EXHIBIT 10.31
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made and entered into effective
as of the 4th day of January, 2001 by and between OneSource Technologies, Inc.,
a Delaware corporation (the "Company") and Xxxxxx X. Xxxxxxx (the "Executive").
The Company and Executive are hereinafter collectively referred to as the
"Parties", and individually referred to as each or any "Party".
Recitals
A. The Company desires assurance of the association and services of
Executive in order to retain Executive's experience, skills, abilities,
background, and knowledge, and is willing to engage Executive's services on
the terms and conditions set forth in this Agreement.
B. Executive desires to be in the employ of the Company, and is willing to
accept such employment on the terms and conditions set forth in this
Agreement.
In consideration of the foregoing premises and the mutual covenants herein
contained, and for other good and valuable consideration, the Parties, intending
to be legally bound, agree as follows:
Agreements
1. Employment:
1.1 The Company hereby employs Executive, and Executive hereby accepts
employment by the Company, upon the terms and conditions set forth in this
Agreement.
1.2 Executive shall be the Chairman of the Board of the Company and shall serve
in such other capacity or capacities as the Board of Directors of the
Company may from time to time prescribe. Additionally, the Executive will
perform tasks in various roles as required in order to build the asset base
and infrastructure to improve the valuation of the Company.
1.3 Executive shall do and perform all services, acts, or things necessary or
advisable to manage and conduct the business of the Company, provided,
however, that at all times during his employment, Executive shall be
subject to the direction and policies from time to time established by the
Board of Directors of the Company. In Executive's role as Chairman,
Executive will make general recommendations that will be subject to
discussion and approval by select committees established within the Board
of Directors, or by the entire Board.
1.4 During the employment term, Executive shall perform the services he is
required to perform pursuant to this Agreement at the Company's offices
located at 0000 Xxxx Xxxxx, Xxxxxxxxxx, Xxxxxxx or at such other place or
places from which such services can be conveniently provided or at which
the Company maintains an office provided, however, that the Company may
from time to time require Executive to travel temporarily to other
locations in connection with the Company's business.
2. Loyal and Conscientious Performance; Non-Competition:
2.1 During his employment by the Company, Executive shall devote significant
time (not less than eight (8) business days on site per month) to the
proper and efficient performance of this Agreement, and shall not, without
the prior written consent of the Board of Directors of the Company,
directly or indirectly, render services of a business, professional or
commercial nature to any other person or entity, whether for compensation
or otherwise, or engage in any business activities competitive with or
adverse to the Company's business or welfare, whether alone, as a partner,
or as a shareholder, officer or director of any other corporation, or as a
trustee, fiduciary or in a similar representative capacity.
2.2 During his employment by the Company, Executive shall perform in a
professional and conscientious manner in accordance with applicable
standards of professional conduct in the State of Arizona.
3. Terms of Employment:
3.1 Subject to earlier termination as provided in this Agreement, Executive
shall be employed for a term of two (2) years beginning January 4, 2001 and
expiring at midnight on January 3, 2003 (the "Employment Period"). After
the expiration of such term, this Agreement shall automatically renew for
two consecutive one (1) year periods unless written notice is provided by
the Executive Committee of the Board of Directors at least ninety (90) days
prior to the renewal date.
4. Compensation of Executive:
4.1 During the initial year during the term of this Agreement, the Company
shall pay Executive a salary (the "Base Salary") of Sixty Thousand
($60,000) Dollars per annum payable in bi-weekly installments until such
time as the Company yields positive cash flow for two (2) consecutive
months at which time Executive's salary will be raised to Seventy-Two
Thousand ($72,000) Dollars per annum payable in bi-weekly installments.
Such salary change shall be effected upon the written approval of the
Company's Compensation Committee, signed by the members of the Committee,
which shall be the action of the Board of Directors on a temporary basis
which shall be made permanent by ratification of the full Board of
Directors at its next regularly scheduled meeting.
4.2 Executive's compensation may be changed from time to time by mutual
agreement of Executive and the Board of Directors of the Company. Any such
agreement shall be evidenced by a written amendment of this Agreement,
which, among other things, shall specify with particularity any change in
Executive's compensation and the date or dates when each such change shall
become effective.
4.3 Executive's performance shall be reviewed by the Board of Directors of the
Company on a periodic basis (but not less than twice in each fiscal year
during the term of this Agreement). The Board of Directors may, in its sole
discretion, award such bonuses to Executive as shall be appropriate or
desirable based on Executive's performance.
4.4 All of Executive's compensation shall be subject to customary withholding
taxes and any other employment taxes as are commonly required to be
collected or withheld by the Company, together with any withholdings
required as a result of the Executive's participation in any Company
benefit plan.
4.5 To the extent the Company is unable to pay the base salary to the
Executive, Executive may receive the value of such compensation due and
unpaid as of December 31st of each year during the term of this Agreement
in the form of additional common stock issued to Executive, subject to the
Company's compliance with all securities and other rules and regulations.
5. Other Benefits:
5.1 Executive shall be eligible to participate in and be covered by any pension
and profit sharing, life insurance, accident insurance, health insurance,
hospitalization, disability, medical reimbursement or other plan(s)
maintained from time to time by the Company for its employees.
Participation by the Executive in any such plans shall be subject to any
required withholding from Executive's regular compensation payments. The
Company shall purchase a policy of key man life insurance in the amount of
$1 million dollars on the Executive, which shall be used, in part, to fund
any death benefit payable to the Employee under the provisions of paragraph
8.1.
5.2 During each fiscal year of the term of this Agreement, Executive shall be
entitled to vacation not to exceed two (2) weeks (ten (10) business days)
in each such fiscal year at full salary. It is understood that all
vacations shall be taken during the year earned. Executive agrees that such
vacation shall be taken only at such times as the Company shall from time
to time determine. In addition to the above annual vacation, Executive
shall be entitled to additional time, also at full salary, for sickness or
matters of personal emergency up to a maximum of ten (10) business days per
year.
5.3 If approved in advance of incurring same by the Board of Directors of the
Company, the Company shall pay on Executive's behalf, or reimburse
Executive for expenses incurred in connection with his employment,
including any professional license fees, dues, professional journals, costs
of attending professional conventions, meetings, and continuing education
classes, and entertainment expenses for entertainment aiding the
development of the Company. Executive agrees to submit receipts and other
documentation to support the above expenses as a condition of reimbursement
therefore.
5.4 Subject to the compliance with SEC regulations and appropriate reporting
requirements, the Company agrees to grant Executive a Stock Grant in the
amount of five hundred thousand (500,000) shares (the "Grant") as of May
24, 2001. The Executive, shall, as of May 24, 2001, be granted options to
purchase an additional one million two hundred fifty thousand (1,250,000)
shares of the Company's common stock at the closing market price on May 24,
2001. Seven hundred and fifty thousand (750,000) shares of these options
shall be vested immediately and shall be exercisable in whole or in part by
the Executive on or before May 24, 2006. Five hundred thousand (500,000)
shares of these options shall vest, and become exercisable by the Executive
upon any of the following events; a) when the Company achieves positive
cash flow for two consecutive quarters, b) annualized sales trending must
exceed $3.2 million c) the Company`s sales growth exceeds by 10% of CY
annualized sales for two consecutive quarters. The Chief Financial Officer
shall certify to the Compensation Committee the occurrence of the condition
precedent to vesting, and the Compensation Committee shall confirm the
vesting of the options by written notice to Executive. The options shall be
exercisable by the Executive for a period of five (5) years from the date
they vest. In the event of the sale of the Company prior to the end of the
exercise period, all options granted pursuant to this paragraph shall be
exercisable on or before the date of the closing.
5.5 Any future options or warrants and corresponding shares shall be subject to
the terms and conditions of the Company's stock option plan as the same may
be in force from time to time (the "Plan").
5.6 Should Executive arrange or facilitate any single financing transaction
exceeding Five Hundred Thousand ($500,000) Dollars in a single transaction,
Executive shall be entitled to a transaction fee of five (5%) percent for
the completion of that transaction, provided that the cumulative
transaction fees do not exceed twelve (12%) percent in the aggregate
between all parties.
5.7 In the event of a merger, amalgamation or change of control in any
transaction during the employment period, Executive is entitled to a
transaction fee of the lesser of three (3%) percent (on the gross contract
sales price or a minimum of One Hundred Thousand ($100,000) Dollars),
provided that the transaction is approved by the Board of Directors, The
payment of the transaction fee shall effect the termination of this
Agreement for the remainder of its term however, all unexercised options
referenced in 5.4 will be considered vested or earned with the ratification
of this transaction.
6. Indemnification by the Company:
6.1 The Company shall, to the maximum extent permitted by law, indemnify and
hold Executive harmless against expenses, including reasonable attorney's
fees, judgments, fines, settlements and other amounts actually and
necessarily incurred in connection with any proceeding arising by reason of
Executive's employment by the Company. The Company shall also advance to
the Executive any expenses incurred in defending any such proceeding to the
maximum extent permitted by law.
7. Termination:
7.1 Without cause:
a. Either Party may voluntarily terminate the Employment Agreement and
Executive's employment hereunder without cause for any reason in
his/its sole discretion by giving not less than thirty (30) days prior
written notice to the other Party. As used herein, a termination
"without cause" shall mean any termination that is not "for cause" as
defined in Section 7.2 or 7.3 below, as applicable.
b. If Executive's employment under this Agreement is terminated by the
Company without cause before the last day of the Employment Period,
Executive shall be entitled to receive as compensation an amount
("Severance Pay") equal to the lesser of (a) the equivalent of nine
(9) months of Base Salary, or (b) the equivalent of the Base Salary
for the number of months then remaining in the Employment Period,
which amount shall be paid to Executive at the same time and in the
same manner as if Executive was then employed by the Company.
c. If Executive's employment under this Agreement is terminated by
Executive without cause, Executive shall be entitled to receive as
compensation only the applicable Base Salary prorated to the date of
such termination on the basis of a 365-day year.
7.2 Termination by Company for cause:
a. At the direction of the Company's Board of Directors, the Company may
terminate the Employment Agreement and Executive's employment
hereunder for cause by delivery of written notice to Executive
specifying the cause or causes relied upon for such termination. If
the Employment Period and Executive's employment under this Agreement
is terminated by the Company for cause before the last day of the
Employment Period, Executive shall be entitled to receive as
compensation for such fiscal year, only the Base Salary set forth in
Section 4.1 prorated to the date of termination on the basis of a
365-day year. Grounds for the Company to terminate the Employment
Period "for cause" shall consist of the occurrence of any of the
following events:
(i) Executive's failure or refusal to perform the duties reasonably
related to the capacity in which he is employed hereunder which
have been or may be assigned to him by the Board of Directors of
the Company, and Executive has not corrected such conduct within
thirty (30) days of written notice thereof , specifying the
duties to be performed, from the Company to Executive;
(ii) Executive's performance of any action when specifically and
reasonably instructed not to do so by the Board of Directors of
the Company;
(iii)Executive's commission of any fraud against the Company or use
or appropriation for his personal use or benefit of any funds or
properties of the Company in a material amount not authorized by
the Board of Directors to be used or appropriated;
(iv) Executive's conviction of any crime involving moral turpitude;
(v) The bankruptcy of the Company or, as reasonably determined by the
Company's Board of Directors, the likelihood that the Company
will be unable to meet its liabilities maturing within ninety
(90) days of such determination; or
(vi) Executive's material breach of any provision of this Agreement,
and Executive's failure to cure such breach within thirty (30)
days of written notice thereof from the Company to Executive.
b. Termination Date: Any notice of termination given pursuant to this
Article 7 shall effect termination as of the date specified in such
notice or, in the event no such date is specified, on the last day of
the month in which such notice is delivered.
7.3 Termination Upon Death or Disability. Executive's employment hereunder
shall terminate without notice upon the date of Executive's death or the
date when Executive becomes "completely disabled" as that term is defined
in Section 8.2.
7.4 Non-solicitation:
a. For a period of two (2) years following the termination of Executive's
employment with the Company, Executive shall not solicit or in any
manner encourage employees of the Company to leave its employ.
b. If this Agreement is terminated other than immediately pursuant to
Section 7.1 or 7.2, the Board of Directors of the Company may, in its
sole discretion and subject to its other obligations under this
Agreement, relieve Executive of his duties under this Agreement and
assign Executive other duties and responsibilities to be performed
until the termination becomes effective.
8. Death or Disability During Term of Employment:
8.1 Upon termination of Executive's employment pursuant to Section 7.4,
Executive or his estate or personal representative, as the case may be,
shall be entitled to receive Executive's Base Salary set forth in Section
4.1 for a period of six (6) months following the date of death or the date
when Executive becomes completely disabled, or through the end of the
fiscal year in which such termination occurs, whichever is longer.
8.2 The term "completely disabled" as used in this Agreement shall mean the
inability of Executive to perform his duties under this Agreement because
he has become permanently disabled within the meaning of any policy of
disability income insurance covering employees of the Company then in
force. In the event the Company has no policy of disability income
insurance covering employees of the Company then in force when Executive
becomes disabled, the term "completely disabled" shall mean the inability
of Executive to perform his duties under this Agreement by reason of any
incapacity, physical or mental, which the Board of Directors of the
Company, based upon medical advice or an opinion provided by a licensed
physician acceptable to the Board of Directors of the Company, determines
to have incapacitated Executive from satisfactorily performing all of his
usual services for the Company for the foreseeable future. Based upon such
medical advice or opinion, the action of the Board of Directors of the
Company shall be final and binding and the date such action is taken shall
be the date of such complete disability for purposes of this Agreement.
9. Executive's Duties Regarding Trade Secrets; Confidential Information and
Patent Rights:
9.1 Upon termination of this Agreement, Executive shall promptly deliver to the
Company all equipment, notebooks, documents, memoranda, reports, files,
books, correspondence, lists or other written, electronic or graphic
records, and the like, relating to the Company's business, which are or
have been in Executive's possession or under his control.
9.2 Executive shall not disclose or use at any time, except as necessary to
perform his duties under this Agreement, either during or subsequent to his
employment, any secret or confidential information or knowledge obtained by
Executive while employed by the Company from either the Company, its other
employees or its customers. Executive agrees to execute any Company
Non-Competition, Non-Disclosure Agreements, as approved by legal counsel to
the Company, in such form as may be presented to him from time to time.
9.3 Executive agrees that he will promptly and fully inform and disclose to the
Company from time to time all inventions, designs, improvements and
discoveries which he now has, or may hereafter have, during the term of
this Agreement which pertain or relate to the business of the Company or to
any experimental work carried on by the Company, whether conceived by the
Executive or with others and whether or not conceived during regular
working hours. All such inventions, designs, improvements and discoveries
shall be the exclusive property of the Company. Executive shall assist the
Company and shall execute all documents and do all things necessary to
obtain such patents on all such inventions, designs, improvements and
discoveries deemed patentable by the Company and shall execute all
documents and do all things necessary to obtain such patents, and to vest
the Company with full and exclusive title thereto and protect the same
against infringement by others.
9.4 Executive, during the term of this Agreement, will have access to and
become acquainted with various trade secrets, including but not limited to
formulas, patterns, devices, secret inventions, processes, customer lists
and compilations of information, records and specifications which are owned
by the Company and which may or may not be regularly used in the operation
of the business of the Company. Executive shall not disclose any of the
aforesaid trade secrets, directly or indirectly, or use them in any way,
either during the term of this Agreement or at any time thereafter, except
as required in the course of his employment by the Company. All files,
records, documents, drawings, specifications, equipment, computer disks,
other electronic media and similar items relating to the business of the
Company, whether prepared by the Executive or otherwise coming into his
possession, shall remain the exclusive property of the Company and shall
not be removed from the premises of the Company except for purposes related
to the pursuit of the business of the Company, without the prior written
consent of the Company.
9.5 Executive agrees to hold in confidence and refrain from disclosing to any
person information about the Company which Executive knows as a result of
the performance of this duties under this Agreement, except for the
disclosure of information which Executive reasonably believes is generally
known or available to the public or which is appropriate under the
circumstances to disclose in connection with the performance of his duties
under this Agreement.
10. Assignment and Binding Effect:
10.1 This Agreement shall be binding upon and inure to the benefit of Executive
and Executive's heirs, executors, administrators and legal representatives.
Neither this Agreement nor any rights or obligations under this Agreement
shall be assignable by Executive. This Agreement shall be binding upon and
inure to the benefit of the Company and its successors, assigns and legal
representatives. The Company may assign this Agreement pursuant to a sale
of the business.
11. Notices:
11.1 All notices or demands of any kind, required or permitted to be given by
the Company or Executive under this Agreement, shall be given in writing
and shall be personally delivered (and receipted for) or mailed by
certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Company: OneSource Technologies, Inc.
0000 Xxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxx Xxxxxxxx
If to Executive: Xx. Xxxxxx X. Xxxxxxx
000 Xxx Xxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
Any such written notice shall be deemed received either when personally
delivered or three (3) days after its deposit in the United States mail as
specified above. Either Party may change its address for notices by giving
notice to the other Party in the manner specified in this section.
12. Choice of Law:
12.1 This Agreement is made in Scottsdale, Arizona. This Agreement shall be
construed and interpreted in accordance with the laws of the State of
Arizona.
13. Integration:
13.1 This Agreement contains the entire agreement of the Parties relating to the
subject matter of this Agreement, and supersedes all prior oral and written
employment agreements or arrangements between the Parties. This Agreement
cannot be amended or modified except by a written agreement signed by
Executive and the Company.
14. Waiver:
14.1 No term, covenant or condition of this Agreement or any breach thereof
shall be deemed waived, except with the written consent of the Party
against whom the waiver is claimed, and any waiver of any such term,
covenant, condition or breach shall not be deemed to be a waiver of any
preceding or succeeding breach of the same or any other term, covenant,
condition or breach.
15. Severability:
15.1 The unenforceability, invalidity or illegality of any provision of this
Agreement shall not render any other provision of this Agreement
unenforceable, invalid or illegal.
16. Interpretation; Construction:
16.1 The headings set forth in this Agreement are for convenience only and shall
not be used in interpreting this Agreement. This Agreement has been drafted
by legal counsel representing the Company, but Executive has been
encouraged, and has had the opportunity to consult with his own independent
counsel and tax advisors with respect to the terms of this Agreement. The
Parties acknowledge that each Party and its counsel has reviewed and
revised, or had an opportunity to review and revise this Agreement and the
normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the
interpretation of this Agreement.
17. Representations and Warranties;
17.1 Executive represents and warrants that he is not restricted or prohibited,
contractually or otherwise, from entering into and performing each of the
terms and covenants contained in this Agreement, and that his execution and
performance of this Agreement will not violate or breach any other
agreement between Executive and any other person or entity.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.
COMPANY:
OneSource Technologies, Inc.
A Delaware corporation
By: /s/ Xxxxx Xxxxxxxx
--------------------------------
Xxxxx Xxxxxxxx
President & Chief Executive Officer
EXECUTIVE:
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxx
