EXHIBIT 10.21
EXECUTION COPY
|__| Employee's Copy
|__| Company's Copy
LUMINANT WORLDWIDE CORPORATION
EMPLOYMENT AGREEMENT
To Richard M. Scruggs:
This Agreement establishes the terms of your employment with Luminant
Worldwide Corporation, a Delaware corporation (the "COMPANY"). Your employment
under this Agreement is contingent on effectiveness of the registration of the
Company's common stock with the Securities and Exchange Commission for the
Company's initial public offering ("IPO"). If the registration does not become
effective by December 31, 1999, this Agreement will not bind either you or the
Company, unless both you and the Company agree otherwise in writing. The Company
has been formed as a parent company to acquire a number of companies engaged in
the business of providing internet professional services and to make a public
offering of the Company's common stock.
EMPLOYMENT AND DUTIES You and the Company agree to your employment on the
terms contained herein as a Key Practice Leader. In
such position, you will report directly to the
Company's Chief Executive Officer or his delegate
(your "DIRECT REPORT"). (The Company's Board of
Directors (the "BOARD") or the Company's Chief
Executive Officer may change your Direct Report from
time to time in its or his discretion.) During at
least the first year after the Effective Date, you
will serve on an executive committee of Key Practice
Leaders that will provide strategic and operational
guidance to the Company. You agree to perform
whatever duties the Board or your Direct Report may
assign you from time to time that are reasonably
consistent with your position as a senior executive
officer and Key Practice Leader. During your
employment, you agree to devote your full business
time, attention, and energies to performing those
duties (except as your Direct Report otherwise
agrees from time to time). You agree to comply with
the noncompetition, secrecy, and other provisions of
Exhibit A to this Agreement.
TERM OF EMPLOYMENT Your employment under this Agreement begins as of
the effective date of registration for the IPO (the
"EFFECTIVE DATE"). Unless sooner terminated under this
Agreement, your employment ends at 6:00 p.m. Central
Time on the third anniversary of the Effective Date.
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The period running from the Effective Date to the
applicable date in the preceding sentence is the
"TERM."
Termination or expiration of this Agreement ends
your employment but does not end your obligation to
comply with Exhibit A or the Company's obligation,
if any, to make payments under the PAYMENTS ON
TERMINATION and SEVERANCE provisions as specified
below.
COMPENSATION
SALARY The Company will pay you an annual salary (the
"SALARY") from the Effective Date at the rate of not
less than $250,000 in accordance with its generally
applicable payroll practices. The Board or your
Direct Report will review your Salary annually and
consider you for increases.
BONUS The Board or its Compensation Committee, or if the
Board directs, your Direct Report will establish
annual bonus targets under which you will be
eligible for an annual bonus equal to up to 100% of
your Salary. It is the Company's good faith
intention to establish bonus targets for the first
year, in consultation with you, within 90 days
following the Effective Date.
OPTIONS You will be eligible to receive options under the
Company's 1999 Equity Incentive Plan that will, to
the extent possible, qualify as incentive stock options
under the Internal Revenue Code.
Upon a Change of Control (as defined below), all
options will become fully exercisable. This
paragraph will modify any inconsistent provision in
any option agreement entered into by you and the
Company to the extent necessary to provide for such
acceleration. "Change of Control" for this purpose
means the occurrence of any one or more of the
following events after the Company's IPO and prior
to the termination or expiration of this Agreement:
(i) a person, entity or group (other than the
Company, any Company subsidiary, any Company
benefit plan, or any underwriter temporarily
holding securities for an offering of such
securities) acquires ownership of more than 50%
of the undiluted total voting power of the
Company's then outstanding securities eligible
to vote to elect members of the Board of
Directors ("Company Voting Securities");
(ii) the individuals that constitute the Board
of Directors of the Company immediately prior to
a proxy contest cease to constitute at least a
majority of the Board (excluding
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any Board seat that is vacant or otherwise
unoccupied) immediately following the proxy
contest;
(iii) during any two year period, the
individuals that constitute the Board of
Directors at the beginning of the period (the
"INCUMBENT DIRECTORS") cease for any reason to
constitute at least a majority of the Board
(excluding any Board seat that is vacant or
otherwise unoccupied), provided that any
individuals approved for service on the Board by
a majority of Incumbent Directors are treated as
Incumbent Directors;
(iv) completion of a merger or consolidation of
the Company with or into any other entity,
unless the holders of the Company Voting
Securities outstanding immediately before such
completion, together with any trustee or other
fiduciary holding securities under a Company
benefit plan, hold securities that represent
immediately after such merger or consolidation
at least 50% of the combined voting power of the
then outstanding voting securities of either the
Company or the other surviving entity or its
parent;
(v) the stockholders of the Company approve (a)
a plan of complete liquidation or dissolution of
the Company or (b) an agreement for the
Company's sale or disposition of all or
substantially all the Company's assets and such
liquidation, dissolution, sale or disposition is
completed; or
(vi) any other event which the Board of Directors
determines should constitute a Change of Control.
EMPLOYEE BENEFITS While the Company employs you under this Agreement, the
Company will provide you with the same benefits as
it makes generally available from time to time to
the Company's senior executive employees, as those
benefits are amended or terminated from time to
time, including participation in vacation policies
(and payment for accrued vacation) on a basis
comparable to that for senior executives. Your
participation in the Company's benefit plans will be
subject to the terms of the applicable plan
documents and the Company's generally applied
policies, and the Company in its sole discretion may
from time to time adopt, modify, interpret, or
discontinue such plans or policies.
COMPENSATION You will be eligible under a senior executive
compensation program that will consider you for annual
increases in Salary and
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REVIEW that will periodically review your progress in light of
targets and goals.
PLACE OF EMPLOYMENT Your principal place of employment will be at the
office at which you were employed by a predecessor
company on December 31, 1998 (or, if later, on your
starting date with the predecessor) or such other
offices as the Company may establish from time to
time and to which it assigns you in its sole
discretion, provided that you will not be required
to relocate outside of Harris County, Texas and
surrounding counties. You understand and agree that
you must travel from time to time for business
reasons.
EXPENSES The Company will reimburse you for reasonable and
necessary travel and other business-related expenses
you incur for the Company in performing your duties
under this Agreement (with the travel accommodations
substantially comparable to that of senior executives
of the Company). You must itemize and substantiate all
requests for reimbursements. You must submit requests
for reimbursement in accordance with the policies and
practices of the Company.
NO OTHER EMPLOYMENT While the Company employs you, you agree that you will
not, directly or indirectly, provide services to any
person or organization for which you receive
compensation or otherwise engage in activities that
would conflict or interfere significantly with your
faithful performance of your duties as an employee
without the Board's prior written consent. (This
prohibition excludes any work performed at the
Company's direction.) You may manage your personal
investments, as long as the management takes only
minimal amounts of time and is consistent with the
provisions of the NO CONFLICTS OF INTEREST Section
and the NO COMPETITION Section in Exhibit A.
You represent to the Company that you are not
subject to any agreement, commitment, or policy of
any third party that would prevent you from entering
into or performing your duties under this Agreement,
and you agree that you will not enter into any
agreement or commitment or agree to any policy that
would prevent or hinder your performance of duties
and obligations under this Agreement, including
Exhibit A.
NO CONFLICTS OF You confirm that you have fully disclosed to the
INTEREST Company, to the best of your knowledge, all
circumstances under which you, your spouse, and
other persons who reside in your household have or
may have a conflict of interest with the Company.
You further agree to fully disclose to the Company
any such circumstances that might arise during your
employment upon your becoming
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aware of such circumstances. You agree to fully comply
with the Company's policy and practices relating to
conflicts of interest.
NO IMPROPER PAYMENTS You will neither pay nor permit payment of any
remuneration to or on behalf of any governmental
official other than payments required or permitted
by applicable law. You will comply fully with the
Foreign Corrupt Practices Act of 1977, as amended.
You will not, directly or indirectly,
make or permit any contribution, gift, bribe,
rebate, payoff, influence payment, kickback, or
other payment to any person or entity, private or
public, regardless of what form, whether in money,
property, or services
to obtain favorable treatment for business
secured,
to pay for favorable treatment for business
secured,
to obtain special concessions or for special
concessions already obtained, or
in violation of any legal requirement, or
establish or maintain any fund or asset related to
the Company that is not recorded in the Company's
books and records, or
take any action that would violate (or would be
part of a series of actions that would violate)
any U.S. law relating to international trade or
commerce, including those laws relating to trading
with the enemy, export control, and boycotts of
Israel or Israeli products (as is sought by certain
Arab countries).
TERMINATION Subject to the provisions of this section, you and the
Company agree that it may terminate your employment,
or you may resign, except that, if you voluntarily
resign, you must provide the Company with 90 days'
prior written notice (unless the Board or your
Direct Report has previously waived such notice in
writing or authorized a shorter notice period).
FOR CAUSE The Company may terminate your employment for "CAUSE"
if you:
(i) commit a material breach of your obligations
or agreements under this Agreement, including
Exhibit A;
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(ii) commit an act of gross negligence with
respect to the Company or otherwise act with
willful disregard for the Company's best interests;
(iii) fail or refuse to perform any duties
delegated to you that are consistent with the
duties of similarly-situated senior executive or
are otherwise required under this Agreement;
(iv) seize a corporate opportunity for yourself
instead of offering such opportunity to the Company
if within the scope of the Company's or its
subsidiaries' business; or
(v) are convicted of or plead guilty or no
contest to a felony (or to a felony charge reduced
to misdemeanor), or, with respect to your
employment, to any misdemeanor (other than a
traffic violation) or, with respect to your
employment, commit either a material dishonest act
or common law fraud or knowingly violate any
federal or state securities or tax laws.
Your termination for Cause will be effective
immediately upon the Company's mailing or written
transmission of notice of such termination. Before
terminating your employment for Cause under clauses
(i) - (iv) above, the Company will specify in
writing to you the nature of the act, omission,
refusal, or failure that it deems to constitute
Cause and, unless the Board or your Direct Report
reasonably concludes the situation could not be
corrected, give you 30 days after you receive such
notice to correct the situation (and thus avoid
termination for Cause), unless the Company agrees to
extend the time for correction. You agree that the
Board or your Direct Report will have the discretion
to determine in good faith whether your correction
is sufficient, provided that this decision does not
foreclose you from using the Dispute Resolution
provisions of Exhibit B.
WITHOUT CAUSE Subject to the provisions below under PAYMENTS ON
TERMINATION and SEVERANCE, the Company may terminate
your employment under this Agreement before the end
of the Term without CAUSE. The Company agrees not to
terminate your employment without CAUSE during the
first six months after the Effective Date.
DISABILITY If you become "DISABLED" (as defined below), the
Company may terminate your employment. You are
"disabled" if you are unable, despite whatever
reasonable accommodations the law requires, to
render services to the Company for more than 90
consecutive days because of physical or mental
disability, incapacity, or
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illness. You are also disabled if you are found to
be disabled within the meaning of the Company's
long-term disability insurance coverage as then in
effect (or would be so found if you applied for the
coverage).
GOOD REASON You may resign for Good Reason with 45 days' advance
written notice. "GOOD REASON" for this purposes
means, without your consent, (i) the Company
materially breaches this Agreement or (ii) the
Company relocates your primary office outside of
Harris County, Texas and surrounding counties.
You must give notice to the Company of your
intention to resign for Good Reason within 30 days
after the occurrence of the event that you assert
entitles you to resign for Good Reason. In that
notice, you must state the condition that you
consider provides you with Good Reason and, if such
reason relates to clause (i) above, must give the
Company an opportunity to cure the condition within
30 days after your notice. Before or during the 30
day period, either party may request mediation under
Exhibit B to resolve any such disputes, and, if so
requested, the parties agree to cooperate to arrange
a prompt mediation during no more than a 30 day
period. If the Company fails to cure the condition,
your resignation will be effective on the 45th day
after your notice (unless the Board has previously
waived such notice period in writing or agreed to a
shorter notice period or unless mediation is
proceeding in good faith), in which case such
resignation will become effective 15 days after the
end of such mediation, if not previously cured.
You will not be treated as resigning for GOOD REASON
if the Company already had given notice of
termination for CAUSE as of the date of your notice
of resignation.
DEATH If you die during the Term, the Term will end as of
the date of your death.
PAYMENTS ON TERMINATION If you resign or the Company terminates your employment
with or without Cause or because of disability or
death, the Company will pay you any unpaid portion
of your Salary pro-rated through the date of actual
termination (and any annual bonuses already
determined by such date but not yet paid unless your
employment is terminated with CAUSE), reimburse any
substantiated but unreimbursed business expenses,
pay any accrued and unused vacation time (to the
extent consistent with the Company's policies), and
provide such other benefits as applicable laws or
the terms of the benefits require. Except to the
extent the law requires otherwise or as provided in
the SEVERANCE paragraph,
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neither you nor your beneficiary or estate will have
any rights or claims under this Agreement or
otherwise to receive severance or any other
compensation, or to participate in any other plan,
arrangement, or benefit, after such termination or
resignation. If your employment never begins because
the Company does not complete its IPO, you
acknowledge that you have no rights to the Severance
set forth below or to any other payments under or
with respect to this Agreement.
SEVERANCE In addition to the foregoing payments, if before the
end of the Term, the Company terminates your
employment without CAUSE or you resign for GOOD
REASON, the Company will
pay you severance equal to your Salary, as then
in effect, for 18 months on the same schedule as
though you had remained employed during such
period, even though you are no longer employed;
pay the after-tax premium cost for you to
receive any group health coverage the Company
must offer you under Section 4980B of the
Internal Revenue Code of 1986 ("COBRA COVERAGE")
for the period of such coverage (unless the
coverage is then provided under a self-insured
plan);
pay you, at the time the Company would otherwise
pay your annual bonus, your pro rata share of
the bonus for the year of your termination,
where the pro rata factor is based on days
elapsed in your year of termination till date of
termination over 365, less any portion of the
bonus for the year of your termination already
paid; and
accelerate your options such that any options
that would become exercisable within the six
months after your date of termination or
resignation will become exercisable as a result
of your termination or resignation (and will
expire in accordance with the option's terms
within 90 days after such date).
You are not required to mitigate amounts payable
under the SEVERANCE paragraph by seeking other
employment or otherwise, nor must you return to
the Company amounts earned under subsequent
employment.
EXPIRATION Expiration of this Agreement, whether because of
notice of non-renewal or otherwise, does not
constitute termination without CAUSE nor provide you
with GOOD REASON and does not entitle
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you to SEVERANCE, unless the Company's general
severance practices entitle you to severance in that
situation. If you remain employed at the end of the
Term and your employment then ends as a result of
expiration of the Agreement, the Company will pay
you severance equal to your Salary, as then in
effect, for 12 months on the same schedule as though
you had remained employed during such period, even
though you are no longer employed, which payments
you agree compensate you for the restrictions under
Exhibit A upon contract expiration.
MISCELLANEOUS If prior to the expiration or termination of this
Agreement the Company replaces the existing signage
at Align Solutions Corp., including but not limited
to the glass panels with logo icons, you will be
entitled to such signage.
ASSIGNMENT The Company may assign or otherwise transfer this
Agreement and any and all of its rights, duties,
obligations, or interests under it to
Align Solutions Corp. or any of the affiliates or
subsidiaries of the Company or
to any business entity that at any time by merger,
consolidation, or otherwise acquires all or
substantially all of the Company's stock or assets
or to which the Company transfers all or
substantially all of its assets.
Upon such assignment or transfer, any such business
entity will be deemed to be substituted for the
Company for all purposes (except that the Company
will remain secondarily liable if it transfers this
Agreement to a subsidiary). You agree that
assignment or transfer does not entitle you to
Severance. This Agreement binds and benefits the
Company, its successors or assigns, and your heirs
and the personal representatives of your estate.
Without the Board's or your Direct Report's prior
written consent, you may not assign or delegate this
Agreement or any or all rights, duties, obligations,
or interests under it.
SEVERABILITY If the final determination of an arbitrator or a
court of competent jurisdiction declares, after the
expiration of the time within which judicial review
(if permitted) of such determination may be
perfected, that any term or provision of this
Agreement, including any provision of Exhibit A, is
invalid or unenforceable, the remaining terms and
provisions will be unimpaired, and the invalid or
unenforceable term or provision will be deemed
replaced by a term or provision that is valid and
enforceable and that comes closest to expressing the
intention of the invalid or
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unenforceable term or provision.
AMENDMENT; WAIVER Neither you nor the Company may modify, amend, or
waive the terms of this Agreement other than by a
written instrument signed by you and an executive
officer of the Company duly authorized by the Board.
Either party's waiver of the other party's
compliance with any provision of this Agreement is
not a waiver of any other provision of this
Agreement or of any subsequent breach by such party
of a provision of this Agreement.
WITHHOLDING The Company will reduce its compensatory payments to
you for withholding and FICA taxes and any other
withholdings and contributions required by law. The
Company will, if reasonably practicable, credit you
with the FICA and unemployment tax withholdings you
incurred in 1999 before the Effective Date.
GOVERNING LAW The laws of the State of Texas (other than its
conflict of laws provisions) govern this Agreement.
NOTICES Notices must be given in writing by personal
delivery, by certified mail, return receipt
requested, by telecopy, or by overnight delivery.
You should send or deliver your notices to the
Company's corporate headquarters. The Company will
send or deliver any notice given to you at your
address as reflected on the Company's personnel
records. You and the Company may change the address
for notice by like notice to the others. You and the
Company agree that notice is received on the date it
is personally delivered, the date it is received by
certified mail, the date of guaranteed delivery by
the overnight service, or the date the fax machine
confirms effective transmission.
SUPERSEDING EFFECT This Agreement supersedes any prior oral or written
employment, severance, option, or fringe benefit
agreements between you and the Company, other than
with respect to your eligibility for generally
applicable employee benefit plans. This Agreement
supersedes all prior or contemporaneous negotiations,
commitments, agreements, and writings with respect
to the subject matter of this Agreement (other than
the Agreement and Plan of Organization or other
transaction document dated as of June 2, 1999). All
such other negotiations, commitments, agreements,
and writings will have no further force or effect;
and the parties to any such other negotiation,
commitment, agreement, or writing will have no
further rights or obligations thereunder.
Employment Agreement with Richard M. Scruggs Page 10 of 21
If you accept the terms of this Agreement, please sign in the space indicated
below. We encourage you to consult with any advisors you choose.
LUMINANT WORLDWIDE CORPORATION
By: /s/ Guillermo G. Marmol
---------------------------------
Guillermo G. Marmol
Chief Executive Officer
I accept and agree to the terms of employment set forth in this Agreement:
/s/ Richard M. Scruggs
- - ------------------------------
Richard M. Scruggs
Dated:_____________________
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EXHIBIT A
NO COMPETITION You agree to the provisions of this Exhibit A in
consideration of (i) your employment by the Company
and salary and benefits under this Agreement and the
training you will receive in connection with such
employment and (ii) the Company's acquisition of
your prior employer, and you agree that Exhibit A
should be considered ancillary to the agreement by
which that employer was acquired or otherwise became
part of the Company or a subsidiary (the "ACQUISITION
AGREEMENT"). While the Company (or its successor or
transferee) employs you and to the end of the
Restricted Period (as defined below), you agree as
follows:
You will not, directly or indirectly, be employed by,
lend money to, or engage in any Competing Business
within the Market Area (each as defined below). That
prohibition includes, but is not limited to, acting,
either singly or jointly or as agent for, or as an
employee of or consultant to, any one or more persons,
firms, entities, or corporations directly or
indirectly (as a director, independent contractor,
representative, consultant, member, or otherwise) that
constitutes such a Competing Business. You also will
not invest or hold equity or options in any Competing
Business, provided that you may own up to 3% of the
outstanding capital stock of any corporation that is
actively publicly traded without violating this NO
COMPETITION covenant, so long as you have no
involvement beyond passive investing in such business
and you comply with the second sentence of this
paragraph.
If, during the Restricted Period, you are offered
and want to accept employment with a business that
engages in activities similar to the Company's, you
will inform your Direct Report in writing of the
identity of the business, your proposed duties with
that business, and the proposed starting date of
that employment. You will also inform that business
of the terms of this Exhibit A. The Company will
analyze the proposed employment and make a good
faith determination as to whether it would threaten
the Company's legitimate competitive interests. If
the Company determines that the proposed employment
would not pose an unacceptable threat to its
interests, the Company will notify you that it does
not object to the employment.
You acknowledge that, during the portion of the
Restricted Period that follows your employment, you
may engage in any business activity or gainful
employment of any type and in any place except as
described above. You acknowledge that you will
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be reasonably able to earn a livelihood without
violating the terms of this Agreement.
You understand and agree that the rights and
obligations set forth in this NO COMPETITION Section
will continue and will survive through the
Restricted Period.
DEFINITIONS
COMPETING BUSINESS COMPETING BUSINESS means any service or product of any
person or organization other than the Company and
its successors, assigns, or subsidiaries (collectively,
the "COMPANY GROUP") that competes with any service
or product of the Company Group provided by any
member of the Company Group during your employment.
COMPETING BUSINESS includes any enterprise engaged
in the formation or operation of internet professional
services firms that provide strategic, interactive
design and technical business services, information
technology and interactive business consulting, and
other related services to assist clients in
integrating and maintaining their electronic
commerce capabilities.
MARKET AREA The Market Area consists of the United States and
Canada. You agree that the Company provides services
both at its facilities and at the locations of its
customers or clients and that, by the nature of its
business, it operates globally.
RESTRICTED PERIOD For purposes of this Agreement, the RESTRICTED
PERIOD ends at the first anniversary of the date
your employment with the Company Group ends for any
reason, provided that the end of the RESTRICTED
PERIOD does not shorten any restrictions to which
you are bound by the Acquisition Agreement.
NO INTERFERENCE; During the Restricted Period, you agree that you will
NO SOLICITATION not, directly or indirectly, whether for yourself or
for any other individual or entity (other than the
Company or its affiliates or subsidiaries),
intentionally
solicit any person or entity who is, or was, within
the 24 months preceding your date of termination
or resignation, a customer, prospect (with respect
to which any member of the Company Group has
incurred substantial costs or with which you have
been involved), or client of the Company Group
within the Market Area, with the 24 month period
reduced to 12 months for prospects with which you
have not been involved;
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hire away or endeavor to entice away from the
Company Group any employee or any other person or
entity whom the Company Group engages to perform
services or supply products and including, but
not limited to, any independent contractors,
consultants, engineers, or sales representatives
or any contractor, subcontractor, supplier, or
vendor; or hire any person whom the Company Group
employs or employed within the prior 12 months.
SECRECY
PRESERVING COMPANY Your employment with the Company under and, if
CONFIDENCES applicable, before this Agreement (with a predecessor
to a member of the Company Group), has given and
will give you access to Confidential Information (as
defined below). You acknowledge and agree that
using, disclosing, or publishing any Confidential
Information in an unauthorized or improper manner
could cause the Company or Company Group to incur
substantial loss and damages that could not be
readily calculated and for which no remedy at law
would be adequate. Accordingly, you agree with the
Company that you will not at any time, except in
performing your employment duties to the Company or
the Company Group under this Agreement (or with the
Board's or your Direct Report's prior written
consent), directly or indirectly, use, disclose, or
publish, or permit others not so authorized to use,
disclose, or publish any Confidential Information
that you may learn or become aware of, or may have
learned or become aware of, because of your prior or
continuing employment, ownership, or association
with the Company or the Company Group or any of
their predecessors, or use any such information in a
manner detrimental to the interests of the Company
or the Company Group.
PRESERVING OTHERS' You agree not to use in working for the Company Group
CONFIDENCES and not to disclose to the Company Group any trade
secrets or other information you do not have the
right to use or disclose and that the Company Group
is not free to use without liability of any kind.
You agree to promptly inform the Company in writing
of any patents, copyrights, trademarks, or other
proprietary rights known to you that the Company or
the Company Group might violate because of
information you provide.
CONFIDENTIAL "CONFIDENTIAL INFORMATION" includes, without
INFORMATION limitation, information that the Company or the Company
Group has not previously disclosed to the public or to
the trade with respect to
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the Company's or the Company Group's present or
future business, including its operations, services,
products, research, inventions, discoveries,
drawings, designs, plans, processes, models,
technical information, facilities, methods, trade
secrets, copyrights, software, source code, systems,
patents, procedures, manuals, specifications, any
other intellectual property, confidential reports,
price lists, pricing formulas, customer lists,
financial information (including the revenues, costs,
or profits associated with any of the Company's or
the Company Group's products or services), business
plans, lease structure, projections, prospects,
opportunities or strategies, acquisitions or
mergers, advertising or promotions, personnel
matters, legal matters, any other confidential and
proprietary information, and any other information
not generally known outside the Company or the
Company Group that may be of value to the Company or
the Company Group but, notwithstanding anything to
the contrary, excludes any information properly in
the public domain. "CONFIDENTIAL INFORMATION" also
includes confidential and proprietary information
and trade secrets that third parties entrust to the
Company or the Company Group in confidence.
You understand and agree that the rights and
obligations set forth in this SECRECY Section will
continue indefinitely and will survive termination
of this Agreement and your employment with the
Company or the Company Group.
EXCLUSIVE PROPERTY You confirm that all Confidential Information is and
must remain the exclusive property of the Company or
the relevant member of the Company Group. Any office
equipment (including computers) you receive from the
Company Group in the course of your employment and
all business records, business papers, and business
documents you keep or make, whether on digital media
or otherwise, in the course of your employment by
the Company relating to the Company or any member of
the Company Group must be and remain the property of
the Company or the relevant member of the Company
Group. Upon the termination of this Agreement with
the Company or upon the Company's request at any
time, you must promptly deliver to the Company or to
the relevant member of the Company Group any such
office equipment (including computers) and any
Confidential Information or other materials (written
or otherwise) not available to the public or made
available to the public in a manner you know or
reasonably should recognize the Company did not
authorize, and any copies, excerpts, summaries,
compilations, records, or documents you made or that
came into your possession during your employment.
You agree that you will not, without the
Employment Agreement with Richard M. Scruggs Page 15 of 21
Company's consent, retain copies, excerpts,
summaries, or compilations of the foregoing
information and materials. You understand and agree
that the rights and obligations set forth in this
EXCLUSIVE PROPERTY Section will continue
indefinitely and will survive termination of this
Agreement and your employment with the Company Group.
COPYRIGHTS, DISCOVERIES, You agree that all records, in whatever media
INVENTIONS, AND PATENTS (including written works), documents, papers,
notebooks, drawings, designs, technical
information, source code, object code, processes,
methods or other copyrightable or otherwise
protected works you conceive, create, make, invent,
or discover that relate to or result from any work
you perform or performed for the Company or the
Company Group or that arise from the use or
assistance of the Company Group's facilities,
materials, personnel, or Confidential Information in
the course of your employment (whether or not during
usual working hours), whether conceived, created,
discovered, made, or invented individually or
jointly with others, will be and remain the absolute
property of the Company (or another appropriate
member of the Company Group, as specified by the
Company), as will all the worldwide patent,
copyright, trade secret, or other intellectual
property rights in all such works. (All references
in this section to the Company include the members
of the Company Group, unless the Company determines
otherwise.) You irrevocably and unconditionally
waive all rights, wherever in the world enforceable,
that vest in you (whether before, on, or after the
date of this Agreement) in connection with your
authorship of any such copyrightable works in the
course of your employment with the Company Group or
any predecessor. Without limitation, you waive the
right to be identified as the author of any such
works and the right not to have any such works
subjected to derogatory treatment. YOU RECOGNIZE ANY
SUCH WORKS ARE "WORKS FOR HIRE" OF WHICH THE COMPANY
IS THE AUTHOR.
You will promptly disclose, grant, and assign
ownership to the Company for its sole use and
benefit any and all ideas, processes, inventions,
discoveries, improvements, technical information,
and copyrightable works (whether patentable or not)
that you develop, acquire, conceive or reduce to
practice (whether or not during usual working hours)
while the Company or the Company Group employs you.
You will promptly disclose and hereby grant and
assign ownership to the Company of all patent
applications, letters patent, utility and design
patents, copyrights, and reissues thereof or any
foreign equivalents thereof, that may at any time be
filed or granted for
Employment Agreement with Richard M. Scruggs Page 16 of 21
or upon any such invention, improvement, or
information. In connection therewith:
You will, without charge but at the Company's
expense, promptly execute and deliver such
applications, assignments, descriptions, and other
instruments as the Company may consider reasonably
necessary or proper to vest title to any such
inventions, discoveries, improvements, technical
information, patent applications, patents,
copyrightable works, or reissues thereof in the
Company and to enable it to obtain and maintain
the entire worldwide right and title thereto; and
You will provide to the Company at its expense
all such assistance as the Company may
reasonably require in the prosecution of
applications for such patents, copyrights, or
reissues thereof, in the prosecution or defense
of interferences that may be declared involving
any such applications, patents, or copyrights
and in any litigation in which the Company may
be involved relating to any such patents,
inventions, discoveries, improvements, technical
information, or copyrightable works or reissues
thereof. The Company will reimburse you for
reasonable out-of-pocket expenses you incur and
pay you reasonable compensation for your time if
the Company Group no longer employs you. You and
the Company agree that the Company will not
assert that it owns the book you have proposed
writing, even if related to your work. You agree
that the book will not violate Exhibit A.
To the extent, if any, that you own rights to works,
inventions, discoveries, proprietary information,
and copyrighted or copyrightable works, or other
forms of intellectual property that are incorporated
in the work product you create for the Company
Group, you agree that the Company will have an
unrestricted, non-exclusive, royalty-free,
perpetual, transferable license to make, use, sell,
offer for sale, and sublicense such works and
property in whatever form, and you hereby grant such
license to the Company (and the Company Group).
This COPYRIGHTS, DISCOVERIES, INVENTIONS AND PATENTS
section does not apply to an invention or discovery
for which no equipment, supplies, facility or trade
secret information of the Company Group (including
its predecessors) was used and that was developed
entirely on your own time, unless (a) the invention
relates (i) directly to the business of the Company
Group, or (ii) the Company Group's actual or then
reasonably
Employment Agreement with Richard M. Scruggs Page 17 of 21
anticipated research or development, or (b) the
invention results from any work you performed for
the Company Group or any predecessor.
MAXIMUM LIMITS If any of the provisions of Exhibit A are ever
deemed to exceed the time, geographic area, or
activity limitations the law permits, you and the
Company agree to reduce the limitations to the
maximum permissible limitation, and you and the
Company authorize a court or arbitrator having
jurisdiction to reform the provisions to the maximum
time, geographic area, and activity limitations the
law permits; PROVIDED, HOWEVER, that such reductions
apply only with respect to the operation of such
provision in the particular jurisdiction with
respect to which such adjudication is made.
INJUNCTIVE RELIEF Without limiting the remedies available to the Company,
you acknowledge
that a breach of any of the covenants in this
Exhibit A may result in material irreparable
injury to the Company and Company Group for
which there is no adequate remedy at law, and
that it will not be possible to measure
damages for such injuries precisely.
You agree that, if there is a breach or threatened
breach, the Company or any member of the Company
Group may be entitled to obtain a temporary
restraining order and/or a preliminary or permanent
injunction restraining you from engaging in
activities prohibited by any provisions of this
Exhibit A or such other relief as may be required to
specifically enforce any of the covenants in this
Exhibit A. The Company or any member of the Company
Group will, in addition to the remedies provided in
this Agreement, be entitled to avail itself of all
such other remedies as may now or hereafter exist at
law or in equity for compensation and for the
specific enforcement of the covenants contained in
this Agreement. Resort to any remedy provided for in
this Section or provided for by law will not prevent
the concurrent or subsequent employment of any other
appropriate remedy or remedies, or preclude the
Company's or the Company Group's recovery of
monetary damages and compensation. You also agree
that the Restricted Period or such longer period
during which the covenants hereunder by their terms
survive will extend for any and all periods for
which a court with personal jurisdiction over you
finds that you violated
Employment Agreement with Richard M. Scruggs Page 18 of 21
the covenants contained in this Exhibit A.
EXHIBIT B
DISPUTE RESOLUTION
MEDIATION If either party has a dispute or claim relating to
this Agreement or their relationship and except as
set forth in ALTERNATIVES, the parties must first
seek to mediate the same before an impartial
mediator the parties mutually designate, and the
parties must equally share the expenses of such
proceeding (other than their respective attorneys'
fees). Subject to the mediator's schedule, the
mediation must occur within 45 days of either
party's written demand. However, in an appropriate
circumstance, a party may seek emergency equitable
relief from a court of competent jurisdiction
notwithstanding this obligation to mediate.
BINDING ARBITRATION If the mediation reaches no solution or the parties
agree to forego mediation, the parties will promptly
submit their disputes to binding arbitration before
one or more arbitrators (collectively or singly, the
"ARBITRATOR") the parties agree to select (or whom,
absent agreement, a court of competent jurisdiction
selects). The arbitration must follow applicable law
related to arbitration proceedings and, where
appropriate, the Commercial Arbitration Rules of the
American Arbitration Association.
ARBITRATION PRINCIPLES All statutes of limitations and substantive laws
applicable to a court proceeding will apply to this
proceeding. The Arbitrator will have the power to
grant relief in equity as well as at law, to issue
subpoenas duces tecum, to question witnesses, to
consider affidavits (provided there is a fair
opportunity to rebut the affidavits), to require
briefs and written summaries of the material
evidence, and to relax the rules of evidence and
procedure, provided that the Arbitrator must not
admit evidence it does not consider reliable. The
Arbitrator will not have the authority to add to,
detract from, or modify any provision of this
Agreement. The parties agree (and the Arbitrator
must agree) that all proceedings and decisions of
the Arbitrator will be maintained in confidence, to
the extent legally permissible, and not be made
public by any party or the Arbitrator without the
prior written consent of all parties to the
arbitration, except as the law may otherwise require.
DISCOVERY; EVIDENCE; The parties have selected arbitration to expedite the
PRESUMPTIONS resolution of disputes and to reduce the costs and
burdens associated with litigation. The parties agree
that the Arbitrator should take these
Employment Agreement with Richard M. Scruggs Page 19 of 21
concerns into account when determining whether to
authorize discovery and, if so, the scope of
permissible discovery and other hearing and
pre-hearing procedures. The Arbitrator may permit
reasonable discovery rights in preparation for the
arbitration, provided that it should accelerate the
scheduling of and responses to such discovery so as
not to unreasonably delay the arbitration. Exhibits
must be marked and left with the Arbitrator until it
has rendered a decision. Either party may elect, at
its expense, to record the proceedings by audiotape
or stenographic recorder (but not by video). The
Arbitrator may conclude that the applicable law of
any foreign jurisdiction would be identical to that
of Texas on the pertinent issue(s), absent a party's
providing the Arbitrator with relevant authorities
(and copying the opposing party) at least five
business days before the arbitration hearing.
NATURE OF AWARD The Arbitrator must render its award, to the extent
feasible, within 30 days after the close of the
hearing. The award must set forth the material
findings of fact and legal conclusions supporting
the award. The parties agree that it will be final,
binding, and enforceable by any court of competent
jurisdiction. Where necessary or appropriate to
effectuate relief, the Arbitrator may issue
equitable orders as part of or ancillary to the
award. The Arbitrator must equitably allocate the
costs and fees of the proceeding and may consider in
doing so the relative fault of the parties. The
Arbitrator may award reasonable attorneys' fees to
the prevailing party to the extent a court could
have made such an award.
APPEAL The parties may appeal the award based on the
grounds allowed by statute, as well as upon the
ground that the award misapplies the law to the
facts, provided that such appeal is filed within the
applicable time limits law allows. If the award is
appealed, the court may consider the ruling,
evidence submitted during the arbitration, briefs,
and arguments but must not try the case DE NOVO. The
parties will bear the costs and fees associated with
the appeal in accordance with the arbitration award
or, in the event of a successful appeal, in
accordance with the court's final judgment.
ALTERNATIVES This DISPUTE RESOLUTION provision does not preclude
a party from seeking equitable relief from a court
(i) to prevent imminent or irreparable injury or
(ii) pending arbitration, to preserve the last
peaceable status quo, nor does it preclude the
parties from agreeing to a less expensive and faster
means of dispute resolution. It does not prevent the
Company from immediately seeking in court an
injunction or other remedy with
Employment Agreement with Richard M. Scruggs Page 20 of 21
respect to Exhibit A.
Employment Agreement with Richard M. Scruggs Page 21 of 21