EXHIBIT 10.25
AMENDED AND RESTATED
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (the "AMENDED
AGREEMENT") is by and among Xxxxxx X. Xxxxxxx ("EXECUTIVE") and RoomSystems,
Inc., a Nevada corporation ("EMPLOYER"). Executive and Employer are collectively
referred to herein as the "Parties". The Amended Agreement shall amend and
supersede that certain Executive Employment Agreement, by and among the Parties,
entered into on January 1, 1999.
R E C I T A L S:
WHEREAS, Employer's board of directors (the "BOARD") desires to employ
Executive in an executive capacity and the Executive desires to be employed in
such capacity.
NOW THEREFORE, in consideration of the mutual covenants and conditions
hereinafter set forth and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE I
TERM
1.1 EMPLOYMENT. Employer employs Executive and Executive accepts employment
under the terms and conditions of this Amended Agreement.
1.2 TERM. The term of this Amended Agreement shall be for thirty-six (36)
months with an open option thereon as set forth herein and shall be effective as
of January 1, 1999, and shall terminate on December 31, 2001, unless extended by
mutual agreement of the Parties. Upon mutual agreement of the Parties, this
Amended Agreement may be extended for an additional period upon written notice
given to Executive not less than three (3) months prior to the termination of
this Amended Agreement.
A. OPTION TERM. Upon mutual agreement of the Parties, and upon the
condition that there is no breach of any condition or term of this Amended
Agreement at the time of exercise, this Amended Agreement may be extended for an
additional twelve (12) months on the same terms and conditions of this Amended
Agreement, unless modified or amended upon the written consent of Employer and
Executive.
ARTICLE II
COMPENSATION
2.1 COMPENSATION. For all services rendered by Executive, Employer shall
pay Executive the salary of $155,000 per year commencing on January 1, 1999.
Salary payments shall be subject to withholding and other applicable taxes.
A. SALARY ADJUSTMENT. Employer and Executive recognize that certain
"Events" (as defined in the following paragraph) may occur which will cause a
salary
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increase. Upon the occurrence of any one of the Events listed in the following
paragraph, Executive's salary shall be increased to $185,000 per year during the
term of this Amended Agreement. Such increase shall be automatic upon the
occurrence of any one of the Events listed below.
B. DEFINITION OF "EVENTS." For purposes of this Amended Agreement and
particularly, the salary increase described in the immediately preceding
paragraph, any one of the following shall be considered an "Event":
i. MERGER. A merger with a third party entity, whereby at least
fifty-one percent (51%) of Employer's outstanding common stock is merged with
such entity.
ii. SALE/ACQUISITION. A sale or acquisition of at least fifty-one
percent (51%) of Employer's outstanding common stock or the sale of all or
substantially all of Employer's assets to a third party entity.
iii. DEBT FACILITY. A debt facility is established providing
Employer a debt facility of at least $6 million.
iv. INITIAL PUBLIC OFFERING. Employer closes an initial public
offering of its common stock.
2.2 EARNED MONETARY BONUSES. Executive shall be entitled to an annual
cash bonus in accordance with Exhibit "A" attached hereto and incorporated
herein by reference (the "ANNUAL CASH BONUS"). Executive's performance shall
be reviewed annually to determine the payment of bonuses, if any, in addition
to the Annual Cash Bonus.
2.3 AUTOMOBILE ALLOWANCE. Executive shall be entitled to an automobile
allowance of $600 per month, payable in equal payments. Employer shall pay
Executive's automobile insurance and reasonable maintenance.
2.4 STOCK OPTION CONSIDERATION. Executive, as partial consideration for
his services, shall be entitled to receive options to purchase common stock
in accordance with Exhibit "B" attached hereto and incorporated herein by
reference.
2.5 EXECUTIVE BENEFITS. In addition to the foregoing, Executive shall be
entitled to the following benefits:
A. HEALTH INSURANCE. Employer shall provide and pay for health,
dental and life insurance for Executive and his family with an insurance carrier
of Employer's choice. The benefits offered under this paragraph shall include a
standard executive health and life insurance program.
B. EXPENSES. Executive may incur reasonable expenses for
promoting Employer's business, including expenses for entertainment, travel and
similar items. Employer will reimburse Executive for all such reasonable
expenses upon Executive's presentation of an itemized account of such
expenditures. Employer shall provide Executive with a Diner's Club, American
Express or other credit card for his use in promoting and representing Employer.
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C. VACATIONS. Executive shall be entitled each year to "Flexible
Time Off" ("FTO") commensurate with a "Grade I" Executive, as described in
Employer's EXECUTIVE HANDBOOK.
ARTICLE III
DUTIES OF EXECUTIVE
3.1 DUTIES. Executive is engaged as President and Chief Executive Officer,
and will serve as Chairman of the Board of Employer. Executive shall have
authority over decision-making and managerial duties regarding the business of
Employer, and shall supervise and direct all of the business of Employer
according to business plans and strategies provided by Employer, reporting only
to the Board. The precise services of Executive may be extended or curtailed by
mutual agreement of Employer and Executive from time to time.
3.2 EXTENT OF SERVICES. Executive shall devote so much of his productive
time, ability and attention to the business of the Company as is necessary to
fulfill his duties, and shall perform all such duties in a professional, ethical
and businesslike manner. Executive will not, either during the term of this
Amended Agreement and for a period of twelve (12) months thereafter, directly or
indirectly engage in any other business, either as an Executive, employer,
consultant, principal, officer, director, advisor, or in any other business
capacity, which is competitive with the business of the Company, without the
express written consent of the Company. Furthermore, the Board may require that
Executive account for his time spent performing his duties hereunder at any
time. Upon such notice, Executive shall account for his time and deliver such
accounting to the Board until further notified. Based upon such records, the
Board, in its sole discretion, may adjust Executive's FTO and/or salary during
such period accordingly.
3.3 ENGAGING IN OTHER EMPLOYMENT. Executive hereby agrees to undertake the
responsibilities for and devote his productive time, abilities, and attention to
the business of Employer during the term of this Amended Agreement.
3.4 REGULATIONS. Executive agrees to comply with all federal, state and
local laws, ordinances, and regulations in the conduct of his business on behalf
of Employer.
3.5 EXECUTIVE AS A SHAREHOLDER OF EMPLOYER. Employer recognizes that
Executive is a shareholder of Employer. Executive may be issued shares of common
stock of Employer in the future as a result of a purchase or bonus ("EXECUTIVE'S
SHARES").
3.6 ACCOUNTABILITY. Executive shall be directly responsible solely to the
Board.
ARTICLE IV
DUTIES OF EMPLOYER
4.1 PAYMENT OF COMPENSATION AND PROVISION OF BENEFITS. During the term
hereof, Employer agrees to pay all compensation, benefits, allowances and FTO
due Executive as set forth herein.
4.2 WORKING FACILITIES. Employer shall provide offices, stenographic help
and such other facilities and services as are suitable to his position and
appropriate for the performance of his duties.
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ARTICLE V
DISABILITY; DEATH DURING EMPLOYMENT
5.1 DISABILITY. If Executive is unable to perform his services by reason of
illness or incapacity for a period of more than one (1) month, the compensation
thereafter payable to him during the continued period of such illness or
incapacity for a period not to exceed twelve (12) months shall be sixty percent
(60%) of Executive's then existing salary. Executive's full compensation shall
be reinstated upon his recovery. Notwithstanding anything to the contrary,
Employer may terminate this Amended Agreement at any time after Executive shall
be absent from his employment, for whatever cause, for a continuous period of
more than twelve (12) months, and the obligations of Employer shall thereupon
terminate. If it is determined, pursuant to the terms of this Amended Agreement,
that Executive is disabled or incapacitated and cannot discharge the duties and
responsibilities contemplated hereunder, Employer shall have the right to hire
an Executive to replace him in whatever position he may have at that time.
A. DISABILITY INSURANCE. In lieu of the foregoing, Employer may obtain
disability insurance for Executive. Should this occur, paragraph 5.1 above shall
be null and void and the terms of said disability insurance shall govern, so
long as the terms in such policy are equal to or greater than the terms outlined
in Section 5.1 above.
B. KEY MAN INSURANCE. Executive shall cooperate in obtaining a Key Man
Insurance policy on him to Employer's satisfaction.
5.2 DEATH DURING EMPLOYMENT. If Executive dies during the term of
employment, Employer shall pay to the estate of Executive the compensation which
would otherwise be payable to Executive up to the end of the month in which
death occurs. In addition, Employer shall pay a sum equal to two (2) years
salary payable in three (3) equal monthly installments after the death of
Executive to the spouse of Executive or if he is not survived by his spouse,
then to Executive's heirs in equal shares, or if there are no such surviving
heirs, to the estate of Executive.
ARTICLE VI
CONFIDENTIAL INFORMATION; TRADE SECRETS; PROPRIETARY RIGHTS
6.1 CONFIDENTIALITY. Executive hereby acknowledges that he has received
information regarding the business of Employer, including but not limited to
customer lists, product information, business strategy, executive agreements,
all of which is confidential information (the "CONFIDENTIAL INFORMATION"). The
Parties hereto recognize and acknowledge that the Confidential Information is
proprietary and integral to Employer's business and agrees to keep such
Confidential Information confidential and not disclose the same to any third
person, corporation and/or entity for a period of three (3) years subsequent to
the termination of this Amended Agreement or termination of Executive as an
Executive of Employer, whether such termination is with or without cause.
6.2 PRODUCTS. All products relating to Employer's business, designed,
improved or enhanced by Executive, will be the sole property of Employer and
Executive will not be allowed to possess or use them unless Employer agrees in
writing thereto. Whenever requested to do so by Employer, Executive will execute
any and all applications, assignments or other instruments that Employer deems
necessary to protect Employer's
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interests therein. Executive's obligations hereunder shall survive the
termination of Executive's employment with respect to inventions, discoveries
and improvements conceived or made by Executive during the term of Executive's
employment described in this Amended Agreement.
ARTICLE VII
NON-COMPETITION
7.1 NON-COMPETITION. During Executive's term of employment set forth in
this Amended Agreement, and for a period of one (1) year thereafter, Executive
will not directly or indirectly be an owner, partner, director, manager, officer
or Executive or otherwise render services or be associated with any business
that competes with Employer.
ARTICLE VIII
TERMINATION
8.1 TERMINATION WITH CAUSE. Employer may terminate Executive with cause
upon providing thirty (30) days' advance written notice to Executive. Upon
termination with cause, Executive shall be entitled to cash compensation equal
to the greater of the following: (i) twenty-four (24) months of his then
existing salary, or (ii) the remainder of the salary due under this Amended
Agreement. For purposes of this Amended Agreement, termination "with cause"
shall be for any of the following:
A. Any breach of any material obligations owed to Employer;
B. Failure to follow the directive of the Company's board of
directors; or
C. Conviction of a felony or any act involving moral turpitude.
In the event of termination with cause, all cash compensation, as referred to
above, shall be paid to Executive on a bimonthly basis.
8.2 TERMINATION WITHOUT CAUSE. Employer may terminate Executive without
cause upon providing thirty (30) days advance written notice to Executive. Upon
termination without cause by Employer, Executive shall be entitled to cash
compensation equal to the greater of the following: (A) the remainder of the
salary due under this Amended Agreement; or (B) the then existing base salary of
Executive for a period of thirty-six (36) months from the date of termination
without cause. In the event of termination without cause, all cash compensation,
as referred to above, shall be paid to Executive on a bimonthly basis.
8.3 PURCHASE OF THE EXECUTIVE'S SHARES. Upon termination, Executive's
Shares shall be dealt with as follows:
A. TERMINATION WITH CAUSE. Upon termination with cause, Employer shall
purchase Executive's Shares for two hundred percent (200%) of the average
closing price, as quoted on the NASDAQ SmallCap, National Market or any other
national
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securities exchange, for the ninety (90) day period preceding the date of
termination; or if Employer's common stock is not quoted or otherwise traded on
a national securities exchange, then Employer shall purchase the Executive's
Shares for two hundred percent (200%) of the average price of all private sales
of common stock by Employer to third Parties for the ninety (90) day period
preceding the date of termination with cause (referred to herein as the "STOCK
PURCHASE PRICE"). The Stock Purchase Price shall be paid to Executive in
twenty-four (24) equal monthly payments, commencing thirty (30) days after the
date of termination with cause.
B. TERMINATION WITHOUT CAUSE. If Executive is terminated without
cause, Executive shall have the sole discretion to either (i) sell the
Executive's Shares to Employer at the Stock Purchase Price; or (ii) retain
ownership of the Executive's Shares. Executive shall notify Employer within
thirty (30) days of termination without cause of his election hereunder. Should
Executive elect to sell the Executive's Shares to Employer for the Stock
Purchase Price, Executive shall so notify Employer and Employer shall remit the
entire amount of the Stock Purchase Price to Executive within ninety (90) days
of the date of notification hereunder.
8.4 TERMINATION UPON SALE OF BUSINESS. Notwithstanding anything to the
contrary, Employer may terminate this Amended Agreement upon thirty (30) days'
written notice upon the occurrence of any of the following events, which any one
event will be treated as a termination without cause for purposes of severance
allowance pursuant to this Amended Agreement.
A. The sale by Employer of substantially all of its assets to a single
purchaser or a group of associated purchasers;
B. The sale, exchange or other disposition, in one transaction, of
more than fifty percent (50%) of the outstanding common stock of the Employer;
C. A decision by Employer to terminate its business and liquidate its
assets; or the merger or consolidation of Employer in a transaction in which the
shareholders of Employer receive more than fifty percent (50%) of the
outstanding voting shares of the new or continuing corporation.
D. Notwithstanding the foregoing, should Employer agree to sell all or
substantially all of its assets, Employer shall purchase Executive's Shares for
an amount equal to the greater of the Stock Purchase Price or the same price
sold by shareholders of Employer.
8.5 EXERCISE OF OPTIONS TO PURCHASE COMMON STOCK. As of June 6, 2000,
Executive holds options to purchase 344,025 shares of common stock of Employer.
Executive was issued options to purchase 336,675 shares of common stock of
Employer pursuant to Employer's 2000 Stock Option Plan ("2000 STOCK OPTION
PLAN"), and will receive additional options to purchase shares of common stock
(Executive's options to purchase 336,675 shares of common stock of Employer as
well as the additional options to be issued to Executive are collectively
referred to hereinafter as the "SUNYICH OPTIONS") under the 2000 Stock Option
Plan as determined by Employer's Compensation Committee. Notwithstanding the
terms of the 2000 Stock Option Plan, the Sunyich Options are subject to the
following terms and conditions:
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A. TERMINATION WITH CAUSE. Should Employer terminate Executive
pursuant to paragraph 8.1 hereof, Executive shall retain the Sunyich Options and
shall have the irrevocable right to exercise all of the Sunyich Options through
the final date on which the Sunyich Options may be exercised by Executive, as
set forth on the written stock option grants evidencing the Sunyich Options.
B. TERMINATION WITHOUT CAUSE. Should Employer terminate Executive
pursuant to paragraph 8.2 hereof, (i) Executive shall retain the Sunyich Options
and shall have the irrevocable right to exercise all of the Sunyich Options
through the final date on which the Sunyich Options may be exercised by
Executive, as set forth on the written stock option grants evidencing the
Sunyich Options, (ii) the Company shall pay the aggregate exercise price on all
Sunyich Options exercised by Executive, and (iii) the Company shall pay all
applicable state and federal personal income tax incurred by Executive as a
result of the Company paying the exercise price on the Sunyich Options exercised
by Executive.
C. TERMINATION UPON SALE OF THE BUSINESS. Should Employer terminate
Executive pursuant to paragraph 8.4 hereof, (i) Executive shall retain the
Sunyich Options and shall have the irrevocable right to exercise all of the
Sunyich Options through the final date on which the Sunyich Options may be
exercised by Executive, as set forth on the written stock option grants
evidencing the Sunyich Options, (ii) the Company shall pay the aggregate
exercise price on all Sunyich Options exercised by Executive, and (iii) the
Company shall pay all applicable state and federal personal income tax incurred
by Executive as a result of the Company paying the exercise price on the Sunyich
Options exercised by Executive.
D. PAYMENT OF EXERCISE PRICE AND RELATED INCOME TAX UPON CONCLUSION OF
THE AMENDED AGREEMENT. If Executive is employed by Employer upon the conclusion
of this Amended Agreement, (i) Executive shall retain the Sunyich Options and
shall have the irrevocable right to exercise all of the Sunyich Options through
the final date on which the Sunyich Options may be exercised by Executive, as
set forth on the written stock option grants evidencing the Sunyich Options,
(ii) the Company shall pay the aggregate exercise price on all Sunyich Options
exercised by Executive, and (iii) the Company shall pay all applicable state and
federal personal income tax incurred by Executive as a result of the Company
paying the exercise price on the Sunyich Options exercised by Executive.
ARTICLE IX
GENERAL PROVISIONS
9.1. WAIVER OF BREACH. The waiver by Employer of breach of any provisions
of this Amended Agreement by Executive shall not operate or be construed as a
waiver of any subsequent breach by Executive. No waiver shall be valid unless in
writing and signed by an authorized officer of Employer.
9.2 ASSIGNMENT. Executive acknowledges that the services to be rendered by
him are unique and personal. Accordingly, Executive may not assign any of his
rights under this Amended Agreement. The rights and obligations of Employer
under this Amended Agreement shall inure to the benefit of and shall be binding
upon the successors and assigns of Employer.
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9.3 MODIFICATION. This Amended Agreement may not be modified, changed or
altered orally but only by an agreement in writing signed by the party against
an enforcement of any waiver, change, modification, extension or discharge as
sought.
9.4. GOVERNING LAW. This Amended Agreement shall be governed by and
construed under the laws of the State of Nevada.
9.5 INTEGRATION CLAUSE. This instrument contains the entire agreement
between the Parties hereto and supersedes any and all prior written and/or oral
agreements. This Amended Agreement may be altered or modified only in writing
signed by the Parties hereto.
9.6 NOTICES. Any notice required or desired to be given under this Amended
Agreement shall be deemed given if in writing sent by certified mail to the
Parties at each party's last known address.
9.7 ATTORNEYS' FEES. Should any party seek the enforcement of any term of
this Amended Agreement, the prevailing party thereunder shall be entitled to
attorneys' fees and costs for the enforcement of such term or provision.
9.8 ARBITRATION. In the event of any dispute arising under this Amended
Agreement, including any dispute regarding the nature, scope or quality of
services provided by either party hereto, its is hereby agreed that such dispute
shall be resolved by binding arbitration to be conducted by the American
Arbitration, to be arbitrated in accordance with its rules and regulations and
procedures in Las Vegas, Nevada. In the event of any such arbitration, pending
resolution of the arbitration and the award of costs by the arbitrator, each
party hereto shall advance one-half of the amounts, if any, requested by the
arbitrator and/or the sponsoring organization.
EMPLOYEE
---------------------------------
XXXXXX X. XXXXXXX
EMPLOYER
BY:
------------------------------
XXXXXXX X. XXXXXX
SECRETARY
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EXHIBIT "A"
ANNUAL CASH BONUS
In consideration for the 540,000 shares of Common Stock relinquished by
Executive on October 1, 1999 and cancelled immediately thereafter, the Company's
Compensation Committee shall, no later than December 31, 2000, vote on the terms
of the annual cash bonus pool set forth below.
The formula for determining the annual cash bonus for Executive is as
follows:
1. ANNUAL CASH BONUS POOL: The Annual Cash Bonus Pool (the "POOL") for
determining the total amount available for the executive officers of the Company
is as follows: the Pool shall be comprised of two percent (2%) of Employer's
fiscal year gross revenues, and five percent (5%) of Employer's fiscal year net
income.
2. EXECUTIVE'S PARTICIPATION: Executive shall be entitled to receive, on an
annual basis, not less than twenty-eight and seventy-six hundred percent
(28.76%) of the Xxxx.
0
XXXXXXX "X"
OPTIONS TO PURCHASE COMMON STOCK
In consideration for the 540,000 shares of Common Stock relinquished by
Executive on October 1, 1999 and cancelled immediately thereafter, the Company's
Compensation Committee shall, no later than December 31, 2000, issue additional
options to purchase common stock to Executive in an amount to be determined.
In addition to the foregoing, Executive shall receive, on an annual basis,
options to purchase common stock in an amount to be determined by the Company's
Compensation Committee.
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