AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Agreement is effective as of the 21st day of May, 2001
("Agreement") and is by and between XXXXXXXXXXX.XXX, INC., a Nevada corporation
("Company"), and XXXX XXXXXX, a resident of the State of Florida ("Executive").
WHEREAS, the Company and the Executive entered into an Employment
Agreement dated February 1, 2000;
WHEREAS, the Company desires to continue to employ the Executive and
the Executive desires to continue to be employed by the Company pursuant to
revised terms and conditions; and
WHEREAS, the Company and the Executive wish to enter into a new
employment agreement covering the continued employment of the Executive by the
Company.
NOW, THEREFORE, in consideration of the promises and the mutual
covenants set forth in this Agreement, and intending to be legally bound, the
Company and the Executive agree as follows:
1. Term of Employment
(a) Offer/Acceptance/Effective Date. The Company hereby offers
employment to the Executive, and the Executive hereby accepts employment with
the Company, subject to the terms and conditions set forth in this Agreement.
(b) Termination of Prior Agreement. Upon execution of this
Agreement by both parties, the Employment Agreement dated February 1, 2000, will
automatically terminate and this Agreement will supersede and replace the
Employment Agreement dated February 1, 2000.
(c) Term. The term of this Agreement shall commence on the
date first indicated above and shall remain in effect for two (2) years
thereafter ("Term").
2. Duties.
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(a) General Duties. The Executive shall serve as the President
and Chief Executive Officer of the Company with duties and responsibilities that
are customary for such executives including, without limitation, the overall
management, leadership and future vision of the Company subject to the approval
and ratification of such other duties from time to time by the Board of
Directors of the Company.
(b) Best Efforts. The Executive covenants to use his
best efforts to perform his duties and discharge his responsibilities pursuant
to this Agreement in a competent, diligent and faithful manner.
(c) Devotion of Time. The Executive shall devote substantially
all of his time, attention and energies during normal business hours to the
Company's affairs (exclusive of periods of sickness and disability and of such
normal holiday and vacation periods as have been established by the Company).
Notwithstanding the foregoing, Executive shall have the right and is encouraged
to devote time, attention and energies during normal business hours to Junior
Chamber International (Jaycees) including running for and holding local,
national and international office. Executive's devotion of time, attention and
energies during normal business hours to the Jaycees shall not be a breach of
this employment agreement.
3. Compensation and Expenses.
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(a) Base Salary. For the services of the Executive
to be rendered by him under this Agreement, the Company shall pay the Executive
for each of the periods indicated below an annual base salary ("Base Salary") as
follows:
(i) From May 21, 2001 to December 31, 2001, the amount
of $200,000;
(ii) From January 1, 2002, the amount of $250,000 until
increased, but not decreased, based on a review by
the Compensation Committee prior to the end of the
Company's 2002 fiscal year.
The Base Salary shall be prorated for any period of less than
a full calendar year.
The Company shall pay the Executive his Base Salary in equal
installments no less frequently than semi-monthly.
(b) Base Salary Adjustment. The Base Salary may not
be decreased hereunder during the term of this Agreement, but may be increased
upon review by, and at the sole discretion of, the Company's Board of Directors.
(c) Bonus. The Company shall pay the Executive a special
one-time performance and merit bonus equal to 15% of Base Salary by January 15,
2002. Executive shall also be entitled to receive bonus compensation in an
amount as approved by the Company's Board of Directors based upon the
performance criteria as may be established by the Compensation committee from
time to time. Such bonuses may be paid in cash or issued in shares of the
Company's common stock as elected by Executive. At no time may the bonus be less
than 5% of the Company's income before taxes as computed under GAAP. The
Executive may elect to receive the bonus in the Company's common stock at 90% of
the current market value. Current market value shall be the closing base price
of the Company's common stock on the date such bonus is declared by the Board of
Directors.
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(d) Expenses. In addition to any compensation received
pursuant to Section 3, the Company will reimburse the Executive for all
reasonable, ordinary and necessary travel, educational, seminar, trade shows,
entertainment and miscellaneous expenses incurred in connection with the
performance of his duties under this Agreement, provided that the Executive
properly accounts for such expenses to the Company in accordance with the
Company's practices. Such reimbursement shall include travel, lodging and food
costs for Executive's immediate family to the extent they accompany the
Executive on business related travel.
(e) Subsidiary and Affiliate Payments. In recognition of the
fact that in the course of the performance of his duties hereunder, the
Executive may provide substantial benefits to the Company's subsidiaries or
affiliated companies, the Executive and the Company may at any time and from
time to time agree that all or any portion of the compensation due the Executive
hereunder may be paid directly to the Executive by one or more of the Company's
subsidiaries or affiliated companies.
(f) Additional Equity Based Incentive Compensation.
The Executive shall be entitled to additional annual equity-based incentive
compensation as set forth in the Company's Management Incentive Compensation
Plan as established by the Compensation Committee of the Board of Directors.
(g) Personal Expense Allowance. In addition to the
reimbursement of expenses under subsection (d) above, the Company shall pay the
Executive a personal expense allowance of $2,000 per month during the term of
this Agreement.
(h) Non-Interest Loans. Upon execution of this Agreement by
both parties, the Company shall loan the Executive the sum of $50,000 pursuant
to the terms of a loan agreement which will require repayment of such amount,
without interest, twenty-four (24) months after the date of the loan, subject to
the other provisions of this Agreement. Within five (5) working days following
the completion of an initial public offering, the Company shall loan the
Executive an additional $250,000 pursuant to the terms of a loan agreement which
will require repayment of such amount, without interest, twenty-four (24) months
after the date of the loan, subject to the other provisions of this Agreement.
The Company shall release the Executive from the obligation to pay back such
loans if (i) the Executive fully performs his obligations under this Agreement
for the entire term hereof; (ii) there is a Change of Control of the Company as
provided in Section 7 below; or (iii) the Executive's employment is terminated
for any reason other than for "Cause" pursuant to Section 5(a).
4. Benefits.
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(a) Vacation. For each calendar year during the Term during
which the Executive is employed, the Executive shall be entitled to vacation
(which shall accrue and vest, except as may be hereinafter provided to the
contrary, on each January lst thereof) without loss of compensation or other
benefits to which he is entitled under this Agreement, as follows:
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(i) For the remainder of calendar year 2001, 20 work
days;
(ii) For calendar year 2002, 25 work days; and
(iii) For 2003 until termination of this Agreement, 35
work days.
If the Executive is unable to take all of his vacation days during a
year for which he becomes vested therein, then the Executive at his sole option,
may elect to (x) carry over any unused vacation to the next calendar year to be
used solely in that next year or (y) receive an appropriate pro rata portion of
his Base Salary corresponding to the year in which vacation days vested.
The Executive shall take his vacation at such times as the Executive
may select and the affairs of the Company or any of its subsidiaries or
affiliates may permit.
(b) Employee Benefit Programs. In addition to the compensation to
which the Executive is entitled pursuant to the provisions of Section 3 hereof,
during the Term the Executive will be entitled to participate in any stock
option plan, stock purchase plan, pension or retirement plan, and insurance or
other employee benefit plan that is maintained at that time by the Company for
its employees, including any programs of life, disability, basic medical and
dental, and supplemental medical and dental insurance.
(c) Automobile Allowance. During the term of this Agreement, the
Company shall pay the Executive an additional $750 per month as an automobile
allowance to be applied to any automobile expense incurred by the Executive.
(d) Annual Physical. The Executive agrees to have an annual physical
examination performed by a physician of his choice during each year of this
Agreement. The Company shall reimburse Executive for the costs of his annual
physical examination.
(e) Additional Benefits. The Company shall provide to the Executive
additional benefits with a fair market value of $24,000 per year for the balance
of the term of this Agreement. Such additional benefits may include an
additional automobile allowance, a housing allowance, additional vacation,
and/or membership to organizations or clubs.
(f) Educational Benefits. The Company shall pay or reimburse the
Executive for all educational endeavors of the Executive, provided the
educational establishment is considered of good reputation and the studies are
relevant to the Company's business or the Executive's management duties.
5. Termination.
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(a) Termination by Company for Cause. The Company may only
terminate the Executive's employment pursuant to this Agreement before
expiration of the Term for cause only upon fulfillment of the events described
in subparagraph 5(a)(i) below. Upon any such termination for cause, the
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Executive shall have no right to other compensation, bonus or reimbursement
under Section 3 or to participate in any employee benefit programs or other
benefits to which he may be entitled under Section 4 for any period subsequent
to the effective date of termination; provided, however, that any vested but
unexercised options shall remain in effect following any such termination but
all unvested options shall expire. The loans described in Section 3(h) shall not
be released, waived and forgiven in the event of a termination of the
Executive's employment by the Company for cause. For purposes of this Agreement,
the term "cause" shall mean only:
(i) the Executive's conviction of a crime
involving fraud, theft or misappropriation
involving the Company or any of its
subsidiaries or affiliates and all appeals
with respect thereto have been extinguished or
abandoned by the Executive;
(b) Death or Disability. This Agreement and the Company's
obligations hereunder will terminate upon the death or disability of the
Executive. For purposes of this Section 5(b), "disability" shall mean that for a
period of six (6) months in any twelve-month period, the Executive is incapable
of substantially fulfilling the duties set forth in this Agreement because of
physical, mental or emotional incapacity resulting from injury, sickness or
disease as determined by an independent physician mutually acceptable to the
Company and the Executive. Upon any termination of this Agreement due to death
or disability, the Company will pay the Executive or his legal representative,
as the case may be, any accrued but unpaid then current Base Salary (which may
include any accrued but unused vacation time) through the date of such
termination of employment plus any other compensation that may be due and unpaid
plus a lump-sum payment equal to 2.99 times the then current Base Salary. Any
unexercised options will remain in effect in accordance with such options terms.
The loans described in Section 3(h) shall be released, waived and forgiven in
the event of a termination of this Agreement upon the death or disability of the
Executive.
(c) Voluntary Termination. Prior to any other termination of
this Agreement, the Executive may, on ninety (90) days' prior written notice to
the Company given at any time during the Term, terminate his employment with the
Company. Upon any such termination with proper notice, the Company shall pay the
Executive any accrued but unpaid Base Salary through the date of such
termination of employment (not including any accrued but unused vacation time)
plus a payment equal to two (2) times the then current Base Salary (payable in
one lump sum or in monthly payments as elected by the Executive) and the
Executive shall have no further right to other compensation, bonus or
reimbursement under Section 3 or to participate in any employee benefit programs
or other benefits to which he may be entitled under Section 4 for any period
subsequent to the effective date of such termination; provided, however, that
any vested but unexercised options shall remain in effect following any such
termination and all unvested options shall immediately vest upon such
termination. The loans described in Section 3(h) shall be released, waived and
forgiven in the event of a voluntary termination of employment by the Executive.
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(d) Termination for any reason other than for "Cause", Death
or Disability or Voluntary Termination. In the event the Executive's employment
is terminated for any reason other than (i) for "Cause" (paragraph 5(a)), (ii)
Death or Disability (paragraph 5(b)), or (iii) Voluntary Termination by
Executive (paragraph 5(c)), then the Company shall be obligated to immediately
pay the Executive a cash lump sum equal to 2.99 times the then current Base
Salary and the loans described in Section 3(h) shall be released, waived and
forgiven and any vested but unexercised options shall remain in effect and all
unvested options shall immediately vest upon the effective date of termination
pursuant to this paragraph.
6. Restrictive Covenants.
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(a) Competition with the Company. The Executive covenants and
agrees that during the Term of this Agreement and for a period of eighteen (18)
months after termination of this Agreement, the Executive shall not, without the
prior written consent of the Company, directly or indirectly (whether as a sole
proprietor, partner, member, stockholder, director, officer, employee or in any
other capacity as principal or agent) compete with the Company. Notwithstanding
the foregoing, if the Executive is terminated pursuant to Section 5(d) or
termination occurs for any reason other than for "Cause" (including voluntary
termination) after a Change of Control as described in Section 7, the 18 month
non-compete provision set forth in this Section 6(a) shall be released and of no
further force or effect unless the Executive elects to have the non-competition
covenant take effect in which case the Company shall pay the Executive his Base
Salary within the 18 month (or such shorter period as elected by Executive)
non-compete period. Notwithstanding this restriction, Executive shall be
entitled to invest in stock of other competing public companies so long as his
ownership is less than 5% of such company's outstanding shares. If the Company
does not employ the Executive beyond the expiration of the Term, the Company
shall pay the Executive the Base Salary in effect upon expiration of the Term
during the 18 month non-compete period stated above, or, with the approval of
the Executive, may release and waive the foregoing non-competition provision.
(b) Disclosure of Confidential Information. The Executive
acknowledges that during his employment he will gain and have access to
confidential information regarding the Company and its subsidiaries and
affiliates. The Executive acknowledges that such confidential information as
acquired and used by the Company or any of its subsidiaries or affiliates
constitutes a special, valuable and unique asset in which the Company or its
subsidiaries or affiliates, as the case may be, holds a legitimate business
interest. All records, files, materials and confidential information (the
"Confidential Information") obtained by the Executive in the course of his
employment with the Company shall be deemed confidential and proprietary and
shall remain the exclusive property of the Company or its subsidiaries or
affiliates, as the case may be. The Executive shall not, except in connection
with and as required by his performance of his duties under this Agreement, (i)
use any Confidential Information for his own benefit or the benefit of any
person or entity with which he may be associated other than the Company; or (ii)
disclose any Confidential Information to any person, firm, corporation,
association or other entity for any reason or purpose whatsoever without the
prior written consent of the Board of Directors of the Company, unless such
information previously shall have become public knowledge through no action by
or omission of the Executive.
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(c) Subversion, Disruption or Interference. At no time during
the term of this Agreement shall the Executive, directly or indirectly,
interfere, induce, influence, combine or conspire with, or attempt to induce,
influence, combine or conspire with, any of the employees of, or consultants to,
the Company to terminate their relationship with the Company or compete with or
ally against the Company or any of its subsidiaries or affiliates in the
business in which the Company or any of its subsidiaries or affiliates is then
engaged in.
(d) Enforcement of Restrictions. The parties hereby agree that
any violation by Executive of the covenants contained in this Section 6 will
likely cause irreparable damage to the Company or its subsidiaries and
affiliates and may be restrained by process issued out of a court of competent
jurisdiction, in addition to any other remedies provided by law.
7. Change of Control.
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(a) For purposes of this Agreement, "Change of
Control" means:
(i) the closing of any merger, combination,
consolidation or similar business
transaction involving the Company in which
the holders of a majority of the shares of
the common stock of the Company immediately
prior to such closing are not the holders of
a majority of the ordinary voting securities
of the surviving entity in such transaction;
or
(ii) the closing of any sale by the Company of
all or substantially all of its assets to an
acquiring entity in which the holders of a
majority of the shares of common stock of
the Company immediately prior to such
closing are not the holders of a majority of
the ordinary voting securities of the
acquiring entity; or
(iii) the closing of any sale by the holders of
common stock of the Company of an amount of
common stock that equals or exceeds a
majority of the shares of common stock of
the Company immediately prior to such
closing to an entity in which the holders of
a majority of the shares of the common stock
of the Company immediately prior to such
closing are not the holders of a majority of
the ordinary voting securities; or
(iv) a change in the composition of the Board of
Directors of the Company such that the
current members of the Board of Directors
are no longer the majority in number of the
Board of Directors.
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(v) An Event of Default is declared under the
Securities Purchase Agreement, Registration
Rights Agreement, Certificate of Designation
of Series A Preferred Stock or other related
agreements with the holders of the Company's
Series A Preferred Stock.
(vi) Any holder of the Series A Preferred Stock
elects to convert the Series A Preferred
Stock into shares of the Company's common
stock, which results in the holders of the
Series A Preferred Stock (or their
affiliates) owning greater than fifteen
percent (15%) of the outstanding number of
shares of the Company's common stock.
(b) If, during the Term, the Executive's employment is
terminated by the Company after a Change of Control, the Executive shall be
entitled to receive, subject to the provisions of subsection (c) below, a
lump-sum payment equal to 299% of the Executive's current Base Salary in
addition to any other compensation that may be due to and owing to the Executive
under Section 3 hereof and all stock options issued to Executive shall
immediately vest and be exercisable in full at any time over the remaining term
of the stock options. In addition, in the event of a Change of Control, the
Executive shall be released from the non-competition provisions of Section 6(a)
and such restrictive covenants against competition shall be of no further fee or
effect.
(c) If, during the Term, a Change of Control event occurs and
the Executive voluntarily terminates pursuant to Section 5(c), the Executive
shall be released from the non-competition provisions of Section 6(a) and this
non-compete restrictive covenant shall be of no further force or effect.
(d) The amounts payable to the Executive under any other
compensation arrangement maintained by the Company which become payable after
payment of the lump-sum provided for in subsection (b) above upon or as a result
of the exercise by Executive of rights which are contingent on a Change of
Control (and would be considered a "parachute payment" under Internal Revenue
Code 280G and regulations thereunder), shall be reduced to the extent necessary
so that such amounts, when added to such lumps-sum, do not exceed 299% of the
Executive's Base Salary (as computed in accordance with provisions of the
Internal Revenue Code of 1986, as amended and any regulations promulgated
thereunder) for determining whether the Executive has received an excess
parachute payment. Any such excess amount shall be deferred and paid in the next
tax year.
(e) In the event of a proposed Change of Control, the Company
will allow the Executive to participate in all meetings and negotiations related
thereto.
(f) The loans described in Section 3(i) shall be released,
waived and forgiven in the event of a Change of Control.
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8. Assignability. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of the Company, provided that such successor or assign shall acquire all
or substantially all of the assets and business of the Company. The Executive's
rights and obligations hereunder may not be assigned or alienated and any
attempt to do so by the Executive will be void.
9. Severability. If any provision of this Agreement is deemed to be
invalid or unenforceable or is prohibited by the laws of the state or
jurisdiction where it is to be performed, this Agreement shall be considered
divisible as to such provision and such provision shall be inoperative in such
state or jurisdiction and shall not be part of the consideration moving from
either of the parties to the other; provided, however, that the provisions of
Section 6 may be modified and enforced by a court in any legal or equitable
action as necessary to comply with applicable law as determined by the court.
The remaining provisions of this Agreement shall be valid and binding.
10. Notice. Notices given pursuant to the provisions of this
Agreement shall be sent by certified mail, postage prepaid, or by overnight
courier, or telecopier to the following address:
To the Company:
xXxxxxxxxxx.xxx
0000 Xxx 00 Xxxxx, Xxxxx 000
Xxxx Xxxxxx, XX 00000
To the Executive: Xxxx Xxxxxx
000 Xxxx Xxxxx Xxxxx
Xxxx Xxxxxx, XX 00000
Either party may, from time to time, designate any other address to
which any such notice to it or him shall be sent. Any such notice shall be
deemed to have been delivered upon the earlier of actual receipt or four days
after deposit in the mail, if by certified mail.
11. Miscellaneous.
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(a) Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the internal, substantive laws of the State of
Florida without giving effect to the conflict of laws rules thereof.
(b) Waiver/Amendment. The waiver by any party to this Agreement of a
breach of any provision hereof by any other party shall not be construed as a
waiver of any subsequent breach by any party. No provision of this Agreement may
be terminated, amended, supplemented, waived or modified other than by an
instrument in writing signed by the party against whom the enforcement of the
termination, amendment, supplement, waiver or modification is sought.
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(c) Attorney's Fees. In the event any legal or equitable action is
commenced to enforce the terms and conditions hereof, the prevailing party shall
be entitled to reasonable attorneys' fees, costs and expenses.
(d) Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and replaces and
supersedes any prior agreements or understandings.
(e) Counterparts. This Agreement may be executed in counterparts, all
of which shall constitute one and the same instrument.
(f) Attorney Review. The parties acknowledge that each has had an
opportunity to retain an attorney to review the terms and conditions of this
Agreement. No provision hereof shall be interpreted against the interests of one
party solely because such provision was drafted by such party or by the attorney
for such party.
(g) Arbitration. Any controversy or claim arising out of or relating
to this Agreement, or the breach of this Agreement, shall be settled by
arbitration in accordance with the rules of the American Arbitration Association
conducted in a location selected by Executive. A judgment of a court having
jurisdiction may be entered upon the arbitrator's award.
IN WITNESS WHEREOF, the Company and the Executive have executed this
Agreement as of the day and year first above written.
COMPANY:
XXXXXXXXXXX.XXX, INC.
By:
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Name:
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Its:
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EXECUTIVE:
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XXXX XXXXXX
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