EXHIBIT 10.4
Form of Employment Agreement
Between
Protosource Corporation and
Xxxxxxx Xxxxx
EMPLOYMENT AGREEMENT
AGREEMENT MADE THIS 3RD DAY OF NOVEMBER, 1999, AND EFFECTIVE AS OF THE
1ST day of November, 1999, by and between PROTOSOURCE CORPORATION, A CALIFORNIA
CORPORATION HAVING ITS PRINCIPAL PLACE OF BUSINESS AT 0000 00XX Xxxxxx, Xxxxx
Xxxxxx, XX 00000, (HEREINAFTER CALLED THE "COMPANY") AND XXXXXXX XXXXX, HAVING
AN ADDRESS AT 0000 00XX Xxxxxx, Xxxxx Xxxxxx, XX 00000 (hereinafter called
"Employee"),
WITNESSETH:
Whereas, the Company is an Internet Service Provider engaging in web
development and web hosting throughout the continental United States;
Whereas, Employee has significant strategic managerial and financial
ability in the company's business which is of significant value to the Company;
Whereas, the Company desires to assure itself of the services of Employee
and to that end desires to enter into a contract of employment with him, upon
the terms and conditions herein set forth; and
Whereas, Employee is desirous of entering into such a contract of
employment;
Now, therefore, in consideration of the premises and the mutual covenants
herein set forth, the parties hereto agree as follows:
1. The Company hereby employs Employee during the employment
period, as hereafter fixed, as the President and Chief
Executive Officer of the Company. Employee shall, subject to
the authority of the Board of Directors of the Company, have
supervision and control over, and responsibility for, the
general management and operation of the Company. Employee
shall also have such other powers and duties as may, from time
to time, be prescribed by the Board of Directors of the
Company, provided that such duties are consistent with those
normally incident to the office of the President and Chief
Executive Officer.
2. The employment period shall commence as of November 1,
1999, (the "effective date"), and shall continue through and
terminate on October 31, 2001 (the "Employment Period"),
unless earlier terminated by either the Company or Employee,
or extended pursuant to the terms hereinafter contained,
subject to the following terms and conditions:
a. In the event, (i) Employee terminates his
employment or (ii) Employee's employment is terminated by the
Company for cause, the Employment Period shall terminate at
the end of the month in which such event occurs.
b. In the event Employee, by reason of physical or
mental disability (excluding infrequent and temporary absences
due to ordinary transitory illnesses), shall be unable, for
more than 120 days in the aggregate, during any 12-month
period in the Employment Period, to perform the services
required of him hereunder, the Employment Period shall
terminate at the end of the month following the month in which
either Employee or the Company shall have given notice to the
other of its intention to terminate the Employment Period
because of such disability.
c. The term of the Employment Period shall be
automatically extended for successive one-year renewal terms,
commencing on November 1, 2001 and on November 1, of each year
thereafter unless the Board of Directors shall elect not to
extend the term, whereupon the Company shall be required to
provide Employee with a minimum of 120 days prior written
notice, (postmarked no later than June 30) of its intention
not to extend the term in the following year.
d. In the event the Employment Period shall terminate
pursuant to subparagraphs "a" or "b" hereinabove, any amounts
payable to Employee under paragraph 3 hereof, including, but
not limited to, any salary accrued to the last day of the
Employment Period, shall be paid to Employee or, in the event
of Employee's death, to his estate.
3. As compensation for the performance by Employee of his
obligations under this agreement, the Company shall pay to
employee during the Employment Period:
a. A base salary at the rate of not less than
$175,000.00 per year, the precise rate to be fixed by the
Board of Directors of the Company from time to time, payable
on the Company's normal pay days or in such other installments
as may be agreed upon.
b. The annual base salary shall be automatically
increased to $200,000.00 annually once the Company's monthly
gross revenues run at the rate of $291,666.66 ($3,500,000.00
annually) and operating profitability exceeds $50,000.00
monthly for at least three consecutive months. For purposes of
this Agreement, the term "operating profitability" shall be
defined as earnings before interest, taxes, depreciation and
amortization (EBITDA).
c. The annual base salary shall be automatically
increased to $250,000.00 annually once the Company's monthly
gross revenues run at the rate of $416,666.66 ($5,000,000.00
annually) and operating profitability exceeds $100,000.00
monthly for at least three consecutive months
d. An automobile allowance of $500.00 per month
payable monthly in advance, commencing on April 1, 2000.
e. Notwithstanding anything hereinabove to the
contrary, in the event of the Employee's death during
the first two (2) years of this Agreement or any renewal term
thereof, the entire base salary due for such two (2) year term
or the remainder of such renewal term, shall be deemed earned,
due and payable to his Estate as of the date of his death.
4. In addition to the compensation herein provided, Employee
shall be entitled to:
a. Four weeks vacation during each year of the
Employment Period.
b. Reimbursement for reasonable business-related travel
and entertainment expenses incurred by Employee
in the performance of his duties, payable after submission of
such reports and vouchers as the Company may, in accordance
with its then current policy, from time to time require of all
employees.
c. Participate in the Company's benefit and welfare
plans, including life, accident and disability plans, which
are available to the Company's executives generally, excluding
medical, hospital and dental coverage.
5. Employee accepts the employment hereunder and agrees that
during the Employment Period, Employee shall faithfully
perform his duties to the best of his ability and in
accordance with the directions and orders of the Board of
Directors of the Company. He shall devote his attention and
energies to the performance of such duties during his billable
working hours. Employee agrees that he will travel to whatever
extent is reasonably necessary to conduct the Company's
business.
6. The Company may not terminate their Agreement at any time
except for cause. The Company shall be deemed to have
terminated Employee's employment for cause if the Company
terminates his employment by reason of: (a) Employee's
criminal conviction for commission of an act of fraud,
embezzlement, theft or dishonesty; or (b) Employee's
commission of any other criminal act involving moral turpitude
which causes embarrassment to the Company.
7. Immediately upon execution of this Agreement the Company
shall grant to Employee options to purchase 100,000 shares of
the Company's common stock in accordance with the terms
hereinafter set forth. The exercise price with respect to each
share of stock subject to the option will be the last
transaction price of the stock on the NASDAQ market on the
date of the execution of this Agreement. The option will be
exercisable by the Employee as to 60,000 shares of stock at
any time after November 1, 2000. The option will be
exercisable by the Employee as to the next 20,000 shares of
stock at any time after the Employee's annual base salary is
or should be increased to $200,000.00 annually pursuant to the
terms of this Agreement and the option will be exercisable by
the Employee as to the remaining 20,000 shares of stock at any
time after the Company's gross revenues run at the average
rate of $350,000.00 monthly for a period of at least three (3)
consecutive months. Notwithstanding anything herein to the
contrary, the options will be immediately exercisable as to
all 100,000 shares of stock (a) at any time the Company is
liquidated, purchased, acquired by or merged into another
business entity, (b) in the event of the Employee's death, in
which case the Employee's estate shall have the immediate
right to exercise the option at any time, or (c) in the event
this Agreement or the Employee's employment by the Company is
for any reason (other than for cause as defined in paragraph
"6" hereinabove) terminated or suspended.
8. Employee shall promptly communicate and disclose to the
Company all other information and data pertaining to the
Company's business obtained by him in the course of his
employment (whether or not made, and/or developed by employee
or by others in the employ of the Company). All written
materials, records and documents made by Employee or coming
into his possession during the Employment Period concerning
any inventions, products, processes or equipment,
manufactured, used, developed, including, but not limited to,
know-how, trade secrets, drawings, systems, plans, pricing
costs, methods, specifications, business plans, marketing
techniques, investigated or considered by the Company, or
otherwise concerning the business or affairs of the Company,
shall be the property of the Company, and upon termination of
the Employment Period, or upon request of the Company during
the Employment Period, Employee shall promptly deliver the
same to the Company. Employee agrees to render such reports to
the Company of the activities of the business undertaken by
him or conducted under his direction during the Employment
Period as the Company may reasonably request.
9. During the terms of this Agreement and all extensions
thereof, the Company agrees to maintain in full force and
effect a life insurance policy having a face amount of not
less than $250,000 which names the Employee as the insured and
his spouse as the named beneficiary.
10. Any notice to be given by either party hereunder shall be
in writing, mailed by certified or registered mail with return
receipt requested, shall be addressed to the other party at
the address herein before stated or to such other address as
may have been furnished by such other party in writing and
shall be deemed to have been given on the date of mailing.
11. No modification, amendment or waiver of any of the
provisions of this Agreement shall be effective unless in
writing specifically referring hereto, and signed by both
parties.
12. This instrument constitutes the entire agreement of the
parties hereto with respect to Employee's employment and his
compensation therefore, except that nothing herein contained
shall be construed as preventing Employee either from
participating in such employee plans as the Company and its
affiliates shall make available to Employee and others, or
from receiving reimbursement from the Company or its
affiliates for expenses reasonably incurred by Employee in
their behalf or in the pursuit of his duties on their behalf.
13. The failure to enforce, at any time, any of the provisions
of this Agreement or to required, at any time, performance by
the other party of any of the provisions hereof shall in no
way be construed to be a waiver of such provisions, or to
affect either the validity of this Agreement, or any part
hereof, or the right of either party thereafter to enforce
each and every provision in accordance with the terms of this
Agreement.
14. If any legal action is instituted by Employee to enforce
any provision of this Agreement, the Company will reimburse
Employee for all reasonable costs thereby incurred by him
(including reasonable attorneys' fees) if Employee prevails in
such action.
15 The invalidity or unenforceability of any particular
provision of this Agreement shall not affect the other
provisions hereof, and this Agreement shall be construed in
all respect as if such invalid or unenforceable provision were
omitted.
16. This Agreement shall be binding upon and shall inure to
the benefit of the Company and any successor of the Company,
and any such successor shall be deemed substituted for the
Company under the provisions of this Agreement. For the
purposes of this Agreement the term "successor" shall mean any
person, firm, corporation or other business entity which at
any time, whether by merger, purchase, liquidation or
otherwise, shall acquire all or substantially all of the
assets or business of the Company.
17. This Agreement shall be binding upon and shall inure to
the benefit of Employee, his legal representatives and
assigns, except that Employee's obligations to perform such
future services and rights to receive payment therefor are
hereby expressly declared to be nonassignable and
nontransferable.
18. The Agreement shall be governed and construed in
accordance with the laws of the State of New York.
In Witness Whereof, the parties hereto have caused this instrument to
be duly executed as of the day and year first written above.
PROTOSOURCE CORPORATION, Company
By:___________________________ ___________________________
XXXXXXX XXXXX, Director XXXXXXX XXXXX, Employee
By: ______________________________
XXXXXXX XXXXXX, Director
By: ______________________________
XXXXXX XXXXXXXXXXXX, Director
