EXHIBIT 10.10
QT 5, INC.
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made and entered into this
ninth day of June 2003 by and between QT 5, Inc., a Delaware corporation (the
"Company"), and Xxxxxx X. Xxxxx ("Executive").
RECITALS
WHEREAS, Executive has the experience to provide services to the
Company of an extraordinary character which gives such services a unique value;
and
WHEREAS, the Company desires to retain the services of Executive, and
Executive desires to be employed by the Company for the term of this Agreement.
NOW AND THEREFORE, the Company and Executive, intending to be legally
bound, hereby agree as follows:
1. EMPLOYMENT. The Company hereby employs Executive as the PRESIDENT of
the Company. For the term of Executive's employment, and upon the other
conditions set forth in this Agreement, Executive accepts such employment and
agrees to perform services for the Company, subject always to such resolutions
as are established from time to time by the Board of Directors of the Company.
2. TERM. The term of Executive's employment hereunder shall commence on
the execution date of this Agreement and continue through June 8, 2008 subject
to the termination provisions contained herein. The Agreement may be terminated
by the Company only for cause as set forth below, and shall not constitute "at
will" employment.
3. POSITION AND DUTIES.
3.1. SERVICES WITH THE COMPANY. During the term of this Agreement,
Executive agrees to perform such duties and exercise such powers related thereto
as may from time to time be assigned to him by the Company's Board of Directors
(the "Board"). Executive shall duly and diligently perform all duties assigned
to him while in the employ of the Company. He shall be bound by and faithfully
observe and abide by all rules and regulations of the Company which are brought
to his notice or of which he should be reasonably aware. Executive hereby
accepts such employment, agrees to serve the Company in the capacities
indicated, and agrees to use Executive's best efforts in, and shall devote
Executive's full working time, attention, skill and energies to, the advancement
of the interests of the Company and the performance of Executive's duties and
responsibilities hereunder.
3.2. NO CONFLICTING DUTIES. Executive shall devote sufficient
productive time, ability, and attention to the business of the Company during
the term of this Agreement in a manner that will serve the best interests of the
Company. During the term hereof, Executive shall not serve as an officer,
director, employee, consultant or advisor to any other business without the
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prior written consent of the Company's Board, which may be withheld for any
reason. Executive hereby confirms he is under no contractual commitments
inconsistent with his obligations set forth in this Agreement. This Agreement
shall not be interpreted to prohibit Executive from making passive personal
investments or conduct private business affairs if those activities do not
materially interfere with the services required under this Agreement.
4. COMPENSATION.
4.1 ANNUAL SALARY. As compensation for all services to be rendered
by Executive under this Agreement, the Company shall pay to Executive an annual
salary of Three Hundred Thousand Dollars ($300,000), which shall increase to
Three Hundred Sixty Thousand Dollars ($360,000) effective October 1, 2003 (the
"Annual Salary"). Executive's Annual Salary shall be paid on a regular basis in
accordance with the Company's normal payroll procedures and policies. On or
before the yearly anniversary date of this Agreement, the Board of Directors
shall determine the increase to the Annual Salary, but in no event shall it be
less than ten (10%) . The adjusted Annual Salary shall become effective on
October 1 each year.
4.2 SIGNING BONUS. Upon the execution of this Agreement, Executive
shall earn a signing bonus of One Hundred Thousand Dollars ($100,000) (the
"Signing Bonus") payable by the Company in four quarterly payments of Twenty
Five Thousand Dollars ($25,000) each on July 1, 2003, October 1, 2003, January
1, 2004 and April 1, 2004. In addition, the Company shall issue and deliver to
Executive, in the aggregate a series of five-year Warrants to purchase 1,280,000
shares (the "Warrants") of the Company's common stock (the "Shares"), which
shall include provisions for cashless exercise. The purchase price for the
Shares shall be $0.17 per share. The Warrants shall be issued, and shall fully
vest on the date of issuance. The number and character of the Shares of common
stock and the purchase price are subject to adjustment as provided therein. A
form of the Warrant is attached hereto as Exhibit A.
4.3 NET PROFIT BONUS. The Company shall pay Executive an annual
bonus ("Net Profit Bonus"). The Net Profit Bonus shall equal two percent (2%) of
the Company's annual net income, calculated using Generally Accepted Accounting
Principles. The Net Profit Bonus shall be payable annually no later than the
fifteenth (15th) day of the third month following the end of the Company's
fiscal year in cash and/or the equivalent cash amount in fully vested stock
options at the fair market price of the Company's stock on the last day of the
Company's calendar year, at the sole discretion of Executive.
4.4 INCENTIVE STOCK OPTIONS. The Company shall issue incentive stock
options to Executive pursuant to the Company's qualified Incentive Stock Option
Plan. At the discretion of, and in an amount to be determined by, the Board of
Directors, no later than seventy five (75) days following the end of each of the
Company's fiscal years, Executive will receive incentive stock options at an
exercise price equal to the fair market value at the end of each fiscal year,
but in no event shall the total value exceed $100,000 per year. However, if the
Executive owns at least 10% of the Company's common stock, then the purchase
price that will be paid to the Company when the option is exercised and the
stock purchase must equal 110% of the fair market value of the common stock as
of the date of grant. The Incentive Stock Options shall vest immediately and
shall terminate ten years from the date of grant. Executive may exercise the
incentive stock options, at his sole and absolute discretion, by providing the
Company with written notice accompanied by (1) cash or a cashier's check an
amount equal to the product of the incentive
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stock option exercise price and the number of shares Executive desires to
purchase pursuant to this provision; or (2) by a cashless exercise whereby
Executive receives the net amount of shares after deducting the value of the
exercise price.
4.5 STOCK AND OPTION REGISTRATION RIGHTS. In the event the Company
with or without the assistance of an investment banking firm, conducts a
registered offering of the Company's shares, the Company shall provide Executive
with registration rights to all shares, warrants and/or options which Executive
then holds or otherwise directly or constructively owns.
4.6 ANTI-DILUTION. The number and kind of shares or other securities
that may be issued in accordance with this Agreement shall be subject to
adjustment from time to time upon the happening of certain events while this
Agreement remains effective, as follows:
(a) Merger, Sale of Assets, etc. If the Company at
any time shall consolidate with or merge into or sell
or convey all or substantially all its assets to any
other corporation, the Executive, shall thereafter
have the right to have issued such number and kind of
shares or other securities as would have been
issuable or distributable on account of such
consolidation, merger, sale or conveyance, upon or
with respect to the number of shares of Common Stock
and number of Warrants Executive could be entitled to
have issued immediately prior to such consolidation,
merger, sale or conveyance based on this Agreement.
The foregoing provision shall similarly apply to
successive transactions of a similar nature by any
such successor or purchaser. Without limiting the
generality of the foregoing, the provisions of this
Section shall apply to such securities of such
successor or purchaser after any such consolidation,
merger, sale or conveyance.
(b) Reclassification, etc. If the Company at any time
shall, by reclassification or otherwise, change the
Common Stock into the same or a different number of
securities of any class or classes, the Executive
shall thereafter have the right to have issued an
adjusted number of such securities and kind of
securities as would have been issuable as the result
of such change with respect to the number of shares
of Common Stock or Warrants that may be issuable to
Executive immediately prior to such reclassification
or other change as of the effective date for such
reclassification or change.
(c) Stock Splits, Combinations and Dividends. If the
shares of Common Stock are subdivided or combined
into a greater or smaller number of shares of Common
Stock, or if a dividend is paid on the Common Stock
in shares of Common Stock, any securities issuable to
Executive shall be proportionately adjusted in case
of subdivision of shares or stock dividend by the
ratio which the total number of shares of Common
Stock outstanding immediately after such event bears
to the total number of shares of Common Stock
outstanding immediately prior to such event.
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(d) Share Issuance. Subject to the provisions of this
Section, if the Company at any time shall issue any
shares of Common Stock prior to the exercise of any
warrants that have been issued to Executive in
accordance with this Agreement (otherwise than as:
(i) provided in Sections 4.6(a), 4.6(b) or 4.6(c) or
this subparagraph; (ii) pursuant to warrants or
options that may be granted in the future under any
option plan of the Company, or any employment
agreement, joint venture, credit, leasing or other
financing agreement or any joint venture or other
strategic arrangement, in each case now or
hereinafter entered into by the Company; (iii)
pursuant to any agreement entered into by the Company
or any of its subsidiaries for the acquisition of
another business (whether by stock purchase or asset
purchase, merger or otherwise; or (iv) for services
rendered by consultants; (i), (ii) and (iii) above,
are hereinafter referred to as the "Excluded
Issuances")) for a consideration less than the
exercise price of Executive warrants (the "Exercise
Price"), then, and thereafter successively upon each
such issue, the Exercise Price shall be reduced as
follows: (i) the number of shares of Common Stock
outstanding immediately prior to such issue shall be
multiplied by the Exercise Price and the product
shall be added to the aggregate consideration, if
any, received by the Company upon such issue of
additional shares of Common Stock; and (ii) the sum
so obtained shall be divided by the number of shares
of Common Stock outstanding immediately after such
issue. The resulting quotient shall be the adjusted
Exercise Price. Except for the Excluded Issuances for
purposes of this adjustment, the issuance of any
security of the Company carrying the right to convert
such security into shares of Common Stock or of any
warrant, right or option to purchase Common Stock
shall result in an adjustment to the Exercise Price
upon the issuance of shares of Common Stock upon
exercise of such warrant exercise rights.
(e) During the period the warrant exercise right
exists, the Company will reserve from its authorized
and unissued Common Stock a sufficient number of
shares to provide for the issuance of Common Stock
upon the full exercise of Executive's warrants. The
Company represents that upon issuance, such shares
will be duly and validly issued, fully paid and
non-assessable. The Company agrees that its issuance
of the Executive's warrants shall constitute full
authority to its officers, agents, and transfer
agents who are charged with the duty of executing and
issuing stock certificates to execute and issue the
necessary certificates for shares of Common Stock
upon the exercise of Executive's warrants.
4.7 EXPENSES. The Company shall reimburse Executive for all
reasonable business or travel expenses and office related expenses incurred by
Executive in the performance of his duties; including but not limited to:
airfare, automobile rental, lodging, meals, telephone, copy costs, and supplies.
4.8 BUSINESS TRAVEL. The Company and Executive recognize that it may
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periodically be necessary for Executive to travel on behalf of the Company. The
Company agrees that whenever Executive is required to travel a distance in
excess of that which may be reached within three hours or more by regularly
scheduled commercial air carriers, the Company will pay for Executive to travel
in business class or better.
4.9 ANNUAL VACATION. Executive shall be entitled to fourteen (14)
days vacation time each year without loss of compensation. In the event that
Executive is unable for any reason to take the total amount of vacation time
authorized herein during any year, any unused vacation time shall carry over
from year to year. Any earned but unused vacation time will be paid to Executive
based upon his annual rate of all compensation paid in the previous twelve
months upon termination or expiration of this Agreement.
4.10 SICK LEAVE. Executive shall be entitled to seven (7) days sick
leave each year without loss of compensation. In the event that Executive does
not take the total amount of sick leave authorized herein during any year, any
unused sick leave shall carry over from year to year. Any entitled but unused
sick leave will be paid to Executive based upon his annual rate of all
compensation paid in the previous twelve months upon termination or expiration
of this Agreement.
4.11 HEALTH INSURANCE. The Company, at its sole cost and expense,
shall provide Executive and his immediate family members with comprehensive PPO
or HMO health insurance including but not limited to medical, dental, vision and
disability coverage.
4.12 PAYMENT UPON SALE OR MERGER OF COMPANY. In the event the
Company shall merge, sell a controlling interest, or sell a majority of its
assets, the Company shall pay Executive Seven Hundred and Twenty Thousand
Dollars ($720,000). Further, as to any vested but unexercised options to
purchases shares in the Company which are held by Executive at the earlier of
(1) the Company's execution of a Letter of Intent to (a) merge, (b) sell a
controlling interest, or (c) sell a majority of its assets, or (2) the date of
any such merger or sale is consummated, the Company shall pay Executive cash in
the amount equal to the difference between the consideration paid to the Company
on a per share basis less the exercise price of the option, the value of which
is multiplied by the number of options which Executive holds.
4.13 AUTOMOBILE ALLOWANCE. The Company shall provide Executive a
monthly automobile allowance in the amount of $750.00 (the "Automobile
Allowance"). In the event this Agreement is terminated prior to its expiration
for any reason, all payments of the Automobile Allowance shall cease immediately
and Executive shall be responsible for any and all payments remaining on any
lease, loan or rental agreement in connection with said Automobile Allowance.
Payment of the aforesaid allowance shall be subject to any applicable
withholdings tax. The Executive shall be responsible for all income taxes
imposed on the Executive by reason of the automobile allowance.
5. TERMINATION AND TERMINATION BENEFITS. Notwithstanding the provisions
of Section 2, Executive's employment under this Agreement shall terminate under
the following circumstances set forth in this Section 5.
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5.1 TERMINATION BY THE COMPANY FOR CAUSE. Executive's employment
under this Agreement may be terminated for Cause without further liability on
the part of the Company other than for accrued but unpaid Annual Salary through
the date of termination effective immediately upon written notice to Executive.
No termination for Cause may be invoked by the Company without first providing
Executive with at least thirty (30) days written notice to correct any breach,
default or causation. Such written notice shall set forth with reasonable
specificity the Company's basis for such notice of termination and Executive
shall have thirty (30) days to correct the condition set forth in the notice.
"Cause" shall mean the following:
(i) Commission of a criminal act involving fraud,
embezzlement or breach of trust or other act which
would prohibit Executive from holding his position
under the rules of the Securities and Exchange
Commission.
(ii) Willful, knowing and malicious violation of
written corporate policy or rules of the Company.
(iii) Willful, knowing and malicious misuse,
misappropriation, or disclosure of any of the
Proprietary Matters.
(iv) Misappropriation, concealment, or conversion of
any money or property of the Company.
(v) Being under the habitual influence of
intoxicating liquors or controlled substances while
in the course of employment.
(vi) Intentional and non-trivial damage or
destruction of property of the Company. For purposes
of this provision, non-trivial is defined to mean
damage occurring in the course of a single act or
occurrence in an amount exceeding Two Thousand
Dollars ($2,000).
(vii) Reckless and wanton conduct which endangers the
safety of other persons or property during the course
of employment or while on premises leased or owned by
the Company.
(viii) The performance of duties in a habitually
unsatisfactory manner after being repeatedly advised
in writing by the Company of such unsatisfactory
performance.
(ix) Continued incapacity on the part of Executive to
perform his duties, unless waived by the Company.
5.2 TERMINATION WITHOUT CAUSE.
5.2.1 DISABILITY. Executive's employment shall terminate upon
Executive becoming totally or permanently disabled for a period of six (6)
months or more. For purposes of this Agreement, the term "totally or permanently
disabled" or "total or permanent disability" means Executive's inability on
account of sickness or accident, whether or not job related, to engage in
regularly or to perform adequately his assigned duties under this Agreement
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as determined reasonably and in good faith by the Company. Prior to terminating
the Agreement pursuant to this provision, the Company shall engage and consult
one or more physicians as may be reasonable. In the event of termination
pursuant to this paragraph, Executive shall be entitled to receive any accrued
and unpaid base salary and any and all accrued, earned but unpaid bonuses or
benefits described in Section 4 to which Executive is entitled on the date of
such termination. All other rights Executive has under any benefit or stock
option plans and programs shall be determined in accordance with the terms of
such plans and programs.
5.2.2 DEATH. Executive's employment shall terminate immediately upon
the death of Executive. Upon such termination, the obligations of Executive and
Company under this Agreement shall immediately cease. If Executive's employment
is terminated pursuant to this paragraph, Company shall pay Executive's
beneficiary or beneficiary designated by Executive in writing to the Company, or
in the absence of such beneficiary, Executive's estate, shall be entitled to
receive (i) any accrued but unpaid base salary and any and all accrued, earned
but unpaid bonuses or benefits described in Section 4 to which Executive is
entitled on the date of such termination, and (ii) Executive's then current base
salary through ninety (90) days after the date of death in accordance with
Company's payroll procedures as if Executive's employment by Company had
continued for such period. All other rights Executive has under any benefit or
stock option plans and programs shall be determined in accordance with the terms
and conditions of such plans and programs.
5.2.3 ELECTION BY EXECUTIVE. Executive's employment may be
terminated at any time by Executive upon not less than ninety (90) days written
notice by Executive to the Board of Directors. Upon such termination, the
obligations of the Executive and Company under this Agreement shall immediately
cease. In the event of termination pursuant to this paragraph, Executive shall
be entitled to receive any accrued and unpaid base salary and any and all
accrued, earned but unpaid bonuses or benefits described in Section 4 to which
Executive is entitled on the date of such termination. All other rights
Executive has under any benefit or stock option plans and programs shall be
determined in accordance with the terms of such plans and programs.
5.2.4 ELECTION BY COMPANY. Executive's employment may be terminated
at any time by the Company upon not less than ninety (90) days written notice by
the Company to Executive. Upon such termination, the obligations of the
Executive and Company under this Agreement shall immediately cease. In the event
of termination pursuant to this paragraph, Executive shall be entitled to
receive (i) any accrued and unpaid base salary and (ii) any and all accrued,
earned but unpaid bonuses or benefits described in Section 4 to which Executive
is entitled on the date of such termination. Additionally, in the event of
termination of Executive's employment with the Company pursuant to this Section
5.2.4, the Company shall pay to Executive (i) In the event of Executive's
termination within the first or second year of the Term, Two Hundred percent
(200%) of Executive's Annual Salary for the remainder of the Term, payable on
the date of termination; (ii) In the event of Executive's termination within the
third or fourth year of the Term, One Hundred Fifty percent (150%) of
Executive's annual salary for the remainder of the Term, payable on the date of
termination; and (iii) In the event of Executive's termination within the fifth
year of the Term, One Hundred Twenty Five percent (125%) of Executive's annual
salary for the remainder of the Term, payable on the date of termination.. All
other rights Executive has under any benefit or stock option plans and programs
shall be determined in accordance with the terms of such plans and programs.
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5.3 SURRENDER OF RECORDS AND PROPERTY. Upon termination of his
employment with the Company, Executive shall deliver promptly to the Company all
records, electronic media, manuals, books, blank forms, documents, letters,
memoranda, notes, notebooks, reports, data, tables, and calculations or copies
thereof, which are the property of the Company and which relate in any way to
the business, products, practices or techniques of the Company, and all other
property (keys, office equipment, computers, mobile phones, credit cards, etc.)
of the Company and Proprietary Matter, including but not limited to, all
documents which in whole or in part contain any trade secrets or confidential
information of the Company, which in any of these cases are in his possession or
under his control.
5.4 FULL SATISFACTION OF CLAIMS. The parties hereto agree that the
benefits upon termination described in this Section 5 are to be in full
satisfaction, compromise and release of any claims arising out of any
termination of the Executive's employment pursuant to Section 6(c), and such
amounts shall be contingent upon the Executive's delivery of a general release
of such claims upon termination of employment in a form reasonably satisfactory
to the Company, it being understood that none of the benefits shall be provided
unless and until the Executive determines to execute and deliver such release.
5.5 SURVIVAL OF TERMS. Notwithstanding termination of this Agreement
as provided in this Section 5 or any other termination of Executive's employment
with the Company, Executive's obligations under Sections 6, 8, 9 and 10 hereof
shall survive any termination of Executive's employment with the Company at any
time and for any reason.
6. PROPRIETARY MATTER. Except as permitted or directed by the Company,
Executive shall not during the term of his employment or at any time thereafter
divulge, furnish, disclose, or make accessible (other than in the ordinary
course of the business of the Company) to anyone for use in any way any
confidential, secret, or proprietary knowledge or information of the Company
("Proprietary Matter") which Executive has acquired or become acquainted with or
will acquire or become acquainted with, whether developed by himself or by
others, including, but not limited to, any trade secrets, confidential or secret
designs, processes, formulae, software or computer programs, plans, devices or
material (whether or not patented or patentable, copyrighted or copyrightable)
directly or indirectly useful in any aspect of the business of the Company, any
confidential customer, distributor or supplier lists of the Company, any
confidential or secret development or research work of the Company, or any other
confidential, secret or non-public aspects of the business of the Company.
Executive acknowledges that the Proprietary Matter constitutes a unique and
valuable asset of the Company acquired at great time and expense by the Company,
and that any disclosure or other use of the Proprietary Matter other than for
the sole benefit of the Company would be wrongful and would cause irreparable
harm to the Company. Both during and after the term of this Agreement, Executive
will refrain from any acts or omissions that would reduce the value of
Proprietary Matter to the Company. The foregoing obligations of confidentiality,
however, shall not apply to any knowledge or information which is now published
or which subsequently becomes generally publicly known, other than as a direct
or indirect result of the breach of this Agreement by Executive nor shall it
apply to any knowledge or information Executive had prior to the execution of
this Agreement.
7. VENTURES. If, during the term of this Agreement, Executive is
engaged in or associated with the planning or implementing of any project,
program, or venture involving the Company and a third party or parties, all
rights in the project, program, or venture shall belong to the
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Company and shall constitute a corporate opportunity belonging exclusively to
the Company. Except as expressly approved in writing by the Company, Executive
shall not be entitled to any interest in such project, program, or venture or to
any commission, finder's fee or other compensation in connection therewith,
other than the compensation to be paid to Executive as provided in this
Agreement.
8. NON-SOLICITATION OF EMPLOYEES. During Executive's employment by the
Company hereunder and for the one (1) year period following the termination of
such employment for any reason, Executive shall not, either directly or
indirectly, on his own behalf or in the service or on behalf of others solicit,
divert or hire away, or attempt to solicit, divert or hire away any person then
employed full time by the Company.
9. NON-COMPETITION. Executive agrees that he shall not, during the term
of this Agreement, and for a period of one (1) year thereafter:
(i) directly or indirectly own, engage in, manage,
operate, join, control, or participate in the
ownership, management, operation, or control of, or
be connected as a stockholder, partner, member, joint
venturer, director, officer, employee, consultant,
agent, beneficiary, or otherwise with, any
corporation, limited liability company, partnership,
sole proprietorship, association, business, trust, or
other organization, entity or individual which
develops, manufactures or markets products or
performs services which are competitive with or
similar to the products or services of the Company or
its subsidiaries; provided, that Executive may own,
directly or indirectly, securities of any entity
traded on any national securities exchange or listed
on the National Association of Securities Dealers
Automated Quotation System if Executive does not,
directly or indirectly, own 1% or more of any class
of equity securities, or securities convertible into
or exercisable or exchangeable for 1% or more of any
class of equity securities, of such entity;
(ii) call upon, solicit, direct, take away, provide
products or services to, or attempt to call upon,
solicit, direct, take away or provide products or
services to, or accept any orders of business from
any customers or clients of the Company for products
or services which are competitive with or similar to
the products or services of the Company or its
subsidiaries.
(iii) directly or indirectly request or advise any
present or future supplier, service provider or
financial resource of the Company to withdraw,
curtail or cancel the furnishing of such service or
resource to the Company.
10. CONFIDENTIALITY.
10.1 CONFIDENTIALITY. In the course of performing services hereunder
on behalf of the Company and its affiliates, Executive has had and from time to
time will have access to Confidential Information. Executive agrees (i) to hold
the Confidential Information in strict confidence, (ii) not to disclose the
Confidential Information to any person (other than in the regular business of
the Company or its affiliates), and (iii) not to use, directly or indirectly,
any of the Confidential Information for any purpose other than on behalf of the
Company and its affiliates. All
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documents, records, data, apparatus, equipment and other physical property,
whether or not pertaining to Confidential Information, that are furnished to
Executive by the Company or are produced by Executive in connection with
Executive's employment will be and remain the sole property of the Company. Upon
the termination of Executive's employment with the Company for any reason and as
and when otherwise requested by the Company, all Confidential Information
(including, without limitation, all data, memoranda, customer lists, notes,
programs and other papers and items, and reproductions thereof relating to the
foregoing matters) in Executive's possession or control, shall be immediately
returned to the Company.
10.2 CONFIDENTIAL INFORMATION. As used in this Agreement, the term
"Confidential Information" shall mean information belonging to the Company of
value to the Company or with respect to which Company has right in the course of
conducting its business and the disclosure of which could result in a
competitive or other disadvantage to the Company. Confidential Information
includes information, whether or not patentable or copyrightable, in written,
oral, electronic or other tangible or intangible forms, stored in any medium,
including, by way of example and without limitation, trade secrets, ideas,
concepts, designs, configurations, specifications, drawings, blueprints,
diagrams, models, prototypes, samples, flow charts processes, techniques,
formulas, software, improvements, inventions, domain names, data, know-how,
discoveries, copyrightable materials, marketing plans and strategies, sales and
financial reports and forecasts, customer lists, studies, reports, records,
books, contracts, instruments, surveys, computer disks, diskettes, tapes,
computer programs and business plans, prospects and opportunities (such as
possible acquisitions or dispositions of businesses or facilities) which have
been discussed or considered by the management of the Company. Confidential
Information includes information developed by Executive in the course of
Executive's employment by the Company, as well as other information to which
Executive may have access in connection with Executive's employment.
Confidential Information also includes the confidential information of others
with which the Company has a business relationship. Notwithstanding the
foregoing, Confidential Information does not include information in the public
domain, unless due to breach of Executive's duties under Section 10.1.
11. ASSIGNMENT. This Agreement shall not be assignable, in whole or in
part, by either party without the written consent of the other party, except
that the Company may, without the consent of Executive, assign its rights and
obligations under this Agreement to any corporation, firm or other business
entity (i) with or into which the Company may merge or consolidate, or (ii) to
which the Company may sell or transfer all or substantially all of its assets or
of which fifty percent (50%) or more of the equity investment and of the voting
control is owned, directly or indirectly, by, or is under common ownership with,
the Company. Upon such assignment by the Company, the Company shall obtain the
assignees' written agreement enforceable by Executive to assume and perform, and
after the date of such assignment, the terms, conditions, and provisions imposed
by this Agreement upon the Company. After any such assignment by the Company and
such written agreement by the assignee, the Company shall be discharged from all
further liability hereunder and such assignee shall thereafter be deemed to be
the Company for the purposes of all provisions of this Agreement including this
section.
12. INDEMNIFICATION. The Company shall indemnify Executive as provided
in the Delaware General Corporations Code, Company's Charter or Bylaws in effect
at the commencement of
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this Agreement. The scope of indemnification to which Executive is entitled
shall not be diminished, but may be expanded by the Company, by amendment of the
Company's Bylaws, Articles of Incorporation or otherwise. Executive shall
indemnify and hold the Company harmless from all liability for loss, damages or
injury resulting from the negligence or misconduct of Executive.
13. LIABILITY INSURANCE. The Company shall provide, at its sole cost
and expense, under which Executive shall be covered, Directors and Officers
Liability Insurance and Errors and Omissions Liability Insurance in coverage
amounts not less than $10 million, respectively.
14. MISCELLANEOUS.
14.1 PREPARATION OF AGREEMENT. This Agreement was prepared by the
Company solely on behalf of such party. Each party acknowledges that: (i) he or
it had the advice of, or sufficient opportunity to obtain the advice of, legal
counsel separate and independent of legal counsel for any other party hereto;
(ii) the terms of the transactions contemplated by this Agreement are fair and
reasonable to such party; and (iii) such party has voluntarily entered into the
transactions contemplated by this Agreement without duress or coercion. Each
party further acknowledges that such party was not represented by the legal
counsel of any other party hereto in connection with the transactions
contemplated by this Agreement, nor was he or it under any belief or
understanding that such legal counsel was representing his or its interests.
Except as expressly set forth in this Agreement, each party shall pay all legal
and other costs and expenses incurred or to be incurred by such party in
negotiating and preparing this Agreement; in performing due diligence or
retaining professional advisors; in performing any transactions contemplated by
this Agreement; or in complying with such party's covenants, agreements and
conditions contained herein. Each party agrees that no conflict, omission or
ambiguity in this Agreement, or the interpretation thereof, shall be presumed,
implied or otherwise construed against any other party to this Agreement on the
basis that such party was responsible for drafting this Agreement.
14.2 COOPERATION. Each party agrees, without further consideration,
to cooperate and diligently perform any further acts, deeds and things, and to
execute and deliver any documents that may be reasonably necessary or otherwise
reasonably required to consummate, evidence, confirm and/or carry out the intent
and provisions of this Agreement, all without undue delay or expense.
14.3 GOVERNING LAW. This Agreement is made under and shall be
government by and construed in accordance with the laws of the State of
California.
14.4 ENTIRE AGREEMENT.This Agreement contains the entire agreement
of the parties relating to the subject matter hereof and supersedes all prior
agreements and understandings with respect to such subject matter, and the
parties hereto have made no agreements, representations or warranties relating
to the subject matter of this Agreement which are not set forth herein.
14.5 LEGAL PROCEEDINGS. Should any party institute or should the
parties otherwise become a party to any action or proceeding to enforce or
interpret this Agreement, the prevailing party in any such action or proceeding
shall be entitled to receive from the non-prevailing party all costs and
expenses of prosecuting or defending the action or proceeding. This Agreement
and the rights of each party under this Agreement shall be governed by,
interpreted under,
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and construed and enforced in accordance with the laws of the State of
California.
14.6 WITHHOLDING TAXES. The Company shall undertake to make
deductions, withholdings and tax reports with respect to payments and benefits
under this Agreement to the extent that it reasonably and in good faith believes
that it is required to make such deductions, withholdings and tax reports.
Payments under this Agreement shall be in amounts net of any such deductions or
withholdings. Nothing in this Agreement shall be construed to require the
Company to make any payments to compensate the Executive for any adverse tax
effect associated with any payments or benefits or for any deduction or
withholding from any payment or benefit.
14.7 AMENDMENTS. No amendment or modification of this Agreement
shall be deemed effective unless made in writing signed by the parties hereto.
14.8 NO WAVIER. No term or condition of this Agreement shall be
deemed to have been waived nor shall there be any estoppel to enforce any
provisions of this Agreement, except by a statement in writing signed by the
party against whom enforcement of the waiver or estoppel is sought. Any written
waiver shall not be deemed a continuing waiver unless specifically stated, shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than that specifically waived.
14.9 SEVERABILITY. To the extent any provision of this Agreement
shall be invalid or unenforceable, it shall be considered deleted here from and
the remainder of such provision and of this Agreement shall be unaffected and
shall continue in full force and effect.
14.10 NOTICES. Any and all notices, requests or other communications
required or permitted in or by any provision of this Agreement shall be in
writing and may be delivered personally or by certified mail directed to the
addressee at such person's or entity's last known post office address, and if
given by certified mail, shall be deemed to have been delivered when deposited
in such, mail postage prepaid.
This Agreement is executed on the date first written above at Los
Angeles, California.
COMPANY: EXECUTIVE:
QT 5, INC.
By: _________________________ ___________________________
Title: ______________________
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EXHIBIT A
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