EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made and entered into this
9th day of December, 1996, by and between XXXXX X. XXXXX ("Employee") and XXXXXX
XXXXX INCORPORATED, a Nevada corporation ("Xxxxxx Xxxxx"), based on the
following:
Premises
X. Xxxxxx Xxxxx desires to employ Employee as its Chief Financial
Officer, and Employee wishes to be so employed.
B. The parties desire to set forth the terms of such employment in
writing.
Agreement
NOW, THEREFORE, based on the foregoing premises, which are incorporated
herein by reference, and for and in consideration of the mutual covenants and
agreements hereinafter set forth and the mutual benefit to the parties to be
derived herefrom, it is hereby agreed as follows:
1. Employment and Term.
(a) Xxxxxx Xxxxx hereby employs Employee and Employee hereby accepts
employment upon the terms and conditions set forth herein. The term of
Employee's employment shall begin on the date hereof. The term of this
Agreement, hereinafter referred to as the "Employment Period," shall be
five (5) years, unless terminated earlier pursuant to the other provisions
of this Agreement.
(b) During the Employment Period, Employee will serve as Xxxxxx
Xxxxx' chief financial officer. Employee agrees to serve in such position
with Xxxxxx Xxxxx or any of its subsidiaries and such substitute or further
positions of substantially consistent rank and authority as shall, from
time to time, be determined by Xxxxxx Xxxxx' executives or board of
directors. Employee agrees to perform such duties appropriate for the
chief financial officer of Xxxxxx Xxxxx as may be assigned to him from time
to time by Xxxxxx Xxxxx.
2. Performance of Services.
(a) During the Employment Period, Employee agrees to perform
faithfully the duties assigned to him by the board of directors or
management of Xxxxxx Xxxxx to the best of his ability, to devote his full
and undivided business time, attention, and services to the business of
Xxxxxx Xxxxx and not to engage in any other substantial business activities
other than at the direction or with the approval of the board of directors
of Xxxxxx Xxxxx; provided, however, that nothing herein shall restrict
Employee from conducting incidental personal business that does not
conflict with his obligations under the terms of this Agreement.
(b) All duties hereunder shall be rendered in Utah County, Utah, and,
on a temporary basis, at such other places as the interests, needs,
business, and opportunities of Xxxxxx Xxxxx shall require; provided,
however, that Employee shall not be required to relocate his residence
without the mutual consent of Xxxxxx Xxxxx and Employee.
(c) Employee shall observe and comply with the commercially
reasonable rules and regulations of Xxxxxx Xxxxx respecting its business
and shall carry out and perform such commercially reasonable orders,
directions, and policies of Xxxxxx Xxxxx as they may be from time to time
communicated to Employee either orally or in writing. Employee shall
further observe and comply with all applicable rules, regulations, and laws
governing the business of Xxxxxx Xxxxx known to Employee.
3. Professional Standards. Employee shall perform his duties under this
Agreement in a professional manner and in accordance with such standards as may
be established from time to time by the executive officers or board of directors
of Xxxxxx Xxxxx and such other legal, ethical, and fiduciary standards as may be
applicable to Employee and his conduct.
4. Exclusivity of Services and Nondisclosure of Confidential Information.
(a) Employee agrees that for a period ending on the first anniversary
of the termination of the Employment Period:
(i) he will not engage in any activity competitive with the
business of Xxxxxx Xxxxx or any of its affiliates (the "Xxxxxx Xxxxx
Group"), directly or indirectly, in the market defined in subsection
4(c), whether as employer, proprietary owner, partner, stockholder
(other than the holder of less than five percent (5%) of the stock of
an entity, the securities of which are traded on a national securities
exchange or in the over-the-counter market), director, officer,
employee, consultant, or agent;
(ii) he will not solicit, in competition with the Xxxxxx Xxxxx
Group, any person who is a customer of the business conducted by the
Xxxxxx Xxxxx Group at the date hereof or a customer of the business
conducted by the Xxxxxx Xxxxx Group at any time during the Employment
Period; and
(iii) he will not induce or attempt to persuade any employee
of the Xxxxxx Xxxxx Group to terminate his or her employment
relationship in order to enter into employment with any party in
competition with the Xxxxxx Xxxxx Group.
(b) Employee further agrees that he will not, at any time during the
Employment Period or at any time after the termination of this Agreement,
irrespective of the time, manner, or cause of termination, use, disclose,
copy, or assist any other person or firm in the use, disclosure, or copying
of any trade secrets or other confidential information of the Xxxxxx Xxxxx
Group, except to the extent authorized in writing by Xxxxxx Xxxxx. Upon
termination of his employment hereunder, Employee will surrender to Xxxxxx
Xxxxx all records and other documents obtained by him or entrusted to him
during the course of his employment by Xxxxxx Xxxxx (together with all
copies thereof); provided, however, that Employee may retain copies of such
documents as are necessary for Employee's personal records for income tax
purposes. For purposes of this section 4, proprietary information about
the business of the Xxxxxx Xxxxx Group shall be treated as confidential
until it has been published or is generally or publicly known outside the
Xxxxxx Xxxxx Group or until it has been recognized as standard practice
outside the Xxxxxx Xxxxx Group.
(c) The following provisions shall apply to the covenants of Employee
contained in this section 4:
(i) The covenants contained in clauses (i) and (ii) of
subsection 4(a) shall apply to those markets in which the Xxxxxx Xxxxx
Group is doing business at the termination of the Employment Period
and those markets in which the Xxxxxx Xxxxx Group has publicly or
internally issued written plans to enter prior to the termination of
the Employment Period.
(ii) Employee agrees that a breach or threatened breach on his
part of any covenant contained in this section 4 will cause such
damage to Xxxxxx Xxxxx as will be irreparable. Therefore, without
limiting the right of Xxxxxx Xxxxx to pursue all other legal and
equitable remedies available for violation by Employee of the
covenants contained in this section 4, it is expressly agreed that
remedies other than injunctive relief cannot fully compensate the
Xxxxxx Xxxxx Group for such a violation and that Xxxxxx Xxxxx and the
Xxxxxx Xxxxx Group shall be entitled to injunctive relief to prevent
any such violation or continuing violation.
(iii) It is the intent and understanding of each party hereto
that if, in any action before any court or agency legally empowered to
enforce the covenants contained in this section 4, any term,
restriction, covenant, or promise contained therein is found to be
unreasonable and for that reason unenforceable, then such term,
restriction, covenant, or promise shall be deemed modified to the
extent necessary to make it enforceable by such court or agency.
5. Business Ideas.
(a) Employee acknowledges that Xxxxxx Xxxxx will own all rights in
all "Business Ideas" (as hereinafter defined) which are originated or
developed by Employee, either alone or with employees or consultants of
Xxxxxx Xxxxx, during the Employment Period.
(b) Employee agrees that, during the Employment Period, he will:
(i) assign to Xxxxxx Xxxxx all Business Ideas and promptly
execute all documents which Xxxxxx Xxxxx may reasonably require to
protect its patent, copyright, and other rights to such Business Ideas
throughout the world; and
(ii) promptly disclose to Xxxxxx Xxxxx all information concerning
all material Business Ideas "originated" by Employee or any employee
of Xxxxxx Xxxxx, which come to his attention and which concern the
business of Xxxxxx Xxxxx.
(c) For purposes of this section 5, "Business Ideas" shall mean all
ideas, whether or not patentable, which are originated or developed by
Employee in connection with his employment by Xxxxxx Xxxxx and which relate
to the business of Xxxxxx Xxxxx and/or the Xxxxxx Xxxxx Group.
6. Compensation and Benefits. For all services rendered by Employee
pursuant to this Agreement, Xxxxxx Xxxxx shall compensate Employee as follows:
(a) As compensation for Employee's services hereunder, Xxxxxx Xxxxx
agrees to pay Employee during the Employment Period an annual salary of
$85,000. Such annual salary may be increased from time to time during the
Employment Period, at the sole discretion of the board of directors of
LarsonoDavis or the designated compensation committee, taking into
consideration the performance of Xxxxxx Xxxxx and its subsidiaries, the
contribution of Employee to such performance, and such other factors as the
board of directors or the compensation committee may deem appropriate.
(b) Xxxxxx Xxxxx shall also grant Employee an option to acquire
10,000 shares of common stock of LarsonoDavis at an exercise price of
$10.50 per share and subject to such additional terms and conditions as are
set forth on Exhibit "A" attached hereto and incorporated herein by this
reference. So long as he is then an employee of Xxxxxx Xxxxx, the right to
exercise such option shall vest with respect to twenty percent (20%) of the
shares subject to the option as of the date that is one year subsequent to
the date of grant and an additional twenty percent (20%) of such shares on
each following anniversary of the date of grant. If not previously
exercised, the option shall expire with respect to twenty percent (20%) of
the shares each year beginning on the date that is five years subsequent to
the initial vesting of the option.
(c) If he is then an employee of Xxxxxx Xxxxx, Employee shall receive
an award under Xxxxxx Xxxxx' Employee Stock Award Plan on January 1, 1998,
of shares of common stock with a value of $10,000, calculated at the then
current trading price of Xxxxxx Xxxxx' common stock as reported by the
Nasdaq Stock Market.
(d) Xxxxxx Xxxxx shall provide to Employee, at the principal
executive offices of Xxxxxx Xxxxx, suitable offices and facilities
appropriate for Employee's position and suitable for the performance of
Employee's responsibilities.
(e) Employee shall be entitled to three weeks vacation and sick leave
in accordance with the general policy of the Xxxxxx Xxxxx Group for
employees of like level. Vacations shall be taken by Employee at a time
and with starting and ending dates mutually convenient to Xxxxxx Xxxxx and
Employee. Vacations or portions of vacations not used in one employment
year shall be treated in accordance with LarsonoDavis' standard policy as
it exists from time to time.
(f) Xxxxxx Xxxxx shall reimburse Employee for all proper expenses
incurred by him in the performance of his duties hereunder in accordance
with the policies and procedures established by Xxxxxx Xxxxx. Such
expenses shall include, but not be limited to, reimbursement of
professional licensing and membership costs.
(g) Xxxxxx Xxxxx shall pay for the cost of Employee attending ongoing
professional educational programs mutually acceptable to Xxxxxx Xxxxx and
Employee. Time spent attending such programs shall not be treated as
vacation.
(h) Employee shall have the right to participate in employee benefit
programs provided by the Xxxxxx Xxxxx Group. Employee's participation in
such plans shall be on the terms and conditions specified in the various
plans.
(i) Xxxxxx Xxxxx shall withhold from Employee's compensation
hereunder all proper federal and state payroll taxes and income taxes on
compensation paid to Employee and shall provide an accounting to Employee
for such amounts withheld.
7. Termination of Agreement.
(a) Termination by Xxxxxx Xxxxx for Cause. Xxxxxx Xxxxx shall have
the right, without further obligation to Employee other than for
compensation previously accrued, to terminate this Agreement for cause
("Cause") by showing that (i) Employee has materially breached the terms
hereof; (ii) Employee, in the reasonable determination of the board of
directors of Xxxxxx Xxxxx, has been grossly negligent or engaged in
material willful or gross misconduct in the performance of his duties; or
(iii) Employee has committed or been convicted of fraud, embezzlement,
theft, or dishonesty or other criminal conduct against Xxxxxx Xxxxx.
(b) Termination Upon Death or Disability of Employee. This Agreement
shall terminate immediately upon Employee's death or upon the disability of
Employee. "Disability" is defined as the inability of Employee, by reason
of physical or mental illness or other cause, to substantially perform his
duties for a period of 90 days or more.
(c) Termination by Notice. This Agreement can be terminated by
either party on 30 days written notice. In the event of a termination
under this paragraph as a result of written notice form Xxxxxx Xxxxx to
Employee, Employee, in addition to compensation accrued through the end of
the 30 day notice period but not then paid, shall be entitled to receive
severance compensation in an amount equal to an additional two months of
Employee's then base pay.
(d) Change of Control. Notwithstanding the foregoing provisions, if
this Agreement is terminated by Xxxxxx Xxxxx within one hundred and twenty
days (120) days of a change of control of Xxxxxx Xxxxx, Employee shall be
entitled to receive severance pay as of the date of termination, equal to
three (3) months of Employee's base pay as of the date of such change of
control. In addition, on any change of control, the right to acquire the
shares of common stock subject to any options previously granted to
Employee by Xxxxxx Xxxxx shall immediately become one hundred percent
(100%) vested. For purposes of this provision, a "change of control" is
defined as the occurrence of any of the following events:
(i) The sale, lease, exchange or other transfer in one
transaction or a series of transactions of all or substantially all of
the assets of Xxxxxx Xxxxx to a single purchaser that is not a wholly
owned subsidiary of Xxxxxx Xxxxx or to a group of associated
purchasers;
(ii) The sale, lease, exchange, or other disposition to a single
person or group of persons under common control in one transaction or
a series of related transactions resulting in such person or persons
owning, directly or indirectly, greater than twenty-five percent (25%)
of the combined voting power of the outstanding shares of Xxxxxx
Xxxxx' common stock;
(iii) As a result of a merger, consolidation, sale of all or
substantially all of the assets of Xxxxxx Xxxxx, a contested election,
or any combination of the foregoing, the persons who were directors of
Xxxxxx Xxxxx immediately prior thereto shall cease to constitute a
majority of the board of directors of Xxxxxx Xxxxx or any successor to
LarsonoDavis;
(iv) The decision by Xxxxxx Xxxxx to terminate its business and
liquidate its assets;
(v) The merger or consolidation of Xxxxxx Xxxxx in a transaction
in which the shareholders of Xxxxxx Xxxxx immediately prior to such
merger or consolidation receive less than fifty percent (50%) of the
outstanding voting securities of the new or continuing corporation; or
(vi) A person (within the meaning of Section 3(a)(9) or Section
13(d)(3), as in effect on the date hereof, of the Securities Exchange
Act of 1934 (the "Exchange Act")) shall become the beneficial owner
(within the meaning of rule 13d-3 of the Exchange Act as in effect on
the date hereof) of fifty percent (50%) or more of the outstanding
voting securities of Xxxxxx Xxxxx.
(e) Exit Interview. To insure a clear understanding of this
Agreement, including but not limited to the protection of the business
interests of Xxxxxx Xxxxx, Employee agrees, upon termination of this
Agreement for any reason or the expiration of the Employment Period, at no
additional expense to Xxxxxx Xxxxx, to engage in an exit interview with
Xxxxxx Xxxxx at a time and place designated by Xxxxxx Xxxxx.
8. Indemnification. Xxxxxx Xxxxx shall indemnify Employee and hold
Employee harmless from liability for acts or decisions made by Employee while
performing services for Xxxxxx Xxxxx to the extent permitted by applicable law.
Xxxxxx Xxxxx shall use its best efforts to obtain coverage for Employee under
any insurance policy now in force or hereafter obtained during the term of this
Agreement insuring officers and directors of Xxxxxx Xxxxx against such
liability. Employee agrees to indemnify and to hold Xxxxxx Xxxxx harmless from
any and all damages, losses, claims, liabilities, costs, or expenses arising
from Employee's acts or omissions in violation of his duties under this
Agreement which constitute fraud, gross negligence, or willful and knowing
violations of the terms of this Agreement.
9. Notice. Any notice or request required or permitted to be given
hereunder shall be sufficient if in writing and delivered personally, sent by
facsimile transmission, or sent by registered mail, return receipt requested, to
the addresses hereinabove set forth or to any other address designated by either
of the parties hereto by notice similarly given. Such notice shall be deemed to
have been given upon such personal delivery, facsimile transmission, or mailing,
as the case may be, to the addresses set forth below:
If to Employee, to: Xxxxx X. Xxxxx
0000 Xxxx 0000 Xxxxx
Xxxxx, Xxxx 00000
Confirmation: (000) 000-0000
If to Xxxxxx Xxxxx, to: Xxxxxx Xxxxx Incorporated
Attn: Xxxxx X. Xxxxxx, President
0000 Xxxx 000 Xxxxx
Xxxxx, Xxxx 00000
Fax: (000) 000-0000
Confirmation: (000) 000-0000
With a copy to: Xxxxx X. Xxxx, Esq.
Xxxxx, Xxxxx & Xxxxxxx, L.L.C.
Eighth Floor, Bank Xxx Xxxxx
00 Xxxx Xxxxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Fax: (000) 000-0000
Confirmation: (000) 000-0000
10. Assignment. Neither this Agreement nor any rights or benefits
hereunder may be assigned by either party hereto without the prior written
consent of the other party.
11. Attorneys' Fees. In the event that any action, suit, arbitration, or
other proceeding is instituted concerning or arising out of this Agreement, the
prevailing party shall be entitled to recover all of such party's costs,
including reasonable attorneys' fees, incurred in each and every such action,
suit, arbitration, or other proceeding, including any and all appeals or
petitions therefrom.
12. Validity of Provisions and Severability. If any provision of this
Agreement is, or becomes, or is deemed invalid, illegal, or unenforceable in any
jurisdiction, such provision shall be deemed amended to conform to the
applicable jurisdiction, or if it cannot be so amended without materially
altering the intention of the parties, it will be stricken. However, the
validity, legality, and enforceability of any such provisions shall not in any
way be effected or impaired thereby in any other jurisdiction and the remainder
of this Agreement shall remain in full force and effect.
13 Entire Agreement. This Agreement constitutes the entire agreement and
understanding between the parties pertaining to the subject matter of this
Agreement. This Agreement supersedes all prior agreements, if any, any
understandings, negotiations, and discussions, whether oral or written. No
supplement, modification, waiver, or termination of this Agreement shall be
binding unless executed in writing by the party to be bound thereby.
14. Governing Law. This Agreement shall be governed by and construed and
interpreted in accordance with the laws of the state of Utah.
IN WITNESS WHEREOF, Xxxxxx Xxxxx has caused this Agreement to be signed by
its duly authorized officer and Employee has signed this Agreement as of the
date first above written.
Xxxxxx Xxxxx:
XXXXXX XXXXX INCORPORATED
By /s/ Xxx X. Xxxxxxx
Duly Authorized Officer
Employee:
/s/ Xxxxx X. Xxxxx
Xxxxx X. Xxxxx
