Exhibit 10.1
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement (the "Agreement") is entered into as of
September 1, 2005 by and between Xxx Xxxxxx (the "Executive") and NuTech
Digital, Inc., a California corporation (the "Company").
WHEREAS, the Company believes that Executive's service, experience, and
knowledge are valuable to the Company in connection with its business; and
WHEREAS, the Company desires to employ Executive, and Executive desires to
be employed by the Company, as the Chief Executive Officer and President of the
Company.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties hereto agree as follows:
1. Employment. The Company hereby employs Executive as its Chief Executive
Officer and President and Executive accepts such employment upon the terms and
conditions hereinafter set forth.
2. Term of Employment.
(a) Term. Subject to the provisions of Section 6, the term of
Executive's employment pursuant to this Agreement shall commence on and as of
the date hereof and shall terminate on July 31, 2012 (the "Term").
(b) Automatic Renewal. Subject to the provisions of Section 6, this
Agreement will be automatically renewed for successive periods of one year (each
a "Renewal Period") after the expiration of the Term, unless either party gives
notice to the other, at least 180 days prior to the expiration of any Renewal
Period, that the party desires to terminate this Agreement.
3. Duties; Extent of Service. During Executive's employment under this
Agreement, Executive (i) shall serve as an employee of the Company with the
titles and positions of Chief Executive Officer and President, reporting to the
Board of Directors of the Company, shall have such executive responsibilities as
the Board of Directors of the Company shall from time to time designate,
provided that, in all cases Executive shall be subject to the oversight and
supervision of the Board of Directors of the Company in the performance of his
duties, and (ii) shall render all services reasonably incident to the foregoing.
Executive hereby accepts such employment, agrees to serve the Company in the
capacities indicated, and agrees to use Executive's best efforts in, and shall
devote Executive's full working time, attention, skill and energies to, the
advancement of the interests of the Company and its subsidiaries and the
performance of Executive's duties and responsibilities hereunder.
4. Salary, Bonus and Stock Option.
(a) Salary. During Executive's employment under this Agreement, the
Company shall pay Executive a salary at the rate of $600,000 per annum (the
"Base Salary"). The Base Salary shall be subject to withholding under applicable
law, shall be prorated for partial years and shall be payable in periodic
installments not less frequently than monthly in accordance with the Company's
usual practice for its executive officers as in effect from time to time.
(b) Bonus. Executive shall receive a performance bonus if the financial
targets set established by the Board of Directors are satisfied (the
"Performance Bonus"). Executive and the Board shall meet no later than 90 days
from the start of each of the Company's fiscal years to establish performance
standards and goals to be met by Executive, which standards and goals shall be
based upon earnings, cash flows, and other objectives that are mutually agreed
to by Executive and the Board. These financial targets or performance goals
shall be set forth in a memorandum from the Board of Directors to Executive.
During the Term and each Renewal Period, the Company shall pay to Executive, no
later than 30 days after the completion of each fiscal year, a bonus that shall
be computed as follows:
(i) for each year in which the Company's net profits (which for
this Agreement shall be defined as net profits before taxes) are equal to the
performance standards and goals, Executive shall receive as a Performance Bonus
50% of the Base Salary, as set forth in Section 4(a) of this Agreement;
(ii) for each year in which the Company's net profits are equal to
105% of the performance standards and goals, Executive shall receive as a
Performance Bonus 75% of the Base Salary, as set forth in Section 4(a) of this
Agreement; and
(iii) for each year in which the Company's net profits are equal to
115% of the performance standards and goals, Executive shall receive as a
Performance Bonus 100% of the Base Salary, as set forth in Section 4(a) of this
Agreement.
Nothing in this section shall prevent Executive and the Company from
mutually agreeing to an alternative computation of the Performance Bonus, which
may be implemented and paid to Executive in place of the Performance Bonus
described herein.
(c) Stock Options. As an incentive to enter into this Agreement and
perform the services required under it, Executive shall receive an option to
purchase 6,000,000 shares of the Company's common stock, no par value, at a
price of $0.121 per share. The option shall have a term of five years. Executive
shall also receive an option to purchase 2,000,000 shares of the Company's
common stock, which grant shall be tied to performance. The terms of the options
shall be memorialized in a separate agreement.
5. Benefits.
(a) Regular Benefits. During Executive's employment under this
Agreement, Executive shall be entitled to participate in any and all medical,
pension, dental and life insurance plans and disability income plans, retirement
arrangements and other employment benefits as in effect from time to time for
executive officers of the Company generally. Such participation shall be subject
to (i) the terms of the applicable plan documents (including, as applicable,
provisions granting discretion to the Board of Directors of the Company or any
administrative or other committee provided for therein or contemplated thereby)
and (ii) generally applicable policies of the Company.
(b) Vacation. During Executive's employment under this Agreement,
Executive shall receive paid vacation annually in accordance with the Company's
practices for executive officers, as in effect from time to time, but in any
event not less than four weeks per calendar year.
(c) Expenses. The Company shall reimburse Executive for all reasonable
business expenses incurred by Executive during Executive's employment hereunder
to the extent in compliance with the Company's business expense reimbursement
policies in effect from time to time and upon presentation by Executive of such
documentation and records as the Company shall from time to time require.
(d) Taxation of Payments and Benefits. The Company shall undertake to
make deductions, withholdings and tax reports with respect to payments and
benefits under this Agreement to the extent that it reasonably and in good faith
believes that it is required to make such deductions, withholdings and tax
reports. Payments under this Agreement shall be in amounts net of any such
deductions or withholdings. Nothing in this Agreement shall be construed to
require the Company to make any payments to compensate Executive for any adverse
tax effect associated with any payments or benefits or for any deduction or
withholding from any payment or benefit.
6. Termination and Termination Benefits. Notwithstanding the provisions of
Section 2, Executive's employment under this Agreement shall terminate under the
following circumstances set forth in this Section 6.
(a) Termination by the Company for Cause. Executive's employment under
this Agreement may be terminated for Cause without further liability on the part
of the Company other than for accrued but unpaid Base Salary through the date of
termination effective immediately upon written notice to Executive. "Cause"
shall mean the following:
(i) the conviction of Executive of any act of embezzlement,
raud, larceny or theft on or from the Company or an affiliate of the
Company;
(ii) the conviction of Executive for a felony or any
misdemeanor, which misdemeanor involves moral turpitude, deceit,
dishonesty or fraud;
(iii) any material misconduct or violation of the Company's
policies, in either case, which continues for a period of 90 days after
written notice given to Executive; or
(iv) a material breach by Executive of any of the covenants,
terms or provisions of this Agreement or any agreement between the
Company and Executive regarding confidentiality or assignment of
inventions.
(b) Termination by Executive. Executive's employment under this
Agreement may be terminated by Executive by written notice to the Board of
Directors at least 180 days prior to such termination.
(c) Termination by the Company Without Cause or upon Death or
Disability. Subject to the payment of Termination Benefits pursuant to Section
6(d), Executive's employment under this Agreement may be terminated without
Cause by the Company upon 90 days written notice to Executive or upon
Executive's death or disability. As used herein, the term "disability" shall
mean the inability of Executive, by reason of injury, illness or other similar
cause, to perform a major part of his duties and responsibilities in connection
with the conduct of the business and affairs of the Company for a period of 180
days.
(d) Certain Termination Benefits. Unless otherwise specifically
provided in this Agreement or otherwise required by law, all compensation and
benefits payable to Executive under this Agreement shall terminate on the date
of termination of Executive's employment under this Agreement. Notwithstanding
the foregoing, in the event of termination of Executive's employment with the
Company pursuant to Section 6(c) above during the Term or any Renewal Period,
the Company shall pay to Executive in a lump sum (a) the Base Salary for the
remainder of the Term or the Renewal Period, (b) three years' Base Salary, (c)
any Performance Bonus to which Executive may be entitled, (d) an amount equal to
the average of any discretionary bonus paid to Executive during the three years
prior to his termination and (e) the Company shall immediately repay in full,
irrespective of the terms of the promissory notes or other agreements evidencing
the indebtedness, any loans made by the Executive to the Company or personally
guaranteed by the Executive on behalf of the Company (the "Severance Benefits").
In the event of termination of Executive's employment with the Company pursuant
to Sections 6(a) or 6(b) above, all obligations of the Company under this
Agreement shall immediately terminate other than (i) any obligation of the
Company with respect to earned but unpaid Salary and earned benefits
contemplated hereby to the extent accrued or vested through the date of
termination and (ii) the obligation of the Company to immediately repay in full,
irrespective of the terms of the promissory notes or other agreements evidencing
the indebtedness, any loans made by the Executive to the Company or personally
guaranteed by the Executive on behalf of the Company.
The parties hereto agree that the Severance Benefits are to be in full
satisfaction, compromise and release of any claims arising out of any
termination of Executive's employment pursuant to Section 6(c), and such amounts
shall be contingent upon Executive's delivery of a general release of such
claims upon termination of employment in a form reasonably satisfactory to the
Company, it being understood that no Severance Benefits shall be provided unless
and until Executive determines to execute and deliver such release.
(e) Certain Non-Renewal Benefits. Unless otherwise specifically
provided in this Agreement or otherwise required by law, all compensation and
benefits payable to Executive under this Agreement shall terminate on the date
this Agreement expires in accordance with Section 2(b) above. Notwithstanding
the foregoing, if the Company gives notice to Executive that it will not renew
this Agreement in accordance with Section 2(b) above, the Company shall pay
Severance Benefits to Executive.
The parties hereto agree that the Severance Benefits are to be in full
satisfaction, compromise and release of any claims arising out of any
termination of Executive's employment pursuant due to the expiration of this
Agreement, and such amounts shall be contingent upon Executive's delivery of a
general release of any claims related to such termination in a form reasonably
satisfactory to the Company, it being understood that no Severance Benefits
shall be provided unless and until Executive determines to execute and deliver
such release.
(f) Notwithstanding termination of this Agreement as provided in this
Section 6 or any other termination of Executive's employment with the Company,
Executive's obligations under Section 7 hereof shall survive any termination of
Executive's employment with the Company at any time and for any reason.
7. Non-Solicitation; Confidentiality; Proprietary Rights.
(a) Nonsolicitation. Executive agrees that he shall not, during the
term of this Agreement, and for a period of one year thereafter solicit any
employee of the Company to terminate such employee's employment with the
Company, or agree to hire any such employee or former employee of the Company
(unless at least 12 months have passed since the termination of such employee's
employment with the Company).
(b) Confidential Information. As used in this Agreement, the term
"Confidential Information" shall mean information belonging to the Company (for
purposes of this Section 7 including all predecessors of the Company) of value
to the Company or with respect to which Company has right in the course of
conducting its business and the disclosure of which could result in a
competitive or other disadvantage to the Company. Confidential Information
includes information, whether or not patentable or copyrightable, in written,
oral, electronic or other tangible or intangible forms, stored in any medium,
including, by way of example and without limitation, trade secrets, ideas,
concepts, designs, configurations, specifications, drawings, blueprints,
diagrams, models, prototypes, samples, flow charts processes, techniques,
formulas,
software, improvements, inventions, domain names, data, know-how, discoveries,
copyrightable materials, marketing plans and strategies, sales and financial
reports and forecasts, customer lists, studies, reports, records, books,
contracts, instruments, surveys, computer disks, diskettes, tapes, computer
programs and business plans, prospects and opportunities (such as possible
acquisitions or dispositions of businesses or facilities) which have been
discussed or considered by the management of the Company. Confidential
Information includes information developed by Executive in the course of
Executive's employment by the Company, as well as other information to which
Executive may have access in connection with Executive's employment.
Confidential Information also includes the confidential information of others
with which the Company has a business relationship. Notwithstanding the
foregoing, Confidential Information does not include information in the public
domain, unless due to breach of Executive's duties under Section 7(c).
(c) Confidentiality. In the course of performing services hereunder on
behalf of the Company and its affiliates, Executive has had and from time to
time will have access to Confidential Information. Executive agrees (i) to hold
the Confidential Information in strict confidence, (ii) not to disclose the
Confidential Information to any person (other than in the regular business of
the Company or its affiliates), and (iii) not to use, directly or indirectly,
any of the Confidential Information for any purpose other than on behalf of the
Company and its affiliates. All documents, records, data, apparatus, equipment
and other physical property, whether or not pertaining to Confidential
Information, that are furnished to Executive by the Company or are produced by
Executive in connection with Executive's employment will be and remain the sole
property of the Company. Upon the termination of Executive's employment with the
Company for any reason and as and when otherwise requested by the Company, all
Confidential Information (including, without limitation, all data, memoranda,
customer lists, notes, programs and other papers and items, and reproductions
thereof relating to the foregoing matters) in Executive's possession or control,
shall be immediately returned to the Company.
(d) Third Party Agreements and Rights. Executive hereby confirms that
Executive is not bound by the terms of any agreement with any previous employer
or other party that restricts in any way Executive's use or disclosure of
information or Executive's engagement in any business. Executive represents to
the Company that Executive's execution of this Agreement, Executive's employment
with the Company and the performance of Executive's proposed duties for the
Company will not violate any obligations Executive may have to any such previous
employer or other party. In Executive's work for the Company, Executive will not
disclose or make use of any information in violation of any agreements with or
rights of any such previous employer or other party, and Executive will not
bring to the premises of the Company any copies or other tangible embodiments of
non-public information belonging to or obtained from any such previous
employment or other party.
(e) Litigation and Regulatory Cooperation. During and after Executive's
employment, Executive shall cooperate fully with the Company in the
defense or prosecution of any claims or actions now in existence or which may be
brought in the future against or on behalf of the Company that relate to events
or occurrences that transpired while Executive was employed by the Company.
Executive's full cooperation in connection with such claims or actions shall
include, but not be limited to, being available to meet with counsel to prepare
for discovery or trial and to act as a witness on behalf of the Company at
mutually convenient times. During and after Executive's employment, Executive
also shall cooperate fully with the Company in connection with any investigation
or review of any federal, state or local regulatory authority as any such
investigation or review relates to events or occurrences that transpired while
Executive was employed by the Company. The Company shall reimburse Executive for
any reasonable out-of-pocket expenses incurred in connection with Executive's
performance of obligations pursuant to this Section 7(e).
(f) Inventions. Executive recognizes that the Company and its
affiliates possess a proprietary interest in all of the Confidential Information
and have the exclusive right and privilege to use, protect by copyright, patent
or trademark, or otherwise exploit the processes, ideas and concepts described
therein to the exclusion of Executive, except as otherwise agreed between the
Company and Executive in writing. Executive expressly agrees that any products,
inventions, discoveries or improvements made by Executive in the course of
Executive's employment, including any of the foregoing which is based on or
arises out of the Confidential Information, shall be the property of and inure
to the exclusive benefit of the Company. Executive further agrees that any and
all products, inventions, discoveries or improvements developed by Executive
(whether or not able to be protected by copyright, patent or trademark) during
the course of his employment, or involving the use of the time, materials or
other resources of the Company or any of its affiliates, shall be promptly
disclosed to the Company and shall become the exclusive property of the Company,
and Executive shall execute and deliver any and all documents necessary or
appropriate to implement the foregoing.
(g) Business Opportunities. Executive agrees, while he is employed by
the Company, to offer or otherwise make known or available to it, as directed by
the Board of Directors of the Company and without additional compensation or
consideration, any business prospects, contracts or other business opportunities
that Executive may discover, find, develop or otherwise have available to
Executive in the Company's general industry and further agrees that any such
prospects, contacts or other business opportunities shall be the property of the
Company.
(h) Acknowledgment. Executive acknowledges that the provisions of this
Section 7 are an integral part of Executive's employment arrangements with the
Company.
8. Parties in Interest; Certain Remedies. It is specifically understood
and agreed that this Agreement is intended to confer a benefit, directly or
indirectly, on the Company and its direct and indirect subsidiaries and
affiliates, and that any breach of the provisions of this Agreement by Executive
or any of Executive's affiliates will result in
irreparable injury to the Company and its subsidiaries and affiliates, that the
remedy at law alone will be an inadequate remedy for such breach. Accordingly,
subject to Section 9 hereof, Executive agrees that if Executive breaches, or
proposes to breach, any portion of this Agreement, the Company or its
subsidiaries and affiliates shall be entitled, in addition to any other remedy
it may have, to enforce the specific performance of this Agreement by Executive
through both temporary and permanent injunctive relief without the necessity of
posting a bond or proving actual damages, but without limitation of their right
to damages and any and all other remedies available to them, it being understood
that injunctive relief is in addition to, and not in lieu of, such other
remedies.
9. Integration. This Agreement constitutes the entire agreement between
the parties with respect to the subject matter hereof and supersedes all prior
agreements between the parties with respect to any related subject matter.
10. Assignment; Successors and Assigns, etc. Neither the Company nor
Executive may make any assignment of this Agreement or any interest herein
without the prior written consent of the other party; provided that the Company
may assign its rights under this Agreement without the consent of Executive in
the event that the Company shall effect a reorganization, consolidate with or
merge into any other corporation, partnership, organization or other entity, or
transfer all or substantially all of its properties or assets to any other
corporation, partnership, organization or other entity. This Agreement shall
inure to the benefit of and be binding upon the Company and Executive, their
respective successors, executors, administrators, heirs and permitted assigns.
11. Enforceability. If any portion or provision of this Agreement
(including, without limitation, any portion or provision of any section of this
Agreement) shall to any extent be declared illegal or unenforceable by a court
of competent jurisdiction, then the remainder of this Agreement, or the
application of such portion or provision in circumstances other than those as to
which it is so declared illegal or unenforceable, shall not be affected thereby,
and each portion and provision of this Agreement shall be valid and enforceable
to the fullest extent permitted by law.
12. Waiver. No waiver of any provision hereof shall be effective unless
made in writing and signed by the waiving parry. The failure of any party to
require the performance of any term or obligation of this Agreement, or the
waiver by any party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.
13. Notices. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and delivered
in person or sent by a nationally recognized overnight courier service or by
registered or certified mail, postage prepaid, return receipt requested, to
Executive at the last address Executive has filed in writing with the Company
or, in the case of the Company, at 0000 Xxxxxx Xxxxxx, Xxx Xxxx, Xxxxxxxxxx
00000.
14. Amendment. This Agreement may be amended or modified only by a written
instrument signed by Executive and by a duly authorized representative of the
Company.
15. Governing Law. This contract shall be construed under and be governed
in all respects by the laws of the State of California, without giving effect to
the conflict of laws principles thereof.
16. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be taken to be
an original and all of which taken together shall constitute one and the same
document.
17. Certain Definitions. For purposes of this Agreement, the term "person"
means an individual, corporation, limited liability company, partnership,
entity, association, trust or any unincorporated organization; a "subsidiary"
means any corporation more than 50 percent of whose outstanding voting
securities, or any limited liability company, partnership, joint venture or
other entity more than 50 percent of whose total equity interest, is directly or
indirectly owned by such person; and an "affiliate" of a person shall mean, with
respect to a person or entity, any person or entity which directly or indirectly
controls, is controlled by, or is under common control with such person or
entity.
18. Attorneys' Fees and Costs. If any action at law or in equity is
necessary to enforce or interpret any of the rights or obligations under this
Agreement, the prevailing party shall be entitled to reasonable attorneys' fees,
costs, and disbursements in addition to any other relief to which the prevailing
party may be entitled.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
COMPANY:
NuTech Digital, Inc.
By:
-------------------------------------
Name:
Title:
EXECUTIVE:
Xxx Xxxxxx
----------------------------------------
