EXHIBIT 10.7
EMPLOYMENT AGREEMENT
(XXXX XXXXX)
EMPLOYMENT AGREEMENT
BY AND BETWEEN
XsunX, Inc.
AND
Xxxx Xxxxx
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, made effective as of January 1, 2007
("Agreement"), is entered into by and between XsunX, Inc., a Colorado
corporation ("Company"), and Xxxx Xxxxx, ("Employee").
R E C I T A L S
WHEREAS, the Company desires to employ and obtain the services of
Employee and Employee desires to assume employment with the Company; and
WHEREAS, the undersigned parties desire to formalize such employment
relationship; and,
NOW, THEREFORE, in consideration of the promises, mutual covenants and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties to this
Agreement agree as follows:
1. Term. Subject to the terms and conditions of this Agreement the
Company agrees to employ Employee and Employee agrees to serve the Company as
provided in this Agreement. Employee's employment pursuant to this Agreement
shall be for a period of two (2) years and shall commence upon the effective
date hereof (the "Commencement Date") and shall continue to and including
December 31, 2009 (the "End Date") unless earlier terminated in accordance with
the provisions of Paragraphs 8 or 9 of this Agreement; provided further that the
term of this Agreement may be extended by the mutual agreement of the parties
hereto.
2. Duties of Employee. The duties of Employee shall be as follows:
2.1. Employee shall assume the duties of Chief Financial
Officer for the Company and shall perform such duties incident thereto as may be
assigned to Employee from time to time which duties shall include, without
limitation, responsibilities for the management of corporate finance, operations
and systems analysis, accounting and audit management, SEC securities compliance
and reporting, business development and plan of operations, and such customary
executive, managerial, planning and implementation duties of any such position
as these duties shall be defined by Company from time to time. Employee shall
perform and hold such other positions and duties as may be assigned to Employee
by the Company and as are not inconsistent with the provisions of this
Agreement. Employee agrees to devote Employee's best efforts and skills to the
business interests of the Company, to do Employee's utmost to further enhance
and develop the interests and welfare of the Company, and to devote Employee's
working time and attention to the business of the Company.
2.2. Employee shall truthfully and accurately make, maintain
and preserve all records and reports that the Company may, from time to time,
request or require, and shall fully account for all money, records, equipment,
materials or other property belonging to the Company of which Employee may have
custody and shall pay over and deliver same promptly whenever and however
Employee may be directed to do so.
2.3. Employee shall obey all lawful rules, regulations,
special instructions, and directives as directed by the Company applicable to
Employee and shall endeavor to improve Employee's ability and knowledge of the
Company business in an effort to increase the value of Employee's services for
the mutual benefit of the parties to this Agreement.
2.4. Employee shall make available to the Company any and all
information of which Employee has knowledge that is relevant to the Company's
business, but is not otherwise prohibited from disclosing, and make all
suggestions and recommendations which Employee believes will be of benefit to
the Company.
3. Compensation. For and in consideration of the performance by
Employee of the services, terms, conditions, covenants and promises herein
recited, the Company agrees to pay to Employee in the manner herein stated, to
be reviewed annually, the following:
3.1. As the principal consideration of the services to be
performed by Employee hereunder during the term of this Agreement, Employee
shall receive, the sum of One Hundred Thirty Five Thousand Dollars ($135,000)
per year, payable monthly, or in the manner and on the timetable in which the
Company's payroll customarily is handled; provided, that at the end of each full
year from the Commencement Date, the compensation may be increased in an amount
to be determined by the Board of Directors of the Company. This annual
compensation may sometimes be herein referred to as Employee's "Base Pay".
3.2. The Company may pay Employee compensation in addition to
Employee's Base Pay upon Company's attainment of certain business development
and/or revenue attainment levels in the form of a bonus or an increase to the
Base Pay as may be determined in the sole discretion of the Board of Directors
of the Company from time to time.
(a) Increase to Base Pay. Subject to the attainment of a
minimum of Five Million Dollars ($5,000,000) in sales revenue the Base Pay of
the Employee will be increased to One Hundred Fifty Thousand Dollars ($150,000)
adjusted on a go forward basis from the date of the sale and receipt by the
Company of a deposit.
((b) Additional Compensation. This additional compensation
shall be computed on an annual basis upon the anniversary of each year of
continuous employment and paid to Employee within ten (10) days of completion of
a review specific to the performance of Employee. The Company shall provide
Employee with an employment review within thirty (30) days of each anniversary
date of Employee's commencement of employment hereunder. The Company shall not
be obligated to increase Employee's compensation pursuant to any such review.
Notwithstanding the foregoing, the Company reserves the right to change, modify
or amend, upon thirty (30) days written notice, any such bonus compensation
plans at any time. Notwithstanding the foregoing, any change shall be
prospective and shall not divest any bonus compensation paid as of the date of
such changes or modifications.
(i) Revenue Attainment. Company shall pay
Employee a cash bonus if the Company realizes certain gross revenue attainment
during the term of each full fiscal year. The cash bonus may be based upon the
following schedule: Cumulative
Revenue Attainment Cash Bonus
------------------ ----------
$ 5,000,000 $ 5,000
$ 15,000,000 $ 10,000
$ 25,000,000 $ 15,000
The foregoing schedule shall apply in respect of the first year of employment
ending December 31, 2007 for the preceding twelve (12) month period beginning
January 1, 2007. The revenue attainment levels set forth in the foregoing
schedule shall be increased annually by twenty-five (25%) percent per annum for
each subsequent twelve (12) month period during the term of this Agreement.
4. Special Compensation Benefits. Employee shall be provided with the
following benefits within sixty (60) days of the consummation of the sale of all
or substantially all of the stock or assets of the Company which results in the
termination or relocation of the Employee within one (1) year of sale:
4.1 Payment in an amount equal to six (6) months Base Pay at
the rate of Base Pay then paid to Employee at the time of sale; and,
4.2 Payment for all accrued but unused vacation time.
5. Stock Incentives. The Company may (but shall be not be obligated to)
issue you certain stock bonuses, stock options, stock appreciation rights, stock
awards, phantom stock awards, or performance awards ("Awards") in conjunction
herewith or otherwise from time to time. Based upon the performance review
described in Section 3.2 (a) herein, or an award made in conjunction herewith,
the Company may issue Employee stock options, the value of which, on a first
time annual basis, shall be in an amount up to, but shall not exceed, One
Hundred Thousand Dollars ($100,000.00) of the then current closing price of the
Company's common stock on the date of the stock option issue. This stock option
grant is intended to qualify as an incentive stock option within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended. Any Awards shall
be issued, and, to the extent applicable, vest and be exercised, pursuant to the
terms and conditions of a separate agreement ("Grant Agreement") and in
accordance with the provisions of any incentive plan adopted by the Company or,
at the discretion of the Company, the 2007 XsunX, Inc. Stock Option Plan
("Plan"). You hereby agree to execute and deliver any such reasonable Grant
Agreement. The terms "Award" and "Grant Agreement" shall be used herein as
defined and used in the Plan.
6. Benefits. In addition to the above compensation, the Company may provide
Employee with the following:
6.1. Participation in the Company health plan providing
Company sponsored participation in an amount up to Four Hundred Dollars ($400)
monthly for use by Employee in payment of major medical premium associated with
such health plan;
6.2. Reimbursement, from time to time, upon Employee's
submission of expense account and supporting documents using approved Company
forms and as may be required by the Internal Revenue Service, for all reasonable
out of town travel, and other ordinary, reasonable and necessary business
expenses incurred by Employee as part of and in connection with the direct
performance of duties specified herein;
6.3. Company credit card as may be determined by the
Board of Directors of the Company from time to time;
6.4. At the request of Company, Employee shall cooperate with
Employer to secure, for Company, a key man life insurance policy on the life of
Employee in the amount of $500,000 to be divided in half and paid in equal sums
to Company and Employees elected benefactors upon Employee's death;
6.5. Other Benefits. The Company may, in its sole discretion,
(but shall not be obligated to) provide these and other and further benefits.
Notwithstanding the foregoing, the Company may change, suspend or discontinue
any such benefits at any time without notice to Employee due only to adverse
financial condition of the Company.
7. Vacations and Holidays. Company shall:
7.1. Permit Employee Fifteen (15) days paid vacation during
the first year of employment with the Company. Such amount may be increased in
the sole discretion of the Board of Directors of the Company from time to time.
Vacation may be taken in Employee's discretion, so long as it is not
inconsistent with and is subject to the reasonable business needs of the
Company.
7.2. Permit Employee to take those holidays and other days
that the other Employees of the Company are entitled to take.
8. Termination. This Agreement may be terminated as follows:
8.1. In accordance with the provisions of Section 9 hereof.
8.2. Notwithstanding the foregoing, the Company may, at its
option, terminate the employment of Employee at any time during the term of this
Agreement without notice, for good cause. Dismissal for good cause shall
include, but not be limited to, any of the following:
8.2.1. The conviction of Employee by a court of
competent jurisdiction (and to which no further appeal can be taken) of a
felony, securities violations or any other crime involving moral turpitude;
8.2.2. The commission by Employee of an act of fraud
or other act materially evidencing bad faith or dishonesty;
8.2.3. The misappropriation by Employee of any funds
or property or other rights of the Company;
8.2.4. The suspension or removal or termination of
Employee by or at the request or requirement of any governmental authority
having jurisdiction over the Company;
8.2.5. The willful refusal to follow any lawful
directive of the Board of Directors of Company;
8.2.6 The material breach by Employee of any material
terms of this Agreement or any other agreement between Employee on the one hand
and the Company or its parent corporation, or any affiliate of the Company or
its parent corporation, on the other hand;
8.2.7 The failure by Employee to reasonably perform
assigned tasks and directives of the Company within the time frame assigned;
8.2.8 The adverse financial condition of the Company;
and
8.2.9 Upon the death of the Employee.
Upon termination for cause, Employee shall be paid, as full and final
severance compensation, Employee's unpaid Base Pay accrued through the date of
termination, any unpaid but accrued benefits, and any unpaid but accrued
vacation time. The Company hereby reserves the right to offset against any
accrued and unpaid compensation any sums that the Company may establish as
damages resulting from Employee's negligent or intentional malfeasance or
misfeasance.
9. Permanent Disability of Employee. In the event Employee becomes
mentally or physically disabled to such an extent that Employee is unable to
substantially perform Employee's normal duties on behalf of the Company with
reasonable accommodations as described in this Agreement for a period of thirty
(30) days or more, the Company, at any time thereafter, shall have the right, at
its sole option, to declare Employee permanently disabled and thereupon
terminate employment hereunder. In such event, Employee, as full and final
severance compensation, shall be paid Employee's unpaid Base Pay accrued through
the date of termination, and any unpaid but accrued and earned benefits, all of
which shall be as accrued through the date of the Company's declaration of
permanent disability and termination.
10. Duty of Loyalty. During the term of this Agreement, and at all
times that Employee is employed by the Company, Employee shall not, directly or
indirectly, either as a principal, partner, member, stockholder, corporate
officer, director, employee, representative, consultant, agent, or in any other
Employee or representative capacity, own, manage, engage or participate in any
business that is in competition in any manner whatsoever with the business of
Company without the prior written consent of Company. Notwithstanding the
foregoing, Employee may own, as a passive or portfolio investment, stock or
other equity interest not exceeding five percent (5%) of the total ownership
interests of any competing business, provided that Employee is not a director,
officer, manager, employee, consultant, or active in the management of such
business or compensated, directly or indirectly, in any manner by such business
(other than normal and customary stock dividends or distributions made to all
shareholders or equity owners without distinction). During his employment,
Employee shall be deemed a fiduciary of the Company with all duties attendant to
a fiduciary owed by Employee to the Company. All rights of enforcement and
remedies regarding fiduciaries shall inure to the Company. Violation of the
foregoing provisions shall constitute unfair competition and shall be a breach
of this Agreement and of Employee's fiduciary duties hereunder.
11. Non-Solicitation. During the term of this Agreement, and for a
period of two (2) years after the termination of this Agreement or any
employment by the Company, Employee shall not solicit any of the directors,
officers or employees of the Company for the benefit of any competing business
or otherwise interfere in or with the relationship between the Company and any
such employee. Employee shall be deemed a fiduciary of the Company, even after
the termination of this Agreement or any employment by the Company, with all
duties in regard to trade secrets and confidential information attendant to a
fiduciary owed by Employee to the Company. All rights of enforcement and
remedies regarding fiduciaries shall inure to the Company. Violation of the
foregoing provisions shall constitute unfair competition and shall be a breach
of this Agreement and of Employee's fiduciary duties hereunder.
12. Confidentiality. You (Employee) agree that all lists of, and other
information pertaining to, discoveries, ideas, concepts, know-how, techniques,
designs, specifications, drawings, blueprints, diagrams, flow charts, data,
costs, prices, customer lists, marketing plans, goals, sales figures, revenue,
profits, and other technical, financial or business information respecting
existing or planned works and/or works to be developed, and, financial records,
computer software programs, strategic plans, contracts, agreements, literature,
manuals, brochures, books, records, correspondence, computer programs, software,
source codes, computations, data files, algorithms, techniques, processes,
designs, specifications, drawings, charts, plans, schematics, computer disks,
magnetic tapes, books, files, records, reports, documents, Instruments,
agreements, contracts, correspondence, letters, memoranda, financial,
accounting, sales, purchase and employment data, capital structure information,
corporate organizational information, identities, names and address of, and any
information pertaining to, shareholders, directors, officers, employees,
contractors, vendors, suppliers, customers, clients, lenders, financing and
business participants, and all persons associated with the Company, information
pertaining to business models, business plans, projections, assumptions and
analyses, particular projects, and all other data and information and similar
items relating to the business of the Company and all other data and information
and similar Items relating to the Company of whatever kind or nature and whether
or not prepared or compiled by the Company and all other materials furnished or
made available to you by the Company or any of its affiliates (as hereinafter
defined) relating to the business conducted by the Company ("Confidential
Information"), is and are proprietary and confidential and are and shall remain
the sole property of the Company. Affiliate as used in this section shall mean
Company, any entity in which Company owns a majority ownership (directly or
indirectly), or any entity that owns a majority ownership of Company (directly
or indirectly). You acknowledge that the Confidential Information derives
independent economic value, actual or potential, from not being generally known
to the public or to other persons who can obtain economic value from its
disclosure or use and that this confidentiality provision constitutes efforts
that are reasonable under the circumstances to maintain the secrecy thereof. You
further acknowledge that the Confidential Information constitutes trade secrets
pursuant to California Civil Code ss.3426.1 and any similar law, rule or
regulation under the laws of the State of Colorado.
You agree that you will not, directly or indirectly, at any time during
or after termination of employment use or reveal, divulge, disclose,
disseminate, distribute, license, sell, transfer, assign or otherwise make
known, directly or indirectly, the Confidential Information to any person or
entity not expressly authorized by the Company to receive such Confidential
Information. You shall exercise the highest degree of care and discretion in
accordance with your duty hereunder to prevent improper use or disclosure of the
Confidential Information and will retain all such Confidential Information in
trust in a fiduciary capacity unless: (i) such use or disclosure has been
authorized in writing by the Company through an executive officer, or (ii) is
required to be disclosed by law, a court of competent jurisdiction or a
governmental or regulatory agency. However, you, if permitted by such authority,
agree to immediately inform the Company or any such requirement prior to the
disclosure so that the Company can seek to protect such information. Further,
you agree to return and deliver all such materials, including all copies,
remnants, or derivatives thereof to the Company upon the termination of your
employment with the Company or at any other time upon request.
13. Patents and Inventions. Other than those items listed on Schedule
"A", attached hereto and by this reference made a part of herein, any interest
in patents, patent applications, inventions, technological innovations,
copyrights, copyrightable works, developments, discoveries, designs, and
processes which Employee now or hereafter during the period employee is employed
by the Company under this Agreement or otherwise and for one (1) year thereafter
may own, conceive of, or develop and either relating to the fields in which the
Company may then be engaged or contemplates (as demonstrated by the records of
the Company) being engaged or conceived of or developed utilizing the time,
material, facilities, or information of the Company ("Inventions") shall belong
to the Company. As soon as Employee owns, conceives of, or develops any such
Invention, employee agrees immediately to communicate such fact in writing to
the Chief Operating Officer of the Company, and without further compensation,
but at the Company's expense (except as set forth below in item (a) of this
Section 13, immediately upon request of the Company, Employee shall execute all
such assignments and other documents (including applications for patents,
copyrights, trademarks, and assignments thereof) and perform any and all acts as
the Company may reasonably request in order (a) to vest in the Company all
Employee's right, title, and interest in and to such Inventions, free and clear
of liens, mortgages, security interests, pledges, charges, and encumbrances
arising from the acts of Employee ("Liens") (Employee to take such action, at
employee's expense, as is necessary to remove all such Liens) and (b), if
patentable or copyrightable, to obtain patents or copyrights (including
extensions and renewals) therefore in any and all countries in such name as the
Company shall determine.
14. Specific Performance. The obligations of Employee under this
Agreement are unique. If Employee should default in any obligations under this
Agreement, Employee acknowledges that it would be extremely impracticable to
measure the resulting damages; accordingly, the Company, in addition to any
other available rights or remedies, may xxx in equity for specific performance
without the necessity of posting a bond or other security, and Employee
expressly waives the defense that a remedy in damages will be adequate.
15. Amendments. This Agreement may be amended only in writing execut-
ed by Employee and Company and approved in writing by the majority vote of the
Board of Directors of the Company.
16. Effect of Headings. The subject headings of the paragraphs and
subparagraphs of this Agreement are included for purposes of convenience only,
and shall not affect the construction or interpretation of any of its
provisions.
17. Parties in Interest. Nothing in this Agreement, whether express
or implied, is intended to confer any rights or remedies under or by reason of
this Agreement on any persons other than the parties to it and their respective
successors and assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third persons to any party to this
Contract, nor shall any provision give any third person any right of subrogation
or action over against any party to this Agreement.
18. Recovery of Litigation Costs. If any legal action or other
proceeding is brought for the enforcement of this Agreement, or because of an
alleged dispute, breach, default or misrepresentation in connection with any of
the provisions of this Agreement, the successful or prevailing party or parties
shall be entitled to recover as an element of their damages, reasonable
attorneys' fees and other costs incurred in that action or proceeding, in
addition to any other relief to which they may be entitled.
19. Gender; Number. Whenever the context of this Contract requires,
the masculine gender includes the feminine or neuter gender, and the singular
number includes the plural.
20. Time of Essence. Time shall be of the essence in all things
pertaining to the performance of this Agreement unless waived in writing by the
undersigned parties.
21. Authority. The parties to this Agreement warrant and represent
that they have the power and authority to enter into this Agreement in the
names, titles and capacitates herein stated and on behalf of any entities,
persons or firms represented or purported to be represented by each respective
party.
22. Waiver. A Waiver by either party of any of the terms and
conditions of this Agreement in any instance shall not be deemed or construed to
a waiver of such terms of condition for the future, or of any subsequent breach
thereof, or of any other term and condition of this Agreement. All waivers must
be made in writing executed by the waiving party.
23. Entire Agreement. This Agreement constitutes the entire
agreement between the parties respecting the subject matter hereof, and there
are no representations, warranties, agreements or commitments between the
parties hereto except as set forth herein. The Agreement controls over any and
all provisions or guidelines contained in any Employee Manual, Employee
Handbook, Company Policy Manual or other similar document. Employee expressly
acknowledges that no Employee Manual, Employee Handbook, Company Policy Manual
or other similar document is or shall become a contract between the Company and
Employee.
24. Notices. Any notice, request, demand or other communication
permitted to be given hereunder shall be in writing and shall be deemed to be
duly given when personally delivered to an Employee officer of the Company or to
Employee, as the case may be, or when deposited in the United States mail, by
certified or registered mail, return receipt requested, postage prepaid, at the
respective addresses of the Company and Employee as shown on the signature page
hereto. Either party may change by notice the address to which notices are to be
sent.
25. Severability. If any provisionof this Agreement shall, for any
reason, be held unenforceable, such provision shall be severed from the
contract. The invalidity of such specific provision, however, shall not affect
the enforceability of any other provision herein, and the remaining provision
shall remain in full force and effect.
IN WITNESS WHEREOF, this Agreement is made effective by Employee and
the Company as of the 1st day of January, 2007.
COMPANY EMPLOYEE
XsunX, Inc.
By _________________________ By ________________________
Xxx X. Xxxxxxxxx, as CEO Xxxx Xxxxx, as Employee
Schedule "A"
Excluded Patents and Inventions
1.
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