EXHIBIT 10.29
AMENDED AND RESTATED
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (the "AMENDED
AGREEMENT") is by and among Xxxxxxx X. Xxxxxx ("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 September 8, 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. Executive
shall provide the services required hereunder from his home office in Xxxxxxx
Oaks, California (the "REMOTE OFFICE"), and Executive shall work out of
Employer's St. Xxxxxx, Utah or Las Vegas, Nevada office Tuesday through Thursday
(minimum of 8 hours per day), every other week, during the term 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 September 27, 1999, and shall terminate on September 26, 2002,
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 $108,000 per year commencing on September 27, 1999.
Salary payments shall be subject to withholding and other applicable taxes.
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A. SALARY ADJUSTMENT. Employer and Executive recognize that certain
"Events" (as defined in the following paragraph) may occur which will cause a
salary increase. Upon the occurrence of any one of the Events listed in the
following paragraph, Executive's salary shall be increased to $120,000 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 a net (after tax)
automobile allowance of $700 per month, payable in 26 equal annual payments of
$323.07. Employer shall also 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. 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 subject to Employee's
credit worthiness.
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B. 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.
2.6 PROFESSIONAL FEES. Employer shall pay all professional fees for
Executive including, but not limited to, the following (a) annual bar dues for
the Arizona and California State Bar Association; (b) reasonable mandatory
continuing legal education courses and fees as required by the Arizona and
California State Bar Associations; and (c) reasonable professional publications
as necessary for Executive to remain current on securities and corporate laws
affecting Employer. Employer shall maintain in effect for the benefit of
Executive, at all times during the term of this Amended Agreement, an employer
professional lawyers insurance policy with Executive Risk Insurance Co. with
policy coverage of not less than $1,000,000.
ARTICLE III
DUTIES OF EXECUTIVE
3.1 DUTIES. Executive is engaged as Secretary and General Counsel of
Employer. Executive shall have authority over decision-making and managerial
duties regarding all legal matters of Employer according to business plans and
strategies provided by Employer, reporting only to the Chief Executive Officer
and the Board of Directors. 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 his full-time (not less
than 40 hours per week), 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,
Employer's Chief Execuitve Officer 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 Chief
Executive Officer until further notified. Based upon such records, Employer's
Chief Executive Officer, in his 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").
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3.6 ACCOUNTABILITY. Executive shall be directly responsible solely to the
Chief Executive Officer of Employer.
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.
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.
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
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information (the "CONFIDENTIAL INFORMATION"). The Parties hereto recognize and
acknowledge that the Confidential Information is proprietary and integral to
Employer's business and Executive 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 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 REMOTE OFFICE. Executive's original employment agreement contained a
condition requiring Executive's relocation to St. Xxxxxx, Utah by January 1,
2000 (the "ORIGINAL RELOCATION CONDITION"). Under the terms of this Amended
Agreement, the Parties have agreed to eliminate the Original Relocation
Condition and allow Executive to perform services from the Remote Office as
described herein, upon the condition described in this paragraph.
A. TEST PERIOD. The Parties agree to a test period, commencing
August 1, 2000 and continuing for ninety (90) days thereafter (the "TEST
PERIOD"), to determine the viability of Executive's performing his duties
hereunder from the Remote Office. Employer agrees to provide Executive a
full-time assistant for the Test Period and beyond, to be hired as soon as
possible following the execution of this Amended Agreement.
At the end of the Test Period, should Employer's board of directors
determine by majority consent that Executive working from the Remote Location is
not in the best interests of Employer and Executive, then Employer shall provide
Executive with a written memorandum delineating all outstanding issues relating
to Executive performing his services from the Remote Office. Executive shall
have a period of thirty (30) days from the date of receipt of such memorandum to
cure all issues cited in such memorandum.
B. DECISION TO TERMINATE THE REMOTE OFFICE. Should Employer's board
of directors determine by majority consent, after the conclusion of the Test
Period
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(including the 30-day cure period), that Executive cannot fulfill his duties
hereunder from the Remote Office, Employer shall so inform Executive and
Executive shall have the following options: (i) relocate to St. Xxxxxx, Utah;
(ii) terminate this Agreement and receive a severance package consisting of 25%,
or $30,000, of Executive's annual salary; (iii) reduce his compensation
hereunder in a mutually agreeable amount; or (iv) work out of the Company's St.
Xxxxxx, Utah office four (4) days per week for the remainder of this Amended
Agreement.
8.2 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) twelve (12) 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;
C. Conviction of a felony or any act involving moral turpitude; or
D. Failure to comply with Paragraph 1.1 hereof.
In the event of termination with cause, all cash compensation, as referred
to above, shall be paid to Executive on a bimonthly basis.
8.3 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.
8.4 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 one hundred twenty percent (120%) of the
average closing price, as quoted on the NASDAQ SmallCap, National Market or any
other national securities exchange on which Employers common stock is quoted or
listed for trading, 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 one hundred twenty percent (120%) 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.
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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.
8.5 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.
8.6 EXERCISE OF OPTIONS TO PURCHASE COMMON STOCK. As of July 12, 2000,
Executive holds options to purchase 124,947 shares of common stock of Employer.
Of this amount, Executive was issued options to purchase 122,274 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 122,274 shares of common stock of
Employer under the 2000 Stock Option Plan as well as the additional options to
be issued to Executive are collectively referred to hereinafter as the "XXXXXX
OPTIONS") under the 2000 Stock Option Plan as determined by Employer's
Compensation Committee. Notwithstanding the terms of the 2000 Stock Option Plan,
the Xxxxxx Options are subject to the following terms and conditions:
A. TERMINATION WITH CAUSE. Should Employer terminate Executive
pursuant to paragraph 8.2 hereof, Executive shall retain the Xxxxxx Options and
shall have the irrevocable right to exercise all of the Xxxxxx Options through
the final date on which the Xxxxxx Options may be exercised by Executive, as set
forth on the written stock option grants evidencing the Xxxxxx Options.
B. TERMINATION WITHOUT CAUSE. Should Employer terminate Executive
pursuant to paragraph 8.3 hereof, (i) Executive shall retain the Xxxxxx Options
and shall have the irrevocable right to exercise all of the Xxxxxx Options
through the final date on which the Xxxxxx Options may be exercised by
Executive, as set forth on the written stock option grants evidencing the Xxxxxx
Options, (ii) the Company shall pay the
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aggregate exercise price on all Xxxxxx 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 Xxxxxx Options exercised by Executive.
C. TERMINATION UPON SALE OF THE BUSINESS. Should Employer terminate
Executive pursuant to paragraph 8.5 hereof, (i) Executive shall retain the
Xxxxxx Options and shall have the irrevocable right to exercise all of the
Xxxxxx Options through the final date on which the Xxxxxx Options may be
exercised by Executive, as set forth on the written stock option grants
evidencing the Xxxxxx Options, (ii) the Company shall pay the aggregate exercise
price on all Xxxxxx 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 Xxxxxx 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 Xxxxxx
Options and shall have the irrevocable right to exercise all of the Xxxxxx
Options through the final date on which the Xxxxxx Options may be exercised by
Executive, as set forth on the written stock option grants evidencing the Xxxxxx
Options, (ii) the Company shall pay the aggregate exercise price on all Xxxxxx
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 Xxxxxx Options exercised by Executive.
E. RESIGNATION BY EXECUTIVE. If Executive resigns prior to the
conclusion of this Amended Agreement, Executive shall retain the Xxxxxx Options
and shall have the irrevocable right to exercise all of the Xxxxxx Options
through the final date on which the Xxxxxx Options may be exercised by
Executive, as set forth on the written stock option grants evidencing the Xxxxxx
Options.
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.
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.
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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
/S/ XXXXXXX X. XXXXXX
---------------------------------
XXXXXXX X. XXXXXX
EMPLOYER
BY: XXXXXX X. XXXXXXX
-----------------------------
XXXXXX X. XXXXXXX
CHIEF EXECUTIVE OFFICER
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EXHIBIT "A"
ANNUAL CASH BONUS
In consideration for the 135,000 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 seventeen and eighty-one hundred percent (17.81%)
of the Xxxx.
00
XXXXXXX "X"
OPTIONS TO PURCHASE COMMON STOCK
In consideration for the 135,000 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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