EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT IS ENTERED INTO AND EFFECTIVE THE 24TH day of
July, 2000 "the "Effective Date") by and between Xxxxxx Marketing, Inc., a
Delaware Corporation (the "Company") and Xxxxx Xxxxxxxx, (the "Employee").
WITNESSETH:
WHEREAS, the Company and Employee desire to enter into an agreement to
set forth certain of the terms and conditions of Employee's employment as the
President of the Company,
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, the parties hereto agree as follows:
1 Employment; Duties: The Company shall employ Employee as the President
of the Company to perform such duties generally associated with such
office. In such capacity, Employee shall report to and be under direct
supervision of Xxxx X. Xxxxx, the Company's Chairman/CEO.
2. Term of Agreement: This Agreement shall be effective as of the
Effective Date and shall have a term of twelve (12) months, thereafter,
subject to termination in accordance with section 5.
3. Duties and Restrictions:
3.1 Duties: Employee shall perform, on behalf of the Company, all
duties and services as directed by his/her supervisor and as
are customarily incident to his/her position. Employee shall
devote his/her full time, effort and attention during regular
business ours to the business and affairs of the Company and
shall perform his/her duties and services hereunder to the
best of his/her ability. Employee may serve as a director, as
a trustee or in a similar position with one or more other
additional entities, provided that such service is consented
to in advance by the Board. Any fees or other compensation
received by Employee for service as a director, as a trustee
or in a similar position with another entity shall be retained
by Employee.
3.2 Confidentiality: Employee agrees to execute the form of
Confidentiality and Non-Compete Agreement attached as Exhibit
A hereto (the "Confidentiality Agreement"). Employee hereby
represents to the Company that he/she has complied with all
obligations under the Confidentiality Agreement and will
continue to abide by its terms. He/She further agrees that the
provisions of the Confidentiality Agreement shall survive any
termination of this Agreement of his/her employment by the
company.
4. Compensation: For the duties and services to be performed by Employee
hereunder, the Company shall pay Employee and Employee agrees to accept
the salary and other benefits described below in this Section 4.
4.1 Salary: Employee shall receive a base salary of $150,000 per
year (the "Base Salary"), payable at such times as the other
Employees of the Company are paid.
4.2 Bonuses: Employee shall be eligible to earn performances
bonuses as determined by the Board or its compensation
committee, in its sole discretion.
4.3 Employee Benefits: Employee shall be entitled to participate,
to the extent he/she is eligible under the terms and
conditions thereof, in any hospitalization of medical
insurance plans, life insurance plans, retirement plans or
other employee benefits plans which are generally available to
employees of the Company. The Company shall be under no
obligation to institute or continue the existence of any
employee benefit plan described herein and may from time to
time amend, modify or terminate any such employee benefit
plan.
4.4 Reimbursement of Expenses: Employee shall be authorized to
incur and shall be reimbursed by the Company for reasonable
expenses, provided that such expenses are substantiated in
accordance with Company policics.
4.5 Stock Options: Employee is to be granted 100,000 shares of
common stock, to vest quarterly over twelve (12) months. The
vestment schedule to be as follows: 25,000 shares on August 1,
2000; 25,000 on November 1, 2000; 25,000 on February 1, 2001;
25,000 on May 1, 2000. Strike price to be based on the
weighted average of the market price the week of July 2000. In
the event the Company is purchased/acquired, all outstanding
shares vest immediately.
5. Termination and Termination Payments and Rights:
5.1 Employee has the right to terminate his employment by the
Company upon not less than one (1) month prior written notice
to the Company. In the event of such elections, Employee's
employment shall terminate effective upon the date set forth
in such notice. In such event, the Company shall pay Employee
all compensation (including Base Salary, as well as any bonus
that has been earned on or prior to the date of termination)
due him/her to the date of termination.
5.2 The Company shall have the right to terminate Employee's
employment without Cause (as defined below) upon not less than
one (1) month prior written notice to Employee. If(i) the
Company shall terminate the Employee's employment without
Cause, or (ii) Employee shall terminate his/her employment for
Good Reason (as defined below), the Company. shall pay
Employee all compensation (including any bonus that has been
earned on or prior to the date of termination) ad benefits due
him/her through the date one year following the Effective
Date.
5.3 The Company shall have the right to terminate Employee's
employment with Cause upon written notice to Employee. In such
even, the Company shall pay Employee all compensation
(including Base Salary as well as any bonus that has been
earned on or prior to the date of termination) due him/her to
the date of his/her termination.
5.4 Notwithstanding the preceding provisions of this Section 5, in
the event of the Employee's termination of employment by the
Company or by the Employee upon, or within one year of, a
Change of Control, as hereinafter defined, the
Company shall be obligated to pay the Employee that portion of
the Base Salary then in effect which shall have accrued to the
Employee through and including the date upon which such Change
in Control shall become effective, plus an amount equal to Two
Hundred Percent (200%) of the Base Salary then in effect. As
used in this Section, "change of Control" means any
transaction or series of transactions which result in the sale
of all or substantially all of the assets of the Company, a
merger or consolidation of the Company with or into another
entity, any ACQUISITION BY ANY PERSON OR ENTITY OF MORE THAN
FIFTY PERCENT (50%) of the issued and outstanding stock of the
Company, or the acquisition by any person or entity of debt
instruments or equity securities of the Company which may, at
any time, be converted into fifty percent (50%) or more of the
issued and outstanding stock of the Company.
6. Definitions:
6.1 "Cause" shall mean (A) willful and repeated failure to comply
with a lawful written direction of the Employee's supervisor,
(B) gross negligence or willful misconduct in the performance
of duties to the Company and/or its subsidiaries, (C)
commission of any act of fraud with respect to the Company
and/or it's subsidiaries, or (D) conviction of a felony or a
crime involving moral turpitude causing material harm to the
standing and reputation of the Company and/or its
subsidiaries, in each case as determined in good faith by the
Company's Board of Directors.
6.2 "Good Reason" shall mean the occurrence of any of the
following events: (i) change by the Company or its successor
of Employee's functions, duties, or responsibilities, which
would cause Employee's position to become one of materially
less responsibility, importance or scope relative to the
business being conducted by the Company (as opposed to any
other business conducted by any such successor); (ii) a
material reduction by the Company or its successor of
Employee's base salary and bonus arrangement in effect; or
(iii) the Company's or its successor's requiring Employee to
be based anywhere other than within fifty (50) miles of the
greater Salt Lake City area, except for required business
travel.
7. Vacation: Employee shall be entitled to vacation annually, to be taken
in accordance with the Company's vacation policies for employees, as in
effect from time to time.
8. Indemnification: In the event Employee is made, or threatened to be
made, a party to any legal action or preceding, whether civil or
criminal, by reason of the fact that Employee is or was a director or
officer of the Company or serves or served any other corporation fifty
percent (50%) or more owned or controlled by the Company in any
capacity at Company's request, Employee shall be indemnified by the
Company, and the Company shall pay Employee's related expenses when and
as incurred, all to the full extent permitted by law.
9. Non-competition Covenant: During the period specified below, Employee
hereby agrees that he/she shall not do any of the following without the
prior written consent of the Board:
9.1 Compete: Carry on anywhere in the United States any business
or activity (whether directly or indirectly, as a partner,
shareholder, owner, principal,
agent, director, affiliate, employee, advisor or consultant)
which is competitive with the business conducted by the
company at the time of termination of Employee's employment or
which the Company, at or prior to such termination, has
considered or contemplated conducting and the Employee is
aware of this possibility. Ownership of no more than five
percent (S%) of the outstanding voting stock of a publicly
traded corporation shall not constitute a violation of this
provision.
9.2 Solicit Business: Solicit or influence or attempt to influence
any client, customer, or other persons, either directly or
indirectly, to direct such client's, customer's or other
person's purchase of the Company's products and/or services
away from the Company or to any person, firm, corporation,
institution, or other entity other than the Company.
9.3 Solicit Personnel.: Solicit any employee of the Company for
employment by anyone other than the Company. For purposes of
this Section, the term "solicit" shall not include the
following activities by Employee: (i) advertising for
employment in ANY BULLETIN BOARD (INCLUDING ELECTRONIC
BULLETIN BOARDS), NEWSPAPER, trade journal, or other
publication available for general distribution to the public;
(ii) participation in any hiring fair or similar event open to
the public not targeted at the Company's employees, (iii) use
of recruiting or employee search firms that have been
instructed by Employee not to target any such employee, and
(iv) negotiating with and/or offering employment to any such
employee who initially contact Employee or one of its
affiliates or who engages in discussions with Employee or one
of its affiliates as a result of any of the activities
included in clauses (i)-(iii). Employee may employ any such
employee provided that neither it nor any of its affiliates
has solicited such employee in contravention of this Section
9.3
9.4 Termination: The covenants set forth in this Section 9 shall
be effective commencing as of the date hereof and shall
continue for a period of one (I) years following termination
of Employee's employment with the Company.
10. SUCCESSORS: ANY SUCCESSOR TO THE COMPANY (WHETHER DIRECT OR INDIRECT
AND whether by purchase, lease, merger, consolidation, liquidation or
otherwise) to all or substantially all of the Company's business and/or
assets shall assume the obligations under this Agreement and agree
expressly to perform the obligations under this Agreement in the same
manner and to the same extent as the Company would be required to
perform such obligations in the absence of a succession. The terms of
this Agreement and all of the rights of the parties hereunder shall
inure to the benefit of, and be enforceable by, Employee's personal or
legal representatives, executors, administrators, successors, heirs,
distributes, devisees and legatees.
11. Notice: Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered or Lent by facsimile or three days
after the date when mailed by U.S. registered or certified mail, return
receipt requested and postage prepaid. Mailed notices to Employee shall
be addressed to Employee at the address recorded in Employee's
personnel file. In the case of the Company, mailed notices shall be
addressed to its corporate headquarters, and all notices shall be
directed to the attention of its Secretary.
12. MISCELLANEOUS PROVISIONS:
12.1 WAIVER: NO PROVISION OF THIS AGREEMENT SHALL BE MODIFIED,
WAIVED OR DISCHARGED UNLESS THE MODIFICATION, WAIVER OR
DISCHARGE IS AGREED TO IN WRITING AND SIGNED BY EMPLOYEES AND
BY AN OFFICER OF THE COMPANY (OTHER THAN EMPLOYEE) AUTHORIZED
BY THE BOARD TO SIGN SUCH MODIFICATION, WAIVER OR DISCHARGE.
NO WAIVER BY EITHER PARTY OR ANY BREACH OF, OR OF COMPLIANCE
WITH, ANY CONDITION OR PROVISION OF THIS AGREEMENT BY THE
OTHER PARTY SHALL BE CONSIDERED A WAIVER OF ANY OTHER
CONDITION OR PROVISION OR OF THE SAME CONDITION OR PROVISION
AT ANOTHER TIME.
12.2 ENTIRE AGREEMENT: NO AGREEMENTS, REPRESENTATIONS OR
UNDERSTANDING (WHETHER ORAL OR WRITTEN AND WHETHER EXPRESS OR
IMPLIED) WHICH ARE NOT EXPRESSLY SET FORTH IN THIS AGREEMENT
HAVE BEEN MADE OR ENTERED INTO BY EITHER PARTY WITH RESPECT TO
THE SUBJECT MATTER HERETO.
12.3 CHOICE OF LAW: THE VALIDITY, INTERPRETATION, CONSTRUCTION AND
PERFORMANCE OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF
THE STATE OF UTAH APPLICABLE TO CONTRACTS WHOLLY MADE AND
PERFORMED IN SUCH STATE.
12.4 SEVERABILITY: IF ANY TERM OR PROVISION OF THIS AGREEMENT OR
THE APPLICATION THEREOF TO ANY CIRCUMSTANCE SHALL, IN ANY
JURISDICTION AND TO ANY EXTENT, BE INVALID OR UNENFORCEABLE,
SUCH TERMS OR PROVISION SHALL BE INEFFECTIVE AS TO SUCH
JURISDICTION TO THE EXTENT AS SUCH INVALIDITY OR
UNENFORCEABILITY WITHOUT INVALIDATING OR RENDERING
UNENFORCEABLE THE REMAINING TERMS AND PROVISIONS OF THIS
AGREEMENT OR THE APPLICATION OF SUCH TERMS AND PROVISIONS TO
CIRCUMSTANCES OTHER THAN THOSE AS TO WHICH IT IS HELD INVALID
OR UNENFORCEABLE, AND A SUITABLE AND EQUITABLE TERM OR
PROVISION SHALL BE SUBSTITUTED THEREFORE TO CARRY OUT, INSOFAR
AS MAY BE VALID AND ENFORCEABLE, THE INTENT AND PURPOSE OF THE
INVALID OR UNENFORCEABLE TERM OR PROVISION.
12.5 EMPLOYMENT TAXES: ALL PAYMENTS MADE PURSUANT TO THIS AGREEMENT
WILL BE SUBJECT TO WITHHOLDING OF APPLICABLE INCOME AND
EMPLOYMENT TAXES.
12.6 ASSIGNMENT OF COMPANY: THE COMPANY MAY ASSIGN ITS RIGHTS UNDER
THIS AGREEMENT TO AN AFFILIATE, AND AN AFFILIATE MAY ASSIGN
ITS RIGHTS UNDER THIS AGREEMENT TO ANOTHER AFFILIATE OF THE
COMPANY OR TO THE COMPANY. IN THE CASE OF ANY SUCH ASSIGNMENT,
THE TERM "COMPANY" WHEN USED IN A SECTION OF THIS AGREEMENT
SHALL MEAN THE CORPORATION THAT ACTUALLY EMPLOYS EMPLOYEE.
12.7 COUNTERPARTS: THIS AGREEMENT MAY BE EXECUTED IN COUNTERPARTS,
EACH OF WHOM SHALL BE DEEMED AN ORIGINAL, BUT ALL OF THIS
TOGETHER WILL CONSTITUTE ONE AND THE SAME INSTRUMENT.
13. ARBITRATION OF DISPUTES: ANY CONTROVERSY, DISPUTE OR CLAIM ARISING OUT
OF OR RELATING TO THIS AGREEMENT, THE BREACH THEREOF, OR THE EMPLOYMENT
RELATIONSHIP BETWEEN THE PARTIES WHICH CANNOT BE RESOLVED AMICABLY BY
THE PARTIES SHALL BE SETTLED BY ARBITRATION IN SALT LAKE CITY, UTAH,
BEFORE A SINGLE ARBITRATOR, IN ACCORDANCE WITH THE RULES OF THE
AMERICAN ARBITRATION ASSOCIATION. THIS ARBITRATION SHALL BE BINDING ON
THE PARTIES AND THE ARBITRATION DECISION MAY BE ENFORCED IN A COURT OF
COMPETENT JURISDICTION IN ACCORDANCE WITH THE LAWS OF THE STATE OF
UTAH. THE ONLY EXCEPTION TO THIS PROVISION IS IN PARAGRAPH 14 BELOW,
RELATING TO INJUNCTION PROCEEDINGS. THE COMPANY WILL BE RESPONSIBLE FOR
THE ARBITRATION COSTS INCURRED IN ARBITRATING ANY SAID
DISPUTE, BUT SUCH COSTS SHALL NOT INCLUDE ANY ATTORNEY'S FEES AND
RELATED EXPENSES INCURRED BY EMPLOYEE IN THE COURSE OF THE ARBITRATION.
14. INJUNCTIVE RELIEF: EMPLOYEE STIPULATES THAT THE SERVICES TO BE
PERFORMED BY HIM/HER UNDER THIS AGREEMENT ARE OF SPECIAL, UNIQUE,
UNUSUAL, EXTRAORDINARY, AND INTELLECTUAL CHARACTER, THAT SUCH SERVICES
GIVE THIS AGREEMENT PARTICULAR VALUE AND THAT THE LOSS OF SUCH SERVICES
CANNOT REASONABLY OR ADEQUATELY BE COMPENSATED IN DAMAGES. ACCORDINGLY,
EMPLOYEE AGREES THAT ANY BREACH OF THIS AGREEMENT BY EMPLOYEE WILL
ENTITLE THE COMPANY TO INJUNCTIVE OR OTHER EQUITABLE RELIEF TO PREVENT
SUCH BREACH, EITHER BEFORE AN ARBITRATOR AS PROVIDED IN PARAGRAPH 13
ABOVE, OR BEFORE ANY COURT HAVING JURISDICTION OVER THE PARTIES.
IN WITNESS WHEREOF, THE PARTIES HERETO HAVE CAUSED THIS AGREEMENT TO BE DULY
EXECUTED AS OF THE DAY AND YEAR FIRST ABOVE WRITTEN:
XXXXXX MARKETING, INC.
XXXX X. XXXXX XXXXX XXXXXXXX
CHAIRMAN/CEO
