EMPLOYMENT AGREEMENT
This employment agreement (this "Agreement") is entered into as of August 1,
2002 (the "Effective Date") between UNIVERSAL GUARDIAN CORPORATION, a Nevada
corporation, (the "Company"), and Xxxxxxx X. Xxxxxxxx ("Skellern") under the
following terms and conditions:
RECITALS
WHEREAS, Skellern is the founder of the Company, the Board of Directors of the
Company desires to set forth the terms and conditions on which (i) the Company
shall employ Skellern, (ii) Skellern shall render services to the Company, and
(iii) the Company shall compensate Skellern for such services; and
WHEREAS, in connection with the continued employment of Skellern by the Company,
the Company desires to restrict Skellern right to compete with the business of
the Company;
WHEREAS, the parties acknowledge that Skellern abilities and services are unique
and essential to the prospects of the Company; and
WHEREAS, in light of the foregoing, the Company desires to continue to employ
Skellern as Chief Executive Officer of Universal Guardian Corporation and
Skellern desires to accept such employment.
NOW THEREFORES, in consideration of the mutual promises, covenants and
agreements set forth, the parties hereto agree as follows:
1. EMPLOYMENT.
The Company hereby employs Skellern and Skellern hereby accepts employment with
the Company upon the terms and conditions hereinafter set forth.
2. TERM.
The term of this Agreement (the "Term") shall be for a period commencing on the
Effective Date of this Agreement and shall continue for a period of 60 months
from the date thereof, unless sooner terminated as provided in Paragraph 6. Upon
expiration of this five (5) year period, the Agreement shall be renewed for
successive terms by mutual consent of the parties.
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3. COMPENSATION.
3.1 For all services rendered by Skellern under this Agreement, the
Company shall pay Skellern a base salary of $195,000.00 per annum in
monthly installments (the "Base Salary"). The amount of the Base
Salary shall increase at a minimum compounded annual rate of %15
through the balance of this agreement, and may be increased at any
time by the approval of the Board of Directors of the Company. No
such change shall in any way abrogate, alter, terminate or otherwise
effect the other terms of this Agreement.
3.2 In addition to the Base Salary, Skellern shall receive an annual
incentive bonus equal to 3.5% of the Company's net profit before
taxes ("Incentive Bonus").
3.3 In addition to the Base Salary, the Company shall pay to Skellern an
automobile allowance of $975 per month during the Term of this
Agreement. Skellern shall pay all expenses relating to the use of an
automobile in furtherance of business of the Company, including
liability insurance, maintenance, repairs, gasoline and oil.
3.4 In addition to the Base Salary, Skellern shall be entitled to paid
vacation, paid health insurance for Skellern and family, paid life
insurance in the amount of $2 million, paid mobile telephone expense
and participation in retirement and investment programs if and when
instituted by the Company.
3.5 Skellern shall be reimbursed for all reasonable "out-of-pocket"
business expenses for business travel and business entertainment
incurred in connection with the performance of his duties under this
Agreement (i) so long as such expenses constitute reasonable
business-related expenses and conform with the Company travel and
entertainment policies for the Chief Executive Officer and Chief
Operating Officer of the Company. The reimbursement of Skellern
business expenses shall be presented to and approved by the Company
based on valid receipts and other appropriate documentation for such
expenses on the approved expense report form.
3.6 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. DUTIES AND RESPONSIBILITIES
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4.1 Skellern shall, during the Term of this Agreement devote
substantially all of his business time, activities, efforts,
energies and skills to the business of the Company and any
corporation controlled by the Company. For purposes of this
Agreement, the term the "Company" shall mean the Company and all
subsidiaries or affiliates.
4.2 During the Term of this Agreement, Skellern shall serve as Chief
Executive Officer.
4.3 To induce the Company to enter into this Agreement, Skellern
represents and warrants to the Company that (a) Skellern is not a
party subject to any employment agreement with any other person,
firm, company, corporation or other business entity, (b) Skellern is
subject to no restraint, limitation or restriction by virtue of any
agreement or arrangement, or by virtue of any law or rule of law
otherwise, which would impair Skellern right or ability (i) to enter
the employ of the Company, or (ii) to perform fully his duties and
obligations pursuant to this Agreement and (c) to the best of the
Executive's knowledge no material litigation is pending or
threatened against any business or business entity owned or
controlled by formerly owned or controlled by Skellern.
5. RESTRICTIVE COVENANTS.
5.1 Skellern acknowledges that he has a major responsibility for the
executive management, 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 Paragraph 5 are essential
to protect the business interests of the Company and the Company
will not enter into this Agreement but for such agreements and
covenants. Accordingly Skellern covenants and agrees as follows:
5.1(a) During the Term of this Agreement and thereafter, Skellern
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
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 general known in the relevant
trade, nor shall Skellern make use of any 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(b) Skellern 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. Skellern hereby
assigns to the Company any rights that he may have in any such trade
secret or proprietary information.
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5.2 If Skellern breaches, or threatens to commit a breach of
Paragraph 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(a) Skellern acknowledges and
agrees that in the event of a violation or threatened
violation of any of the provisions of Paragraph 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 or 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 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 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.
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6. TERMINATION.
6.1 The Company may terminate Skellern employment under this Agreement
at any time for Cause. "Cause" shall exist for termination if
Skellern (i) is adjudicated guilty of a felony by a court of
competent jurisdiction, (ii) commits any act of fraud or intentional
misrepresentation in connection with his employment by the Company,
(iii) has, in the reasonable judgment of, and after good faith
investigation by, the Company's Board of Directors, (a) engaged in
serious and willful misconduct, which conduct has, or would if
generally known, materially adversely affect the goodwill or
reputation of the Company and conduct Skellern has not cured or
altered to the satisfaction of the Board of Directors within to (10)
days following written notice by the Board of Directors to Skellern
regarding such conduct, or (b) willfully and intentionally failed to
perform his duties as specified to him by the Board of Directors
within thirty (30) days following written notice by the Board of
Directors, or (iii) has made any material misrepresentation to the
company under Paragraphs 4 and 5 hereof.
6.2 If the Company terminates Skellern employment under this Agreement
pursuant to the provisions of Paragraph 6.1 hereof, Skellern shall
not be entitled to receive any compensation following the date of
such termination
6.3 Skellern employment may not be terminated by the Company "without
cause". If Skellern's employment under this Agreement is so
terminated, the Company shall make a lump sum cash payment to
Skellern on the date of termination of an amount equal twice the
remaining balance the contract's base salary provision and, (i) a
prorate distribution of remaining bonuses, incentives, and/or stock
distribution through the remaining balance the contract, and (ii)
any unreimbursed expenses accruing to the date of termination. The
Company shall also continue Skellern benefits through the severance
Term.
6.4 This Agreement shall automatically terminate on the last day of the
month in which Skellern dies or becomes permanently incapacitated.
"Permanent Incapacity" as used herein shall mean mental or physical
incapacity, or both, reasonably determined by the Company's Board of
Directors based upon a certification of such incapacity by, in the
discretion of the Company's Board of Directors, either Skellern
regularly attending physician or a duly licensed physician selected
by the Company's Board of Directors, rendering Executive unable to
perform substantially all of his duties hereunder and which appears
reasonably certain to continue for at least six (6) consecutive
months without substantial improvement. Skellern shall be deemed to
have "become permanently incapacitated" on the date the Company's
Board of Directors has determined that Skellern is permanently
incapacitated and so notifies Skellern.
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6.5 If Skellern employment is terminated for any reason (whether by
Skellern or the Company) upon 30 days written notice by Skellern to
the Company following a "Change in Control of the Company" (as
defined below), Skellern shall be entitled to fully accelerate any
remaining contract balance. For purposes of this Agreement, a
"Change in Control of the Company" shall mean, at such time as the
Company's Board of Directors becomes fully constituted (e.g., the
number of directors reaches five (5), a cumulative changed in the
identity of a majority (e.g., 51%) of the members of the Company's
first fully constituted Board of Directors.
6.6 Skellern may terminate his employment hereunder by giving the
Company thirty (30) days prior written notice, which termination
shall be effective on the 30th day following such notice. Voluntary
termination shall entitle Skellern to all compensation, annual
incentives and stock distribution for 60 days following the date of
termination.
6.7 At the Company's option, Skellern shall immediately leave the
Company's premises on the date notice of termination is given by
either Skellern or the Company. If the Company requests Skellern to
leave the Company following notice under Paragraph 6.6, it shall
fully compensate Skellern (salary and benefits) through the 90th day
following the date of Skellern notice.
7. MISCELLANEOUS.
7.1 This Agreement is a personal contract, and the rights and interests
of Skellern hereunder may not be sold, transferred, assigned,
pledged or hypothecated except as otherwise expressly permitted by
the provisions of this Agreement. Skellern shall not under any
circumstances have any option or right to require payment hereunder
otherwise than in accordance with the terms hereof. Except as
otherwise expressly provided herein, Skellern shall not have any
power of anticipation, alienation or assignment of payments
completed hereunder, and all rights and benefits of Skellern shall
be for the sole personal benefit of Skellern, and no other person
shall acquire any right, title or interest hereunder by reason of
any sale, assignment, transfer, claim or judgment or bankruptcy
proceedings against Skellern; provided, however, that in the event
of Skellern death, Skellern estate, legal representative or
beneficiaries (as the case may be) shall have the right to receive
all of the benefits that accrued to Skellern pursuant to, and in
accordance with, the terms of this Agreement.
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8. NOTICES.
All notices, requests, demands and other communications provided for by
this Agreement shall be in writing and (unless otherwise specifically
provided herein) shall be deemed to have been given at the time when
mailed in any general or branch United States Post Office, enclosed in a
registered or certified postpaid envelope, addressed to the parties stated
below or to such changed address as such party may have fixed by notice:
To the Company: Universal Guardian Corporation
0000 X.X. Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Attn: Board of Directors
To Xxxxxxx Xxxxxxxx: Xxxxxxx X. Xxxxxxxx
000 Xxxxxxxx
Xxxxxxx Xxxxx, XX 00000
9. ENTIRE AGREEMENT.
This Agreement supersedes any and all agreements, whether oral or written,
between the parties hereto, with respect to the employment of Skellern by
the Company and contains all of the covenants and Agreements between the
parties with respect to the rendering of such services in any manner
whatsoever. Each party to this Agreement acknowledges that no
representations, inducements, promises or agreements, orally or otherwise,
have been made by any party, or anyone acting on behalf of any party,
which are not embodied herein, and that no other agreement, statement or
promise with respect to such employment not contained in this Agreement
shall be valid or binding. Any modification of this Agreement will be
effective only if it is in writing and signed by the parties hereto.
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10. PARTIAL INVALIDITY.
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 and effect without
being impaired or invalidated in any way.
11. ATTORNEY'S FEES
Should any litigation or arbitration be commenced between the parties
hereto or their personal representatives concerning any provision of this
Agreement or the rights and duties of any person in relation thereto, the
party prevailing in such litigation or arbitration shall be entitled, in
addition to such other relief as may be granted, to a reasonable sum as
and for its or their attorneys' fees in such litigation or arbitration
which shall be determined by the court or arbitration board.
12. ARBITRATION
The parties agree that any disputes arising under this Agreement may be
resolved at the option of either party as in expeditious manner as
possible through binding arbitration administered by the American
Arbitration Association in the County or 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 convenience in any arbitration or action brought under this paragraph.
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.
Notwithstanding the first paragraph of this paragraph, any dispute
involving an amount that is less than or equal to the maximum jurisdictional
amount for small claims court, as may be amended, shall be brought in the small
claims court for the County of Orange, State of California, or such other place
that is mutually agreed upon by the parties.
13. GOVERNING LAW.
This Agreement will be governed by and construed in accordance with the
laws of the State of California.
14. BINDING NATURE.
This Agreement shall be binding upon and insure to the benefit of the
parties hereto and their respective representatives, heirs, successors and
assigns.
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15. WAIVER.
No waiver of any of the provisions of this Agreement shall be deemed, or
shall constitute a waiver of any other provision, whether or not similar,
nor shall any waiver constitute a continuing waiver. No waiver shall be
binding unless executed in writing by the party making the waiver.
16. CORPORATE APPROVALS.
The Company represents and warrants that the execution of this Agreement
by its corporate officer named below has been duly authorized by the Board
of Directors of the Company, it is not in conflict with any Bylaw or other
agreement and will be a binding obligation of the Company, enforceable in
accordance with its terms.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date above written.
THE COMPANY: UNIVERSAL GUARDIAN CORPORATION
BOARD of DIRECTORS
By:________________________________
By: /s/ Xxxxxxx X. Xxxxxxxx
________________________________
Xxxxxxx X. Xxxxxxxx
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