EMPLOYMENT AGREEMENT
This Agreement, by and between SELF-HEATING CONTAINER CORPORATION OF
CALIFORNIA, a California corporation, ("EMPLOYER"), located at 00000 Xxxxxxxxx
Xxxxx, Xxxxx 000, Xxxxx, Xxxxxxxxxx 00000, and XXXXX X. XXXXXXXX of 00000
Xxxxxxx Xxxx, Xxxxxx, Xxxxxxxxxx 00000 ("EMPLOYEE"), is as follows:
ARTICLE 1. TERM OF EMPLOYMENT
Section 1.01. EMPLOYER hereby employs EMPLOYEE and EMPLOYEE hereby
accepts employment with EMPLOYER for a term of three (3) years, commencing
September 1, 1996 and terminating on August 31, 1999.
Section 1.02. As used herein, the phrase "employment term" refers to the
entire period of employment of EMPLOYEE by EMPLOYER hereunder, whether for the
periods provided above or whether terminated earlier as hereinafter provided or
extended by mutual agreement between EMPLOYER and EMPLOYEE.
ARTICLE 2. DUTIES AND OBLIGATIONS OF EMPLOYEE
GENERAL DUTIES
Section 2.01. EMPLOYEE shall serve as Executive Vice President of SELF-
HEATING CONTAINER CORPORATION OF CALIFORNIA. In his capacity as Executive Vice
President, EMPLOYEE shall do and perform all services, acts, or things necessary
or advisable to manage and conduct the business of EMPLOYER, including the
hiring and firing of all employees other than the officers of EMPLOYER, subject
at all times to the policies set by EMPLOYER'S Board of Directors, and to the
consent of the Board when required.
EMPLOYEE shall be responsible for overseeing all aspects of the business of
EMPLOYER including, but not limited to, day-to-day operations, research and
development, sales and marketing, financial, manufacturing, production and
distribution.
DEVOTION TO EMPLOYER'S BUSINESS
Section 2.02. EMPLOYEE shall devote his entire productive time, ability,
and attention to the business of EMPLOYER during the term of this Agreement.
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COMPETITIVE ACTIVITIES
Section 2.03. During the term of this Agreement, EMPLOYEE shall not,
directly or indirectly, either as an employee, consultant, agent, principal,
partner, owner, stockholder, corporate officer, director, or in any other
individual or representative capacity, acquire, hold, retain, engage or
participate in any business that is similar in nature to the business of
EMPLOYER or that is in competition in any manner whatsoever with the business of
EMPLOYER. Nothing in this Agreement, however, shall restrict EMPLOYEE from
working for or on behalf of Insta-Heat, Inc. or from having any dealings
whatsoever with Insta-Heat, Inc. EMPLOYEE shall not be in violation of this
Agreement by his participation in the business of Insta-Heat, Inc. as an
employee, agent, consultant, officer, director or shareholder.
ARTICLE 3. OBLIGATIONS OF EMPLOYER
GENERAL DESCRIPTION
Section 3.01. EMPLOYER shall provide EMPLOYEE with compensation,
incentives, benefits, and business expense reimbursement specified elsewhere in
this Agreement.
OFFICE AND STAFF
Section 3.02. EMPLOYER shall provide EMPLOYEE with an adequate working
environment with personnel and equipment required to perform tasks EMPLOYEE is
required to perform, such as, but not limited to, secretarial and other
assistance, a private office, office equipment, supplies and other facilities
and services suitable to EMPLOYEE's position.
ARTICLE 4. COMPENSATION OF EMPLOYEE
ANNUAL SALARY
Section 4.01. (a) As compensation for the services to be performed
hereunder, EMPLOYEE shall receive a base salary of $8,000.00 per month, payable
once a month, on or before the 5th day of each month, which base salary shall be
automatically increased by five percent (5%) on September 1, 1997, and be
increased by an additional five percent (5%) on September 1, 1998.
(b) In the event EMPLOYER engages in an initial public
offering, at the conclusion of said public offering, EMPLOYEE's base salary
shall be increased from $8,000.00 per month to $12,000.00 per month, which
base salary of $12,000 per month shall be automatically increased by five
percent (5%) on September 1, 1997, and be increased by an additional five
percent (5%) on September 1, 1998.
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(c) The salary set forth herein will not cause EMPLOYER
to be restricted to paying the amount of compensation set forth above, and if
at a later time the Board of Directors determines that the minimum salary
should be increased or bonuses should be given to EMPLOYEE, this Agreement
shall not be seen as any impediment to any such activity or action.
SALARY CONTINUATION DURING DISABILITY
Section 4.02. If EMPLOYEE for any reason whatsoever becomes disabled such
that he is unable to perform the duties prescribed herein, EMPLOYER shall
continue to pay EMPLOYEE's full salary for a period of at least 120 days. If,
after said 120-day period, EMPLOYEE is still unable to perform the duties
prescribed herein, then in that event, EMPLOYER may terminate this Employment
Agreement ("Agreement").
ARTICLE 5. EMPLOYEE INCENTIVES
Section 5.01. EMPLOYEE shall be entitled to any and all EMPLOYEE
incentives that the Board of Directors from time to time may authorize for its
employees.
ARTICLE 6. EMPLOYEE BENEFITS
ANNUAL VACATION
Section 6.01. EMPLOYEE shall be entitled to 15 days vacation time per
year, to accrue pro rata as of the commencement of the Agreement. EMPLOYEE
shall also be entitled to not less than 6 national holidays per year.
ILLNESS
Section 6.02. EMPLOYEE shall be entitled to 5 sick days per year with full
pay.
OTHER BENEFITS
Section 6.03 (a) EMPLOYEE shall be entitled to any and all employee
Benefits, including but not limited to death, health, dental, and vision
benefits, that the Board of Directors from time to time may authorize for its
employees.
(b) EMPLOYER agrees to obtain a key man term life
insurance policy on EMPLOYEE in the face amount of Two Million Dollars.
EMPLOYER shall pay in a timely manner all premiums on said policy. EMPLOYEE
has the sole right to designate a beneficiary for One Million Dollars of said
policy. EMPLOYER, or its designee, shall be the beneficiary for the
remaining One Million Dollars on said policy. EMPLOYER is the sole owner of
the entire
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Two Million Dollar policy and entitled to all rights relating thereto.
EMPLOYEE authorizes EMPLOYER to take all actions necessary to obtain and
maintain said policy, to be the owner thereof, and to pay One Million Dollars of
the proceeds therefrom to EMPLOYER. EMPLOYER authorizes EMPLOYEE to name a
beneficiary for One Million Dollars of said policy. The term of said policy
shall be equal to the term of this Agreement.
ARTICLE 7. BUSINESS EXPENSES
REIMBURSEMENT OF BUSINESS EXPENSES
Section 7.01. EMPLOYER shall promptly reimburse EMPLOYEE for all
reasonable business expenses incurred by EMPLOYEE in connection with the
business of EMPLOYER. Each such expenditure is reimbursable only if EMPLOYEE
furnishes EMPLOYER adequate records and other documentary evidence required by
federal and state statutes and regulations issued by the appropriate taxing
authorities for the substantiation of each such expenditure as an income tax
deduction.
Section 7.02. It is understood that EMPLOYEE, from time to time, will be
required to spend time at industry and marketing-type conventions and that these
expenses will also be reimbursed by EMPLOYER.
ARTICLE 8. TERMINATION OF EMPLOYMENT
TERMINATION FOR CAUSE
Section 8.01. (a) EMPLOYER reserves the right to terminate this agreement
immediately for cause upon commission of one of the following acts by EMPLOYEE:
(i) gross neglect of duties of EMPLOYEE; (ii) theft by EMPLOYEE from EMPLOYER;
(iii) misuse of EMPLOYER's funds for personal gain; and/or (iv) conviction of a
felony.
(b) EMPLOYER also reserves the right to terminate
EMPLOYEE's employment for cause in the event EMPLOYEE wilfully breaches or
habitually neglects the duties which he is required to perform under the
terms of this Agreement, or in any other way materially breaches this
Agreement; provided, however, that any such termination will only occur
following written notice to EMPLOYEE of the reasons or reason for such
termination, supported by a statement of relevant facts and followed by
EMPLOYEE's failure to cure such wilful breach or habitual neglect of duties
or any material breach of this Agreement within thirty (30) days of receipt
of such notice.
(c) EMPLOYER is not obligated to pay EMPLOYEE any
severance pay upon termination for cause as specified in Section 8.01.(a) and
8.01.(b).
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TERMINATION WITHOUT CAUSE
Section 8.02. (a) This Agreement shall be terminated upon the death of
EMPLOYEE. EMPLOYEE is not entitled to receive any death benefits, unless prior
to the date of death of EMPLOYEE the Board of Directors has determined that
death benefits are to be paid to the officers of EMPLOYER.
(b) EMPLOYER reserves the right to terminate this
Employment Agreement in the event EMPLOYEE becomes disabled, subject to the
restrictions set forth in Section 4.02.
(c) EMPLOYEE reserves the right to terminate this
Employment Agreement at any time upon written notice to EMPLOYER of such
intention. EMPLOYER is not obligated to pay EMPLOYEE any sum, other than
amounts that may have accrued, upon his voluntary termination of this
Agreement.
PAYMENT ON TERMINATION
Section 8.03. (a) If at any time during the term of this Agreement, or if
in the three (3)-year period following either a (i) merger or consolidation
where EMPLOYER is not the consolidated or surviving corporation, or (ii)
transfer of all or substantially all of the assets of EMPLOYER, or (iii)
voluntary or involuntary dissolution of EMPLOYER, or (iv) change in the
composition of a majority of the Board of Directors of the Company;
(collectively (i) through (iv) are referred to as a "Change in Control"), then
following such Change in Control, EMPLOYEE, at his sole option and at any time,
may elect one of the following provisions:
(1) Continued employment by EMPLOYER and/or the surviving or
resulting corporation, said successor to be bound by all the provisions of this
Agreement;
(2) Voluntary termination of this Agreement and payment to EMPLOYEE
as severance pay or liquidated damages, or both, of a lump sum payment
("Severance Payment") equal to two hundred ninety-nine percent (299%) of the
EMPLOYEE's average annual base salary and all bonuses received for the five (5)-
year period immediately preceding the Severance Payment, or such greater amount
as a disinterested Board of Directors, or the compensation committee, if formed,
shall provide from time to time pursuant to terms which may not be revoked or
reduced thereafter. However, the total of any payment pursuant to this Section
8.03(a) shall be limited to the extent necessary, in the opinion of legal
counsel acceptable to EMPLOYEE and EMPLOYER, to avoid the payment of an "excess
parachute" payment within the meaning of Internal Revenue Code Section 280 G or
any similar successor provision.
The Severance Payment shall be made not later than the fifth (5th) day
following the
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effective date of the events specified in Section 8.03(a)(i)-(iv) herein;
provided, however, that if the amount of such payments cannot be finally
determined on or before such date, EMPLOYER shall pay to EMPLOYEE on such date a
good faith estimate of the minimum amount of such payments, and shall pay the
remainder of such payments (together with interest at the rate provided in
Internal Revenue Code Section 1274(b)(2)(B) of the Code) as soon as the amount
thereof can be determined, but in no event later than the thirtieth (30th) day
after the applicable termination date. In the event the amount of the estimated
payments exceeds the amount subsequently determined to have been due, such
excess shall constitute a loan by EMPLOYER payable on the fifth (5th) day after
receipt by EMPLOYEE of a written demand for payment from EMPLOYER (together with
interest calculated as above).
(b) In addition, for a two-year period following
termination, EMPLOYER shall continue to include EMPLOYEE in all of its
health, dental, vision, life insurance and other benefit programs in place at
the time of termination. Upon a dismissal other than for cause as stated in
Section 8.01(a) which does not involve Change in Control, EMPLOYEE shall
receive a Severance Payment equal to 2.99 times his average annual base
salary and bonuses during the preceding five (5) years; provided, however,
such payment shall be limited to the extent necessary to avoid the payment of
an "excess parachute" payment as defined above.
(c) If EMPLOYEE is terminated without cause during the
last two years of this Agreement, EMPLOYER will not be required to pay
EMPLOYEE the salary due for the full two-year period, but will only be
required to pay EMPLOYEE the balance of the salary that is due under the term
of this Agreement. In addition, if EMPLOYEE is terminated without cause
during the last two years of this Agreement, EMPLOYER will not be required to
include EMPLOYEE in its benefit programs during the full two-year period, but
will only be required to include EMPLOYEE in its benefit programs for the
balance of the term of this Agreement.
ARTICLE 9. COVENANT NOT TO COMPETE/TRADE SECRETS
Section 9.01. (a) During the term of this Agreement, EMPLOYEE shall not,
directly or indirectly, either as an employee, consultant, agent, principal,
partner, stockholder, corporate officer, director, or in any other individual or
representative capacity, engage or participate in any business that is in
competition in any manner whatsoever with the business of EMPLOYER. Nothing in
this Agreement, however, shall restrict EMPLOYEE from working for or on behalf
of Insta-Heat, Inc. or from having any dealings whatsoever with Insta-Heat, Inc.
EMPLOYEE shall not be in violation of this Agreement by his participation in the
business of Insta-Heat, Inc. as an employee, agent, consultant, officer,
director or shareholder.
(b) The term referred to in Section 9.01.(a) shall
include: (i) the actual employment period of EMPLOYEE; (ii) the time within
which EMPLOYEE is still being paid if EMPLOYEE is terminated without cause;
and (iii) a one year period if EMPLOYEE quits voluntarily.
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TRADE SECRETS/CONFIDENTIAL INFORMATION
Section 9.02. (a) The parties acknowledge and agree that during the term
of this Agreement and in the course of the discharge of his duties hereunder,
EMPLOYEE shall have access to and become acquainted with information concerning
the operation and processes of EMPLOYER that is owned by EMPLOYER and regularly
used in the operation of EMPLOYER'S business and that such information
constitutes EMPLOYER's trade secrets.
(b) EMPLOYEE specifically agrees that he shall not
misuse, misappropriate, or disclose any such trade secrets, directly or
indirectly, to any other person or use them in any way, either during the
term of this Agreement or at any other time thereafter, except as is required
in the course of his employment hereunder. EMPLOYEE agrees not to engage in
any unfair competition with EMPLOYER, either during the term of this
Agreement or at any other time thereafter.
(c) "Confidential information" shall mean information
identified as proprietary relating to the described product concept, specific
product design and its variations, know-how information relating to product
fabrication/assembly, and other information which is disclosed to EMPLOYEE by
EMPLOYER, its affiliates or agents either directly or indirectly, in writing
or by drawings or the product itself, or in any other related way, including
knowledge of EMPLOYEE obtained in EMPLOYEE'S capacities as inventor, owner,
and/or employee of EMPLOYER. It is expressly understood that Confidential
Information extends to the concept of the identified product.
(d) Confidential Information shall not include
information which is public knowledge and not covered under patents or other
rights EMPLOYER may own.
(e) EMPLOYEE shall not disclose Confidential Information
received hereunder to any third party not under a binder of secrecy from
EMPLOYER.
(f) EMPLOYEE agrees not to make any commercial or any
other use of Confidential Information received hereunder, except as may be
provided for under a separate agreement by EMPLOYER.
(g) EMPLOYEE agrees the Confidential Information
received hereunder shall be treated in such a way, taking reasonable steps to
ensure the proprietary nature of this information and to protect this
information from loss or theft, and that EMPLOYEE expressly agrees not to
publish or disclose this information to anyone other than those identified
herein, and that any disclosure will only be to those employees or advisors
needed to evaluate and use it for the purposes noted above. EMPLOYEE will
notify all employees, visitors, associates, or anyone who is given access to
such information, of its confidential nature and the existence and
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importance of this Agreement.
(h) This confidential disclosure clause shall not be
construed to grant EMPLOYEE any license or other rights except as provided
herein.
ARTICLE 10. GENERAL PROVISIONS
NOTICES
Section 9.01. Any notices to be given hereunder by either party to the
other shall be in writing and may be transmitted by personal delivery or by
mail, registered or certified, postage prepaid with return receipt requested.
Mailed notices shall be addressed to the parties at the addressees appearing in
the introductory paragraph of this Agreement, but each party may change that
address by written notice in accordance with this section. Notices delivered
personally shall be deemed communicated as of the date of actual receipt; mailed
notices shall be deemed communicated as of the date of mailing.
ATTORNEYS' FEES AND COSTS
Section 9.02. If any legal action is necessary to enforce or interpret the
terms of this agreement, the prevailing party shall be entitled to reasonable
attorneys' fees and costs.
ENTIRE AGREEMENT
Section 9.03. This Agreement supersedes any and all other agreements,
either oral or in writing, between the parties hereto with respect to the
employment of EMPLOYEE by EMPLOYER and contains all of the covenants and
agreements between the parties with respect to that employment in any manner
whatsoever.
MODIFICATIONS
Section 9.05. Any modification of this Agreement will be effective only if
it is in writing and signed by the party to be charged.
EFFECT OF WAIVER
Section 9.06. The failure of either party to insist on strict compliance
with any of the terms, covenants, or conditions of this agreement by the other
party shall not be deemed a waiver of that term, covenant, or condition, nor
shall any waiver or relinquishment of any right or power at any one time or
times be deemed a waiver or relinquishment of that right or power for all or any
other times.
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PARTIAL INVALIDITY
Section 9.07. If any provision in this Agreement is held by a court of
competent jurisdiction to be invalid, void, or unenforceable, the remaining
provisions shall nevertheless continue in full force without being impaired or
invalidated in any way.
LAW GOVERNING AGREEMENT
Section 9.08. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
Dated: 9/1/96 EMPLOYER:
------------------- SELF-HEATING CONTAINER CORPORATION
OF CALIFORNIA
BY: /s/ Xxxxx X. Xxxxxxx
-------------------------------------
XXXXX X. XXXXXXX, PRESIDENT
EMPLOYEE:
/s/ Xxxxx X. Xxxxxxxx
-------------------------------------
XXXXX X. XXXXXXXX
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