EXECUTION COPY
Exhibit 10.2
EMPLOYMENT AGREEMENT
BETWEEN
EARTHSHELL CORPORATION
AND
XXXXXXX X. XXXXXX
This Employment Agreement (the "Agreement") is entered into as of August
26, 2005 by and between EarthShell Corporation, a Delaware corporation with its
principal office located in Santa Barbara, California (the "Company"), and
Xxxxxxx X. Xxxxxx, an individual ("Executive").
AGREEMENT
1. Services Provided to the Company. Commencing as of September 1, 2005
("Start Date"), Executive shall be employed by the Company as its President and
Chief Executive Officer, and Executive agrees to such employment. During the
term of this Agreement, Employee shall devote all of his regular working hours
to the business and welfare of the Company.. Executive, however, may spend a
reasonable amount of time with respect to charitable and civic activities
(including serving on the board of directors of charitable organizations) and
may make personal investments or conduct private business affairs to the extent
that such activities do not materially interfere with the services required
under this Agreement.
2. Compensation to Executive.
(a) Base Salary. During the term of this Agreement, the Company
shall pay to Executive a base salary in the amount of $400,000 per annum,
payable in accordance with the normal payment pattern of the Company, not to be
less frequently than monthly. The Base Salary shall commence to accrue on the
Start Date.
(b) Stock Options. The Company shall grant to Executive options to
acquire 350,000 shares of the Company's common stock at an exercise price equal
to the market price per share of the Company's common stock at the close of
trading on August 26, 2005. 200,000 of these options shall vest when the Company
operates on a "break-even" basis (i.e., without operating losses) for three
consecutive months and appears able to sustain such operating results in the
reasonable judgment of the Compensation Committee. The balance of 150,000 of
these options shall vest one year after the Start Date.
(c) Additional Compensation. Executive shall be entitled to receive
(i) an annual bonus in an amount up to one year's base salary provided that the
financial and other milestones set forth in Schedule A to this Agreement are met
by the Company and Executive, and (ii) additional stock options or restricted
stock under such terms and conditions as are determined in the future by the
Compensation Committee of the Board of Directors in its sole discretion. In
making its determination, the Compensation Committee shall consider, among other
things, the annual financial results of the Company, meeting critical milestones
on the business plan and Executive's contributions thereto.
3. Employee Benefits. The Company shall provide to Executive each of the
following benefits:
(a) Business Expenses_ The Company shall pay or reimburse Executive
for all reasonable out-of-pocket expenses incurred by Executive in the course of
providing his services hereunder and which are consistent with the Company's
expense reimbursement guidelines or policies, including a car allowance of
$1,000 per month. Such reimbursement shall be made by the Company within thirty
(30) days after receipt of a statement therefor from Executive setting forth in
reasonable detail the expenses for which reimbursement is requested, accompanied
by reasonable documentation evidencing such expenses.
(b) Insurance Coverage and Benefits. Beginning on the Start Date,
the Company shall provide Executive, at the Company's expense, coverage under
the major medical, hospitalization, disability, life and other insurance
programs maintained by the Company for its officers generally, or if none is
made for its officers generally, its employees generally, including any benefit
plans that are provided by the Company subsequent to the date of this Agreement.
In addition, Executive shall receive on the Start Date all other
Company-provided benefits, including sick pay benefits, that are, from time to
time, made available by the Company to its officers generally or, if not made to
its officers generally, its employees generally. Executive shall be entitled to
four weeks paid vacation each year.
4. Termination. Executive's employment hereunder may be terminated upon
thirty (30) days written notice by Executive or the Company, provided that if
Company terminates Executive's employment for other than cause, (i) Executive
shall be entitled to severance pay equal to 100% of his annual base salary which
will be paid no later than sixty (60) days after termination and (ii) all of
Executive's unvested stock options shall vest immediately and shall remain
exercisable for a period of ninety (90) days from the date of termination.
Notwithstanding the foregoing, Executive shall not be entitled to any severance
payment or any vesting of his unvested stock options if his employment shall be
terminated for cause. Cause means the occurrence of any of the following events:
(i) willful and continued failure (to include such failure due to (a) death or
(b) disability for a consecutive period of ninety (90) days or more) by the
Executive to substantially perform his duties with the Company; provided,
however, that the Executive must be notified by the Company of any such failure
to perform his duties and shall have thirty (30) days from the date of such
notice to cure such failure, (ii) any act by the Executive of fraud,
misappropriation, dishonesty, embezzlement or similar conduct against the
Company; or (iii) indictment or conviction of the Executive for a felony or any
other crime involving moral turpitude.
5. Confidential and Proprietary Information. Executive agrees to execute
and deliver to the Company its standard non-disclosure agreement with respect to
the Company's confidential and proprietary information. Such agreement shall be
effective as of the Start Date.
2
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
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Chairman of the Board
If to Executive, to: Xxxxxxx X. Xxxxxx
0000 Xxxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxxx 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 Executive and his
heirs and legal representatives. This Agreement is personal to Executive and
shall not be assignable by Executive.
(c) Waiver of Breach. The waiver by the Company or Executive of a
breach of any provision of this Agreement by the other shall not operate or be
construed as a waiver of any subsequent breach by the other.
(d) Entire Agreement/Amendment. This Agreement shall 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.
(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.
3
IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the date first above written.
EARTHSHELL CORPORATION
a Delaware corporation
By: /s/ Xxxxx Xxxxxxx
--------------------------
Title: Chief Financial Officer
XXXXXXX X. XXXXXX
/s / Xxxxxxx X. Xxxxxx
4
Schedule A
Performance Bonus Criteria
1. $50,000 upon achieving positive cash flow from domestic operations
for the first full quarter.
2. $50,000 upon achieving positive cash flow from domestic operations
for the first six months.
3. $75,000 upon achieving positive cash flow from domestic operations
for the first full year.
4. $50,000 upon completion of the RPI "reverse merger".
5. $50,000, upon EarthShell's receiving $500,000 in royalty revenue
from each licensee (individually), provided that any such licensee
relationship and revenue in question is considered to be sustainable
at that time in the reasonable judgment of the Compensation
Committee.
6. $75,000 at the time that the stock of EarthShell Corporation is
relisted on NASDAQ.
Bonus criteria 1, 2, 3, 4 and 5 above expire on December 31, 2006, and
bonus criterion 6 expires on March 31, 2006.
In no event, however, shall bonus payments be made unless and until the
Company has at least $200,000 in its cash account for a consecutive period of
over thirty (30) days subsequent to the due date of any bonus payment.
5
