Exhibit 10.01
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CHIEF EXECUTIVE OFFICER ENGAGEMENT AGREEMENT
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THIS AGREEMENT (this "Agreement") is made and effective this first day
of October 2003 (the "Commencement Date"), by and between XXXX XXXXXXXXXX
("CEO") and CERISTAR, INC., a Delaware corporation (the "Company" or "Employer")
for the employment of CEO by the Company.
NOW, THEREFORE, the parties agree as follows:
1. Employment. As of the Commencement Date, Employer hereby employs CEO
as the Company's Chief Executive Officer and President under the terms and
conditions set forth herein.
2. Term of Employment. Employer hereby employs the CEO and the CEO
hereby accepts employment under this Agreement effective October 9, 2003 (the
Commencement Date) and continuing for a period of twelve (12) months through
October 8, 2004. Subject to the provisions of termination set forth in Section 8
hereof, renewal of this Agreement shall be automatic for successive one-year
periods unless: (i) the CEO shall have given written notice to the Employer at
least thirty (30) days prior to the expiration of the then current Term that he
does not intend to renew, or (ii) the Company shall have given written notice to
the CEO not less than sixty (60) days prior to the expiration of the then
current Term of its intent to not renew the Agreement, whereupon, in either
case, this Agreement shall expire at the end of the then current Term. Reference
to "Term" herein shall refer to both the initial term and any such successive
renewal period.
3. Duties of CEO.
(a) Chief Executive Officer and President. CEO shall serve as the
Company's Chief Executive Officer and President and shall assume such duties and
responsibilities that are customary for chief executives of corporations in the
Company's business, subject at all times to the direction and control of the
Board of Directors. CEO will perform his services at the Company's offices in
Salt Lake City, Utah, or other offices as determined by the CEO.
(b) Election to the Company's Board of Directors. Effective upon the
Commencement Date, CEO shall be elected to fill a current vacancy on the
Company's Board of Directors (the "Board") and shall serve on the Board until
the CEO is re-elected or his successor is officially elected. During the Term of
this Agreement, the Company shall cause the CEO to be included in the Company's
slate of candidates for election to the Board.
4. (a) Funding. The Company understands that for CEO to perform his
duties under this agreement adequate and timely funding must be provided. As
such the company agrees to:
(i) Initial funding of $250,000 will be placed into the Company
accounts no later then 15 days following the commencement date.
(ii) Subsequent funding equal to the lesser amount of a of $2.5m
or amount approved in the CeriStar business plan will be placed into the
accounts of the company by 120 days from the approval by the Board of Directors
of the CeriStar business plan.
(iii) The company will have authorized the CEO to exercise all
control, except as CEO specifically delegates, over the disposition of those
funds as of the commencement date.
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5. Compensation and Expenses.
(a) Base Salary. For the services of the CEO to be rendered under this
Agreement, the Company will pay the CEO a monthly base salary of $7,500 (as
increased from time to time by the Board, the "Base Salary"). The Company will
pay the CEO his Base Salary per regular company payroll schedules.
(b) Base Salary Adjustment. The Board may increase the CEO's base
salary from time to time on such terms and conditions as the Board deems.
(c) Bonus Compensation. The company will provide a:
(i) Bonus amount that may be paid to the CEO during the term of
this agreement.
(II) Signing bonus equal to $7,500
(d) Stock Option Grant. Upon commencement of this Agreement, the
Company shall grant CEO non-qualified stock options equaling seven percent (7%)
of the currently authorized stock of the Company as of the commencement date of
this Agreement (which shall equal 882,000 shares) at an exercise price equal to
the actual closing price of the stock on the last trading day before the date of
the stock option grant (the "Stock Option"). The Stock Options in this grant
will vest on October 8, 2004. The Stock Option will be more fully described
pursuant to a Stock Option Agreement a form of which is attached, or will be
attached when available, hereto as Exhibit "A".
(e) Executive Officers and Directors Stock Option Pool ("stock option
pool"). Within 30 days of the commencement date Employer will create a stock
option pool equal to 15% of the authorized stock of the company. This stock
option pool will be administered by CEO subject to Board approval.
6. Benefits.
(a) Vacation. For each twelve-month period during the Term, the CEO
will be entitled to four weeks of vacation without loss of compensation or other
benefits to which he is entitled under this Agreement. The CEO shall also be
entitled to all paid holidays generally available by the Company to its CEO.
(b) CEO Benefit Programs. Without limiting the compensation to which
the CEO is entitled pursuant to the provisions of Section 5 during the Term, the
CEO will be provided with life, family health and hospitalization, and
disability insurance. Such insurance will be provided as agreed by CEO.
(c) Officers and Directors insurance. The Employer shall provide the
CEO with an Officers and Directors insurance policy of a minimum value of $5
million dollars. That Officers and Directors insurance policy will be in effect
within 30 days of the effective date.
(d) Automobile. CEO shall be entitled to an automobile for the periods
of time which the CEO is primarily working at the Company's offices.
(e) Temporary Living Expenses. CEO shall be entitled to monthly housing
and living expenses for the periods of time which the CEO is primarily working
at the Company's offices.
7. Expenses. The CEO may incur reasonable expenses for carrying out the
duties provided for under this Agreement, including expenses for entertainment,
travel, computer equipment, broadband access and similar items. The Employer
will reimburse the CEO for all such expenses.
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8. Termination of CEO's Employment
(a) The Employer may terminate this Agreement at any time by giving 30
days' written notice to the CEO. In that event, the CEO, if requested by the
Employer, may continue to render his services, and shall be paid his regular
compensation up to the date of termination. In addition, the CEO shall be paid
the Severance Amount as defined below in section 15(c).
(b) If CEO terminates this contract for cause after 90 days from
Commencement date then CEO shall be entitled to a pro-rata allotment of Stock
Options granted under section 5(d) above.
9. Disability or Death. If the CEO is unable to perform his services by
reason of illness or incapacity the remaining term of this agreement shall be
paid as per section (14c) and all options shall vest at the end of the current
term. In the event of death of CEO compensation equal to the remainder of the
current term shall be paid as per section 5(a) above and all stock options will
vest.
10. Nondisclosure of Confidential Information.
(a) Nondisclosure. The parties hereto acknowledge that during the Term,
the CEO shall be making use of, acquiring and adding to Confidential Information
(as that term is defined in such paragraph 10(b) below). CEO covenants and
agrees that during the Term ,(the "Restricted Period"), he shall not, except
with the prior written consent of the Company, which consent shall not be
unreasonably withheld , or except if acting solely for the benefit of the
Company in connection with the Company's business and in accordance with the
Company's business practices and policies, at any time, disclose, divulge,
report, transfer or use, for any purposes whatsoever, any of such Confidential
Information which has been received, conceived or developed by CEO. CEO also
recognizes that such Confidential Information represents a valuable asset and is
required to ensure the effective and successful conduct of the Company's
business.
(b) Confidential Information. For purposes of this Agreement, the term
"Confidential Information" must be clearly identified as "Confidential" on the
relevant document and shall mean all of the following materials and information,
as identified as "Confidential", which CEO receives, conceives or develops or
has received, conceived or developed, in whole or in part, in connection with
CEO's employment with the Company:
(i) The contents of any manuals or other written materials of the
Company;
(ii) The names of customers, prospective customers or persons,
firms or corporations to whom the CEO may have provided services on behalf of
the Company during the term of this contract
(iii) Any data or database, or other information compiled by the
Company or any parent, subsidiary or affiliate of the Company, including, but
not limited to, information concerning the Company, or any parent, subsidiary or
affiliate of the Company, or any business in which the Company or any parent,
subsidiary or affiliate of the Company, is engaged or contemplates becoming
engaged, any company which the Company represents or with which the Company
engages in business, any customer, prospective customer, or other person, firm
or corporation to whom or which the Company has provided services or to whom or
which any employee of the Company has provided services on behalf of the
Company, or any compilation, analysis, evaluation or report concerning or
deriving from any data or database, or any other information;
(iv) All policies, procedures and techniques regarding training,
marketing and sales, either oral or written, and assorted lists containing
special information pertaining to individual customers and/or prospective
customers; and
(v) Any other information, data, know-how or knowledge of a
confidential or proprietary nature observed, received, conceived or developed by
CEO in connection with CEO's employment by the Company.
(c) Use and Return of Confidential Information.
(i) The CEO agrees that, upon termination of employment with
Company, CEO shall return to Company all such Confidential Information, which is
in CEO's possession regardless of the form in which any such materials are kept.
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11. Covenant Not-to-Compete.
(a) General; Duration of Covenant. CEO covenants and agrees that while
employed by the Company CEO will not directly compete with the Company in its
core services and products within its effective operating territory.
(b) Definition of Competition. For purposes of this Agreement,
competition with the Company shall be deemed to mean engagement in a business
that directly involves those services specifically found in company
documentation current during the term.
(c) Restricted Territory. For purposes of this Agreement, the
"Restricted Territory" shall mean those locations were the company has current
or specifically planned operations.
(d) Solicitation of Employees. During the current term of CEO, CEO
shall not directly induce, influence, interfere, combine or conspire with, or
attempt to induce, influence, interfere, combine or conspire with, any of the
employees of, or consultants to, the Company to terminate their employment with
or compete against the Company or any future subsidiaries, parents or affiliates
of the Company.
(e) Solicitation of Accounts. During the Restricted Period, CEO shall
not directly solicit, interfere with or disrupt or attempt to solicit, interfere
with or disrupt any present or prospective relationship, contractual or
otherwise, between the Company and any client, customer, supplier, financing
source, insurer, sales representative or other person or entity.
12. Reasonableness and Enforcement of Restrictions.
(a) Reasonableness. The Company and CEO hereby agree that the period,
scope and geographical areas of restriction imposed upon CEO by the provisions
of this Agreement are fair and reasonable and are reasonably required for the
protection of the Company and CEO. In the event that any part of this Agreement
shall be held to be unenforceable or invalid, the remaining parts hereof shall
nevertheless continue to be valid and enforceable as though the invalid portions
were not a part hereof. In the event that the provisions of this Agreement
relating to the area of restriction, the period of restriction, or the scope of
restriction, shall be deemed to exceed the maximum area, period of time or scope
which a court of competent jurisdiction would deem enforceable, said area,
period of time and scope shall, for purposes of this Agreement, be deemed to be
the maximum area or period of time or scope which a court of competent
jurisdiction would deem valid and enforceable. The Company and CEO acknowledge
that the covenants and agreements set forth in Sections 10 through 14 hereof are
an inducement to the Company and CEO to enter into this Agreement.
(b) Enforcement. The parties hereby agree that any violation by the
Company or CEO of the covenants contained in this Agreement might cause
irreparable damage to the other party for which that party will have no adequate
remedy at law. In the event that the Company or CEO breaches any of the
covenants or in the event the Company fails to perform as specified in the
relevant sections contained in this Agreement, the Company and CEO hereby agree
and acknowledges that the other party, upon the filing of an action in a Court
of competent jurisdiction, shall be immediately entitled to the issuance of an
ex parte preliminary injunction enjoining the party in breach from continuing
any such breach.
13. Failure to Perform
(a) In the event the Company fails to perform as specified in certain
sections of this agreement then the Company will be in breach of this agreement
and the CEO may choose to choose to consider the agreement terminated and CEO
will be entitled to compensation (the Severance Amount) as defined below.
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14. Change of Control.
(a) For the purposes of this Agreement, a "Change of Control" shall be
deemed to have taken place if: (i) any person, including a "group" as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, becomes the
owner or beneficial owner of Company securities, after the date of this
Agreement, having thirty percent (30%) or more of the combined voting power of
the then outstanding securities of the Company that may be cast for the election
of directors of the Company, or (ii) the persons who were directors of the
Company before the occurrence of any of the following transactions shall cease
to constitute a majority of the Board of the Company, or any successor to the
Company, as the direct or indirect result of, or in connection with, any cash
tender or exchange offer, merger or other business combination, sale of assets
or contested election, or any combination of the foregoing transactions.
(b) The Company and CEO hereby agree that, if CEO is in the employ of
the Company on the date on which a Change of Control occurs (the "Change of
Control Date") the CEO may voluntarily terminate his employment upon written
notice to the Company at which time the CEO shall be entitled to receive the
Severance Amount (as defined below). The Company shall otherwise continue to
employ CEO and CEO will remain in the employ of the Company, in accordance with
the terms of this Agreement and to exercise such authority and perform such CEO
duties as are commensurate with the authority being exercised and duties being
performed by the CEO immediately prior to the Change of Control Date.
(c) The "Severance Amount" shall be a lump sum payment equal to 6
months compensation as found in section 5 or as modified and all stock options
shall immediately vest. Such amount will be paid to CEO within fifteen (15)
business days after his termination of affiliation with the Company or in
accordance with subsection (b) hereof or Section 15 below.
15. Status Change. If there shall occur, with respect to the CEO, any
of the following events: (i) any diminution of duties or diminution in
authority, title or office; (ii) any assignment of duties inconsistent with his
position as Chief Executive Officer and President; (iii) any change in title to
a title of lesser authority; (iv) any reduction in compensation; or (v) or the
failure of the Board to re-nominate the CEO for membership on the Board in
connection with a meeting of shareholders, (vi) any dilution in the percentage
of stock of the company granted to CEO without the approval of the CEO in
section 5(d), then upon the occurrence of any such event the CEO may voluntarily
terminate his employment upon written notice to the Company at which time the
CEO shall be entitled to the Severance Amount in accordance with Section 14(c)
hereof.
16. CEO's Legal Expenses. It is the intent of the Company that the CEO
shall be entitled to be reimbursed for expenses incurred by him in connection
with retaining an attorney or attorneys to review the terms and conditions of
this Agreement. The Employer will likewise reimburse CEO for any and all legal
costs that might be incurred in litigation related to any terms or performance
as specified herein.
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17. Notices. All notices by either party required or permitted by this
Agreement shall be in writing and sent by certified mail, postage prepaid,
return receipt requested, addressed as follows:
If to CEO: Xxxx Xxxxxxxxxx
000 Xxxxxxxxx Xxxxx
Xxxx Xxxxxx, Xxxxxxxxxx 00000
If to Employer: CeriStar, Inc.
00 Xxxx Xxxxxxxx, Xxxxx 0000,
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Chair of the Board of
Directors
Notices may also be mailed to such other addresses as the parties, respectively,
may designate by notice given in like manner, and any such notice, request, or
other communication shall be deemed to have been given when mailed as described.
18. Assignment. Services to be rendered and obligations to be performed
by CEO hereunder are special and unique, and all such services and obligations
and all of CEO's rights hereunder are personal to CEO and shall not be
assignable, delegable, or transferable; provided, however, that in the event of
CEO's death, CEO's personal representative shall be entitled to receive any
payments due hereunder. In the event of a change of control as defined above in
Section 15(a), then all terms and performances of this agreement shall be
transferred, except as changed by the mutual agreement of the parties.
19. Waiver of Breach. The waiver by Employer of any breach of any
provision of this Agreement by CEO shall not operate or be construed as a waiver
of any subsequent breach by the CEO, and the waiver by CEO of a breach of any
provision of this Agreement by Employer shall not operate or be construed as a
waiver of any subsequent breach by Employer.
20. Resolution of Disputes. Except as set forth below, any controversy
or claim arising out of or relating to this Agreement, or the breach thereof,
shall be settled by arbitration in accordance with the rules of the American
Arbitration Association and judgment upon the award rendered by the arbitrator
may be entered in any court of competent jurisdiction located in the State of
Delaware. Notwithstanding anything to the contrary, in the event of the breach
or threatened breach of any provision of this Agreement as a result of which a
party hereto seeks any injunctive remedy, such party may apply to a court of
competent jurisdiction for injunctions, both preliminary and final, enjoining
and restraining such breach or threatened breach, and such remedy shall be in
addition to all other remedies available to such party.
21. Amendment. Only a written instrument signed by each party hereto
may amend this Agreement.
22. Construction of Agreement. This Agreement shall be governed by and
construed under the laws of the State of Delaware without giving effect to its
principles of choice of law. The rule of construction to the effect that
ambiguities be construed against their draftor shall not be employed in the
construction of this Agreement.
23. Partial Invalidity. The invalidity or unenforceability of any
provision hereof shall in no way effect the validity or enforceability of any
other provision.
24. Injunctive Relief. The Company and CEO acknowledges and agree that
in the event either party violates any term, covenant, performance or provision
of this Agreement, the Company or CEO might suffer irreparable harm for which
the other party will have no adequate remedy at law. The parties agree that the
other party shall be entitled to injunctive relief for any breach or violation
of this Agreement, including but not limited to the issuance of an ex parte
preliminary injunction as set forth in Section 13(b), in addition to and not in
limitation of any and all other remedies available to the Company or CEO at law
or in equity.
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25. No Offsets. The existence of any claim or cause of action of the
Company or CEO against the other party, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement of this Agreement.
26. Counterparts. This Agreement may be executed in counterparts, all
of which shall constitute one and the same instrument.
27. Entire Agreement. All prior negotiations and agreements between the
parties hereto are superseded by this Agreement and there are no
representations, warranties, understandings, or agreements other than those
expressly set forth herein.
Executed as of the date hereinabove stated:
EMPLOYER:
CeriStar, Inc.
By: /s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
Its: Board Member
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THE CEO ACKNOWLEDGES AND AGREES THAT CEO HAS READ AND UNDERSTANDS THE TERMS SET
FORTH IN THIS AGREEMENT, INCLUDING THE RESTRICTIVE COVENANTS SET FORTH IN
SECTIONS 10 THROUGH 14, AND HAS BEEN GIVEN A REASONABLE OPPORTUNITY TO CONSULT
WITH AN ATTORNEY PRIOR TO EXECUTION OF THIS AGREEMENT.
CEO [CHECK ONE]
HAS CONSULTED WITH AN ATTORNEY OR
CEO HAS ELECTED NOT TO CONSULT WITH AN ATTORNEY.
INITIAL HERE: ___________
/s/Xxxx Xxxxxxxxxx
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Xxxx Xxxxxxxxxx
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EXHIBIT "A"
FORM OF STOCK OPTION GRANT
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