Employment Agreement - Rackspace Ltd. and Lew Moorman
RACKSPACE, LTD.
EMPLOYMENT AGREEMENT
This Employment Agreement (the "AGREEMENT"), by and among Rackspace,
Ltd., a Texas limited partnership ("EMPLOYER"), and Lew Moorman ("EMPLOYEE"),
is hereby entered into as of April 26, 2000.
R E C I T A L S
A. Employee is employed hereunder by Employer in a confidential
relationship wherein Employee, in the course of Employee's
employment with Employer, has and will continue to become
familiar with and aware of Confidential Information (as
hereinafter defined), and future plans with respect thereto,
all of which has been and will be established and maintained
at great expense to Employer; this information is a trade
secret and constitutes the valuable goodwill of Employer.
A G R E E M E N T S
In consideration of the mutual promises, terms, covenants and
conditions set forth herein and the performance of each, the parties hereto
hereby agree as follows:
1. EMPLOYMENT AGREEMENT.
Employer hereby employs Employee as its Vice President of
Product Development and Strategic Planning. As such, Employee shall
have responsibilities, duties and authority reasonably accorded to and
expected of an executive of Employer and as determined by the General
Partner and/or Board of Directors of the Employer. Employee hereby
accepts this employment upon the terms and conditions herein contained
and agrees to devote Employee's full working time, undivided attention
and best efforts to promote and further the business of Employer.
Employee shall faithfully adhere to, execute and fulfill all
policies established by the Employer.
2. COMPENSATION. For all services rendered by Employee,
Employer shall compensate Employee as follows:
BASE SALARY AND BONUS. The base salary payable to Employee
shall be $3,269.23 for each two week period, payable at the end of
each two week period. In addition, at the end of each calendar year,
provided Employee is an employee at such time, Employee shall receive
a $20,000.00 bonus.
STOCK OPTIONS. Employee will receive the right to receive
Class D Units of the Employer, under the terms of the Option Agreement
executed by Employee and Employer contemporaneously with the execution
of this Agreement (the "Option Agreement").
EXECUTIVE PERQUISITES, BENEFITS, AND OTHER COMPENSATION.
Employee shall be entitled to receive additional benefits and
compensation from Employer in such form and to such extent as
specified below:
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Employer shall pay all premiums for coverage for
Employee under health, and other insurance plans that
Employer may have in effect from time to time.
Employer shall reimburse Employee for all business
travel and other out-of-pocket expenses reasonably incurred
by Employee in the performance of Employee's services
pursuant to this Agreement. All reimbursable expenses shall
be appropriately documented in reasonable detail by Employee
upon submission of any request for reimbursement, and in a
format and manner consistent with Employer's expense
reporting policy.
Employee shall have three weeks of paid vacation for
each twelve months of employment, such vacations to be taken
at times which are mutually convenient to Employee and
Employer.
3. NON-COMPETITION.
Employee recognizes that Employer's willingness to enter into
this Agreement is based in material part on Employee's agreement to
the provisions of this SECTION 3, and that Employee's breach of the
provisions of this Section could materially damage Employer.
Therefore, in consideration of the benefits to be received by
Employee pursuant to this Agreement, including the options under the
Option Agreement, and receipt of Confidential Information, Employee
agrees that Employee will not, during the period of Employee's
employment by or with Employer, and for twelve months immediately
following the termination of Employee's employment with Employer for
any reason whatsoever (except for termination as a result of an
Involunary Termination or a termination which is not for Cause, as
hereafter defined, in which case the period shall be six months from
the date Employee last receives compensation from the Employer) (the
"NONCOMPETE TERM"), directly or indirectly, for himself or on behalf
of or in conjunction with any other person, persons, company,
partnership, corporation or business of whatever nature:
engage, in any capacity whatsoever, including
without limitation as an officer, director, shareholder,
owner, partner, joint venturer, manager, advisor, employee,
independent contractor or consultant, in any Competitive
Business (as defined herein) any where in the world, due to
the world-wide nature of the Employer's business (the
"TERRITORY");
call upon any person or entity, who is, at that
time, an employee, consultant or independent contractor of
Employer or any of its subsidiaries, for the purpose or with
the intent or effect of enticing such employee, independent
contractor or consultant away from or out of the employ or
contract with Employer or any of its subsidiaries; or
call upon any person or entity which is, at that
time, or which has been within one year prior to that time, a
customer of Employer or any of its subsidiaries for the
purpose of soliciting or selling services or products in a
Competitive Business within the Territory.
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Notwithstanding the above, the foregoing covenant shall not
be deemed to prohibit Employee from acquiring as an investment not
more than one percent of the capital stock of a competing business,
whose stock is traded on a national securities exchange or
over-the-counter.
Because of the difficulty of measuring economic losses to
Employer as a result of a breach of the foregoing covenant, and
because of the immediate and irreparable damage that could be caused
to Employer for which it would have no other adequate remedy,
Employee agrees that the foregoing covenant may be enforced by
Employer, in the event of a breach by Employee, by injunctions,
restraining orders and other equitable actions.
It is agreed by the parties that the foregoing covenants in
this SECTION 3 impose a reasonable restraint on Employee in light of the
activities and business of Employer on the date of the execution of this
Agreement. For purposes of this Agreement, "Competitive Business" means any
business that competes with Employer, including, without limitation, any
business that provides, sells or leases dedicated servers for connection with
the internet as its primary product/service line; provided that Competitive
Business shall also include any business that provides, sells or leases
dedicated servers for connection with the internet in circumstances where such
services are not its primary product/service line, unless Employee first seeks
and obtains the consent of Employer, which consent shall not be unreasonably
withheld and shall be based upon a determination by the Employer that the
position of Employee position (i) will not involve or relate to and will be
separated from the business that provides, sells or leases dedicated servers
for connection with the internet, and (ii) the position of Employee will not
harm or potentially harm the business of the Employer.
The covenants in this SECTION 3 are severable and separate,
and the unenforceability of any specific covenant shall not affect the
provisions of any other covenant. Moreover, in the event any court of
competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the
intention of the parties that such restrictions be enforced to the
fullest extent that the court deems reasonable, and this Agreement
shall be reformed in accordance therewith.
All of the covenants in this SECTION 3 shall be construed as
an agreement independent of any other provision in this Agreement, and
the existence of any claim or cause of action of Employee against
Employer, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by Employer of such covenants.
4. RETURN OF EMPLOYER PROPERTY. For purposes of this Agreement,
"COMPANY MATERIALS" shall mean documents or other media or tangible items that
contain or embody Confidential Information or any other information concerning
the business, operations or plans of Employer or any entity controlled by or
under common control with Employer (an "AFFILIATE"), whether such documents
have been prepared by Employee or others. "COMPANY MATERIALS" include, but are
not limited to, blueprints, drawings, photographs, charts, graphs, notebooks,
customer lists, computer disks, tapes or printouts, sound recordings and other
printed, typewritten or handwritten documents, as well as samples, prototypes,
models, products and the like. All Company Materials shall be and remain the
sole property of Employer, or such Affiliate, as the case may be. During the
time period during which Employee is employed by Employer (the "Term"),
Employee agrees that Employee will not remove any Company
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Materials from the business premises of Employer or deliver any Company
Materials to any person or entity outside of Employer, except as required to
do so in connection with performing the duties of Employee. Employee further
agrees that, immediately upon the termination of Employee's employment by
Employee or Employer for any or no reason (including a wrongful termination),
or during the Term if so requested by Employer, Employee shall return all
Company Materials, apparatus, equipment and other physical property, or any
reproduction of such property. Because of the difficulty of measuring economic
losses to Employer as a result of a breach of this SECTION 4, and because of
the immediate and irreparable damage that could be caused to Employer for
which it would have no other remedy, Employee agrees that this SECTION 4 may
be enforced by Employer in the event of breach by him, by injunctions and
restraining orders.
5. AT WILL EMPLOYMENT. Employee shall be employed on at
"At-Will" basis, and as such may be terminated at any time, with or without
cause. If, within the first twelve months of employment, employment is
terminated by the Employer or its successor for any reason other than Cause
(as defined below) or employee becomes subject to an Involuntary Termination
(as defined below), employee will be entitled to receive continuation of base
salary and insurance benefits for a period of 6 months.
"Cause" shall mean (i) negligence, gross negligence or willful misconduct in
the performance of employee's duties to the Employer, (ii) violation of any
federal or state law which harms or could potentially harm the standing and
reputation of the Employer (as determined by the Board of Directors or General
Partner of Employer in good faith), (iii) indictment of a felony or crime
involving moral turpitude, (iv) submitting a false statement to the Employer
or a third party on behalf of the Employer, with the intention to deceive the
Employer or such third party, (iv) the death or Disability of the Employee, or
(v) a breach of this Agreement by Employee.
"Disability of Employee" means, the expiration of a continuous period of one
hundred and eighty (180) days during which Employee is unable to perform his
assigned duties due to physical or mental incapacity.
"Involuntary Termination" means voluntary resignation by Employee upon 30 days
prior written notice to the Employer, following (i) a material reduction or
change in the duties, responsibilities and requirements inconsistent with the
Employee's position with the Employer and Employee's prior duties,
responsibilities and requirements (taking into account the difference in job
title and duties that may occur following an acquisition but that do not
actually result in a material change in employee's job duties,
responsibilities and requirements), which, after written notice from the
Employee to the Employer that such reduction or change constitutes an
Involuntary Termination is not appropriately modified by the Employer within
ten business days of such written notice; (ii) any reduction in base
compensation; or (iii) a requirement that employee relocate to a location more
than 50 miles from the Employer's current location (unless the location is
Austin Texas, in which case such requirement shall not constitute an
Involuntary Termination).
6. Upon termination of employment, Employee shall be entitled
to receive all compensation earned and all benefits and reimbursements due
through the effective date of termination. All other rights and obligations of
Employer and Employee under this Agreement shall cease as of the effective
date of termination, except that Employee's obligations under SECTIONS 3, 4,
6, 7, 8 AND 13 hereof shall survive such termination in accordance with their
terms.
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7. INVENTIONS.
Employee agrees to promptly disclose in writing to Employer
all "INVENTIONS", (which term includes improvements, inventions, works
of authorship, trade secrets, technology, computer programs, formulas,
compositions, ideas, designs, processes, techniques, know-how and
data, whether patentable or not patentable) made or conceived or
reduced to practice or developed by Employee, either alone or jointly
with others, during the Term. Employee also agrees to disclose to the
CEO or COO of Employer Inventions conceived, reduced to practice, or
developed by Employee within six (6) months of termination of
Employee's employment with Employer; such disclosures shall be
received by Employer in confidence (to the extent they are not
assigned in (b) below) and do not extend the assignment made in
Section (b) below. Employee agrees not to disclose Inventions covered
by this SECTION 6 to any person outside of Employer unless requested
to do so by management personnel of Employer.
Employee agrees that all Inventions which Employee makes,
conceives, reduces to practice or develops (in whole or in part,
either alone or jointly with others) during his employment shall be
the sole property of Employer and Employee hereby assigns such
Inventions and all rights therein to Employer. Employer shall be the
sole owner of all rights in connection therewith.
Employee agrees to perform, during and after Employee's
employment with Employer, all acts deemed necessary or desirable by
Employer to permit and assist it, at Employer's expense, in
evidencing, perfecting, obtaining, maintaining, defending and
enforcing Employer's rights in any Inventions and/or Employee's
assignment with respect to such Inventions in any and all countries.
Such acts may include, but are not limited to, execution of documents
and assistance or cooperation in legal proceedings. Employee hereby
irrevocably designates and appoints Employer and its duly authorized
officers and agents, as Employee's agents and attorneys-in-fact to
act for and in Employee's behalf and instead of Employee, to execute
and file any documents and to do all other lawfully permitted acts to
further the above purposes with the same legal force and effect as if
executed by Employee.
Any assignment of copyright hereunder includes all rights of
paternity, integrity, disclosure and withdrawal and any other rights
that may be known as or referred to as "moral rights" (collectively,
"MORAL RIGHTS"). To the extent that such Moral Rights cannot be
assigned under applicable law and to the extent the following is
allowed by the laws in the various jurisdictions where Moral Rights
exist, Employee hereby waives such Moral Rights and consents to any
action of Employer that would violate such Moral Rights in the absence
of such consent. Employee agrees to confirm such waivers and consents
from time to time as requested by Employer.
Employee has attached to this Agreement a complete list of
all existing Inventions to which Employee claims ownership as of the
date of this Agreement and that Employee desires to specifically
clarify are not subject to this Agreement, and Employee acknowledges
and agrees that such list is complete. If no such list is attached to
this Agreement, Employee represents that Employee has no such
Inventions at the time of signing this Agreement.
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8. CONFIDENTIALITY.
Employee acknowledges and agrees that all Confidential
Information (as defined below) is confidential and a valuable, special
and unique asset of Employer that gives Employer an advantage over its
actual and potential, current and future competitors. Employee further
acknowledges and agrees that all Confidential Information shall be the
sole property of Employer. At all times, both during the term of
Employee's employment and after the termination of Employee's
employment for any reason (including wrongful termination), Employee
shall hold all Confidential Information in strict confidence, and
shall not use any Confidential Information except for the benefit of
Employer, in accordance with the duties assigned to Employee by
Employer. Employee shall not, at any time (either during or after the
term of Employee's employment), disclose any Confidential Information
to any person or entity (except other employees of Employer who have
a need to know the information in connection with the performance of
their employment duties ), or copy, reproduce, modify, decompile, or
reverse engineer any Confidential Information, or remove any
Confidential Information from Employer's premises, without the prior
written consent of Employer, or permit any other person to do so.
Employee shall take reasonable precautions to protect the physical
security of all documents and other material containing Confidential
Information (regardless of the medium on which the Confidential
Information is stored). This Agreement applies to all Confidential
Information, whether now known or later to become known to Employee.
As used in this Agreement, the term "CONFIDENTIAL
INFORMATION" shall mean any information that was or will be
developed, created, or discovered by or on behalf of Employer, or
which became or will become known by, or was or is conveyed to
Employer, which has commercial value in Employer's business.
"CONFIDENTIAL INFORMATION" includes, but is not limited to,
information about trade secrets, computer programs, designs,
technology, ideas, know-how, processes, formulas, compositions, data,
techniques, improvements, inventions (whether patentable or not),
works of authorship, business and product development plans, the
salaries and terms of compensation of other employees, customers and
other information concerning Employer's actual or anticipated
business, research or development, or which is received in confidence
by or for Employer from any other person. Employee agrees that
Employee's employment creates a relationship of confidence and trust
between Employee and Employer with respect to Confidential
Information.
Because of the difficulty of measuring economic losses to
Employer as a result of a breach of this SECTION 7, and because of the
immediate and irreparable damage that could be caused to Employer for
which it would have no other adequate remedy, Employee agrees that this
SECTION 7 may be enforced by Employer in the event of a breach by
Employee by injunctions and restraining orders.
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9. NO PRIOR AGREEMENTS. Employee hereby represents and warrants
to Employer that the execution of this Agreement by Employee and his
employment by Employer and the performance of Employee's duties hereunder will
not violate or be a breach of any agreement with a former employer, client or
any other person or entity. Further, Employee agrees to indemnify Employer for
any claim, including but not limited to attorneys' fees and expenses of
investigation, by any such third party that such third party may now have or
may hereafter come to have against Employer based upon or arising out of any
noncompetition agreement, invention or secrecy agreement between Employee and
such third party which was in existence as of the date of this Agreement.
10. ASSIGNMENT; BINDING EFFECT. Employee understands that he has
been selected for employment by Employer on the basis of Employee's personal
qualifications, experience and skills. Employee, therefore, shall not assign
all or any portion of Employee's performance under this Agreement. Subject to
the preceding two sentences, this Agreement shall be binding upon, inure to
the benefit of and be enforceable by the parties hereto and their respective
heirs, legal representatives, successors and assigns. Therefore Employer
include a successors of Rackspace, Ltd., as well as an acquirer of all or
substantially all of the assets of Employer.
11. COMPLETE AGREEMENT. This Agreement is not a promise of
future employment. This Agreement supersedes any other agreements or
understandings, written or oral, between Employer, or any predecessor of
Employer, and Employee, and Employee has no oral representations,
understandings or agreements with Employer or any of its officers, directors
or representatives covering the same subject matter as this Agreement.
This written Agreement is the final, complete and exclusive statement
and expression of the agreement between Employer and Employee and of all the
terms of this Agreement, and it cannot be varied, contradicted or supplemented
by evidence of any prior or contemporaneous oral or written agreements. This
written Agreement may not be later modified except by a written instrument
signed by a duly authorized officer of Employer and Employee, and no term of
this Agreement may be waived except by a written instrument signed by the
party waiving the benefit of such term.
12. NOTICE. Whenever any notice is required hereunder, it shall
be given in writing addressed as follows:
TO EMPLOYER: 112 East Pecan, Suite 600
San Antonio, Texas 78205
Attention: President
TO EMPLOYEE:
---------------------------------
Notice shall be deemed given and effective three days after the deposit in the
U.S. mail of a writing addressed as above and sent first class mail,
certified, return receipt requested, or when actually received. Either party
may change the address for notice by notifying the other party of such change
in accordance with this SECTION 11.
13. SEVERABILITY; HEADINGS. If any portion of this Agreement is
held invalid or inoperative, the other portions of this Agreement shall be
deemed valid and operative and, so far as is reasonable and possible, effect
shall be given to the intent manifested by the portion held
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invalid or inoperative. The Section headings herein are for reference purposes
only and are not intended in any way to describe, interpret, define or limit
the extent or intent of the Agreement or of any part hereof.
14. ARBITRATION.
(1) Any controversy or claim arising out of or relating to
this Agreement, or the breach thereof, shall be settled by binding
arbitration by a single arbitrator in accordance with the Commercial
Arbitration Rules of the American Arbitration Association in San
Antonio, Texas (the "Rules"). Upon receipt of notice of any dispute to
be settled by binding arbitration, the American Arbitration
Association shall use its best efforts to appoint a single arbitrator
within thirty (30) days after receipt of such notice. The arbitrator
shall be determined by the Employee and the Employer, unless the
parties are unable to agree upon the arbitrator, in which case the
arbitrator shall be chosen in accordance with the Rules. The above
notwithstanding, the Employer shall have the right to seek and obtain
injunctive or other equitable relief from a court of competent
jurisdiction, in the event that Employee violates the terms of this
Agreement including but not limited to Sections 3 and 8.
(2) The arbitrator shall not have the authority to add to,
detract from, or modify any provision hereof, nor shall the arbitrator
award exemplary or punitive damages to either party. A decision by the
arbitrator shall be final and binding. Judgment may be entered on the
arbitrator's award in any court having jurisdiction, and such award
shall not be appealable.
15. GOVERNING LAW. This Agreement shall in all respects be
governed by and construed in accordance with the laws of the State of Texas.
16. COUNTERPARTS. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original and all
of which together shall constitute but one and the same instrument. Facsimile
transmission of any signed original document and/or retransmission of any
signed facsimile transmission will be deemed the same as delivery of an
original. At the request of any party, the parties will confirm facsimile
transmission by signing a duplicate original document.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
RACKSPACE, LTD.
By: Macroweb, LC, its general partner
BY: /s/ GRAHAM M. WESTON
-------------------------------------
NAME: GRAHAM M. WESTON
TITLE: MEMBER
/s/ Lew Moorman
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Lew Moorman
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