Exhibit 10.7
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EMPLOYMENT AGREEMENT
This Agreement is between Particle Interconnect Corporation, a Colorado
corporation, hereinafter referred to as the "Company," and Xxxxxx X. Xxxxx,
President, hereinafter referred to as "Employee."
1. Engagement. The Company hereby engages the Employee and the Employee
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hereby accepts engagement upon the terms and conditions hereinafter set forth.
Employee's compensation set forth herein shall be subject to all applicable
federal or state tax withholding provisions.
2. Term. Subject to the provisions for termination as hereinafter provided,
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the term of this Agreement shall be for a period of Thirty-Six (36) months
commencing on October 22, 1996. The parties hereby acknowledge and agree it is
their intent that: (a) any extension or renewal of this Agreement shall be
concluded at least Three (3) months prior to the expiration date of the initial
Thirty-Six (36) months term and Three (3) months prior to the expiration date
of any subsequent extension or renewal term hereof; and (b) absent mutual
agreement to the contrary, the failure to conclude such extension or renewal by
the dates indicated shall be deemed notice to the Company and the Employee that
the Agreement shall not be extended.
At the end of one (1) year the Board of Directors shall review the Employee's
performance and upon their determination of satisfactory performance, Employee
shall be eligible for appointment as Chief Executive Officer of the Company.
3. Duties. The Employee shall be the President of the Company. As
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Employee, the Employee shall, during the term of this Agreement, perform the
responsibilities and duties, exercise the powers and follow the instructions
which from time to time may be lawfully assigned to or vested in him by the
Board of Directors of the Company. It is agreed that during the term of this
Agreement, the Employee will not accept an officership or directorship,
participate in the operation or management of or act as a Employee to any other
company, which is in the same line of business as or in competition with the
Company unless it be a company either owned or controlled by the Company,
without the prior written consent of the Board of Directors of the Company.
4. Extent of Services. Employee agrees to provide not less than 40 hours
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per week of executive services to the Company for the compensation paid to the
Employee. Employee shall not be prevented from investing Employee's assets in
such form or manner as will not require any services on the part of the Employee
in the operation of the affairs of the companies in which such investments are
made, except that in no event may the Employee make investments in any firms in
competition with, or in the business of supplying goods or services to the
Company, unless such investments are disclosed to and approved by the Board of
Directors of the Company.
5. Compensation. For services rendered by the Employee under this
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Agreement, the Company shall pay the Employee the compensation set forth on
EXHIBIT "A". If during the term of the Agreement the Employee is unavailable
because of illness which prevents Employee from performing Employee's duties
described herein, the Company shall be obligated to pay the Employee for all
such periods of absence; not to exceed however three (3) months.
6. Bonus and Stock Option Plans and Benefit Programs. The Company proposes
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to establish certain bonus and stock option plans. During the term of this
Agreement, and as additional compensation, the Employee will be eligible to
participate in those plans currently in effect and as they may be amended from
time to time, so long as such plans remain in existence. Furthermore, during
the term of this Agreement, the Employee shall be entitled to participate in all
current or subsequently enacted benefit programs applicable to other officers,
directors, agent and employees of the Company. For purposes of this Agreement,
all references to stock option plans, bonus plans or benefit programs shall be
deemed to mean that Employee shall be eligible to participate in such plans or
programs of the Company in which Employee presently participates or is eligible
for, or such plans or programs of the Company that may subsequently be adopted
in substitution for the Company plans or programs. Options, if any, under this
Agreement as set forth on EXHIBIT "B."
7. Expenses. The Employee is authorized to incur reasonable expenses with
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regard to the business of the Company, including expenses for entertainment,
travel and other items of a similar character. The Company will reimburse the
Employee for all such expenses incurred by him in the performance of Employee's
duties hereunder. The Company will re-imburse Employee for all moving and
transportation costs in relocating to Colorado Springs, Colorado. Employee
shall present copies of all such expenses to the Company prior to reimbursement.
8. Termination by Company. This Agreement may be terminated by the Company
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as follows:
(a) If the Employee shall commit a breach of this Agreement, and such breach,
if capable of rectification, is not rectified with thirty (30) calendar
days of receipt by Employee from the Company of written notice requiring
him so to do;
(b) If the Employee shall be convicted of a felony criminal offense, or been
found in a judicial proceeding initiated after the date of this Agreement
by a court of competent jurisdiction, in a decision subject to no further
appeals, to have committed any dishonest or unlawful act or to have been
engaged or engaging in any conduct which might irreparably injure or tend
to injure the reputation or business of the Company;
(c) If the Employee shall grossly, willfully or inexcusably neglect the
performance of Employee's duties as set forth herein. Such standard of
neglect shall however be determined only by the Board of Directors, based
upon written opinion of independent counsel and written advice to
Employee and unanimously approved by the full Board of Directors
especially convened for such purpose.
9. Termination by Employee. Employee may terminate this Agreement with or
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without cause, and if terminated, the Company and Employee agree to abide by and
promptly honor the provisions of Section 10 of this Agreement. Cause for
termination by Employee shall not consist of the Company's refusal to follow the
bona-fide professional recommendations of the Employee.
10. Payments upon Termination by Company or Employee. It is agreed that if
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this Agreement is terminated payments and/or provisions for payments will be
made as follows:
(a) If the Company terminates this Agreement on some basis other than for any
of the reasons as stated in Paragraph 8 hereof, the Company will take the
actions set forth in Subparagraphs (1), (2) and (3) of this Paragraph.
If the Employee terminates this Agreement for cause, which shall be
limited to a failure by the Company to pay Employee's compensation, the
Company will take the actions set forth in Subparagraphs (1), (2) and (3)
of this Paragraph.
(1) All stock options granted to the Employee will become immediately
vested for the full amount of Optioned Shares and shall be
exercised, if ever, in accordance with and subject to the terms and
provisions of the Intercell Corporation 1995 Compensatory Stock
Option Plan and Employee's Stock Option Agreement; and
(2) The Employee will receive within fifteen (15) days of the effective
date of such termination, all compensation and all other benefits
that would have accrued and/or been payable to the Employee during
the term of this Agreement; and
(3) The Employee will be paid in full any other contractual benefits
Employee may have with the Company and be reimbursed for all un-
reimbursed accountable expenses.
(b) If the Company terminates this Agreement for a reason or reasons set
forth in paragraph 8 hereof or the Employee terminates this Agreement
without cause, the Company will only be obligated to pay to the Employee
the actual amount of compensation accrued to the date of termination, the
Employee will be bound to the terms of the Intercell Corporation 1995
Compensatory Stock Option Plan as it relates to the exercise of any
vested options, and, all other payments or benefits recited herein shall
be canceled and terminated, without recourse.
11. Termination Due to Change in Control. If Employee is terminated by the
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Company, for any reason as part or because of a change in control of the
Company, then Employee shall be entitled to a one time lump sum payment of cash
for the termination of this Agreement as follows:
Termination Occurring In Amount
Years One (1) through Two (2) $ 270,000.00
Years Three (3) $ 180,000.00
The cash payment set forth herein, shall be made within Five (5) days of the
date of delivery to Employee of written termination of this Agreement by the
Company. Upon receipt of the payment as set forth herein, the Employee and the
Company shall in writing cancel this Agreement and the parties shall be released
of all further obligations under this Agreement, provided however, that any
options which have been granted to Employee and which are otherwise vested shall
remain unimpaired and in full force and effect.
A change in control of the Company shall be deemed to have occurred when, as a
result of any type of corporate reorganization, execution of proxies or voting
trusts or other arrangements, a person or group of persons acquire sufficient
equity or voting control of the Company to elect more than a majority of the
Board of Directors.
12. Notices of Termination. All Notices of Termination provided for in this
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Agreement must be in writing and must provide for a minimum notice period of
Sixty (60) calendar days between the date of such notification and the effective
date of such termination.
13. Arbitration. Any claim or controversy arising out of, or relating to,
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this Agreement, or the making, performance or interpretation of this Agreement,
shall be settled by arbitration in El Paso County, Colorado, according to the
Commercial Rules of the American Arbitration Association then existing, and
judgment on the arbitration award may be entered in any court having
jurisdiction over the subject matter of the controversy. The arbitrator shall
have been a member of the State Bar of Colorado for at least ten (10) years;
shall be neutral and impartial; and shall not have had any prior relationship
with either Party. The arbitrator shall be paid at the daily rate established
by the American Arbitration Association then in effect for each and every day of
the arbitration proceedings, including all days of hearings, case study,
preparation and deliberation and such payment shall be assessed equally against
the parties. The law governing the arbitration tribunal shall be the law of
Colorado, irrespective of any choice of law principles.
14. Notices. Any notice required or permitted to be given under this
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Agreement shall be sufficient if in writing, and if sent by registered or
certified mail to the Employee's residence in the case of the Employee, or to is
principal office in the case of the Company.
15. Waiver, Modification or Cancellation. Any waiver, alteration or
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modification of any of the provisions of this Agreement or cancellation or
replacement of this Agreement shall not be valid unless in writing and signed by
the Parties.
16. Binding Effect. This Agreement shall inure to the benefit of and be
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binding upon the Company, its successors and assigns, including but not limited
to any entity which may acquire all or substantially all of the Company's assets
and business or with or into which the Company may be consolidated or merged,
and the Employee, Employee's successors, representatives and assigns, provided
that the duties of the Employee as described herein may not be delegated.
17. Severability. The invalidity or unenforceability of any provision of
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this Agreement shall in no way affect the validity or enforceability of any
other provision.
18. Entire Agreement. This Agreement represents the entire Agreement between
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the parties. Each party represents that there are no other oral, written,
express or implied contracts, agreements or understandings between them.
19. Authorization. Each party represents that he, she or it is duly
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competent, authorized and capable of executing this Agreement as a valid,
binding and enforceable Agreement.
20. Governing Law. The substantive law of Colorado shall govern all the
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terms, conditions and interpretations of this Agreement and all other
instruments, documents or agreements executed pursuant hereto. In the event of
litigation concerning this Agreement or any other instrument, document or
agreement relating to it, the parties hereto agree that the exclusive venue and
place of jurisdiction shall be the State of Colorado, City and County of Denver.
Further, the Employee by execution hereof, irrevocably and unconditionally
consents to receive service of process and further agrees to file a general
appearance upon either acceptance of process by the Employee or actual service
of process upon the Employee.
21. Nondisclosure and Non-Competition. Employee agrees to the terms and
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conditions of Employee's obligations, if any, relating to nondisclosure and non-
competition as set forth on Exhibit "C."
22. Specific Representations. Each party represents that:
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(a) The consideration recited herein shall conclusively be deemed fair,
adequate, reasonable and sufficient.
(b) He, she or it has voluntarily and without fraud, duress, coercion, undue
influence or improper persuasion executed this Agreement.
(c) The signature appearing below is Employee's manual, original, genuine,
authentic and undeniable signature.
DATED: October 22, 1996
Particle Interconnect Corporation Xxxxxx X. Xxxxx
By: /s/ Xxxxxx X. Sales By: /s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Sales Xxxxxx X. Xxxxx
Chief Executive Officer Individually
EXHIBIT "A"
Period Minimum Compensation
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October 22, 1996 - October 21, 1997 $90,000.00 per year
payable according to the Company's normal payroll practices, but in no event
less frequently than monthly; the Employee's salary shall be reviewed by the
Board of Directors no less often than once every six (6) months.
EXHIBIT "B"
OPTION PARTICIPATION
An Option for One Hundred Thousand (100,000) shares under the Intercell
Corporation 1995 Compensatory Stock Option Plan. This option shall vest
according to the following schedule: one-thirty-sixth (1/36) per month on the
last day of each month, for Thirty-Six (36) months, beginning with November 1,
1996 and ending with October 31, 1999.
EXHIBIT "C"
NONDISCLOSURE AND NON-COMPETITION
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1. During the term of Employee's employment with the Company and for one (1)
year thereafter, Employee shall not, directly or indirectly, as principal,
agent, employee, trustee, or in any like capacity, or through the agency of any
corporation, partnership, association, agent, agency or any other like entity,
i) engage in any business that is similar to the business conducted by the
Company, its subsidiaries or affiliates; or
ii) solicit any person (natural or otherwise) who is or has been within three
(3) years prior to the date Employee's association is terminated, a
customer or client of the Company, its subsidiaries or affiliates; or
iii) induce any present or future Employee or affiliate of the Company, its
subsidiaries or affiliates to accept employment or similar association
with the Employee or any person, firm, association, corporation or other
entity with whom the Employee is now or may hereafter become associated;
or
iv) become the direct or beneficial owner of the capital stock of, or acquire
the right or option to become such owner, or become a member or partner
of any partnership or any owner or affiliate of any other business which
conducts a business similar to the business conducted by the Company.
v) in any manner interfere with, disrupt or attempt to disrupt the
relationship between the Company and/or any of its customers, or use in
any manner whatsoever, the Company's customer list, database, or trade
secrets.
2. The parties agree that in light of the specialized nature of the industry
and the national-customer base of the Company's business that the restrictions
set forth in Paragraph 1 hereof shall apply to Employee within the territory of
the United States of America.
3. In the event of a violation by Employee of any of the covenants contained
in this Agreement, it is mutually agreed that the term of said covenant and/or
covenants shall be automatically extended against Employee for a period of one
(1) year from the date on which Employee permanently ceases such violation or
for a period of one (1) year from the date of the entry by a Court of competent
jurisdiction of a final order or judgment enforcing said covenant(s), whichever
period is later. The extension of the term(s) of said covenant(s) as provided
in this sub-paragraph 3 shall be in addition to, and not in lieu of the remedies
provided below.
4. Other than within the proper course of Employee's duties, the Employee
will not during or at any time after the termination of association with the
Company, use for himself or others or divulge or convey to others any secret or
confidential information, knowledge or data of the Company, its subsidiaries,
its affiliates or that of third parties obtained by him during the period of
Employee's employment with the Company. Such information, knowledge or data
includes but is not limited to secret or confidential matters,
i) of a technical nature such as but not limited to research methods, know-
how, reporting procedures, composition, processes, computer databases and
similar items or research project,
ii) of a business nature such as but not limited to information about
finances, costs, profits, sales, contracts, transactions, or customer
lists, or
iii) pertaining to future developments such as but not limited to research
and development or future marketing or advertising programs.
Further, the Employee shall, during and after the period of Employee's
employment, diligently endeavor to prevent the publication or disclosure of any
such secret or confidential information, knowledge or data.
5. Except as otherwise provided in a written agreement between Employee and
the Company, if any, all forms, manuals, letters, notes, notebooks, reports,
sketches, formulas, computer programs and similar items, memoranda, client
lists, business, marketing and financial plans and studies and all other
materials and all copies thereof relating in any way to the business of the
Company or of its subsidiaries or affiliates and in any way obtained or produced
by the Employee during the period of Employee's employment with the Company
shall be the property of the Company and shall be surrendered to the Company or
its authorized representative upon the termination of the employment or at any
other time at the request of the Company. Employee further agrees that Employee
will not make or retain any copies of any of the foregoing and will so represent
to the Company upon the termination of Employee's employment.
6. The Company and Employee agree that the Company would not have an
adequate remedy at law for money damages in the event that the provisions of
this Agreement are not complied with in accordance with their terms, and
therefore agree that in the event of any breach of any of these provisions by
the Employee, the Company shall be entitled to equitable relief by way of
injunction or otherwise, together with costs and expenses incurred by it,
including attorneys' fees, in addition to such other remedies as the Company may
have.
7. In the event, Employee violates the terms of this Nondisclosure and Non-
competition section, and in the further event that Company is not made aware of
such violation until a point in time after which Employee has commenced engaging
in services similar to those engaged in by Company, for clients for whom Company
has provided services within three years of the date of Employee's termination
of employment, then in addition to the injunctive relief provide for
in subparagraph 6 above, Company shall be entitled to liquidated damages which
shall be based upon the revenues generated by Employee from Company's clients as
follows.
a. Employee shall pay to Company one-third of all revenues collected by
Employee from Company's clients for a period of three (3) years from the
date on which Employee first collected revenues from any such Company
client.
8. The parties hereby acknowledge that the restrictive covenants contained
in this Agreement are fair and reasonable in light of all of the facts and
circumstances of the relationship between Employee and Company; however,
Employee and Company are aware that in certain circumstances courts have refused
to enforce certain agreements not to compete. Therefore, in furtherance and not
in derogation of the provisions of this Agreement, Company and Employee agree
that in the event a court of competent jurisdiction should for any reason
decline to enforce any of said covenants, that Employee's Agreement shall be
deemed to be modified to restrict Employee's competition with Company to the
maximum extent in time, geography and otherwise as the court shall deem
enforceable and/or to grant Company such other relief at law or in equity as
shall be reasonable necessary to protect the interest of Company.
