercise the option to
purchase 41,580 incentive stock options and 92,452 non-qualified stock options
in accordance with the terms of the Plan.
11.4 Notwithstanding any provision in this
Agreement to the contrary, including without limitation Section 11.2 or
Section 11.3, Employee shall not be entitled to receive any further compensation
under this Agreement in the event Employee violates any provision of Section 13
of this Agreement.
11.5 In the event, during the term of this
Agreement, Employee dies or is deemed by Employer, in its sole and absolute
discretion, to be totally and permanently disabled, Employer shall have the
right to terminate this Agreement.
12. No Prior Agreements. Employee represents that he is not a party
to, or otherwise subject to or bound by, the terms of any contract, agreement,
or understanding which in any manner would limit or otherwise affect his ability
to perform his obligations hereunder, including, without limitation, any
contract, agreement, or understanding containing any provision limiting
Employee's right to compete with a prior employer. Employee further represents
and warrants that his employment with Employer will not require the disclosure
or use of any confidential information belonging to prior employers or other
persons or entities.
13. Covenant not to Compete. Employee acknowledges that during the
course of his employment, he will acquire confidential information about
Employer's business, including but not limited to, its long and short term
goals, marketing strategy, operations, revenues, fees/prices, customer and
client lists, and other pertinent information, and that in his capacity as
President and Chief Executive Officer, he is uniquely positioned to know or have
access to the most sensitive aspects of Employer's totality of operations,
including responsibility for contacting and developing relationships with
Employer's customers and other relevant Employer contacts. Employee also
acknowledges and agrees that his skills used in the operation of Employer's
business are personal and unique, and that, except as otherwise provided in his
Agreement, he has agreed to provide those unique skills exclusively to Employer
during the term of this Agreement. Accordingly:
12.6 Employee agrees that upon the termination
of his employment, whenever and however such termination is effected,
whether by Employee or Employer, with or without Cause, and for twenty-four (24)
months following such termination, he will not, directly or indirectly, compete
with Employer (within any city, town, or county in which franchisees or other
business entities bearing Employer's trade name are in operation at the time of
Employee's separation from employment, or in which Employer has begun plans or
preparations to locate such a franchise or entity at the time of Employee's
separation from employment) within the geographical limits of the United States
of America, its territories and possessions. Employee acknowledges and agrees
that the scope of Employer's operations currently includes or exceeds the
geographic limitation of this restrictive covenant.
12.7 Employee agrees that competition, as used
in this Agreement, shall include, but not be limited to, engaging in competitive
activity, either as an individual, partner, joint venturer with any other person
or entity, employee, agent, investor (other than in publicly traded stock),
consultant or representative of any other person or entity, or otherwise being
associated in a competitive capacity with any business entity which directly or
indirectly competes with Employer.
12.8 It is the specific intent of the parties
that Employee shall be restricted from competing directly or indirectly
with any segment of Employer's business in which Employee engaged prior to the
termination of employment and from any segment of Employer's business about
which Employee acquired proprietary or confidential information during the
course of his employment, or relating to Employee's personal and unique skills.
Employee acknowledges for these purposes that the scope of his engagement and
knowledge includes the entirety of Employer's operations and proprietary or
confidential information. Employer's business includes, without limitation:
12.8.1 Advertising and marketing
directed to those individuals, corporations, or other entities required to
file tax returns with the Internal Revenue Service or relevant state tax
collection agency; providing advice and counsel to such entities regarding tax
planning, completing and filing all required tax forms for customers;
representing or providing testimony or evidentiary support in the event of
customer and/or challenges to customer's tax filings. These operations include a
mechanism for providing customers, upon the electronic filing of their tax
forms, with "Superfast Refunds," in anticipation of their actual tax returns.
12.9 Employer and Employee have examined in
detail this Covenant Not to Compete and agree that the restraint imposed upon
Employee is reasonable in light of the legitimate interests of Employer, and it
is not unduly harsh upon Employee's ability to earn a livelihood.
13. Non-Solicitation of Customers and Franchisees. Employee agrees
that during his employment with Employer, he shall not, directly or indirectly,
solicit or attempt to solicit the trade of, or trade with, any customer or
prospective customer, or existing or prospective franchisee, including an entity
or person known by Employee to have received and not acted upon a proposal by
Employer to become a customer or franchisee of Employer, of Employer for any
business purpose other than for the benefit of Employer. Employee further agrees
that for twenty-four (24) months following the termination of this Agreement,
and without regard to how termination of such Agreement is effected, whether by
himself or Employer, with or without cause, Employee shall not, directly or
indirectly, solicit or attempt to solicit the trade of, or trade with, any
customer or previously identified prospective customers, or existing or
previously identified prospective franchisee, with whom Employee had contact,
conducted business, or became aware of during and as a result of his employment
with Employer, to provide the same or similar services as he provided while
employed by Employer.
14. Non-Solicitation of Employees. Employee agrees that during his
employment with Employer, and for twenty-four (24) months following the
termination of this Agreement, without regard to how termination of such
Agreement is effected, whether by himself or Employer, with or without cause,
Employee shall not, directly or indirectly, solicit or induce, or attempt to
solicit or induce, any employee of Employer to leave Employer for any reason
whatsoever, or hire any individual then employed by Employer at the time of
termination of this Agreement, or who becomes employed during the twenty-four
(24) month period covered by this Section 15.
15. Injunctive Relief.
15.1 Employee acknowledges that the remedies
at law for any breach by Employee of any restrictive covenant contained in
this Agreement will be inadequate and that Employer shall be entitled to
injunctive relief against Employee in addition to any other remedy and damages
available. Employee acknowledges that the restrictions contained herein are
reasonable, but agrees that if any court of competent jurisdiction shall hold
such restrictions unreasonable as to time, geographic area, activities, or
otherwise, such restrictions shall be deemed to be reduced to the extent
necessary in the opinion of such court to make them reasonable.
15.2 Employee agrees that the non-competition,
non-disclosure, and non-solicitation obligations contained herein shall be
extended by the length of time which Employee shall have been in breach of any
of said provisions. Employee recognizes that the time periods included in the
restrictive covenants contained herein shall begin on the date a court of
competent jurisdiction enters an order enjoining Employee from violating such
provisions unless good cause can be shown as to why the periods described should
not begin at that time.
16. Restrictive Covenants of the Essence. The restrictive covenants
of the Employee set forth herein are of the essence of this Agreement; they
shall be construed as independent of any other provision in this Agreement; and
the existence of any claim or cause of action of the Employee against the
Employer, whether predicated on this Agreement or not, shall not constitute a
defense to the enforcement by the Employer of the restrictive covenants
contained herein. Employer shall at all times maintain the right to seek
enforcement of these provisions whether or not Employer has previously refrained
from seeking enforcement of any such provision as to Employee or any other
individual who has signed an agreement with similar provisions.
17. Disclosure of Materials. Employee agrees that he shall promptly
disclose to Employer all processes, techniques, methods, discoveries,
improvements, inventions, and/or other materials made or developed by Employee
in whole or in part during the period of Employee's employment which are related
in any way to the business activities of Employer. Employee recognizes that all
such materials shall belong to and be the sole property of Employer, and
Employee hereby assigns and agrees to assign all rights to such materials to
Employer.
18. Return of Materials. Upon the termination of Employee's
employment with Employer for any reason, however such termination is effected,
whether by Employee or Employer, with or without cause, Employee shall promptly
deliver to Employer all property, materials, documents, and copies of documents
concerning Employer's operations or customers which Employee has in his
possession at the time of termination. Any work performed by Employee to create,
develop or improve such property, materials and/or documents shall not entitle
employee to retention thereof.
19. Review by Counsel. Employee understands the nature of the
burdens imposed by the restrictive covenants contained in this Agreement.
Employee acknowledges that he is entering into the Agreement on his own
volition, and that he has been given the opportunity to have this Agreement,
including the restrictive covenants and jury waiver clause, reviewed by his
legal counsel. Employee represents that upon careful review, he knows of no
reason why any restrictive covenant contained in this Agreement is not
reasonable and enforceable.
20. Assignability. The obligations of the parties under this
Agreement shall continue for the period specified after the termination of
Employee's employment with Employer for any reason, with or without cause, and
shall be binding on Employee's heirs, executors, legal representatives, and
assigns; and shall inure to the benefit of any successor or permitted assigns of
Employer.
21. Severability. It is the intention of the parties that the
provisions of the restrictive covenants herein shall be enforceable to the
fullest extent permissible under the applicable law. If any clause or provision
of this Agreement is held to be illegal, invalid, or unenforceable under present
or future laws effective during the term hereof, then the remainder of this
Agreement shall not be affected thereby, and in lieu of each clause or provision
of this Agreement which is illegal, invalid or unenforceable, there shall be
added, as a part of this Agreement, a clause or provision as similar in terms to
such illegal, invalid or enforceable clause or provision as may be possible and
as may be legal, valid, and enforceable.
22. Attorneys' Fees. Employee shall pay, indemnify, and save
Employer harmless against all costs and expenses (including any attorneys'
fees) incurred by Employer with respect to enforcement of its rights under this
Agreement.
23. Consent to Jurisdiction and Venue. Employee hereby irrevocably
submits to the jurisdiction of the Circuit Court of the City of Virginia Beach,
Virginia, in any action or proceeding arising out of, or relating to, this
Agreement, and Employee hereby irrevocably agrees that all claims in respect of
any such action or proceeding may be heard and determined in such Court.
Employee agrees that a final judgment in any action or proceeding shall, to the
extent permitted by applicable law, be conclusive and may be enforced in other
jurisdictions by suit on the judgment, or in any other manner provided by
applicable law related to the enforcement of judgments.
24. Jury Waiver. Employee and Employer agree that in any litigation,
action or proceeding arising out of or relating to this Agreement, trial shall
be to a court of competent jurisdiction without a jury. Employee and Employer
irrevocably waive any right Employee or Employer may have to a trial by jury and
a copy of this Agreement may be introduced as written evidence of the waiver of
the right to trial by jury. Employer has not made, and Employee has not relied
upon, any oral representation regarding the enforceability of this provision.
Employee and Employer have read and understand the effect of this jury waiver
provision.
25. Governing Law. This Agreement shall be governed by and construed
in accordance with the domestic laws of the Commonwealth of Virginia without
giving effect to any choice or conflict of law provision or rule (whether of the
Commonwealth of Virginia or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the Commonwealth of
Virginia.
26. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original and which together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement
on the date first above written.
May 29, 1997 /s/ Xxxxx X. Xxxxxx
---------------------------- -------------------------------------
DATE XXXXX X. XXXXXX
XXXXXXX XXXXXX, INC.
BY: /s/ Xxxxxxxxxxx Xxxxx
DATE May 29, 1997 -----------------------
----------------------
ITS: Chief Financial Officer
------------------------
