EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made as of August 26,
1998 by CYNET, INC, a Texas corporation (the "Employer"), and R. XXXX
XXXXX, an individual resident of the State of Texas (the "Executive").
INTRODUCTION
Employer, directly or through one or more subsidiaries, is engaged in
the business of providing fax and related communication services. The
Employer desires to employ the Executive, and the Executive wishes to accept
such employment, upon the terms and conditions set forth in this Agreement.
The parties, intending to be legally bound, agree as follows:
Section 1. DEFINITIONS. For the purposes of this Agreement, the
following terms have the meanings specified or referred to in this Section 1.
1.1 "AFFILIATE" or "AFFILIATES" --any Person that, directly or
indirectly, controls, or is controlled by or under common control with, the
Employer, including the Employer. For the purposes of this definition,
"control" (including the terms "controlled by," and "under common control
with") means the power to direct or cause the direction of the management and
policies of any Person, directly or indirectly, through ownership of voting
securities, by contract, or otherwise.
1.2 "AGREEMENT" -- this Consulting Agreement, as amended from time to
time.
1.3 "BASIC COMPENSATION" -- Salary and Benefits.
1.4 "BENEFITS" -- as defined in Section 3.1 (c).
1.5 "BOARD OF DIRECTORS" -- the board of directors of the Employer.
1.6 "CONFIDENTIAL INFORMATION" -- any and all:
(a) trade secrets concerning the business and affairs of Employer
or any Affiliate, product specifications, data, know-how, formulae,
compositions, processes, designs, sketches, photographs, graphs,
drawings, samples, inventions and ideas, past, current, and planned
research and development, current and planned manufacturing or
distribution methods and processes, customer lists, current and anticipated
customer requirements, price lists, market studies, business plans, data
bases, computer software and programs (including object code and source
code), computer software and database technologies, systems, structures,
and architectures (and related formulae, compositions, processes,
improvements, devices, know-how, inventions, discoveries, concepts, ideas,
designs, methods and information), and any other information, however
documented, that is a trade secret within the meaning of the common law of
the State of Texas, and
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(b) information concerning the business and affairs of Employer or
any Affiliate (which includes historical financial statements, financial
projections and budgets, historical and projected sales, marketing and
customer data, capital spending budgets, acquisition prospects and
plans, the names and backgrounds of key personnel, personnel training and
techniques and materials), however documented; and
(c) notes, analysis, compilations, studies, summaries, and other
material prepared by or for any Affiliate containing or based, in whole
or in part, on any information included in the foregoing.
1.7 "DISABILITY" -- as defined in Section 5.2.
1.8 "EFFECTIVE DATE" -- the date stated in the first paragraph of the
Agreement.
1.9 "EMPLOYEE INVENTION" -- any idea, invention, technique,
modification, process, or improvement (whether patentable or not), any
industrial design (whether registrable or not), any mask work, however fixed
or encoded, that is suitable to be fixed, embedded or programmed in a
semiconductor product (whether recordable or not), and any work of authorship
(whether or not copyright protection may be obtained for it) created,
conceived, or developed by the Executive, either solely or in conjunction
with others, during the Employment Period, OF a period that includes a
portion of the Employment Period, that relates in any way to, or is useful in
any manner in, the business then being conducted or proposed to be conducted
by the Employer or the Affiliates, and any such item created by the
Executive, either solely or in conjunction with others, following termination
of the Executive's employment with the Employer, that is based upon or uses
Confidential Information.
1.10 "EMPLOYMENT PERIOD" -- the term of the Executive's employment
under this Agreement.
1.11 "FISCAL YEAR" -- the Employer's fiscal year, as it exists on the
Effective Date or as changed from time to time.
1.12 "FOR CAUSE" -- as defined in Section 5.3.
1.13 "INCENTIVE COMPENSATION" -- as defined in Section 3.2.
1.14 "OPTION PLAN" -- the CyNet, Inc. Stock Incentive Option Plan.
1.15 "NONINCENTIVE COMPENSATION" -- as defined in Section 3.3.
1.16 "PERSON" -- any individual, general or limited partnership, joint
venture, corporation (including any non-profit corporation), limited
liability company, bank, estate, trust, association, entity, unincorporated
organization, or government body.
1.17 "POST-EMPLOYMENT PERIOD" -- as defined in Section 7.2.
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1.18 "PROPRIETARY ITEMS" -- as defined in Section 6.2(a)(iv).
1.19 "SALARY" -- as defined in Section 3.1(a).
1.20 "SIGNING BONUS" -- as defined in Section 3.1(b).
Section 2. EMPLOYMENT TERM AND DUTIES.
2.1 EMPLOYMENT. The Employer hereby employs the Executive, and the
Executive hereby accepts employment by the Employer, upon the terms and
conditions set forth in this Agreement.
2.2 TERM. Subject to the provisions of Section 5, the term of the
Executive's employment under this Agreement will be three (3) years,
beginning on the Effective Date and ending on the third anniversary of the
Effective Date. Thereafter, the term may continue for additional one (1)
year periods upon the mutual written agreement of the Executive and the
Employer.
2.3 DUTIES. The Executive will have such duties as are assigned or
delegated to the Executive by the Board of Directors (which duties shall be of a
senior management or executive level) and will initially serve as Vice
President, Finance and Chief Financial Officer. The Executive will devote
substantially all of his entire business time, attention, skill, and energy
exclusively to the business of the Employer, will use his best efforts to
promote the success of the Employer's business, and will cooperate fully with
the Board of Directors in the advancement of the best interests of the
Employer. For the Executive's service as a director of the Employer or
officer of any of its Affiliates, the Executive will fulfill his duties as
such director or officer without additional compensation.
Section 3. COMPENSATION.
3.1 BASIC COMPENSATION.
(a) SALARY. The Executive will be paid an annual salary of
$125,000.00, subject to adjustment as provided below (the "Salary"), which
will be payable in equal periodic installments according to the Employer's
customary payroll practices, but no less frequently than monthly. The Salary
will be reviewed by the Board of Directors not less frequently than annually,
and may be adjusted upward or downward in the sole discretion of the Board of
Directors, but in no event will the Salary be less than $125,000.00 per year.
Employer further agrees to a targeted minimum base salary of $140,000.00
following the first anniversary of this Agreement.
(b) SIGNING BONUS. In order to induce the Executive to accept
employment with the Employer, the Employer agrees to pay the Executive a
bonus of $30,000.00 ("Signing Bonus"). Subject to the Executive's employment
by the Employer, such bonus shall be paid to the Executive $15,000.00 on
September 30, 1998 and $15,000.00 on December 31, 1998, unless Executive, at
his sole discretion, grants Employer an extension of time to pay the Signing
Bonus.
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(c) BENEFITS. The Executive will, during the Employment
Period, be permitted to participate in such pension, profit sharing, bonus,
life insurance, hospitalization, major medical, and other employee benefit
plans of the Employer that may be in effect from time to time, to the extent
the Executive is eligible under the terms of those plans (collectively, the
"Benefits").
(d) LIFE INSURANCE. Employer will provide or reimburse Executive
with a separate term life insurance policy in the amount of $250,000.00 through
the term of Executive's employment Agreement, payable to the Executive's
designated beneficiary.
3.2 INCENTIVE COMPENSATION. As additional compensation (the
"Incentive Compensation"), for the services to be rendered by the Executive
pursuant to this Agreement, the Executive will be entitled to receive such
Incentive Compensation as may be determined by the Board of Directors.
3.3 NONINCENTIVE COMPENSATION. As additional compensation (the
"Nonincentive Compensation") for the services to be rendered by the Executive
pursuant to this Agreement, the Executive shall be granted an incentive stock
option to purchase 100,000 shares of Class A Common Stock, at an exercise
price of $.39 per share, under the Option Plan. Employer shall cause to be
issued a Stock Option Agreement reflecting the date of grant as August 26,
1998. The options associated with this grant shall vest ratably over a three
(3) year period.
3.4 VACATIONS AND HOLIDAYS. The Executive will be entitled to paid
vacation each Fiscal Year in accordance with the vacation policies of the
Employer in effect for its executive officers from time to time which
vacation shall not be less than four (4) weeks. Vacation must be taken by
the Executive at such time or times as approved by the Chairman of the Board
of Directors. The Executive will also be entitled to the paid holidays and
other paid leave set forth in the Employer's policies. Vacation days and
holidays during any Fiscal Year that are not used by the Executive during
such Fiscal Year may not be used in any subsequent Fiscal Year without prior
written approval of the Chief Executive Officer, but Executive shall be paid
at the end of each Fiscal Year for any vacation days which Executive was
unable to use as a result of a request for approval of a vacation having been
denied by the Chairman of the Board of Directors.
Section 4. FACILITIES AND EXPENSES.
Section 4. FACILITIES AND EXPENSES. The Employer will furnish the
Executive office space, equipment, supplies, and such other facilities and
personnel as the Employer deems necessary or appropriate for the performance
of the Executive's duties under this Agreement and as are commensurate, with
Executive's duties under Section 2.3. The Employer will pay the Executive's
dues in such professional societies and organizations as the Chairman of the
Board of Directors of the Employer deems appropriate, and will pay on behalf
of the Executive (or reimburse the Executive for) reasonable expenses incurred
by the Executive at the request of, or on behalf of, the Employer in the
performance of the Executive's duties pursuant to this Agreement, and in
accordance with the Employees employment policies, including reasonable expenses
incurred by the Executive in attending conventions, seminars, and other business
meetings, in appropriate business
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entertainment activities, and for promotional expenses. The Executive must
file expense reports with respect to such expenses in accordance with the
Employer's policies.
Section 5. TERMINATION.
5.1 EVENTS OF TERMINATION. The Employment Period, the Executive's
Basic Compensation, Incentive Compensation, Nonincentive Compensation, and
any and all other rights of the Executive under this Agreement or otherwise
as an employee of the Employer will terminate (except as otherwise provided
in this Section 5)
(a) upon the death of the Executive;
(b) upon the Disability of the Executive (as defined in Section
5.2) immediately upon notice from either party to the other;
(c) for cause (as defined in Section 5.3), immediately upon
notice from the Employer to the Executive, or at such later time as such
notice may specify, or
(d) upon Executive's voluntary termination of employment, which
termination shall be effective thirty (30) days after Employer's receipt of
Executive's written resignation.
5.2 DISABILITY. For purposes of this Section 5, the Executive will
be deemed to have a "Disability", if, for physical or mental reasons, the
Executive is unable to perform the Executive's duties under this Agreement
for 120 consecutive days, or 180 days during any twelve month period, as
determined in accordance with this Section 5.2. The Disability of the
Executive will be determined by a medical doctor selected by written agreement
of the Employer and the Executive upon the request of either party no notice
to the other. If the Employer and Executive cannot agree on the selection of
a medical doctor then the two medical doctors will select a third medical
doctor who will determine whether the Executive has a Disability. The
determination of the medical doctor selected under this Section 5.2 will be
binding on both parties. The Executive must submit to a reasonable number of
examinations by the medical doctor making the determination of Disability
under this Section 5.2, and the Executive hereby authorizes the disclosure
and release to the Employer of such determination and all supporting medical
records. If the Executive is not legally competent, the Executive's legal
guardian or duly authorized attorney-in-fact will act on behalf of the
Executive, under this Section 5.2, for the purposes of submitting the
Executive to the examinations, and providing the authorization of disclosure,
required under this Section 5.2.
5.3 FOR CAUSE. For purposes of Section 5.1, the phrase "For Cause"
means (a) the Executive's breach of a material provision of this Agreement,
which breach is not substantially cured within (30) days after receipt of
written notice thereof from Employer; (b) the Executive's repeated failure to
adhere to any written Employer policy and Executive's failure to cure such
noncompliance within thirty (30) days after receipt of written notice hereof
from Employer; (c) the appropriation (or attempted appropriation) of a
material business opportunity of the Employer, including attempting to secure
or securing any personal profit in connection with any transaction entered
into on behalf of the Employer; (d) the misappropriation (or attempted
misappropriation) of
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any of the Employer's funds or property; or (e) the conviction of, the
indictment for (or its procedural equivalent), or the entering of a guilty
plea or plea or no contest with respect to, a felony or the equivalent
thereof.
5.4 TERMINATION PAY. Effective upon the termination of this
Agreement, the Employer will be obligated to pay the Executive (or, in the
event of his death, his designated beneficiary as defined below) only such
compensation as is provided in this Section 5.4, and in lieu of all other
amounts and in settlement and complete release of all claims the Executive
may have against the Employer under this Agreement. For purposes of this
Section 5.4, the Executive's designated beneficiary will be such individual
beneficiary or trust, located at such address, as the Executive may designate
by notice to the Employer from time to time or, if the Executive fails to give
notice to the Employer of such a beneficiary, the Executive's estate.
Notwithstanding the preceding sentence, the Employer will have no duty, in any
circumstances, to attempt to open an estate on behalf of the Executive, to
determine whether any beneficiary designated by the Executive is alive or to
ascertain the address of any such beneficiary, to determine the existence of any
trust, to determine whether any person or entity purporting to act as the
Executive's personal representative (or the trustee of a trust established by
the Executive) is duty authorized to act in that capacity, or to locate or
attempt to locate any beneficiary, personal representative, or trustee.
(a) Termination by the Employer for Cause. If the Employer
terminates this Agreement for Cause, the Executive will be entitled to
receive his Salary or Benefits through the date such termination is effective
and the vested portion of any Incentive Compensation and any Nonincentive
Compensation.
(b) TERMINATION AND DISABILITY. If this Agreement is
terminated by either party as a result of the Executive's Disability, as
determined under Section 5.2, the Employer will pay the Executive his Salary
and Benefits through the remainder of the calendar month during which such
termination is effective and for the lesser of (i) six consecutive months
thereafter, or (ii) the period until Disability insurance benefits commence
under the Disability insurance coverage, if any, furnished by the Employer to
the Executive. The Executive shall be entitled to the vested portions of his
Incentive Compensation and Nonincentive Compensation and to a pro rata
portion of his Incentive Compensation and Nonincentive Compensation for the
year during which such Disability occurs, but shall not be entitled to any
other Incentive Compensation or Nonincentive Compensation. Executive shall
be entitled to continue to participate in Employer's group health insurance
(if such participation is permitted by the insurance company providing such
insurance coverage) after Disability occurs, provided Executive reimburses
Employer for the costs of such coverage, Executive shall also be entitled to
acquire from Employer any life insurance policy in effect on Executive's life
at the date of Disability, provided Executive reimburses Employer the cash
surrender value, if any, accumulated in such life insurance policy and
assumes the obligation to make payments to maintain such insurance policy in
effect.
(c) TERMINATION UPON DEATH. If this Agreement is terminated
because of the Executive's death, the Executive will be entitled to receive
his Salary and Benefits through the end of the calendar month in which his
death occurs. The Executive shall be entitled to
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receive the vested portions of his Incentive Compensation and Nonincentive
Compensation and to a pro rata portion of his Incentive Compensation and
Nonincentive Compensation for the year during which the Executive's death
occurs, but shall not be entitled to any other Incentive Compensation or
Nonincentive Compensation for any subsequent year. Executive's family shall
be entitled to continue to participate in Employer's group health insurance
(if such participation is permitted by the insurance company providing such
insurance coverage) after Executive's occurs, provided Executive's family
reimburses Employer for the costs of such coverage.
(d) TERMINATION UPON RESIGNATION. If this Agreement is
terminated because of the voluntary resignation of the Executive hereunder,
the Executive shall be entitled to receive his Salary and Benefits through
the effective date of his termination and any vested portions of his
Incentive Compensation or Nonincentive Compensation. The Executive shall not
be entitled to any other Incentive Compensation or to any other Nonincentive
Compensation.
(e) TERMINATION BY THE EMPLOYER NOT FOR CAUSE. If the Employer
terminates this Agreement not for cause, the Executive, at the option of the
Executive, will be entitled to either: (i) receive all of the compensation
and Benefits provided by Section 3.1, and the Incentive Compensation provided
by Section 3.2 and the Nonincentive Compensation provided by Section 3.3 for the
remainder of the Employment Term, and the Executive shall be subject to the
provisions of Section 7.2 hereof, or (ii) the Executive shall be entitled to
receive all of the compensation and Benefits provided by Section 3.1 and the
vested portions of any Incentive Compensation provided by Section 3.2 and
Nonincentive Compensation provided by Section 3.3 through the end of the
calendar month in which such termination occurs, and the Executive shall not be
subject to the provisions of Section 7.2.
(f) BENEFITS. The Executive's accrual of, or participation in
plans providing for, the Benefits will cease at the effective date of the
termination of this Agreement, and the Executive will be entitled to accrued
Benefits pursuant to such plans only as provided in such plans. The
Executive will not receive, as part of his termination pay pursuant to this
Section 5, any payment or other compensation for any holiday, sick leave, or
other leave unused on the date the notice of termination is given under this
Agreement.
(g) EXPIRATION OF EMPLOYMENT. Employer agrees to notify the
Executive not less than sixty (60) days prior to the expiration of the initial
term of this Agreement or any subsequent continuation thereof as to whether
Employer desires to extend the Employment Period of this Agreement.
5.5 This Agreement may be terminated by Executive, by written notice
to Employer, in the event of the Employer's breach of a material provision of
this Agreement, which breach is not substantially cured within thirty (30)
days after Employer's receipt of written notice thereof from Executive. If
this Agreement is terminated by Executive as a result of Employer's breach,
Executive shall not be subject to the provisions of Section 7.2 hereof.
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5.6 TERMINATION UPON CHANGE IN CONTROL. Notwithstanding any other
provision of this Agreement, the Executive's employment under this Agreement
may be terminated during the Employment Period by the Executive if a "Change
of Control" (as defined below) of the Employer occurs without the consent of
the Executive. If Executive elects to terminate his employment as a result
of a Change of Control, Executive will be entitled to receive his salary and
benefits and the vested portions of his Incentive Compensation and
Nonincentive Compensation for a period of two (2) years after the Effective
Date of such termination. For purposes of this Agreement, a "Change of
Control" of Employer shall be deemed to have occurred if, after the Effective
Date (a) any "person" (as such term is defined in Sections 1 3(d) and 14(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) is
or becomes the "beneficial owner" (as defined in Rule ]3d-3 under the
Exchange Act), directly or indirectly, of securities of the Employer
representing 50% or more of the combined voting power of Employer's then
outstanding securities, without the prior approval of at least a majority of
the members of the Board in office immediately prior to such person obtaining
such percentage interest; (b) there occurs a proxy contest or a consent
solicitation, or Employer is a party to a merger, consolidation, sale of
assets, plan of liquidation or other reorganization not approved by at least
a majority of the members of the Board, as a consequence of which members of
the Board in office immediately prior to such transaction or event constitute
less than a majority of the Board thereafter; or (c) during any period of two
consecutive years, other than as a result of an event described in clause (b)
of this Section 5.6, individuals who at the beginning of such period
constituted the Board (including for this purpose any new director whose
election was approved by a vote of at least a majority of the directors then
in office who were directors at the beginning of such period) cease for any
reason to constitute at least a majority of the members of the Board.
Section 6. NON-DISCLOSURE CONVENANT. EMPLOYEE INVENTIONS.
6.1 ACKNOWLEDGMENTS BY THE EXECUTIVE. The Executive acknowledges
that during the Employment Period and as a part of his employment, the
Executive will be afforded access to Confidential Information; public
disclosure of such Confidential Information could have an adverse effect on
the Employer and its business; because the Executive possesses substantial
technical expertise and skill with respect to the Employer's business, the
Employer desires to obtain exclusive ownership of each Employee Invention,
and the Employer will be at a substantial competitive disadvantage if it
fails to acquire exclusive ownership of each Employee Invention; and the
provisions of this Section 6 are reasonable and necessary to prevent the
improper use or disclosure of Confidential Information and to provide the
Employer with exlusive ownership of all Employee Inventions.
6.2 AGREEMENTS OF THE EXECUTIVE. In consideration of the
compensation and benefits to be paid or provided to the Executive by the
Employer under this Agreement, the Executive covenants as follows:
(a) Confidentiality.
(i) During and for a period of two (2) years following
the Employment Period, the Executive will hold in confidence the Confidential
Information and will
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not disclose it to any person except with the specific prior written consent
of the Employer or except as otherwise expressly permitted by the terms of this
Agreement.
(ii) Any trade secrets of any Affiliate will be entitled
to all of the protections and benefits under the common law of the State of
Texas and any other applicable law. If any information that the Employer
deems to be a trade secret is found by a court of competent jurisdiction not
to be a trade secret for purposes of this Agreement, such information will,
nevertheless, be considered Confidential Information for purposes of this
Agreement. The Executive hereby waives any requirement that the Employer
submit proof of the economic value of any trade secret or post a bond or
other security.
(iii) None of the foregoing obligations and restrictions
applies to any part of the Confidential Information that the Executive
demonstrates either (x) was known by Executive prior to the date of his
employment by the Employer, (y) was or became generally available to the
public other than as a result of a disclosure by the Executive, or (z) was
made known to Executive on a nonconfidential basis from a source other than
Employer or its representatives or agents, provided that such source is not
bound by a confidentiality agreement with, or other oblilgation of secrecy
to, Employer or another party.
(iv) The Executive will not remove from the premises of
the Employer or any Affiliate (except to the extent such removal is for
purposes of the performance of the Executive's duties at home or while
traveling, or except as otherwise specifically authorized by the Employer or
such Affiliate) any document, record, notebook, plan, model, component,
device, or computer software or code, whether embodied in a disk or in any
other form (collectively, the "Proprietary Items"). The Executive recognizes
that, as between the Employer or any Affiliate and the Executive, all of the
Proprietary Items, whether or not developed by the Executive, are the
exclusive property of the Employer or the Affiliates. Upon termination of
this Agreement by either party, or upon the request of the Employer or any
Affiliate during the Employment Period, the Executive will return to the
Employer or the Affiliates all of the Proprietary Items in the Executive's
possession or subject to the Executive's control, and the Executive shall not
retain any copies, abstracts, sketches, or other physical embodiment of any
of the Proprietary Items.
(b) EMPLOYEE INVENTIONS. Each Executive Invention will belong
exclusively to the Employer. The Executive acknowledges that all of the
Executive's writing, works of authorship, specially commissioned works, and
other Employee Inventions are works made for hire and the property of the
Employer, including any copyrights, patents, or other intellectual property
rights pertaining thereto. If it is determined than any such works are not
works made for hire, the Executive hereby assigns to the Employer all of the
Executive's right, title, and interest, including all rights of copyright,
patent, and other intellectual property tights, to or in such Employee
Inventions. The Executive covenants that he will promptly:
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(i) disclose to the Employer in writing any Employee
Invention,
(ii) assign to the Employer or to a party designated by
the Employer, at the Employer's request and without additional compensation,
all of the Executive's right to the Employee Invention for the United States
and all foreign jurisdictions,
(iii) execute and deliver to the Employer such
applications, assignments, and other documents as the Employer may request in
order to apply for and obtain patents or other registrations with respect to
any Employee Invention in the United States and any foreign jurisdictions;
(iv) sign all other papers necessary to carry out the above
obligations, and
(v) give testimony and render any other assistance in
support of the Employer's rights to any Employee Invention.
6.3 DISPUTES OR CONTROVERSIES. The Executive recognizes that should
a dispute or controversy arising from or relating to this Agreement be
submitted for adjudication to any court, arbitration panel, or other third
party, the preservation of the secrecy of Confidential Information may be
jeopardized. All pleadings, documents, testimony, and records relating to any
such adjudication will be maintained in secrecy and will be available for
inspection by the Employer, the Executive, and their respective attorneys and
experts, who will agree, in advance and in writing, to receive and maintain
all such information in secrecy, except as may be limited by them in writing,
Section 7. NON-COMPETITION AND NON-INTERFERENCE.
7.1 ACKNOWLEDGMENTS BY THE EXECUTIVE. The Executive acknowledges and
agrees that the limitations set forth in this Section 7 are a necessary part
of and ancillary to the Executive's agreement not to disclose Confidential
Information, reasonable and do not impose a greater restraint on the
activities of the Executive than is necessary to protect the business
interest of the Employer, In the event that any such territorial, scope, or
time limitation are deemed to be unreasonable by a court of competent
jurisdiction, the Executive agrees to the reduction of the territorial, scope
or time limitation to the area, scope or time which such court shall have
deemed reasonable.
7.2 COVENANTS OF THE EXECUTIVE. In consideration of the
acknowledgments by the Executive, and in consideration of the compensation and
benefits to be paid or provided to the Executive by the Employer in the event
this Agreement is terminated pursuant to Section 5.4(a), 5.4(d) or 5.4(e)(i),
the Executive covenants that he will not, directly or indirectly:
(a) during the Employment Period, except in the course of his
employment hereunder, and during the Post-Employment Period (as defined
below), engage or invest in, own, manage, operate, finance, control, or
participate in the ownership, management, operation, financing, or control
of, be employed by, associated with, or in any manner connected with, lend
the Executive's name or any similar name to, lend Executive's credit to or
render services or advice to, any business whose products or activities
compete in whole
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or in part with the products or activities of the Employer or any Affiliate
of Employer anywhere within the geographic areas in which the Employer or any
such Affiliate now or hereafter conducts its business, provided, however,
that the Executive may purchase or otherwise acquire up to (but not more
than) one percent of any class of securities of any enterprise (but without
otherwise participating in the activities of such enterprise) if such
securities are listed on any national or regional securities exchange or have
been registered under Section 12(g) of the Securities Exchange Act of 1934;
(b) whether for the Executive's own account or for the account
of any other person, at any time during the Employment Period and the
Post-Employment Period, solicit business of the same or similar type being
carried on by the Employer or any Affiliate of Employer, from any person
known by the Executive to be a customer of the Employer or any such
Affiliate, whether or not the Executive had personal contact with such person
during and by reason of the Executive's employment with the Employer;
(c) whether for the Executive's own account or the account of
any other person at any time during the Employment Period and the
Post-Employment Period, (i) solicit, employ, or otherwise engage as an
employee, independent contractor, or otherwise, any person who is or was an
employee of the Employer or any Affiliate of Employer at any time during the
Employment Period or in any manner induce or attempt to induce any employee
of the Employer and any such Affiliate to terminate his employment with the
Employer; or (ii) interfere with the Employer's or any Affiliate's
relationship with any person, including any person who at any time during the
Employment Period was an employee, contractor, supplier, or customer of the
Employer or any such Affiliate; or
(d) at any time during or after the Employment Period, disparage
the Employer or any of its shareholders, directors, officers, employees, or
agents.
For purposes of this Section 7.2, the term "POST-EMPLOYMENT PERIOD"
means the two-year period beginning on the date of termination of the
Executive's employment with the Employer.
If any covenant in this Section 7.2 is held to be unreasonable,
arbitrary, or against public policy, such covenant will be considered to be
divisible with respect to scope, time, and geographic area, and such lesser
scope, time, or geographic area, or all of them, as a court of competent
jurisdiction may determine to be reasonable, not arbitrary, and not against
public policy, will be effective, binding, and enforceable against the
Executive.
The Executive will, while the covenant under this Section 7.2 is in
effect, give notice to the Employer, within ten days after accepting any
other employment, of the identity of the Executive's new employer. The
Employer may notify such new employer that the Executive is bound by this
Agreement.
Notwithstanding the foregoing to the contrary, the Executive will not
be subject to any covenant under this Section 7.2 in the event:
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(i) the term of the Executive's employment under this Agreement
is not renewed pursuant to Section 2.2; or
(ii) Employer voluntarily files a bankruptcy or insolvency
proceeding (or an involuntary bankruptcy or insolvency proceeding is filed
against Employer, which proceeding has not been dismissed within ninety (90)
days from the filing thereof).
Section 8. GENERAL PROVISIONS.
8.1 The Executive acknowledges that the injury that would be
suffered by the Employer as a result of a breach of the provisions of this
Agreement (including any provision of Sections 6 and 7) would be irreparable
and that an award of monetary damages to the Employer for such a breach would
be an inadequate remedy. Consequently, the Employer will have the right, in
addition to any other rights it may have, to obtain injunctive relief to
restrain any breach or threatened breach or otherwise to specifically enforce
any provision of this Agreement, and the Employer will not be obligated to post
bond or other security in seeking such relief Any such remedy shall be in
addition to any damages which the Employer may be legally entitled to recover
as a result of any breach by the Employee of any provision of this Agreement.
The Employer may pursue any of the remedies described in this Section 8
concurrently or consecutively and in any order as to such breach or
violation, and the pursuit of any one of such remedies at any time will not
be deemed an election of remedies or a waiver of the right to pursue any
other available remedy.
8.2 ESSENTIAL AND INDEPENDENT COVENANTS. The covenants by the
Executive in Sections 6 and 7 are essential elements of this Agreement
supported by the payment of $10.00 and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged by Executive,
and without the Executive's agreement to comply with such covenants, the
Employer would not have entered into this Agreement or employed or continued
the employment of the Executive. The Employer and the Executive have
independently consulted their respective counsel and have been advised in all
respects concerning the reasonableness and propriety of such covenants, with
specific regard to the nature of the business conducted by the Employer.
8.3 REPRESENTATIONS AND WARRANTIES BY THE EXECUTIVE. The Executive
represents and warrants to the Employer that the execution and delivery by
the Executive of this Agreement do not, and the performance by the Executive
of the Executive's obligations hereunder will not, with or without the giving of
notice or the passage of time, or both: violate any judgment, writ, injunction,
or order of any court, arbitrator, or governmental agency applicable to the
Executive; or conflict with, result in the breach of any provisions of or the
termination of, or constitute a default under, any agreement to which the
Executive is a party or by which the Executive is or may be bound. The
Executive further represents and warrants to the Employer that no agreements or
understandings, whether written or oral, are currently in force and effect
between the Executive and the Employer, or any other Person concerning the
subject matter of this Agreement.
8.4 OBLIGATIONS CONTINGENT ON PERFORMANCE. The obligations of the
Employer hereunder, including its obligation to pay the compensation
provided for herein, are contingent upon the Executive's performance of the
Executive's obligations hereunder.
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8.5 WAIVER. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by
either party in exercising any right, power, or privilege under this
Agreement will operate as a waiver of such right, power, or privilege, and no
single or partial exercise of any such right, power, or privilege will
preclude any other or further exercise of such tight, power, or privilege or
the exercise of any other right, power, or privilege. To the maximum extent
permitted by applicable law, no claim or right arising out of this Agreement
can be discharged by one party, in whole or in part, by a waiver or
renunciation of the claim or right unless in writing signed by the other
party; no waiver that may be given by a party will be applicable except in
the specific instance for which it is given; and no notice to or demand on
one party will be deemed to be a waiver of any obligation of such party or of
the right of the party giving such notice or demand to take further action
without notice or demand as provided in this Agreement.
8.6 NOTICES. All notices pertaining to this Agreement must be in
writing, must be sent to the addressee at the address set forth in this
Section, or at such other address as the addressee has designated by a notice
given in the manner set forth in this Section, and must be sent by telegram,
telex, facsimile, electronic mail, courier, or prepaid, certified U.S. Mail.
Notices will be deemed given when received, if sent by telegram, telex,
electronic mail or facsimile and if received between the hours of 8:00 a.m.
and 5:00 p.m., local time of the destination address, on a business day (with
confirmation of completed transmission sufficing as prima facie evidence of
receipt of a notice sent by telex, telecopy, electronic mail, or facsimile),
and when delivered and receipted for (or when attempted delivery is refused
at the address where sent) if sent by courier or by certified U.S. Mail.
Notices sent by telegram, telex, electronic mail, or facsimile and received
between 12:01 a.m. and 7:59 a.m., local time of the destination address, on a
business day will be deemed given at 8:00 a.m., on that same day. Notices
sent by telegram, telex, electronic mail, or facsimile and received at a time
other than between the hours of 12:01 a.m. and 5:00 p.m., local time of the
destination address, on a business day will be deemed given at 8:00 a.m. on
the next following business day after the day of receipt. The addresses for
notice are as follows:
If to Employer: CyNet, Inc.
00000 Xxxxx Xxxx, Xxxxx 000 Xxxxxxx, Xxxxx 00000
Attention- General Counsel Facsimile No.: (000) 000-0000
With a copy to: Chamberlain, Hrdlicka, White, Xxxxxxxx & Xxxxxx
0000 Xxxxx Xxxxxx, Xxxxx 0000 Xxxxxxx, Xxxxx 00000
Attention: Xx. Xxxxx X. Spring, III
Facsimile No.: (000) 000-0000
and
If to the Executive: R. Xxxx Xxxxx
0000 Xxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
8.7 BINDING EFFECT DELEGATION OF DUTIES PROHIBITED. This Agreement
shall inure to the benefit of, and shall be binding upon, the parties hereto
and their respective successors, assigns,
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heirs, and legal representatives, including any entity with which the
Employer may merge or consolidate or to which all or substantially all of its
assets may be transferred. The duties and covenants of the Executive under
this Agreement, being personal, may not be delegated.
8.8 INTERPRETATION. Whenever possible, each provision of this
Agreement shall be determination that any interpreted in such manner as to
be effective and valid under applicable law. A provision of this Agreement is
unenforceable or invalid shall not affect the enforceability or validity of
any other provision.
8.9 HEADINGS. The section headings appearing in this Agreement have
been inserted for convenience only and shall be given no substantive meaning
or significance whatever in construing the terms and provisions of this
Agreement.
8.10 ENTIRE AGREEMENT. This Agreement constitutes the final and
entire agreement and understanding between the parties to this Agreement
concerning the subject matter of this Agreement, and this Agreement
supersedes and replaces all prior agreements and understandings, whether
written or oral, between such parties concerning the subject matter of this
Agreement. No alleged representation, warranty, promise, inducement, or
statement of intention not expressly set forth in this Agreement is binding
on any party to this Agreement.
8.11 ACKNOWLEDGMENT AND RELEASE BY THE EXECUTIVE. By his execution of
this Agreement, the Executive acknowledges that this Agreement supersedes and
replaces all other agreements and understandings, whether written or oral,
between the Executive and any other Person concerning the subject matter of
this Agreement. In consideration for the rights and obligations arising
under this Agreement, the Executive hereby voluntarily, knowingly, fully,
finally, completely, and forever releases, relinquishes, and forever
discharges the Employer and its Affiliates, their officers, directors,
employees, and agents, from any and all claims, actions, demands, and causes
of action of whatever kind or character, whether known or unknown, joint or
several, which the Executive might have or might claim to have against the
Employer for any and all injuries, harm, damages, penalties, costs, losses,
expenses, attorneys' fees, liabilities, or other detriments, if any,
whatsoever and whenever incurred, suffered, or claimed by the Executive
arising from any prior agreement or understanding, whether written or oral,
between the Executive and the Employer, or any other Person concerning the
subject matter of this Agreement.
8.12 GOVERNING LAW. This Agreement will be governed by the laws of
the State of Texas without regard to conflicts of laws principles.
8.13 JURISDICTION. Any action or proceeding seeking to enforce any
provision of, or based on any right arising out of, this Agreement may be
brought against either of the parties in the courts of the State of Texas,
County of Xxxxxx, or, if it has or can acquire jurisdiction, in the United
States District Court for the District of Texas, and each of the parties
consents to the jurisdiction of such courts (and of the appropriate appellate
courts) in any such action or proceeding and waives any objection to venue
laid therein. Process in any action or proceeding referred to in the
preceding sentence may be served on either party anywhere in the world.
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IN WITNESS; WHEREOF, the parties have executed this Agreement as of the
date first written above.
EMPLOYER:
CYNET, INC.
By:
--------------------------------
Xxxxxxx X. Xxxxx, Xx., President
EXECUTIVE:
-----------------------------------
R. Xxxx Xxxxx
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