EXHIBIT 10.3
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "AGREEMENT") is entered into on this
19th day of March 1998 between ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, Inc., a Texas corporation
(the "COMPANY"), and ▇▇▇▇▇ ▇. ▇▇▇▇ ("▇▇. ▇▇▇▇").
RECITALS
This Agreement sets forth in definitive form the terms of ▇▇. ▇▇▇▇'▇
employment by the Company.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements of the parties contained herein, the Company and ▇▇. ▇▇▇▇ hereby
agree as follows:
1. EMPLOYMENT. The Company will employ ▇▇. ▇▇▇▇ and ▇▇. ▇▇▇▇ accepts
employment with the Company for a period of one year beginning on the date of
this Agreement; PROVIDED, HOWEVER, that on each of the first and second
anniversary dates of this Agreement such period of employment shall extend
for an additional one year unless either party notifies the other party to
the contrary at least ninety (90) days prior to such anniversary date (such
period, as the same may be extended as provided above, being the "INITIAL
PERIOD"). ▇▇. ▇▇▇▇'▇ employment may continue after the Initial Period but
will then be terminable by either party at will, with or without cause. The
obligations of the Company and ▇▇. ▇▇▇▇ set forth in that certain
"Noncompetition, Property Rights and Trade Secrets Agreement" and in that
certain "Confidentiality Agreement" (each as defined in Section 8) (referring
to noncompetition, intellectual property rights and confidentiality,
respectively) and in Section 9 (referring to termination) will survive
termination of ▇▇. ▇▇▇▇'▇ employment, regardless of reason.
2. RESIDENCE AND BUSINESS TRAVEL. Each of the parties agrees that the
primary location at which ▇▇. ▇▇▇▇ will be expected to render services
hereunder will be in Dallas, Texas or its environs, but that ▇▇. ▇▇▇▇ will,
from time to time, be expected to travel to other locations where the Company
transacts (or proposes to transact) business and undertake such other
business travel as is reasonably required in the discharge of his duties set
forth below and for the successful operation of the Company.
3. DUTIES. ▇▇. ▇▇▇▇ will be employed initially as the Chief Financial
Officer of the Company, reporting to the Chief Executive Officer of the
Company. In such capacity, ▇▇. ▇▇▇▇ shall be responsible for the preparation
of the Company's financial statements, supervising and maintaining the
Company's accounts and conducting the Company's financial affairs generally,
supervising the Company's personnel involved in the foregoing, and
supervising the Company's Human Resources functions and personnel. In
discharging his duties, ▇▇. ▇▇▇▇ shall have such authority as is reasonably
necessary to perform such duties.
▇▇. ▇▇▇▇ agrees that, to the best of his ability and experience, he will
at all times conscientiously perform such duties and obligations as may be
assigned to him by the Company's Chief Executive Officer or the Company's
Board of Directors.
4. FULL-TIME EMPLOYMENT. ▇▇. ▇▇▇▇'▇ employment will be on a full-time
basis, in accordance with policies of the Company applicable to executive
officers. In addition to such restrictions as are set forth in the
Noncompetition, Property Rights and Trade Secrets Agreement referenced
herein, ▇▇. ▇▇▇▇ will not engage in any other business or render any
commercial or professional services, directly or indirectly, to any other
person or organization, whether for compensation or otherwise, provided that
▇▇. ▇▇▇▇ may (a) provide incidental assistance to family members on matters
of family business or with respect to their personal investments; (b) engage
in charitable activities on behalf of civic, educational or other nonprofit
organizations; and (c) subject to the approval of the Company's Chief
Executive Officer (which approval may be given or withheld in his sole
discretion), sit on the board of directors of corporations and other business
organizations; provided in each case that such activities do not conflict
with or interfere with ▇▇. ▇▇▇▇'▇ obligations to the Company. The parties
recognize and agree that ▇▇. ▇▇▇▇ currently is a member of the Board of
Directors of FAAC Incorporated, and that the consent of the Company's Chief
Executive Officer contemplated by the preceding sentence has been previously
given with regard thereto and is ratified hereby. ▇▇. ▇▇▇▇ may make personal
investments in non-publicly traded corporations, partnerships or other
entities that are not engaged in any business activities competitive with the
Company. Notwithstanding anything to the contrary contained in this
Agreement, ▇▇. ▇▇▇▇ may make personal investments in publicly traded
corporations regardless of the business they are engaged in, provided that
▇▇. ▇▇▇▇ does not at any time own in excess of two percent (2%) of any class
of the issued and outstanding equity securities of any such corporation.
5. SALARY; POTENTIAL INCENTIVE COMPENSATION; ANNUAL REVIEW. ▇▇.
▇▇▇▇'▇ annual base salary for the Initial Period will be not less than
$180,000. All base salary will be payable on the Company's regular payroll
dates, less required withholdings.
If the Company's financial performance meets or exceeds the standards
for financial performance established for a fiscal year by the Company's
Board of Directors (i.e., the Company's "board plan"), then ▇▇. ▇▇▇▇ will be
eligible to receive, subject to such reasonably achievable incentive
compensation criteria as the Company's Board of Directors establishes from
time to time, incentive compensation (which may be in cash or other forms of
consideration, or both) equal to up to seventy percent (70%) of ▇▇. ▇▇▇▇'▇
annual base salary, on terms no less favorable than those applicable to other
executive officers of the Company (e.g., its Chairman, Vice-Chairman, Chief
Executive Officer and Chief Financial Officer). ▇▇. ▇▇▇▇ acknowledges that
the Company's Board of Directors has complete and sole discretion
(exercisable in good faith) to establish and revise the Company's "board
plan" and such reasonably achievable criteria; PROVIDED, HOWEVER, that no
such action may retroactively alter or limit the amount of any incentive
compensation actually and previously earned by ▇▇. ▇▇▇▇.
The Company, acting through its Chief Executive Officer or his or her
designee, shall provide to ▇▇. ▇▇▇▇, and provide ▇▇. ▇▇▇▇ the opportunity to
participate in, an employment performance review not less frequently than
annually.
6. BENEFITS. ▇▇. ▇▇▇▇ will also be entitled to insurance, vacation
and other employee benefits commensurate with his position (and reasonably
consistent with the level of such benefits as are afforded other executive
officers of the Company) in accordance with the Company's
EMPLOYMENT AGREEMENT - Page 2
policies in effect from time to time with respect to executive officers. (As
used in the preceding sentence, employee benefits do not include stock option
grants or other equity-based compensation.) ▇▇. ▇▇▇▇ acknowledges receipt of
a summary of the Company's standard employee benefits policies in effect as
of the date of this Agreement.
7. REIMBURSEMENT OF NORMAL BUSINESS EXPENSES. The Company will, but
in accordance with the Company's policies in effect from time to time,
reimburse ▇▇. ▇▇▇▇ for all out-of-pocket reasonable business expenses
incurred by ▇▇. ▇▇▇▇ in connection with the performance of his duties under
this Agreement, upon submission of the required documentation required
pursuant to the Company's standard policies and record-keeping procedures.
8. INTELLECTUAL PROPERTY. Simultaneously with the execution of this
Agreement, ▇▇. ▇▇▇▇ agrees to execute and deliver (if he has not done so
already) that certain Noncompetition, Property Rights and Trade Secrets
Agreement between him and the Company, a copy of which is attached to this
Agreement as ATTACHMENT A, and that certain Confidentiality Agreement between
him and the Company, a copy of which is attached to this Agreement as
ATTACHMENT B.
9. TERMINATION.
(a) BY THE COMPANY. Notwithstanding Section 1, the Company may
terminate ▇▇. ▇▇▇▇'▇ employment at any time during the Initial Period, with
or without cause, upon notice to ▇▇. ▇▇▇▇.
(b) BY ▇▇. ▇▇▇▇. During the Initial Period, ▇▇. ▇▇▇▇ may
terminate his employment upon notice to the Company only if (i) the Company
is in material breach of this Agreement, (ii) there shall exist a Post
Transaction Reassignment (as subsequently defined), or (iii) ▇▇. ▇.▇.
▇▇▇▇▇▇▇▇ is no longer either or both of the Chairman or the Chief Executive
Officer of the Company; PROVIDED, HOWEVER, that in the case of clauses (i)
and (ii) above, such termination will become effective only upon the
expiration of 30 days following such notice and then only if the breach or
event, as applicable, remains uncured or unremedied, respectively, as of the
effective time of such termination. Such termination shall be deemed a
termination by the Company of ▇▇. ▇▇▇▇'▇ employment under Section 9(a)
without cause, for which ▇▇. ▇▇▇▇ shall have the remedy set forth in Section
9(c).
For the purposes hereof, a "Post Transaction Reassignment" shall mean
the substantial diminution in ▇▇. ▇▇▇▇'▇ duties or responsibilities during
the two months prior to, or the six months after, the consummation of any
transaction (or the last of any series of related transactions) involving the
Company's equity securities or a merger or consolidation of the Company (i)
resulting in the acquisition by any person, entity or group (within the
meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended), not currently possessing the power to elect a majority of the Board
of Directors of the Company, of such power, or (ii) following which the Chief
Executive Officer of the Company serves neither in that capacity nor as
Chairman of the Company (each of the matters referred to in clause (i) and
(ii) above being a "Transaction").
EMPLOYMENT AGREEMENT - Page 3
(c) REMEDY. Upon termination of ▇▇. ▇▇▇▇'▇ employment during the
Initial Period pursuant to Section 9(a) without cause, or pursuant to Section
9(b), only (at which time he shall cease to be an employee of the Company for
all purposes), the Company will (i) thereafter pay to ▇▇. ▇▇▇▇ on the
Company's regular payroll dates and less required withholdings, base salary
at the rate paid to ▇▇. ▇▇▇▇ immediately prior to such termination for the
lesser of (1) the period commencing immediately after such termination and
ending when ▇▇. ▇▇▇▇ accepts other full-time employment and (2) the greater
of (A) nine months and (B) the remaining balance of the Initial Period (the
"Severance Period"); (ii) provide ▇▇. ▇▇▇▇, for the Severance Period, with
major medical health and dental insurance reasonably comparable to employee
benefits then provided to the Company's executive officers in accordance with
the Company's employee benefits policies; and (iii) pay to ▇▇. ▇▇▇▇, as and
when the same would be otherwise payable, any incentive compensation for the
Severance Period based on incentive compensation criteria that, prior to or
on the date of termination, have been established by the Company's Board of
Directors, determined as to amount as if ▇▇. ▇▇▇▇ had remained an employee of
the Company hereunder throughout the Severance Period; PROVIDED, HOWEVER,
that nothing in this Agreement shall be construed as entitling ▇▇. ▇▇▇▇ to
receive stock option grants or grants of other equity-based compensation, or
other consideration in lieu thereof, after such date of termination. Where
the Severance Period shall end prior to the conclusion of any measurement
period relating to incentive compensation, ▇▇. ▇▇▇▇ shall not be disqualified
from receiving such incentive compensation, but instead shall be entitled to
a pro rata amount, based upon the number of days during which he was deemed
to have been eligible for incentive compensation, as compared to the number
of days constituting the entire such measurement period.
In addition, upon termination of ▇▇. ▇▇▇▇'▇ employment during the
Initial Period pursuant to Section 9(a) without cause, or pursuant to Section
9(b), only, and notwithstanding any provision in any stock option agreement
or restricted stock grant to the contrary, for purposes of the vesting of
stock options granted to ▇▇. ▇▇▇▇ on or before the date of this Agreement
(including stock options granted to ▇▇. ▇▇▇▇ as of January 31, 1998), and the
lapse of restrictions associated with a restricted stock grant to ▇▇. ▇▇▇▇ as
of January 31, 1998, such termination shall be deemed to have occurred on the
later of (i) nine months after the actual date of such termination and (ii)
the last day of the Initial Period (and the vesting of such stock options,
and the lapse of such restrictions, shall to that extent be accelerated
accordingly).
PROVIDED, HOWEVER, that upon termination of ▇▇. ▇▇▇▇'▇ employment
pursuant to Section 9(a), without cause, during the Initial Period AND within
six months after a Transaction, then, notwithstanding any provision in any
stock option agreement or restricted stock grant to the contrary, for
purposes of the vesting of stock options granted to ▇▇. ▇▇▇▇ on or before the
date of this Agreement (including stock options granted to ▇▇. ▇▇▇▇ as of
January 31, 1998), and the lapse of restrictions associated with a restricted
stock grant to ▇▇. ▇▇▇▇ as of January 31, 1998, such termination shall be
deemed to have occurred four years after the actual date of such termination
(and the vesting of such stock options, and the lapse of such restrictions,
shall to that extent be accelerated accordingly).
If the Company terminates ▇▇. ▇▇▇▇'▇ employment with cause, or if ▇▇.
▇▇▇▇ terminates his employment in circumstances constituting a breach of this
Agreement, then none of the
EMPLOYMENT AGREEMENT - Page 4
foregoing post-termination payments or benefits, or any other
post-termination or severance payments or benefits, shall be made or provided
to ▇▇. ▇▇▇▇.
For purposes of this Agreement, the term "cause" shall mean conduct
involving one or more of the following as determined by the Company in its
reasonable discretion: (i) the substantial, material and continuing failure
of ▇▇. ▇▇▇▇, after reasonable notice thereof, to render services to the
Company or any subsidiary in accordance with the terms or requirements of
this Agreement; (ii) disloyalty, gross negligence, willful misconduct,
dishonesty or breach of fiduciary duty to the Company or any subsidiary that
results in direct or indirect material loss, damage or injury to the Company
or any subsidiary; (iii) the commission of an act of embezzlement or fraud;
(iv) deliberate disregard of the rules or policies of the Company that
results in direct or indirect material loss, damage or injury to the Company
or any subsidiary; (v) the unauthorized and intentional disclosure of any
trade secret or confidential information of the Company or any subsidiary;
(vi) the commission of an act that constitutes unfair competition with the
Company or any subsidiary or which induces any customer or supplier to
terminate a contract with the Company or any subsidiary, that results in
direct or indirect material loss, damage or injury to the Company or any
subsidiary; (vii) habitual drunkenness or an addiction to drugs; or (viii)
commission of a crime of moral turpitude.
The Company's obligation to make payments (and provide benefits), if
any, pursuant to this Section 9(c) is subject to the condition that ▇▇. ▇▇▇▇
execute and deliver to the Company a comprehensive, general release of the
Company (and its directors, officers, shareholders, employees, agents and
other representatives), in form satisfactory to the Company and its counsel,
releasing the Company from and against any claims, damages and the like that
the Company might or allegedly could otherwise be obligated to pay ▇▇. ▇▇▇▇
as a result of the termination of ▇▇. ▇▇▇▇'▇ employment with the Company
(including for claims of employment discrimination, wrongful termination or
breach of this Agreement).
(d) UPON DEATH. Except as otherwise provided for in this
Agreement, if ▇▇. ▇▇▇▇ dies during the term of this Agreement, then the
Company will pay his estate an amount equal to all earned and unpaid salary,
bonuses (if any) accrued and payable and accrued benefits, all as of the date
of his death.
(e) SURVIVAL. ▇▇. ▇▇▇▇'▇ and the Company's obligations under
Sections 8, 9 and 10(h) of this Agreement and, to the extent that any
allowable expenses have not been reimbursed as of the time of such
termination, under Section 7 of this Agreement, will survive the termination
of ▇▇. ▇▇▇▇'▇ employment with the Company.
10. MISCELLANEOUS.
(a) NOTICES. Any and all notices permitted or required to be
given under this Agreement must be in writing. Notices will be deemed given
(i) when personally received or when sent by facsimile transmission (to the
receiving party's facsimile number), (ii) on the first business day after
having been sent by commercial overnight courier with written verification of
receipt, or (iii) on the third business day after having been sent by
registered or certified mail from a location on the United States mainland,
return receipt requested, postage prepaid,
EMPLOYMENT AGREEMENT - Page 5
whichever occurs first, at the address set forth below or at any new address,
notice of which will have been given in accordance with this Section 10(a):
(i) If to the Company: ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇▇ Rain ▇▇▇▇▇▇▇
(A Professional Corporation)
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) If to ▇▇. ▇▇▇▇: ▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) AMENDMENTS. This Agreement, including the Attachments hereto,
contains the entire agreement and supersedes and replaces all prior
agreements between the Company and ▇▇. ▇▇▇▇ concerning ▇▇. ▇▇▇▇'▇ employment
and employment benefits. This Agreement may not be changed or modified in
whole or in part except by a writing signed by the party against whom
enforcement of the change or modifications is sought.
(c) SUCCESSORS AND ASSIGNS. This Agreement will not be assignable
by either ▇▇. ▇▇▇▇ or the Company, except that the rights and obligations of
the Company under this Agreement may be assigned to a corporation which
succeeds the Company as the result of a merger or other corporate
reorganization and which continues the business of the Company, or
EMPLOYMENT AGREEMENT - Page 6
a subsidiary of the Company, provided that the Company guarantees the
performance by such assignee of the Company's obligations hereunder.
(d) GOVERNING LAW. The laws of the State of Texas (without regard
to its choice of law principles that might apply the law of another
jurisdiction) will govern the validity of this Agreement, the construction of
its terms, and the interpretation and enforcement of the rights and duties of
the parties.
(e) NO WAIVER. The failure of any party to enforce any of the
provisions of this Agreement will not be construed to be a waiver of the
right of such party thereafter to enforce such provisions. The waiver by any
party of the right to enforce any of the provisions of this Agreement on any
occasion will not be construed to be a waiver of the right of such party to
enforce such provisions on any other occasion.
(f) SEVERABILITY. ▇▇. ▇▇▇▇ and the Company recognize that the
limitations contained in this Agreement are reasonably and properly required
for the adequate protection of the interests of the Company. If for any
reason a court of competent jurisdiction or an arbitrator in a binding
arbitration proceeding finds any provision of this Agreement, or the
application thereof, to be unenforceable, then the remaining provisions of
this Agreement will be interpreted so as best to reasonably effect the intent
of the parties. The parties further agree that the court or arbitrator shall
replace any such invalid or unenforceable provisions with valid and
enforceable provisions designed to achieve, to the extent possible, the
business purposes and intent of such unenforceable provisions.
(g) COUNTERPARTS. This Agreement may be executed in counterparts,
each of which will be an original as regards any party whose signature
appears thereon and all of which together will constitute one and the same
instrument. This Agreement will become binding when one or more counterparts
hereof, individually or taken together, bear the signatures of both parties
reflected hereon as signatories.
(h) DISPUTE RESOLUTION.
(i) ARBITRATION OF DISPUTES. Any dispute under this
Agreement shall be resolved by arbitration in Dallas, Texas and, except as
herein specifically stated, in accordance with the commercial arbitration
rules of the American Arbitration Association ("AAA RULES") then in effect,
except that depositions and documentary discovery shall be freely permitted.
However, in all events, these arbitration provisions shall govern over any
conflicting rules that may now or hereafter be contained in the AAA Rules.
Any judgment upon the award rendered by the arbitrator may be entered in any
court having jurisdiction over the subject matter thereof. The arbitrator
shall have the authority to grant any equitable and legal remedies that would
be available in any judicial proceeding instituted to resolve such dispute,
and may, in his or her discretion, award attorneys' fees, expenses and costs.
(ii) COMPENSATION OF ARBITRATOR. Any such arbitration will
be conducted before a single arbitrator who will be compensated for his or
her services at a rate to be determined by the parties or by the American
Arbitration Association, but based upon reasonable
EMPLOYMENT AGREEMENT - Page 7
hourly or daily consulting rates for the arbitrator if the parties are not
able to agree upon his or her rate of compensation.
(iii) SELECTION OF ARBITRATOR. The American Arbitration
Association will have the authority to select an arbitrator from a list of
arbitrators who are lawyers familiar with Texas contract law; PROVIDED,
HOWEVER, that such lawyers cannot work for a firm then performing services
for either party, that each party will have the opportunity to make such
reasonable objection to any of the arbitrators listed as such party may wish
and that the American Arbitration Association will select the arbitrator from
the list of arbitrators as to whom neither party makes any such objection.
If the foregoing procedure is not followed, then each party will choose one
person from the list of arbitrators provided by the American Arbitration
Association (provided that such person does not have a conflict of interest),
and the two persons so selected will select from the list provided by the
American Arbitration Association the person who will act as the arbitrator.
(iv) PAYMENT OF COSTS. Subject to the last sentence of
Section 10(h)(i) above, the Company and ▇▇. ▇▇▇▇ will each pay 50% of the
initial compensation to be paid to the arbitrator in any such arbitration and
50% of the costs of transcripts and other normal and regular expenses of the
arbitration proceedings.
(v) BURDEN OF PROOF. For any dispute submitted to
arbitration, the burden of proof will be as it would be if the claim were
litigated in a Texas judicial proceeding.
(vi) AWARD. Upon the conclusion of any arbitration
proceedings hereunder, the arbitrator will render findings of fact and
conclusions of law and a written opinion setting forth the basis and reasons
for any decision reached and will deliver such documents to each party to
this Agreement along with a signed copy of the award.
(vii) TERMS OF ARBITRATION. The arbitrator chosen in
accordance with these provisions will not have the power to alter, amend or
otherwise affect the terms of these arbitration provisions or the provisions
of this Agreement.
(viii) NATURE OF REMEDY. Except as specifically otherwise
provided below, arbitration will be the sole and exclusive remedy of the
parties for any dispute arising out of this Agreement.
(ix) EQUITABLE REMEDY. Notwithstanding the provisions of
this Section 10(h) and the arbitration provided for herein, actions initiated
or maintained by the parties for injunctive or similar equitable relief are
not subject to arbitration, and may be brought by the parties in any court
that has jurisdiction, and, should the party bringing any such action
prevail, all costs and expenses (including legal fees) shall be borne by the
party against whom such action was brought.
[THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
EMPLOYMENT AGREEMENT - Page 8
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the date first set forth above.
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, INC. EMPLOYEE
By: /s/ ▇.▇. ▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------- ---------------------------
▇.▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇
Chairman of the Board and
Chief Executive Officer
EMPLOYMENT AGREEMENT - Page 9