Ex-10.45
Employment Agreement with Xxxxxxx X. Xxxxxx XX
EXHIBIT 10.45
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is effective as of July 1, 2000, by
and between Telegen Corporation, a California corporation, ("Employer") and
Xxxxxxx X. Xxxxxx XX, an individual, ("Xxxxxx").
A. Employer desires the services of Xxxxxx in order to retain his
experience, abilities, and knowledge, and is therefore willing to engage his
services on the terms and conditions set forth below.
X. Xxxxxx desires to be in the employ of Employer and is willing to do so
on the terms and conditions set forth below.
NOW THEREFORE, in consideration of the above recitals, the mutual promises
and conditions set forth in this Agreement, and other valuable consideration,
the receipt of which is hereby acknowledged, the parties agree as follows:
1. Term. Subject to the termination provisions provided in this
Agreement, Xxxxxx shall be employed for a term commencing July 1, 2000 and
ending July 1, 2002. Thereafter, unless otherwise agreed to in writing, Xxxxxx'x
employment with Employer will be at will.
2. Place of Employment. Unless the parties agree otherwise in writing,
Xxxxxx shall perform the services he is required to perform under this Agreement
at Employer's main offices; however, Employer may from time to time require
Xxxxxx to travel temporarily to other locations on Employer's business, so long
as such travel does not exceed 10 continuous days. For purposes of this
paragraph 2, main offices shall include Employer's corporate office in
California and Employer's office in Seattle, Washington. Employer covenants and
warrants that it shall establish and support a fully staffed office in Seattle,
Washington, the location to be determined and established before this contract
is signed as a material inducement to Xxxxxx to enter into this Agreement.
3. Position and Responsibilities. Employer shall employ Xxxxxx as its
"President and Chief Operating Officer". As President and Chief Operating
Officer, Xxxxxx shall, in cooperation with and at the direction of the Chief
Executive Officer, be responsible for developing, implementing and directing the
strategic and operational aspects of Employer's business.
4. Exclusive Employment. Except as specifically provided for in this
paragraph 4, during his employment, Xxxxxx shall devote his full business time,
energy, and ability exclusively to the business and interests of Employer, and
shall not, without Employer's prior written consent, render to others services
of any kind for compensation, or engage in any other business activity. Xxxxxx
represents to Employer that he has no other outstanding commitments inconsistent
with any of the terms of this Agreement or the services to be rendered under it.
Xxxxxx shall be permitted to conduct the business of WMS Financial Planners
("WMS"), so long as such conduct does not unreasonably interfere with Xxxxxx'x
responsibilities to Employer under this Agreement.
5. Work Schedule. Generally, Xxxxxx shall work ten (10) hours a day,
Monday through Thursday of each week, during the term of his employment.
6. Non-Competition. During his employment with Employer, Xxxxxx shall
not, directly or indirectly, whether as partner, employee, creditor,
shareholder, or otherwise, promote, participate, or engage in any activity or
other business competitive with Employer.
7. Nonsolicitation of Employees. During the period of Employment and for
a period of two (2) years after the cessation of employment for any reason,
whether with or without cause, Xxxxxx shall not directly or indirectly, either
alone or in concert with others, solicit or entice any employee of or consultant
to Employer to leave Employer or work for anyone in competition with Employer.
8. Nonsolicitation of Customers. During the period of employment and for
a period of two (2) years after the cessation of employment for any reason,
whether with or without cause, Xxxxxx shall not directly or indirectly, either
alone or in concert with others, solicit, entice, or in any way divert any
prospective customers, customers or suppliers of Employer to do business with
any business entity in competition with Employer.
9. Compensation.
a. During the term of this Agreement, Employer agrees to pay Xxxxxx
a Base Salary of Four Hundred Thousand dollars ($400,000) per year. The Base
Salary shall be payable as current salary, in installments twice each month
subject to all applicable withholdings and deductions.
b. As an inducement to Xxxxxx to accept employment, Employer hereby
provides Xxxxxx a signing bonus consisting of 125,000 shares of non-assessable,
fully diluted (post split) stock and incentive stock options for 500,000
additional shares at a strike price of $1.75 per share (44,000 of which are
immediately vested and the remaining vest at the rate of 38,000 options per
month.) In addition, Employer shall issue warrants for 75,000 shares with a
strike price of $1.75 per share, to be assigned as directed. All shares, options
and warrants shall be issued to Xxxxxx or his designees.
10. Benefits.
a. Employer will provide and pay for full medical and dental
coverage for Xxxxxx and his wife.
b. Employer will provide and pay for long term disability insurance
for Xxxxxx with a minimum premium of $7,200 per year and a maximum premium of
$8,000 per year.
c. Employer will provide Xxxxxx with participation in the 2000
Employee Stock Option Plan as approved by the Board of Directors.
d. Employer will provide Xxxxxx with participation in the Employee
Stock Purchase Plan as approved by the Board of Directors.
e. Employer will provide Xxxxxx a $2,500,000 VUL joint-life
insurance plan with an annual premium benefit of $30,000, guaranteed payable for
10 years.
f. Employer will provide Xxxxxx an automobile allowance of $750 per
month as approved by the Board of Directors for senior executives.
g. Employer will provide Xxxxxx with an annual incentive bonus based
on the accomplishment of clearly established and quantifiable corporate goals as
established and approved by the Employer's Board of Directors.
11. Vacation; Sick Leave; Retreats. Xxxxxx shall be entitled to six (6)
weeks of paid vacation for each twelve-(12) month period, the first six weeks
being fully accrued in advance and successive weeks shall accrue pro-rata from
the date employment commencing under this Agreement. Vacation time will continue
to accrue so long as Xxxxxx'x total accrued vacation does not exceed ten (10)
weeks. Should Xxxxxx'x accrued vacation time reach ten (10) weeks, Xxxxxx will
have the option of taking his vacation time in cash, up to a maximum of four (4)
weeks. Additionally, Employer shall provide Xxxxxx leave with pay to attend, at
a minimum, two (2) WMS retreats consisting of 4 days each year and one (1)
retreat per year hosted by Pacific West Securities, Inc., consisting of one
week. Corporate executive and staff retreats shall not be counted as vacation
time.
12. Reimbursement of Expenses. During the employment term, to the extent
that such expenditures satisfy the criteria under the Internal Revenue Code for
deductibility by Employer (whether or not fully deductible) for federal income
tax purposes as ordinary and necessary business expenses, Employer shall
reimburse Xxxxxx promptly for reasonable business expenses, including travel,
parking, business meetings, business clothing purchases (not to exceed $5,000
annually), meals, living expenses and lodging away from Seattle, and
professional dues. If any part of any expense reimbursement paid by Employer to
Xxxxxx is finally determined not to be allowable as a federal or state
income tax deduction to Employer, the part disallowed shall be deemed
compensation paid to Xxxxxx by Employer in addition to the compensation paid
under paragraph 9 of this Agreement.
13. Termination by Employer.
a. Employer may terminate this Agreement at any time without notice
for cause, which includes and is limited to, Xxxxxx committing any material act
of fraud or improperly disclosing Proprietary Information.
b. In the event Employer terminates this Agreement without cause or
for any other reason not listed in section (a) above, Employer shall be
obligated to pay and provide Xxxxxx all compensation and benefits (or equivalent
value) for a period of five (5) years following the date of termination. This
clause shall be added to any renewal or extensions of this contract in the
future.
c. In the event that the ownership control of Employer shall
materially change during the term of this Agreement, Xxxxxx, at his sole
election and determination may deem this event a termination of this Agreement
by Employer without cause thereby entitling Xxxxxx to all compensation and
benefits (or equivalent value) to which Employer is obligated under paragraph 13
(b), above.
d. If this Agreement is terminated by Employer, with or without
cause, all unvested options and warrants to which Xxxxxx is entitled under
paragraph 9 (c) shall be deemed immediately vested and exercisable by Xxxxxx.
14. Notification to New Employer. If Xxxxxx leaves the employ of Employer,
Xxxxxx consents to Employer's notification to any new employer of Xxxxxx'x
obligations under this Agreement.
15. Proprietary Information. Through his employment with Employer, Xxxxxx
will have access to Proprietary Information of Employer. "Proprietary
Information" means information (a) that is not known by actual or potential
competitors of Employer or is generally unavailable to the public, (b) that has
been created, discovered, developed, or otherwise become known to Employer or in
which property rights have been assigned or otherwise conveyed to Employer
(whether by virtue of Xxxxxx'x employment or otherwise), and (c) that has
material economic value or potential material economic value to Employer's
present or future business. "Proprietary Information" shall include trade
secrets (as defined under California Civil Code section 3426.1) and all other
discoveries, developments, designs, improvements, inventions, formulas, software
programs, processes, techniques, know-how, negative know-how, data, research,
techniques, technical data, prospective customer lists, customer and supplier
lists, and any modifications or enhancements of any of the foregoing, and all
program, marketing, sales, or other financial or business information disclosed
to Xxxxxx by Employer, either directly or indirectly, in writing or orally or by
drawings or observation, which has actual or potential economic value to
Employer. Such Proprietary Information is considered secret and is disclosed to
Xxxxxx in confidence.
16. Nondisclosure of Proprietary Information. At all times, both during
Xxxxxx'x employment and for a period of two (2) years after the cessation of
Xxxxxx'x employment, whether the cessation is voluntary or involuntary:
x. Xxxxxx shall keep in strictest confidence and trust all
Proprietary Information.
x. Xxxxxx shall not disclose, use, induce or assist in the use or
disclosure of any Proprietary Information or anything related to Proprietary
Information without the express written consent of Employer's Chief Executive
Officer, except as may be necessary in the ordinary course of performing his
duties for Employer; and
x. Xxxxxx shall promptly advise Employer of any knowledge that he
may have of any unauthorized release or use of Employer's Proprietary
Information, and shall take reasonable measures to prevent unauthorized persons
or entities from having access to, obtaining, or being furnished with any
Proprietary Information.
17. Exposure to Criminal and Civil Liability. Xxxxxx acknowledges that in
addition to any rights that Employer may have under this Agreement, that the
unauthorized taking of any Proprietary Information may be a crime under section
499c of the California Penal Code, and may also result in civil liability under
sections 3426.1 through
3426.11 of the California Civil Code.
18. Right to Obtain Injunctive Relief. Xxxxxx is obligated under this
Agreement to keep Proprietary Information confidential and to render services of
a special, unique, unusual, extraordinary, and intellectual character, which
give this Agreement peculiar value. The breach of this Agreement and the loss of
these services cannot be reasonably or adequately compensated in damages in an
action at law. Accordingly, in addition to other remedies provided by law or
this Agreement, Employer shall have the right to obtain injunctive relief
against the breach of this Agreement by Xxxxxx.
19. Authorization to Sign. Employer acknowledges that the Board of
Directors of Employer has authorized its Chief Executive Officer, Xxxxxxx X.
Xxxxxxx, to execute this Agreement.
20. No Assignment. Neither this Agreement, nor any duties or obligations
under this Agreement, may be assigned by Employer or Xxxxxx without the prior
written consent of the other.
21. Attorney's Fees. In the event any suit, action, or any other
proceeding is commenced to enforce or interpret any part of this Agreement, the
prevailing party shall be entitled to recover its costs and reasonable
attorney's fees, court costs, expenses and other costs of investigation and
preparation arising out of or incurred with such proceeding.
22. Advice of Counsel. Employer and Xxxxxx acknowledge to each other that
each party has been represented by independent counsel of its own choice, and
that each party has executed this Agreement with the consent and on the advice
of such independent legal counsel.
23. No Waiver. No waiver of a breach, failure of any condition, or any
right or remedy contained in or granted by the provisions of this Agreement
shall be effective unless it is in writing and signed by the party waiving the
breach, failure, right, or remedy. No waiver by Employer or Xxxxxx of any
breach, failure, right, or remedy shall be deemed a waiver of any other breach,
failure, right, or remedy, whether or not similar, nor shall any waiver
constitute a continuing waiver unless the writing so specifies.
24. Entire Agreement. This Agreement contains the entire Agreement between
the parties and supersedes all prior oral and written Agreements,
understandings, commitments, and practices between them, including all prior
employment Agreements, whether or not fully performed by Xxxxxx before the date
of this Agreement. No oral modifications, express or implied, may alter or vary
the terms of this Agreement. No amendments to this Agreement may be made except
in writing and signed by both parties. No employee or supervisor of Employer is
authorized to alter or vary the terms of this Agreement except by written
Agreement by the Chief Executive Officer of Employer. Any representations
contrary to this Agreement, express or implied, written or oral, are hereby
disclaimed.
25. Governing Law. The formation, construction, and performance of this
Agreement shall be construed in accordance with the laws of the State of
California.
26. Notice. Any notice to Employer required or permitted under this
Agreement shall be given in writing to Employer, either by personal service or
by registered or certified mail, postage prepaid, addressed to Employer,
attention Xxxxxxx X. Xxxxxxx, Chief Executive Officer, at its then principal
place of business. Any such notice to Xxxxxx shall be given in a like manner
and, if mailed, shall be addressed to Xxxxxx at his home address then shown in
Employer's files. For the purpose of determining compliance with any time limit
in this Agreement, a notice shall be deemed to have been duly given (a) on the
date of service, if served personally on the party to whom notice is to be
given, or (b) on the second business day after mailing, if mailed to the party
to whom the notice is to be given in the manner provided in this section.
27. Severability. If any provision of this Agreement is held invalid or
unenforceable, the remainder of this Agreement shall nevertheless remain in full
force and effect. If any provision is held invalid or unenforceable with respect
to particular circumstances, it shall nevertheless remain in full force and
effect in all other circumstances.
Executed by the parties as of the date set forth below.
TELEGEN CORPORATION
By /s/ XXXXXXX X. XXXXXXX Date: July 1, 2000
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Chief Executive Officer
Xxxxxxx X. Xxxxxx XX
/s/ XXXXXXX X. XXXXXX Date: July 1, 2000
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