Exhibit 10.1 Employment Agreement
BETWEEN
AND
XXXXXXX XXXXXXXXXX
This Employment
Agreement (the “Agreement”) is entered into as of April 15, 2000
(the “Effective Date”) by and between EarthShell Corporation, a
Delaware corporation with its principal office located in Baltimore, Maryland
(the “Company”), and Xxxxxxx XxXxxxxxxx, an individual
(“Employee”).
AGREEMENT
1. Services Provided to the Company.
(a) Position and Duties. As of the Effective Date, Employee shall be
employed as Chief Technology Officer of the Company and will have the general responsibility
for all commercialization and technology development activities of the Company and its joint
venture partners and licensees, the management of the technical services agreement with
E. Khashoggi Industries, LLC and its affiliated companies, and oversight responsibility for
the Company's technical resources and operations, including the procurement, development,
improvement and installation of commercial equipment at the Company's or its joint
venturers' or licensees' operating sites in accordance with agreements, specifications,
parameters and efficiencies demonstrated and documented by prototype line operation. Within
the parameters of the approved budgets, Employee will maintain a qualified staff to complete
these responsibilities in order to meet the goals and timelines established by the Company
and under the Chief Executive Officer of the Company.
(b) Reporting Responsibilities. Employee will report to the Chief
Executive Officer of the Company and shall oversee the Company's weekly technical staff
meetings. Employee shall keep the Chief Executive Officer apprised on a weekly basis as to
Employee's progress in achieving the goals and objectives set forth in any budgets,
milestones or business plans established by the Company.
(c) Time Commitment. During the term of this Agreement, Employee shall
devote substantially all of his regular working hours to the business and welfare of the
Company and its subsidiaries, and he shall be required to expend such additional time as is
reasonably required to successfully discharge his duties and responsibilities. Employee
shall be considered an exempt employee for employment law purposes.
2. Compensation to Employee.
(a) Base Salary. Employee shall receive a base salary in the amount of
$250,000 per annum, commencing April 15, 2000.
(b) Stock Options. In addition to the foregoing compensation, subject to
satisfaction of the conditions set forth below or as modified by mutual agreement by the
parties and provided that Employee is employed by the Company as of the vesting date for
each respective option grant:
(i) Pursuant to the Consulting Agreement that was entered into
between Employee and the Company, effective January 1, 2000, the
Company has granted to Employee options to acquire the following number of
shares of the Company’s newly issued common stock, which options are
exercisable at an exercise price of $4.00 per share during the one-year period
commencing January 1, 2001 and ending January 5, 2002, subject to
satisfaction of the modified conditions set forth below (which modified
conditions are subject to the ratification by the Company’s Stock Option
Committee):
(A) Employee has been granted an option to purchase 30,000
shares of the Company’s common stock that shall vest if,
and only if, as of May 1, 2000, the initial equipment line installed at the
Sweetheart Facility has been operating with all 16 presses for a continuous
72 hour period at an overall efficiency rate of greater than 50% and
Sweetheart Cup Company has agreed to a defined set of conditions to assume full
responsibility for plate operations and economics.
(B) Employee has been granted an option to purchase an
additional 40,000 shares of the Company’s common stock that
shall vest if, and only if, as of June 30, 2000, the initial equipment line
installed at the Sweetheart Facility has been operating for a continuous
14 day period at an overall efficiency rate of greater than 80%, all three
equipment lines have been operating with all 16 presses for a continuous
72 hour period at an overall efficiency rate of greater than 10% for each
line, and Sweetheart Cup Company has assumed full responsibility for the
operation and economics of at least one line as defined above.
(ii) Effective June 30, 2000, the Company shall grant to Employee
options to purchase up to an 50,000 shares of the Company’s
newly-issued common stock at an exercise price equal to the fair market value of
the Company’s common stock on June 30, 2000, as determined pursuant to a
pricing formula to be decided by the Stock Option Committee and applied
generally to option grants by the Company to its employees, which options shall
be exercisable over a nine-year term commencing January 1, 2001, subject to
earlier termination upon termination of Employee’s employment with the
Company in accordance with the terms and conditions of the Company’s
standard option agreement, and subject further to satisfaction of the following
conditions (which conditions are subject to ratification by the Stock Option
Committee):
(A) Employee shall be granted an option to purchase 10,000
shares of the Company’s common stock that shall vest if, and only if, as of
June 30, 2000, the initial equipment line installed to produce EarthShell bowls
has been operated for a continuous 24 hour period at an overall efficiency rate
of greater than 80% or economic model efficiencies, raw material costs, quality
and labor have been demonstrated pursuant to the standards attached hereto or
subsequently established by the Executive Committee of the Company’s Board
of Directors.
(B) Employee shall be granted an option to purchase 10,000 shares
of the Company’s common stock that shall vest if, and only if, as of August
1, 2000, the initial equipment line installed to produce EarthShell plates has
been operated for a continuous 24 hour period at an overall efficiency rate of
greater than 80% or economic model efficiencies, raw material costs, quality and
labor have been demonstrated pursuant to the standards attached hereto or
subsequently established by the Executive Committee.
(C) Employee shall be granted an option to purchase 10,000
shares of the Company’s common stock that shall vest if, and only if, as of
August 30, 2000, the initial equipment line installed to produce EarthShell cups
has been operated for a continuous 24 hour period at an overall efficiency rate
of greater than 80% or economic model efficiencies, raw material costs, quality
and labor have been demonstrated pursuant to the standards attached hereto or
subsequently established by the Executive Committee.
(D) Employee shall be granted an option to purchase 10,000
shares of the Company’s common stock that shall vest if, and only if, as of
September 30, 2000, the initial equipment line installed to produce EarthShell
products in Europe has been operated for a continuous 24 hour period at an
overall efficiency rate of greater than 80% or economic model efficiencies, raw
material costs, quality and labor have been demonstrated pursuant to the
standards attached hereto or subsequently established by the Executive
Committee.
(E) Employee shall be granted an option to purchase 10,000 shares of
the Company’s common stock that shall vest if, and only if, as of October
1, 2000, the initial EarthShell paperboard products have been commercially
produced at raw material costs and equipment rates that meet target economics
pursuant to the standards attached hereto or subsequently established by the
Executive Committee.
(c) Additional Compensation. During the term of this Agreement, Employee
shall be entitled to receive such bonuses and incentive compensation (totaling not more than
100% of his base salary) and stock options as the Board of Directors (or the appropriate
committees thereof) shall decide in its sole and absolute discretion.
3. Employee Benefits. The Company shall provide to Employee each of the
following benefits:
(a) Business Expenses. The Company shall pay or reimburse Employee for
all reasonable out-of-pocket expenses incurred by Employee in the course of providing his
services hereunder and which are consistent with the Company's expense reimbursement
guidelines or policies. Such reimbursement shall be made by the Company within
thirty (30) days after receipt of a statement therefor from Employee setting forth in
reasonable detail the expenses for which reimbursement is requested, accompanied by
reasonable documentation evidencing such expenses. The Company agrees to pay up to $4,000
per year of the Employee's dues and fees attributable to his participation in the Young
Presidents Organization.
(b) Insurance Coverage and Benefits. The Company shall provide Employee,
at the Company's expense, coverage under the major medical, hospitalization, disability and
other insurance programs maintained by the Company for its operating officers generally, or
if none is made for its operating officers generally, its employees generally, including any
benefit plans that are provided by the Company subsequent to the date of this Agreement. In
addition, Employee shall receive all other Company-provided benefits, including sick pay
benefits and vacation time, that are, from time to time, made available by the Company to
its operating officers generally or, if not made to its operating officers generally, its
employees generally. Employee agrees that the Company retains the right to establish
compensation, benefits and working conditions for all of its officers or employees and to
change, modify or delete any aspects of its current or future compensation, benefits and
working conditions in its sole discretion. Employee shall initially be entitled to three
weeks of paid vacation per year.
4. Termination.
(a) Employee's employment hereunder may be terminated upon thirty (30)
days written notice by Employee or the Company, provided that if the Company terminates
Employee's employment for other than cause (as defined below), Employee shall be entitled to
receive a lump sum severance payment equal to 100% of his then annual base salary (less the
portion of the base salary which is paid for services rendered following the notice of
termination). The severance payment shall constitute Employee's exclusive and sole remedy
for the Company's termination of this Agreement (although Employee shall also be entitled to
receive any unpaid base salary to which he is entitled under Section 2(a) and which has
accrued through the effective date of termination, as well as reimbursement for all
previously unreimbursed expenses under Section 3(a)). Payment of such severance payment
shall be conditioned on Employee's execution and delivery of a release and termination
agreement containing terms and conditions which are standard and customary for an agreement
of that type.
(b) Notwithstanding the foregoing, Employee shall not be entitled to any
severance payment if Employee terminates this Agreement for any reason (other than by reason
of the Company's uncured default of its material obligations hereunder), or should the
Company terminate this Agreement for cause (in which event this Agreement can be terminated
effective upon the delivery of written notice to Employee).
(c) Cause means the occurrence of any of the following events:
(i) failure (including by reason of death or medical disability for a consecutive period of
sixty (60) days or more) by the Employee to substantially perform his duties with the
Company, including the timely and professional discharge of his duties and responsibilities
under Section 1; provided, however, to the extent the event justifying termination is
capable of being cured by the Employee and does not represent repetitive conduct, Employee
shall be given notice of the problem and a reasonable time period to cure the problem (which
time period shall not exceed ten (10) days); and provided, further, that if Employee does
cure the problem to the Company's reasonable satisfaction within the designated time period,
this Agreement shall continue and shall not be terminated; (ii) any act by the Employee of
fraud, misappropriation, dishonesty, embezzlement or similar conduct against the Company; or
(iii) indictment or conviction of the Employee for a felony or any other crime involving
moral turpitude.
5. Confidential and Proprietary Information; Inventions.
(a) Employee acknowledges that he has executed and delivered to the Company
its standard non-disclosure agreement with respect to the Company's confidential and
proprietary information (the "Confidentiality Agreement"). Such agreement shall continue to
be effective through the date specified therein.
(b) In addition to the duties and obligations of Employee under the
Confidentiality Agreement, Employee covenants and agrees that all inventions, trade secrets,
products, processes, material applications, designs, formulations and ideas of a proprietary
nature created or developed as a result of the services rendered by Employee pursuant to
this Agreement, whether or not subject to patent, trademark or copyright protection, which
are made, developed, created, conceived or reduced to practice by Employee, individually or
jointly with the Company or the Company affiliates, during the term of this Agreement, or at
any time thereafter if based upon or related to Confidential Information belonging to the
Company or the Company affiliates (collectively, the "Inventions"), shall be immediately
reported to the Company and shall be the exclusive property of the Company. Employee shall
perform, at the Company's request and expense, any and all acts and render any technical
assistance which the Company shall reasonably request that are necessary to vest the Company
with all right, title and interest in and to any such Inventions, including the filing,
procurement and maintenance of any patent, trademark or copyright applications. When
appropriate or necessary, Employee shall also perform whatever services or assistance that
may be reasonably requested by the Company to defend its position pertaining to any actions
against infringement of any patent, trademark or copyright issued in connection with the
Inventions or to protect and enforce the same. Nothing in this Agreement shall be construed
as an obligation upon the Company or any Company affiliate to develop or market any
Inventions created by Employee pursuant to this Agreement. Employee agrees that all
Inventions made, developed, created, conceived or reduced to practice by Employee during the
course of rendering Services pursuant to this Agreement, whether or not such Invention is
developed on or off the premises of the Company, shall belong exclusively to the Company and
shall be deemed to be works made for hire.
6. General Provisions.
(a) Notices. Any notice to be given pursuant to this Agreement shall be
in writing and, in the absence of receipted hand delivery, shall be deemed duly given when
mailed, if the same shall be sent by certified or registered mail, return receipt requested,
or by a nationally recognized overnight courier, and the mailing date shall be deemed the
date from which all time periods pertaining to a date of notice shall run. Notices shall be
addressed to the parties at the following addresses:
If to the Company, to: EarthShell Corporation
000 Xxxxxxxxx Xxxxx
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
If to Employee, to: Xxxxxxx XxXxxxxxxx
0000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
(b) Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the Company and any successors whether by merger, consolidation,
transfer of substantially all assets or similar transaction, and it shall be binding upon
and shall inure to the benefit of Employee and his heirs and legal representatives. This
Agreement is personal to Employee and shall not be assignable by Employee.
(c) Waiver of Breach. No waiver of any breach of any of the provisions of
this Agreement shall be deemed a waiver of any preceding or succeeding breach of the same or
any other provisions hereof. No such waiver shall be effective unless in writing and then
only to the extent expressly set forth in writing. All remedies available to either party
for breach of this Agreement are cumulative and may be exercised concurrently or separately,
and the exercise of any one remedy shall not be deemed an election of such remedy to the
exclusion of other remedies.
(d) Entire Agreement/Amendment. This Agreement, the Confidentiality
Agreement and any exhibits attached hereto or thereto constitute the entire agreement
between the parties hereto with respect to the subject matter hereof, and shall supersede
all previous oral and written and all contemporaneous oral negotiations, commitments,
agreements and understandings relating hereto. Any amendment to this Agreement shall be
effective only if it is in writing and signed by the parties to this Agreement. This
Agreement supercedes the Consulting Agreement in its entirety (although the terms and
provisions of the Consulting Agreement shall survive and continue to govern the parties'
consulting arrangement during any fiscal period ending on or prior to April 15, 2000).
Except as set forth in the immediately preceding sentence, the Consulting Agreement is
hereby terminated as of April 15, 2000.
(e) Applicable Law. The validity of this Agreement and the interpretation
and performance of all of its terms shall be construed and enforced in accordance with the
laws of the State of California without reference to choice or conflict of law principles.
(f) Severability. Any provision of this Agreement that is deemed invalid,
illegal or unenforceable in any jurisdiction shall, as to that jurisdiction and subject to
this paragraph, be ineffective to the extent of such invalidity, illegality or
unenforceability, without affecting in any way the remaining provisions hereof in such
jurisdiction or rendering that or any other provision of this Agreement invalid, illegal or
unenforceable in any other jurisdiction. If any covenant should be deemed invalid, illegal
or unenforceable because its scope is considered excessive, such covenant shall be modified
so that the scope of the covenant is reduced only to the minimum extent necessary to render
the modified covenant valid, legal and enforceable.
(g) Arbitration. Employee agrees that any disputes arising out of his
employment, including any claims against officers, directors, shareholders, employees or
agents of the Company, and including but not limited to any claims for alleged wrongful
termination, alleged breach of contract, and alleged discrimination of any type, shall be
finally resolved by an arbitrator in the City of Santa Barbara, California, at the time such
dispute arises in accordance with the American Arbitration Association's Model Employment
Dispute Resolution Rules then in effect (including any state-specific rules applicable to
the place of Employee's primary place of employment with the Company at the time such
dispute arises). Employee and the Company agree that judgment upon any award rendered by
the arbitrator may be entered in any court of competent jurisdiction and that the decisions
of the arbitrator within the scope of the submission shall be final and binding on all
parties. Employee agrees that the only exception to this mandatory arbitration agreement
shall be that the Company may xxx in court for injunctive relief and ancillary remedies for
any alleged violation of Employee's obligation to respect and protect the Company's
confidential information and Inventions as provided in the Confidentiality Agreement and
this Agreement.
(h) Further Assurances. The parties agree to execute and deliver to each
other, upon request, any and all additional documents, instruments and advice necessary to
be filed, recorded or delivered in order to carry out the purposes of this Agreement.
(i) Injunctive Relief. It is hereby understood and agreed that damages
shall be an inadequate remedy in the event of a breach by Employee of the provisions of
Section 5 of this Agreement and that any such breach by Employee will cause the Company
irreparable injury and damage. Accordingly, Employee agrees that the Company shall be
entitled, without waiving any additional rights or remedies otherwise available to the
Company at law or in equity or by statute, to injunctive relief, specific performance or
other equitable remedies in the event of a breach or threatened breach by Employee of such
provisions.
(j) Modifications. No modifications to this Agreement shall be effective
unless in writing and signed by both parties.
(k) Mutually Drafted. This Agreement shall be deemed to have been mutually
drafted and shall be construed fairly and in accordance with its terms. No party shall be
entitled to any presumption or construction in such party's favor as a result of any party
assuming the burden of memorializing the parties' agreement hereunder.
(l) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which together shall
constitute one and the same instrument. Faxed signatures to this Agreement shall be binding
for all purposes.
(m) Expenses. Each party shall bear its own legal and other professional
expenses, as well as any finder's or similar fees, in connection with the preparation,
negotiation and execution of this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first
above written.
EARTHSHELL CORPORATION,
a Delaware corporation
By: /s/ Xxxxx X. Xxxxxx
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Title:
XXXXXXX XXXXXXXXXX
/s/ X. X. XxXxxxxxxx
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