EXHIBIT 10.13
EMPLOYMENT AGREEMENT
BETWEEN: Western Power & Equipment Corp.
an Oregon corporation
AND: Xxxxxxx Xxxx XxXxxx
EFFECTIVE DATE: January 1, 1998
RECITALS
The Company is an Oregon corporation engaged in the construction and
agricultural equipment industry.
Employee is currently employed as the Company's President and Chief
Executive Officer.
The Company desires to continue employing Employee and Employee wishes to
continue employment on the following terms and conditions.
This employment agreement supersedes all previous employment contracts
between the parties.
AGREEMENT
1. Employment Term: The term of employment under this agreement shall begin
January 1, 1998 and continue until December 31, 2007 unless earlier
terminated as provided below.
2. Employment Duties: During the term of this agreement Employee will, to the
best Employee's ability.
2.1. Capacity: Serve as the Company's full-time President and Chief
Executive officer and devote Employee's full and entire business time,
attention, knowledge and skills to faithfully, diligently, and to the
best of the Employees abilities, perform all duties required of the
Employee by the Company. For purposes of this paragraph, the Company
shall include any direct or indirect subsidiaries of the Company.
2.2. Duties: Employee shall render services customarily performed in the
capacity of President and Chief Executive Officer of a corporation
including, but not limited to, management and responsibility of
general
policies and planning for the Company, financial planning,
acquisitions, new product development, strategic planning, opening of
additional outlets, and product line expansion. Employee's duties
shall be directed by, and all times be subject to the discretion of,
the Company's Board of Directors.
2.3. Member of the Board of Directors: Throughout the period of his
employment hereunder, the Employee shall have the right (but not the
obligation), if elected by the requisite majority of the
stockholder(s) to serve, without any further or additional
compensation or remuneration (other than as set forth herein), as
member of the Board of Directors of the Company or any subsidiary of
the Company.
3. Base Compensation:
3.1. Base Compensation: Company shall pay Employee a base salary of
$280,000 per year until July 31, 1998. Starting August 1, 1998 through
December 31, 1998 the Base Salary would be increased to $290,000 per
year. On each January 1 beginning January 1, 1999, Employee's base
salary shall increase by the average percentage increase for all
employees over the prior 12 months. The Employee shall be paid in the
same time and manner as all other employees.
3.2. Bonus Compensation: Employee shall be entitled to an annual
performance bonus as follows:
3.2.1. For each of fiscal years 1998 through and including 2002,
Employees' yearly bonus shall be 5% of the amount by which the
Company's Pre-Tax Income exceeds $1,750,000 for that fiscal
year. The maximum bonus payable in any one fiscal year under
this paragraph shall be $150,000.
3.2.2. For each of fiscal years 2003 through and including 2007,
Employee's yearly bonus shall be 5% of the amount by which the
company's Pre-Tax Income Exceeds 1,750,000 for that fiscal
year. The maximum bonus payable in any one fiscal year under
this paragraph shall be $200,000.
3.3. For the purposes of paragraph 3.2, Pre-Tax Income shall be the total
fiscal year consolidated net income for the Company and its
subsidiaries as determined in accordance with generally accepted
accounting principle by independent accountants then engaged by the
company to audit its financial statements after deduction of all items
customary dedicated from income but before deduction of taxed on
income of the Company, gains or losses from dispositions or purchases
of assets or other extraordinary items (including any deferred
financing expenses incurred by the Company in connection with the
issuance of shares of stock of the Company, and any Employee's bonus.
Yearly bonus payments due Employee shall be paid within 120 following
the end of the fiscal year on which the bonus is based.
3.4. Stock Options: In any year that Employee earns the maximum bonus under
paragraph 3.3, Employee shall receive an option to purchase 25,000
shares of common stock to be priced at the closing market price on the
date of issue, such option to vest one year later. The number of
options to which Employee shall be entitled shall be adjusted for any
stock dividends, stock splits or other similar changes in the capital
structure of the Company. If earned, such yearly options shall be
issued within 120 days of the end of the fiscal year for which they
were earned. The options will be granted under the Company's existing
Employee Stock Option Plan or any supplemental plan adopted by the
Board of Directors and, to the extent eligible, shall be Incentive
Stock Options. The options will have a term of 10- years provided,
however, should Employee terminate his employment pursuant to
paragraph 9.2.2. Or the Company terminates this employment pursuant to
paragraph 9.1.3 or 9.1.4, such options will expire 90-days after such
termination; if the company terminate his employment pursuant to
paragraph 9.1.5 or Employee terminate his employment pursuant to
paragraph 9.2.1, such options expire three years after the date of
such termination (but no later than 10 years after the date of grant)
and if his employment is terminated for cause pursuant to paragraph
9.1.1 or 9.1.2, such options will terminate immediately. Upon
exercise, the shares issued will be registered for resale by the
Company at its expense.
3.5. Status of Compensation: All payments to Employee shall be subject to
customary withholding taxes and other employment taxes and deductions
as required with respect to compensation paid by Company to an
employee.
3.6. Exemption: Employee shall be exempt and/or excluded for purpose of
Oregon employment statutes and the Fair Labor Practice and is exempt
from statutory requirements covering overtime.
4. Fringe Benefits: The Company shall furnish and make available to Employee
such benefits as are from time to time provided to other executive officers
including, but not limited to, life insurance, disability insurance, health
and accident insurance, and pension or retirement plan.
The Company shall maintain for the benefit of employee, the life insurance
policy in the amount of $500,000 which death benefits shall be payable to
the beneficiary of the Employee upon his death.
5. Expenses: The Company shall pay all dues to professional societies and
organizations, premiums for supplemental life and disability insurance,
accident and health insurance in accordance with Company policy, group term
life insurance, and all other expenses paid for by the Company in
accordance with Company policy. The Company shall also pay all reasonable
business expenses, including air and other travel expenses, incurred by
Employee in connection with performance of Employee's duties upon proper
receipts and other documentation.
6. Automobile Expense: The Company shall provide Employee an automobile of
Employee's reasonable choice for Employee's use throughout the term of this
agreement. The Company shall bear all the expenses of such automobile,
including all purchase, lease, or other acquisition related costs, gas,
insurance, maintenance, and repairs for such automobile.
7. Vacation and Holidays: Employee shall be entitled vacation and holiday time
as follows:
7.1. A maximum of four weeks of vacation time per fiscal year in each of
fiscal years 1998 through 2002, inclusive;
7.2. A maximum of five weeks of vacations time per fiscal year in each of
fiscal years 2003 through 2007 inclusive;
7.3. All vacation time shall be paid in accordance with the then current
policy of the Company.
7.4. Employee shall be further entitled to take the legal holidays observed
by Company.
8. Change in Fiscal year: If the Company's fiscal year changes during the term
of this agreement, all compensation and benefits to be received by Employee
shall be appropriately and equitably pro-rated and adjusted to reflect such
change.
9. Termination:
9.1. Termination: At the discretion of the Board of Directors, this
agreement may be terminated by written notice to Employee upon the
occurrence of any of the following events:
9.1.1. Any material act committed by Employee against the Company, or
its subsidiaries constituting fraud, breach of fiduciary duty,
or embezzlement of funds, or a felony conviction for conduct
involving moral turpitude.
9.1.2. Breach or default by Employee in the performance of any
material provision of this agreement after 10-days prior
written notice is given within which time such breach or
default may be remedied. If the Company does not believe
Employee has remedied such breach or default, the Employee
shall be given an opportunity to present his case before the
Board of Directors for their reconsideration.
9.1.3. Physical or mental disability or impairment of employee that
prevents Employee from continuing the normal and proper
performance of Employee's duties and responsibilities under
this agreement for a period of 12 consecutive months. The
initial determination as to whether the Employee is disabled or
impaired shall be made by the physician regularly treating
Employee. The Company shall have the right to determine whether
the Employee is disabled or impaired. If such physician's
opinion differs from that of the physician treading Employee,
the two physicians shall select a third physician who shall
examine employee and, after such examination and a review of
all available information from the other two physician,
determined whether Employee is disabled or impaired and this
decision shall be final and binding upon all the parties. The
starting date for the 12 month period shall be after the third
physician has made his determination or;
9.1.4. Employee's death.
9.1.5. At the discretion of the Board of Directors.
9.2. Payment Upon Termination: Employee may terminate his employment;
9.2.1. For good reason if the Company shall be in material breach of
this agreement and has failed to remedy such breach within 10-
days following written notice of such breach, or
9.2.2. Upon sixty (60) days prior written notice without cause.
9.3. Payment Upon Termination:
9.3.1. Upon termination for any of the causes in paragraph 9.1.1,
9.1.2, 9.1.3, 9.1.4 or 9.2.2, Employee or Employee's spouse or
estate in the event of Employee's death) shall be entitled to
receive all compensation and benefits through the date of
termination. Upon termination due to Employee's death or
disability, all options then granted to Employee which are
unvested at the date of termination shall become immediately
vested as of the date of termination and registered for public
sale.
9.3.2. If Employee's employment is terminated pursuant to paragraph
9.1.5, 9.2.1, the Company shall pay Employee all compensation,
bonuses, and benefits which Employee is entitled through the
date of termination, plus the base compensation provided in
paragraph 3.1 over the remainder of the term of this Agreement.
Further, all stock options granted shall immediately vest and
be registered for public sale. All options then held by
Employee would be extended to a date three years from the date
of termination.
10. Confidentiality: During the term of this agreement and after termination of
employment, Employee shall keep secret and retain in strictest confidence
all confidential matters of the Company along with the Company's know-how,
trade secrets, confidential client lists, details of client, subcontractor,
and consultant contracts, pricing policies, operational methods, marketing
plans and strategies, product development plans, acquisition or bidding
techniques and plans, technical processes, inventions and research project,
business acquisition plans, personnel acquisition plans, and other similar
information unless (I) such information is generally available to the
public without restriction; (ii) Employee is requested by the Company's
Board of Directors or a committee thereof to disclose such confidential
information; (iii) such information is being provided to a customer,
vendor, or consultant of the Company in the ordinary course of business; or
(iv) Employee is compelled to disclose such confidential information by
order, inquiry, or request by a court of law, governmental agency, or other
source of authority and prompt notice of such order is given to the Company
which may challenge such order.
11. Property of the Company: All lists, records, and other non-personal
documents or papers (including all copies thereof), including such items
stored in computer memories, on microfiche, or any other media made or
compiled by or on behalf of the Employee or made available to Employee
relating to the Company are and shall be the property of the Company and
shall be delivered to the Company upon termination of this agreement. All
inventions, including any procedures, formulas, methods, processes, uses,
apparatuses, patterns, designs, drawings, devises, or configurations of any
kind, and all improvements to them which are developed, discovered, made,
or produced, trade secrets or information used by any or all of the Company
shall be the exclusive property of the Company and shall be delivered to
the Company upon termination of this Agreement.
12. Employees of the Company: If Employee's employment is terminated for any
reason other than 9.1.5 or 9.2.1, Employee shall not, directly or
indirectly, solicit any employee of the Company, other than Employee's
personal secretary, or encourage any such employee to leave employment with
the Company.
13. Non-Competition: For a period equal to the latest to occur of (i) such
period as the Employee is employed by the Company; (ii) one year following
the date of termination of this Agreement and; (iii) such period as the
Employee shall continue to receive the base salary under this agreement -
Employee shall not, directly or indirectly, whether individually or as an
employee, stockholder, partner, joint venturer, agent or other
representative of any other person, firm, corporation, or other business
entity engage in any business which is competitive with the business of the
Company. As used herein, the term "business which is competitive with the
businesses of the Company" shall only mean any person, firm, corporation,
or other business entity doing business in the territories serviced by the
Company under it dealership agreements with its suppliers if 10% or more of
the net revenues of such business are derived from the sale, rental, parts,
servicing, or other distribution of small, medium, or heavy construction
equipment of the nature then being sold by the Company including, without
limitation, any such equipment manufactured by Case Corporation or any
other corporation manufacturing equipment in competition with the equipment
then manufactured by Case Corporation.
14. Arbitration: Any controversy or claim arising out of, or relating to, this
agreement or breach thereof, shall be settled by arbitration in accordance
with the rules then applying of the American Arbitration Association, and
any judgment upon the award rendered may be entered in any court having
jurisdiction thereof. Arbitration shall be held in Vancouver, Washington.
The cost of arbitration shall be paid equally by the parties.
15. Notice: Any notices permitted or required under this agreement shall be
given in writing and may be delivered and served personally upon employee
or upon an officer of the Company, or alternatively, may be
deposited in the United States mail, postage prepaid by certified or
registered mail, addressed to the company at its head office or the
Employee at his current address as shown in his personnel file with the
Company. Such notice, if mailed with the State of Washington, shall be
deemed delivered upon the second day following the date post marked, If
mailed out side the State of Washington but within the United States, the
notice shall be deemed delivered upon the third day following the date post
marked.
16. Waiver of Breach: The waiver by either Company or Employee of a breach of
any provision of this Agreement shall not operate or be construed as a
waive of any other provision of any subsequent breach of the same provision
by either Company or Employee.
17. Binding Effect and Assignment: This agreement shall be binding upon and
shall ensure to the benefit of both Company and Employee and their
respective successors, heirs and legal representatives, but neither this
Agreement nor any right hereunder may be assigned by either Company or
Employee without the prior written consent of the other party.
18. Amendment: No amendment or variation of the terms and conditions of these
Agreement shall be valid unless the same is in writing and signed by both
Company and Employee.
19. Partial Invalidity: Invalidation of any term or provision herein by
judgment or court order, or otherwise, shall not affect any other
provisions, which shall remain in full force and effect.
20. Integration: This Agreement embodies the entire agreement of the parties.
There are no promises; terms, conditions or obligations other than those
contained herein. This Agreement shall supersede all prior communications,
representations or Agreements, either verbal or written, between the
parties with regard to Employee's terms of employment. Neither party to
this Agreement has made any representation or warranty relating to this
Agreement or the subject matter of this Agreement except those specifically
contained in writing in this Agreement.
21. Governing Law: This Agreement and all matters of dispute or interpretation
thereof shall be governed a construed in accordance with the laws of the
State of Washington without reference to the provisions of conflict of
laws.
22. Paragraph Headings: The paragraph headings appearing in these Agreement are
not to be construed as interpretations of the text, but are
inserted for convenience of and reference by the reader only.
Western Power & Equipment Corp.,
An Oregon corporation
By: __________________________
------------------------------
Xxxxxx Xxxxxxx, Director C. Xxxx XxXxxx
By: _____________________________
Xxxxx Xxxxxxx, Director
By: _____________________________
Xxxxxx Xxxxx, Chairman