CONFORMED COPY
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is made as of January 31,
2005, between Spacecraft Machine Products, Inc., a corporation organized under
the laws of the State of California (the "Company"), and Xxxxx X. Xxxxxxx, III
(the "Executive").
WHEREAS, in connection with the acquisition of all of the outstanding
capital stock of the Company by Gateway International Holdings, Inc., a Nevada
Corporation, from the Executive and his co-shareholder the parties desire to
formalize the terms and conditions of Executive's employment with the Company.
NOW, THEREFORE, the Company and Executive hereby agree as follows:
1. EMPLOYMENT.
1.1 General. The Company hereby employs Executive in the capacity of
President of the Company commencing with the Effective Date (as defined in
Section 2). Executive hereby accepts such employment, upon the terms and subject
to the conditions herein contained.
1.2 Duties. During Executive's employment with the Company, Executive
shall report directly to the Company's Chief Executive Officer and shall be
responsible for performing those duties consistent with the position of
President, and as may from time to time be reasonably assigned to or requested
of Executive by the Company's Chief Executive Officer. Executive shall use his
reasonable efforts to perform faithfully and effectively such responsibilities.
Executive shall conduct all of his activities in a manner so as to maintain and
promote the business and reputation of the Company.
1.3 Full-Time Position. Executive, during his employment with the
Company, shall devote all of his business time, attention and skills to the
business and affairs of the Company. Executive shall not, during the term of
this Agreement, be engaged in any other business activity without the prior
consent of the Chief Executive Officer of the Company; provided, however, that
this restriction shall not be construed as preventing Executive from investing
his personal assets in passive investments in business entities which are not in
competition with the Company or its affiliates.
1.4 Business Opportunity. Executive hereby agrees to promote and
develop all business opportunities that come to his attention relating to
current or anticipated future business of the Company, in a manner consistent
with the best interests of the Company and with his duties under this Agreement.
Should Executive discover a business opportunity that does not relate to the
current or anticipated future business of the Company, he shall first offer such
opportunity to the Company. Should the Board of Directors of the Company not
exercise its right to pursue this business opportunity within a reasonable
period of time, not to exceed sixty (60) days, then Executive, with the consent
of the Board of Directors, may develop the business opportunity for himself;
provided, however, that such development may in no way conflict or interfere
with the duties owed by Executive to the Company under this Agreement. Further,
Executive may develop such business opportunities only on his own time, and may
not use any service, personnel, equipment, supplies, facility, or trade secrets
of the Company in their development. As used herein, the term "business
opportunity" shall not include business opportunities involving investment in
publicly traded stocks, bonds or other securities, or other investments of a
personal nature.
1.5 Representations of Executive. To induce the Company to enter into
this Agreement, Executive represents and warrants to the Company that as of the
Effective Date (a) Executive will not be a party or subject to any employment
agreement or arrangement with any other person, firm, company, corporation or
other business entity, (b) Executive will not be subject to restraint,
limitation or restriction by virtue of any agreement or arrangement, or by
virtue of any law or rule of law or otherwise which would impair Executive's
right or ability to (i) enter the employ of the Company, or (ii) perform fully
his duties and obligations pursuant to this Agreement, and (c) to the best of
Executive's knowledge no material litigation is pending or threatened against
any business or business entity owned or controlled or formerly owned or
controlled by Executive.
1.6 Location of Employment. Executive's principal place of employment
during his employment with the Company shall be in Torrance, California.
2. TERM. The term of this Agreement shall commence on January 31, 2005 (the
"Effective Date"). The initial term of this Agreement (the "Initial Term") shall
be for a period commencing on the Effective Date and shall continue for a period
of one (1) year from the date hereof, unless sooner terminated as provided in
Section 4.1. Thereafter, this Agreement shall automatically renew for successive
one year terms unless either party shall have given written notice to the other
party not less than 60 days prior to the expiration of the Initial Term or any
successive term of its intent not to renew this Agreement (the Initial Term,
together with any subsequent employment period or periods, being referred to
herein as the "Term").
3. COMPENSATION AND BENEFITS.
3.1 Salary. The Company shall pay to Executive, and Executive shall
accept, as full compensation for any and all services rendered and to be
rendered by him to the Company in all capacities during the Term of his
employment under this Agreement, a base salary at the annual rate of $115,050
("Base Salary"), payable in accordance with the regular payroll practices of the
Company.
3.2 Employee Benefits. The Executive shall be entitled to participate
in tax-qualified and nonqualified deferred compensation and retirement plans,
group term life insurance plans, short-term and long-term disability plans,
employee benefit plans, practices, and programs maintained by the company and
made available to similarly situated executives generally, and as may be in
effect from time to time. Executive also shall be entitled to reimbursement of
reasonable automobile expenses, including repairs, gas and insurance and
cellular phone bills.
3.3 Vacation. Executive shall be entitled to paid vacation in
accordance with the Company's standard vacation policies, with such vacation to
be scheduled and taken in accordance with the Company's standard vacation
policies.
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3.4 Business Expenses. The Company shall reimburse Executive for any
and all necessary, customary and usual business expenses, properly receipted in
accordance with Company policies reasonably incurred by Executive on behalf of
the Company.
3.5 Withholding. All compensation shall be subject to customary
withholding tax and other employment taxes as are required with respect to
compensation paid by a corporation to an employee.
4. TERMINATION OF EMPLOYMENT.
4.1 Events of Termination. Executive's employment with the Company
shall terminate upon the occurrence of any one or more of the following events:
4.1.1 Death. In the event of Executive's death, Executive's
employment shall terminate on the date of death.
4.1.2 Disability. In the event of Executive's Disability (as
hereinafter defined), the Company shall have the option to terminate Executive's
employment by giving a notice of termination to Executive. The notice of
termination shall specify the date of termination, which date shall not be
earlier than thirty (30) days after the notice of termination is given. For
purposes of this Agreement, "Disability" shall mean a physical or mental
impairment which substantially limits a major life activity of Executive and
which renders Executive unable to perform the essential functions of his
position, even with reasonable accommodation which does not impose an undue
hardship on the Company, which condition continues for more than 120 consecutive
days or more than 180 days out of 365 consecutive days. The Board of Directors
shall have the right, in good faith, to make the determination of Disability
under this Agreement based upon information supplied by Executive and/or his
medical personnel, as well as information from medical personnel (or others)
selected by the Company or its insurers.
4.1.3 Termination by the Company for Cause. The Company may,
at its option, terminate Executive's employment for Cause (as hereinafter
defined), based on objective factors determined in good faith by a majority of
the Board of Directors, by giving a notice of termination to Executive
specifying the reasons for termination and, if Executive shall fail to cure same
within ten (10) days of his receiving the notice of termination, his Employment
shall terminate at the end of such 10-day period; provided that in the event the
Board of Directors in good faith determines that the underlying reasons giving
rise to such determination cannot be cured, then said cure period shall not
apply and Executive's employment shall terminate on the date of Executive's
receipt of the notice of termination. "Cause" shall mean (a) Executive's
conviction of, guilty or "no contest" plea to, or confession of guilt of a
felony, or (b) a willful act by Executive which constitutes gross misconduct and
which is materially injurious to the Company, including, but not limited to,
theft, fraud or other illegal conduct.
4.1.4 Reserved.
4.1.5 Termination by Executive. Executive may terminate
Executive's employment for any reason whatsoever by giving written notice of
termination to the Company. Executive's employment shall terminate on the
earlier of (a) the date, following the date of the notice of termination, upon
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which a suitable replacement for Executive is found by the Company or (b) sixty
(60) days after the date of receipt by the Company of the notice of termination.
4.2 Certain Obligations of the Company Following Termination of
Executive's Employment. Following the termination of Executive's employment
under the circumstances described below, the Company shall pay to Executive in
accordance with its regular payroll practices the following compensation and
provide the following benefits:
4.2.1 Death. In the event that Executive's employment is
terminated by reason of Executive's death, Executive's estate shall be entitled
to the following payments:
(a) Base Salary through the date Executive's
employment is terminated;
(b) Any additional compensation prorated to the date
of death of Executive; and
(c) The Company shall pay to Executive's estate the
amounts, and shall provide all benefits generally available under the
employee benefit plans, policies and practices of the Company,
determined in accordance with the applicable terms and provisions of
such plans, policies and practices in each case, as accrued to the date
of termination or otherwise payable as a consequence of Executive's
death.
4.2.2 Disability. In the event that Executive's employment is
terminated by reason of Executive's Disability, Executive shall be entitled to
the following payments:
(a) Base Salary through the date Executive's
employment is terminated;
(b) Any additional compensation, prorated to the date
of Executive's termination due to Executive's Disability; and
(c) The Company shall pay to Executive the amounts
and shall provide all benefits generally available under the employee
benefit plans, policies and practices of the Company, determined in
accordance with the applicable terms and provisions of such plans,
policies and practices in each case, as accrued to the date of
termination or otherwise payable as a consequence of Executive's
Disability.
4.2.3 Reserved.
4.2.4 Termination by Executive or by the Company for Cause. In
the event Executive's employment is terminated by Executive pursuant to Section
4.1.5 hereof ("Termination by Executive") or by the Company pursuant to Section
4.1.3 hereof ("Termination by the Company for Cause"), Executive shall be
entitled to no further compensation or other benefits under this Agreement
except as to that portion of any unpaid Base Salary and other benefits accrued
and earned by him hereunder, up to and including the effective date of such
termination. In addition, Executive shall be entitled to receive any additional
compensation earned but not yet paid with respect only to any fiscal year prior
to the fiscal year of termination.
4.3 Nature of Payments. All amounts to be paid by the Company to
Executive pursuant to this Section 4 are considered by the parties to be
severance payments. In the event such payments are treated as damages, it is
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expressly acknowledged by the parties that damages to Executive for termination
of employment would be difficult to ascertain and the above amounts are
reasonable estimates thereof.
4.4 Duties Upon Termination. Upon termination of Executive's employment
with the Company pursuant to Sections 4.1.1 through 4.1.5 hereof or upon
expiration of the Term, Executive shall be released from any duties and
obligations hereunder (except those duties and obligations set forth in Section
5). Upon termination of Executive's employment with the Company pursuant to
Sections 4.1.1 through 4.1.5 hereof, the obligations of the Company to Executive
shall be as set forth in Section 4.2 hereof.
5. RESTRICTIVE COVENANTS.
5.1 Executive acknowledges that (i) he has a major responsibility for
the operation, administration, development and growth of the Company's business,
(ii) his work for the Company has brought him and will continue to bring him
into close contact with confidential information of the Company and its
customers, and (iii) the agreements and covenants contained in this Section 5
are essential to protect the business interest of the Company and that the
Company will not enter into this Agreement but for such agreements and
covenants. Accordingly, the Executive covenants and agrees as follows:
5.1.1 Except as otherwise provided for in this Agreement,
during the Term of this Agreement and for a period of twelve (12) months
following the termination of this Agreement (the "Termination Period"),
Executive shall not, directly or indirectly, compete with respect to any
services or products of the Company which are either offered or are being
developed by the Company; or, without limiting the generality of the foregoing,
be or become, or agree to be or become, interested in or associated with, in any
capacity (whether as a partner, shareholder, owner, officer, director,
executive, principal, agent, creditor, trustee, consultant, co-venturer or
otherwise) with any individual, corporation, firm, association, partnership,
joint venture or other business entity, which competes with respect to any
services or products of the Company which are either offered or are being
developed by the Company; provided, however, that Executive may own, solely as
an investment, not more than one percent (1%) of any class of securities of any
publicly held corporation in competition with the Company whose securities are
traded on any national securities exchange in the United States of America.
5.1.2 During the Term of this Agreement and during the
Termination Period, Executive shall not, directly or indirectly, (i) induce or
attempt to influence any employee of the Company to leave its employ, (ii) aid
or agree to aid any competitor, customer or supplier of the Company in any
attempt to hire any person who shall have been employed by the Company within
the twelve (12) month period preceding such requested aid, or (iii) induce or
attempt to influence any person or business entity who was a customer or
supplier of the Company during any portion of said period to transact business
with a competitor of the Company in Company's business.
5.1.3 During the Term of this Agreement, the Termination
Period, if applicable, and thereafter, Executive shall not other than in the
performance of his duties disclose to anyone any information about the affairs
of the Company, including, without limitation, trade secrets, trade "know-how",
inventions, customer lists, business plans, operational methods, pricing
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policies, marketing plans, sales plans, identity of suppliers or customers,
sales, profits or other financial information, which is confidential to the
Company or is not generally known in the relevant trade, nor shall Executive
make use of any such information for his own benefit. Any technique, method,
process or technology used by the Company shall be considered a "trade secret"
for the purposes of this Agreement.
5.1.4 Executive hereby agrees that all know-how, documents,
reports, plans, proposals, marketing and sales plans, client lists, client files
and materials made by him or by the Company are the property of the Company and
shall not be used by him in any way adverse to the Company's interests.
Executive shall not deliver, reproduce or in any way allow such documents or
things to be delivered or used by any third party without specific direction or
consent of the Board of Directors of the Company. Executive hereby assigns to
the Company any rights that he may have in any such trade secret or proprietary
information.
5.2 If Executive breaches, or threatens to commit a breach of Section
5.1 (the "Restrictive Covenants"), the Company shall have the following rights
and remedies, each of which shall be enforceable, and each of which is in
addition to, and not in lieu of, any other rights and remedies available to the
Company at law or in equity.
5.2.1 Executive shall account for and pay over to the Company
all compensation, profits, and other benefits, after taxes, which inure to
Executive's benefit which are derived or received by Executive or any person or
business entity controlled by Executive resulting from any action or
transactions constituting a breach of any of the Restrictive Covenants.
5.2.2 Notwithstanding the provisions of subsection 5.2.1
above, Executive acknowledges and agrees that in the event of a violation or
threatened violation of any of the provisions of Section 5, the Company shall
have no adequate remedy at law and shall therefore be entitled to enforce each
such provision by temporary or permanent injunctive or mandatory relief obtained
in any court of competent jurisdiction without the necessity of proving damages,
posting any bond or other security, and without prejudice to any other rights
and remedies which may be available at law or in equity.
5.3 If any of the Restrictive Covenants, or any part thereof, is held
to be invalid or unenforceable, the same shall not affect the remainder of the
covenant or covenants, which shall be given full effect, without regard to the
invalid or unenforceable portions. Without limiting the generality of the
foregoing, if any of the Restrictive Covenants, or any part thereof, is held to
be unenforceable because of the duration of such provision or the area covered
thereby, the parties hereto agree that the court making such termination shall
have the power to reduce the duration and/or area of such provision and, in its
reduced form, such provision shall then be enforceable.
5.4 The parties hereto intend to and hereby confer jurisdiction to
enforce the Restrictive Covenants upon the courts of any jurisdiction within the
geographical scope of such Restrictive Covenants. In the event that the courts
of any one or more of such jurisdictions shall hold such Restrictive Covenants
wholly unenforceable by reason of the breadth of such scope or otherwise, it is
the intention of the parties hereto that such determination not bar or in any
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way affect the Company's right to the relief provided above in the courts of any
other jurisdictions within the geographical scope of such Restrictive Covenants,
as to breaches of such covenants in such other respective jurisdictions, the
above covenants as they relate to each jurisdiction being, for this purpose,
severable into diverse and independent covenants.
6. MISCELLANEOUS PROVISIONS.
6.1 Severability. If in any jurisdiction any term or provision hereof
is determined to be invalid or unenforceable, (a) the remaining terms and
provisions hereof shall be unimpaired, (b) any such invalidity or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction and (c) the invalid or
unenforceable term or provision shall, for purposes of such jurisdiction, 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 unenforceable term
or provision.
6.2 Execution in Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement.
6.3 Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed duly given when delivered by
hand, or when delivered if mailed by registered or certified mail or private
courier service, postage prepaid, return receipt requested or via facsimile
(with written confirmation of receipt) as follows:
If to Executive: Xxxxx X. Xxxxxxx III
0000 Xxxxx Xxxx Xxxxx
Xxxxxx Xxxxx Xxxxxx, XX 00000
Facsimile: 310/373-8988
If to the Company: Spacecraft Machine Products, Inc.
00000 Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xx. Xxxxx X. Xxxxxxx, III
President
or to such other address as a party hereto shall have designated by like notice
to the other party hereto.
6.4 Amendment. No provision of this Agreement may be modified, amended,
waived or discharged in any manner except by a written instrument executed by
the Company and Executive.
6.5 Entire Agreement. This Agreement constitutes the entire agreement
of the parties hereto with respect to the subject matter hereof and supersedes
all prior agreements and understandings of the parties hereto, oral or written,
with respect to the subject matter hereof.
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6.6 Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California applicable to contracts
made and to be wholly performed therein without regard to its conflicts or
choice of law provisions.
6.7 Headings. The headings contained herein are for the sole purpose of
convenience of reference and shall not in any way limit or affect the meaning or
interpretation of any of the terms or provisions of this Agreement.
6.8 Binding Effect; Successors and Assigns. Executive may not delegate
his duties or assign his rights hereunder. This Agreement shall inure to the
benefit of, and be binding upon, the parties hereto and their respective heirs,
legal representatives, successors and permitted assigns.
6.9 Waiver, etc. The failure of either of the parties hereto to at any
time enforce any of the provisions of this Agreement shall not be deemed or
construed to be a waiver of any such provision, nor to in any way affect the
validity of this Agreement or any provision hereof or the right of either of the
parties hereto to thereafter enforce each and every provision of this Agreement.
No waiver of any breach of any of the provisions of this Agreement shall be
effective unless set forth in a written instrument executed by the party against
whom or which enforcement of such waiver is sought, and no waiver of any such
breach shall be construed or deemed to be a waiver of any other or subsequent
breach.
6.10 Representations and Warranties. Executive and the Company hereby
represent and warrant to the other that: (a) he or it has full power, authority
and capacity to execute and deliver this Agreement and to perform his or its
obligations hereunder, (b) such execution, delivery and performance will not
(and with the giving of notice or lapse of time or both would not) result in the
breach of any agreements or other obligations to which he or it is a party or he
or it is otherwise bound and (c) this Agreement is his or its valid and binding
obligation in accordance with its terms.
6.11 Enforcement. Except as otherwise provided herein, if any party
institutes legal action or other dispute resolution proceedings to enforce or
interpret the terms and conditions of this Agreement, the prevailing party shall
be awarded reasonable attorneys' fees at all levels of the proceeding, and the
expenses and costs incurred by such prevailing party in connection therewith.
6.12 Arbitration. The parties agree to arbitrate any disputes arising
under this Agreement in as expeditious a manner as possible through the
commercial rules of the American Arbitration Association in the County of
Orange, California, or such other place that is mutually agreed upon by the
parties. Further, the parties hereby waive any objection based on personal
jurisdiction, venue or forum non-conveniens in any arbitration or action brought
under this Agreement. The decision and award rendered by the arbitrators shall
be final and binding. Judgment upon the award may be entered in any court having
jurisdiction thereof.
6.13 Continuing Effect. Where the context of this Agreement requires,
the respective rights and obligations of the parties shall survive any
termination or expiration of the term of this Agreement.
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6.14 Construction. Both parties have cooperated in the drafting and
preparation of this Agreement. Hence, in any construction to be made of this
Agreement, the same shall not be construed against any party on the basis that
the party was the drafter.
6.15 Expenses. Each party to this Agreement agrees to bear his or its
own expenses in connection with the negotiation and execution of this Agreement.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by
the parties hereto as of the date first above written.
"COMPANY"
SPACECRAFT MACHINE PRODUCTS, INC.,
a California corporation
By: / S /
-----------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
"EXECUTIVE"
/ S /
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Xxxxx X. Xxxxxxx
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