EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement") is made
and entered into as of this 15th day of January, 1999, by and between
StrategiNet, Inc., a Delaware corporation ("Company") and Xxxxxx X.
Xxxxxxx ("Executive").
WITNESSETH:
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WHEREAS, Executive is currently employed by the Company as its
President and Chief Operating Officer; and
WHEREAS, the Company and Executive desire to continue the
Executive's employment with the Company on the terms and conditions
hereinbelow set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the Company and Executive hereby agree as follows:
1. Employment.
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(a) Agreement to Employ. Upon the terms and subject to the
conditions of this Agreement, the Company shall employ Executive, and
Executive hereby agrees to accept employment by the Company.
(b) Term of Employment. Unless terminated as provided in
Paragraph 5.(a) hereof, the Company shall employ Executive pursuant to
the terms of this Agreement for the period commencing on the date hereof
(the "Commencement Date") and ending on December 31, 2003. The period
during which Executive remains employed by the Company pursuant to this
Agreement (as same may be amended or modified from time to time in
accordance herewith) shall be referred to as the "Employment Period."
2. Position and Duties. During the Employment Period,
Executive shall serve as President and Chief Operating Officer of the
Company. During the Employment Period, Executive shall have the duties,
responsibilities and obligations customarily assigned to individuals
serving as President and Chief Operating Officer of comparable companies
and such other duties, responsibilities and obligations not inconsistent
with the position of Executive with the Company as may be specified by
the Board of Directors of the Company (the "Board") from time to time.
Executive shall devote his full business time to the services required
of Executive hereunder, except for vacation time and authorized periods
of absence due to sickness, personal injury or other disability, and
Executive shall use Executive's best efforts, judgment, skill and energy
to perform such services in a manner consonant with the duties of
Executive's position and to improve and advance the business and
interests of Company. Executive represents that Executive's employment
hereunder and compliance by Executive with the terms and conditions of
this Agreement shall not conflict with or result in the breach of any
agreement to which Executive is a party or by which Executive may be
bound.
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3. Compensation.
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(a) Base Salary . During the Employment Period, Company
shall pay Executive a base salary at the annual rate of $200,000, which
salary is referred to herein as "Base Salary." The Company shall pay
Executive's Base Salary in equal monthly installments or in such other
installments upon which the Executive and the Company may agree.
(b) Annual Incentive Compensation.
(1) For each fiscal year of the Company ending during
the Employment Period, Executive shall accrue an annual bonus (the
"Annual Bonus") equal to the following:
(A) For fiscal years 1999 and 2000, thirty percent
(30%) of Executive's Base Salary provided hat, as of the last day of each
respective fiscal year the Company has generated earnings before income
tax ("EBIT"). For the purposes of this Agreement, EBIT shall be
determined solely and exclusively by the Company as evidenced by the
financial statements prepared by (or for) the Company for such fiscal
year; and
(B) For the remaining fiscal years thirty
percent (30%) of Executive's Base Salary provided that, as of the last
day of each such respective fiscal year the Company has generated EBIT;
and
(2) Executive shall become vested in the amount of any
Annual Bonus accrued pursuant to Paragraph 3.(b)(1) hereof
(A) with respect to he 2001, 2002 and 2003 fiscal
years of the Company, in two (2) installments; and
(B) with respect to the 2001, 2002 and 2003
fiscal years of Company, in one (1) installment,
in each case on the dates (the "Vesting Date") set forth in the schedule
below, provided Executive remains continuously employed by Company
pursuant to the terms hereof from the Commencement Date through the
applicable Vesting Date.
VESTING SCHEDULE
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First Installment Second Installment
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Fiscal Year Vesting Vested Vesting Vested
Annual Bonus Date Percentage Date Percentage
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1
2
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2
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3
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4
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(3) Payment of the one-half of the first installment
of any Annual Bonus which becomes vested pursuant to the Vesting Schedule
shall be made to Executive within ten (10) days after receipt by the
Board of the unaudited results of operations of the Company for the
fiscal year with respect to which such Annual Bonus is accrued and
payment of the remaining one-half of the first installment of any Annual
Bonus which becomes vested pursuant to the Vesting Schedule shall be made
to Executive within ten (10) days after receipt by the Board of the
audited financial statements of the Company for the fiscal year with
respect to which such Annual Bonus is accrued; provided, however, that
in no event shall any such payment be made later than 60 days after the
applicable Vesting Date with respect to which such installment is
payable. Payment of the second installment of any Annual Bonus which
becomes vested pursuant to the Vesting Schedule shall be made to
Executive on December 31, 1999, and the amount of any such second
installment shall be increased by interest at the publicly announced
prime rate of *_________* Bank, as in effect from time to time,
compounded quarterly for the period commencing on the last day of the
fiscal year with respect to which the applicable Annual Bonus has accrued
and ending on the day immediately preceding the date of payment of such
second installment.
(4) In the event of the early termination of the
Employment Period pursuant to Paragraph 5 hereof due to a Termination for
Cause or a termination by Executive other than a Termination for Good
Reason prior to any applicable Vesting Date, then the portion of any
Annual Bonus accrued pursuant to Paragraph 1(b)(1) that has not yet
become vested shall be forfeited in its entirety, and Executive shall
have no right to receive payment in respect of any such amount of Accrued
Bonus so forfeited. In the event of the early termination of the
Employment Period pursuant to Paragraph 5 hereof by reason of a
termination due to Executive's death, a Termination Due To Disability,
a Termination Without Cause or a Termination for Good Reason, Executive
shall become fully and immediately vested in the unvested portion (the
"Deferred Installment") of any Annual Bonus accrued pursuant to Paragraph
1(b)(1) hereof with respect to any fiscal year ending prior to the fiscal
year that includes the last day of the Employment Period.
(c) Stock Option. To permit Executive to participate in the long
term success of the Company, the Company hereby grants to Executive at any
time from or from time to time from the date hereof until thirty (30)
business days after the expiration of the Employment Period (the "Expiration
Date") the option to purchase (the "Option") 1,500,000 shares of the common
stock of the Company (the "Option Shares") at a purchase price of $1.00 per
Option Share (the "Option Share Price").
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(1) Adjustment . The number of Option Shares purchasable
and the Option Price shall be subject to adjustment from time to time
upon the happening of certain events as follows:
(A) Reclassification, Consolidation or Merge . In
case of any reclassification or change of the outstanding securities of
the class of securities which are issuable upon exercise of the Option
(other than a change in par value, or from par value to no par value, or
from no par value to par value or as a result of a subdivision or
combination or an increase or decrease in the number of such securities
outstanding) or in case of any consolidation or merger of the Company
with or into another corporation (other than a merger with another
corporation in which the Company is the surviving corporation and which
does not result in any reclassification or change, other than a change
in par value, or from par value to no par value, or from no par value to
par value, or as a result of a subdivision or combination of outstanding
securities issuable upon the exercise of this Option or an increase or
decrease in the number of such securities outstanding), or in case of any
sale or transfer to another corporation of the property of the Company
as an entirety or substantially as an entirety, the Company, or such
successor or purchasing corporation, as the case may be, shall, without
payment of any additional consideration therefor, execute a new option
providing that the Executive shall have the right to exercise such new
option (upon terms not less favorable to the Executive than those then
applicable to the Option) and to receive upon such exercise, in lieu of
each Option Share issuable upon exercise of this Option, the kind and
amount of shares of stock, other securities, money or property receivable
upon such reclassification, change, consolidation, merger, sale or
transfer by the holder of each Option Share issuable upon exercise of
this Option had the Option been exercised immediately prior to such
reclassification, change, consolidation, merger, sale or transfer. Such
new option shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
Paragraph. The provisions of this Paragraph shall similarly apply to
successive reclassifications, changes, consolidations, mergers, sales and
transfers.
(B) Subdivision or Combination. If the Company at
any time while this Option remains outstanding and unexpired, shall
subdivide or combine its outstanding securities of the class of
securities which are issuable upon exercise of the Option, the Option
Share Price shall be proportionately reduced in the case of a subdivision
of such securities, as of the effective date of such subdivision, or, if
the Company shall take a record of holders of such securities for the
purposes of so subdividing, as of such record date, whichever is earlier,
or shall be proportionately increased, in the case of a combination of
such securities, as of the effective date of such combination, or, if the
Company shall take a record of holders of such securities for the purpose
of such combination, as of such record date, whichever is earlier. Upon
each adjustment in the Option Share Price pursuant to this Paragraph, the
number of Option Shares purchasable hereunder at the Option Share Price
shall be adjusted, to the nearest one hundredth of a whole share, to the
product obtained by multiplying such number of Option Shares purchasable
immediately prior to such adjustment in the Option Share Price by a
fraction, the numerator of which shall be the Option Share Price immediately
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prior to such adjustment and the denominator of which shall be the Option
Share Price immediately thereafter.
(C) Stock Dividends. If the Company at any time
while this Option is outstanding and unexpired shall pay a dividend or
make any other distribution on its common stock payable in shares of its
common stock, then the Option Share Price shall be adjusted, as of the
date the Company shall take a record of the holders of its common stock
for the purpose of receiving such dividend or other distribution (or if
no record is taken, as at the date of such payment or other distribution)
to that price determined by multiplying the Option Share Price in effect
immediately prior to such payment or other distribution by a fraction the
numerator of which shall be the total number of shares of common stock
outstanding immediately prior to such dividend or distribution the
denominator of which shall be the total number of shares of common stock
outstanding immediately after such dividend or distribution. Upon each
adjustment in the Option Share Price pursuant to this Paragraph, the
number of Option Shares purchasable pursuant to this Option at the Option
Share Price shall be adjusted, to the nearest one hundredth of a whole
share, to the product obtained by multiplying such number of Option
Shares purchasable immediately prior to such adjustment in the Option
Share Price by a fraction, the numerator of which shall be the Option
Share Price immediately prior to such adjustment and the denominator of
which shall be the Option Share Price immediately thereafter.
(D) Liquidating Dividends, Etc. If the Company at
any time while this Option is outstanding and unexpired shall make a
distribution of its assets to the holders of its common stock as a
dividend in liquidation or by way of return of capital or other than as
a dividend payable out of earnings or surplus legally available for
dividends under applicable law, Executive shall, upon exercise of this
Option, be entitled to receive, in addition to the number of Option
Shares then receivable thereupon, and without payment of any additional
consideration therefor, a sum equal to the amount of such assets as would
have been payable to Executive as owner of that number of Option Shares
receivable by exercise of this Option had Executive been the holder of
record of such Option Shares on the record date for such distribution,
or if no such record is taken, as of the date of such distribution, and
an appropriate provision therefor shall be made a part of any such
distribution.
(E) Other Action Affecting Common Stock. In case
after the date hereof the Company shall take any action affecting the
common stock of the Company other than an action described in any of the
foregoing Paragraphs hereof, which in the opinion of the Board would have
a materially adverse effect upon the rights of the Executive, the Option
Price then in effect and the Option Shares issuable upon exercise of this
Option shall be adjusted in such manner and at such time as the Board on
the advice of the Company's independent public accountants may in good
faith determine to be equitable under the circumstances.
(2) Exercise. After the date hereof and prior to the
Expiration Date, the Option may be exercised, in whole or in part, at any
time or from time to time. In order to exercise the Option, in whole or
in part, the Executive shall deliver to the Company:
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(A) A written notice (the "Exercise Notice")
duly executed by the Executive indicating the election of Executive to
exercise the Option; and
(B) A certified of bank cashier's check payable
to the order of the Company in an amount equal to the aggregate Option
Share Price for the number of Option Shares being purchased.
The Company shall, as promptly as practicable, and in any event
within ten (10) days after the Exercise Notice and the aggregate Option
Share Price are received by the Company, execute and deliver or cause to
be executed and delivered, in accordance with such notice, a certificate
or certificates evidencing the aggregate number of Option Shares
specified in such Exercise Notice. Such certificate or certificates shall
be deemed to have been issued, and Executive shall be deemed for all
purposes to have become a holder of record of such Option Shares, as of
the date the Exercise Notice and the aggregate Option Share Price are
received by the Company. The Company shall pay all expenses, taxes and
other charges payable in connection with the preparation, issuance and
delivery of such stock certificates. No fractional shares of the
Company's common stock will be issued in connection with any purchase
hereunder but in lieu of such fractional shares the Company shall make
a cash refund therefor equal in amount to the product of the applicable
fraction multiplied by the Market Price, as that term is hereinafter
defined, per share on the date of exercise. As used herein, "Market
Price" per share of common stock at any date as of which such price is
to be computed shall be deemed to be the average of the daily closing
prices for the thirty (30) consecutive full trading days immediately
preceding the day in question. The closing price for each day shall be
the last sale price regular way or in case no sale takes place on such
day, the average of the closing high bid and low asked prices regular
way, in either case:
(1) as officially quoted in the National Association
of Securities Dealers Automated Quotation System ("NASDAQ"); or
(2) if, in the reasonable judgment of the Board,
NASDAQ is not the principal United States market for the common stock,
then as quoted on the principal United States market for the common
stock, as determined by the Board; or
(3) if, in the reasonable judgment of the Board,
there exists no principal United States market for the common stock then
as reasonably determined by the Board.
(3) Restrictions on Transferability. Except as specifically
provided for herein, no transfer or other disposition of the Option or
the Option Shares to be acquired upon exercise of the Option (collectively,
the "Securities") shall be valid unless:
(A) there is an effective registration statement under
the Securities Act of 1933 (the "Act") covering the Option or such Option
Shares, as applicable; or
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(B) the Corporation's counsel shall have
furnished the Corporation with an opinion to the effect that registration
is not required under the Act.
(4) Certain Permitted Transfers. The foregoing restrictions
on transferability shall not apply to the Option or the Option Shares with
respect to transfers occurring pursuant to applicable laws of descent and
distribution or transfers among Executive's Family Group (collectively,
the "Permitted Transfers"), provided that such restrictions on
transferability shall be applicable to the Option and the Option Shares
after the occurrence of any such Permitted Transfer. For the purposes
hereof, the Executive's Family Group shall be defined as Executive's
spouse and/or descendants. In the event Executive engages in any such
Permitted Transfer, then Executive shall notify the Company of same
within ten (10) days after the occurrence of such Permitted Transfer
and such notice shall identify the transferee and the nature of the
transfer.
(5) Legend. There shall be imprinted on the face of
each certificate representing the Option Shares purchased pursuant to the
Option the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT").
THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT
BE SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF A CURRENT AND EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT WITH RESPECT TO SUCH SECURITIES, OR AN OPINION
OF THE ISSUER'S COUNSEL TO THE EFFECT THAT REGISTRATION IS NOT
REQUIRED UNDER THE ACT.
(6) Investment. The Executive hereby represents and
warrants that the Securities are being acquired for investment for
Executive's own account, not as a nominee or agent, and not with the view
toward, or for resale in connection with, any distribution thereof The
Executive understands that the Securities have not been registered under
the Act by reason of a specific exemption from the registration
provisions of the Act which depends upon, among other things, the
accuracy of the Executive's representations as expressed herein.
(7) Rule 144. The Executive acknowledges that the
Securities must be held indefinitely unless subsequently registered under
the Act or an exemption from such registration is available. The
Executive is aware of the provisions of Rule 144 (the "Rule") promulgated
under the Act which permit limited resale of securities purchased in a
private transaction, subject to the satisfaction of certain conditions
as set forth in the Rule.
4. Benefits, Perquisites and Expenses.
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(a) Benefits. During the Employment Period, Executive shall be
eligible to participate in each pension, deferred compensation or welfare
benefit plan sponsored or maintained from time to time by the Company, if
any, including without limitation each profit sharing, retirement or
savings plan or program, and each group life, hospitalization, medical,
dental, health, accident or disability insurance or similar plan or
program of the Company, in each case, whether now existing
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or established hereafter, to the extent that Executive is eligible to
participate in any such plan or program in accordance with the Company's
policies applicable to employees and the generally applicable provisions
of such plans and programs. In addition, during the Employment Period,
at the Company's expense, the Company shall provide Executive with term
life insurance coverage providing an aggregate death benefit equal to no
less than Three Million and No/100 Dollars ($3,000,000.00).
(b) Perquisite . During the Employment Period, Executive
shall be entitled to up to four (4) weeks of paid vacation annually and
shall also be entitled to receive such perquisites as may be provided by
the Company in accordance with the then current policies and practices
of the Company.
(c) Business Expense . During the Employment Period, the
Company shall pay or reimburse Executive for all authorized expenses
incurred or paid by Executive in the performance of Executive duties
hereunder, upon presentation of expense statements or vouchers and such
other information as the Company may require and in accordance with the
generally applicable policies and procedures of the Company.
5. Termination of Employment.
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(a) Early Termination of the Employment Agreement.
Notwithstanding Paragraph 1/(b) hereof, the Employment Period shall end
upon the earliest to occur of:
(1) a termination of Executive's employment on account
of Executive's death; or
(2) a Termination Due to Disability; or
(3) a Termination for Cause; or
(4) a Termination Without Cause; or
(5) a Termination for Good Reason; or
(6) a termination of Executive's employment by Executive
following ninety (90) days prior written notice to the Company, other than
a Termination for Good Reason.
(b) Benefits Payable Upon Termination . Following the end
of the Employment Period pursuant to Paragraph 5.(a), Executive (or, in
the event of the death of Executive, Executive's surviving spouse, if
any, or the estate of Executive) shall be paid the type or types of
compensation (as such types of compensation are defined hereinafter)
determined to be payable in accordance with the following table at the
times established pursuant to Paragraph 5.(c):
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CAPTION>
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Earned Salary Vested Accrued Bonus Contingent Severance Welfare
Benefits Bonus Benefit Benefits
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Termination due to death Payable Payable Payable Payable Payable Payable
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Termination due to Disability Payable Payable Payable Payable Payable Payable
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Termination for Cause Payable Payable Not Payable Not Payable Not Payable Not Payable
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Termination Without Cause Payable Payable Payable Payable Payable Payable
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Termination for Good Reason Payable Payable Payable Payable Payable Payable
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Termination by Executive for Payable Payable Not Payable Not Payable Not Payable Not Payable
other than Good Reason
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(c) Timing of Payments .
(1) The amount of any Earned Salary, Contingent
Bonus and Accrued Bonus shall be paid in a single lump sum as soon
as practicable, but in no event more than one hundred twenty (120)
days following the end of the Employment Period.
(2) Vested Benefits shall be payable in
accordance with the terms of the plan, policy, practice, program,
contract or agreement under which such benefits have accrued.
(3) Severance Benefits shall be paid on a
monthly basis during the period commencing on the date of
Executive's termination of employment and ending on the last day of
the calendar month that is coincident with or immediately following
the twelfth month anniversary of the date on which the Employment
Period expired pursuant to Paragraph 5.(a), each such payment to be
made on the last day of each month ending during such period,
except that such payments shall cease if
(A) Executive obtains other employment
which reduces Executive's Severance Benefit to zero; or
(B) Executive breaches any of the provisions
of Paragraph hereof; or
(C) Company elects, at any time and in its
sole and absolute discretion, to pay Executive the present value of
the remaining Severance Benefits payable hereunder in a single lump
sum amount with such present value to be calculated using a
discount rate equal to one hundred twenty-five percent (125%) of
the then-prevailing applicable federal short-term rate, as
determined pursuant to Section 1274(d) of the Internal Revenue Code
of 1986, as amended.
(4) Welfare Benefits shall be provided to
Executive during the twelve (12) month period commencing on the date of
Executive's termination of employment, provided that, to the extent
Executive obtains substantially similar welfare benefit coverage under a
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plan or program of any subsequent employer prior to the expiration
of such twelve (12) month period, Company's obligation to provide
such Welfare Benefits to Executive shall terminate.
(d) Definitions. For the purposes of Paragraphs
3.(b)(2) and 5 hereof, capitalized terms shall have the following
meanings:
(1) "Accrued Bonus" means a prorated amount
equal to the product of the incentive compensation Executive would
have been entitled to receive under Paragraph 3.(b) hereof for the
fiscal year (the "Relevant Fiscal Year") in which Executive's
employment terminates pursuant to Paragraph 5.(a), had Executive
remained employed for the entire Relevant Fiscal Year, determined
in accordance with Paragraph 3.(b)(1) hereof, except as provided
otherwise below, multiplied by a fraction, the numerator of which
is equal to the number of days in the Relevant Fiscal Year that
have elapsed as of the date of Executive's termination of
employment and the denominator of which is 365. For the purposes of
the foregoing clause 5.(d)(1), the amount of incentive compensation
to which Executive would have been entitled shall be calculated
based upon Company's performance for the portion of the Relevant
Fiscal Year ending on the last day of the month in which
Executive's employment terminates, determined from the unaudited
financial statements of Company prepared in respect of such period.
(2) "Contingent Bonus" means the sum of all
Deferred Installments accrued pursuant to Paragraph 3.(b)(1)
hereof, but unpaid as of the last day of the Employment Period,
with respect to fiscal years of Company ending prior to the fiscal
year of Company that includes the last day of the Employment
Period.
(3) "Earned Salary" means any Base Salary
earned, but unpaid, for services rendered to Company on or prior to
the date on which the Employment Period ends.
(4) "Severance Benefit" means an amount
equal to one-twelfth of the annual Base Salary payable to Executive
immediately prior to the end of the Employment Period; provided,
however, that the first Severance Benefit payment made pursuant to
Paragraph 5.(c) hereof shall be reduced by the amount of any Earned
Salary payable for the month of Executive's termination of
employment, and the last such Severance Benefit shall be a prorated
amount equal to the product of (A) the Severance Benefit amount
multiplied by (B) a fraction, the numerator of which is equal to
the number of days in the calendar month that includes the last day
of the Employment Period that has elapsed as of such last day and
the denominator of which is thirty-one (31); and further provided
that if Executive obtains other employment (including self-
employment) during any portion of the period during which Executive
is entitled to receive Severance Benefits hereunder, Executive
shall immediately notify Company in writing of such employment and
the terms thereof, and (regardless of whether or when such notice
is given) the amount payable as a Severance Benefit shall be
reduced, on a dollar-for-dollar basis, but not below zero, by any
salary or other fixed or guaranteed compensation payable to
Executive in connection with such employment (whether payable
currently or deferred). In the event that any fixed or guaranteed
amount is payable
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other than in periodic installments payable at least monthly, such
amount shall be converted into a monthly installment by dividing
such amount by the number of months of service required to be
performed by Executive to receive such compensation or, if no
service is required, the number of remaining months with respect to
which Executive is entitled to received Severance Benefits.
(5) "Termination for Cause" means a
termination of Executive's employment by Company due to:
(A) Executive's conviction of a felony
or the entering by Executive of a plea of nolo contendere to a felony;
(B) Executive's negligence, dishonesty,
malfeasance or misconduct in connection with Executive's employment
hereunder;
(C) Refusal by Executive, in breach of
this Agreement, to perform the duties, responsibilities or obligations
assigned to Executive pursuant to the terms hereof,
(D) Any intentional violation by
Executive of any federal or state law, rule or regulation applicable
to Company under circumstances in which a determination is made by
Company, in the exercise of the reasonable judgement of the
Company, that such violation will have a material adverse affect
upon the business or reputation of Company; or
(E) Any breach by Executive of any
covenant contained in Paragraph 6. of this Agreement.
(6) "Termination Due to Disability" means a
termination of Executive's employment by Company because Executive
has been incapable of fulfilling the positions, duties,
responsibilities and obligations set forth in this Agreement
because of physical, mental or emotional incapacity resulting from
injury, sickness or disease for a period of. (A) at least four (4)
consecutive months; or (B) more than six (6) months in any twelve
(12) month period. Any question as to the existence, extent or
potentiality of Executive's disability upon which Executive and
Company cannot agree shall be determined by a qualified,
independent physician selected by Company and acceptable to both
Company and Executive or, in the event of Executive's mental or
emotional incapacity, Executive's legal representative. The
determination of any such physician shall be final and conclusive
for all purposes of this Agreement.
(7) "Termination for Good Reason" means a
termination of Executive's employment by Executive within ninety
(90) days following a material breach of this Agreement by Company.
Notwithstanding the foregoing, a termination shall not be treated
as a Termination for Good Reason:
(A) If Executive shall have consented in
writing to the occurrence of the event giving rise to the claim of
Termination for Good Reason; or
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(B) Unless Executive shall have delivered
a written notice to Board within thirty (30) days of Executive's
actual knowledge of the occurrence of such event stating that
Executive intends to terminate Executive's employment for Good
Reason and specifying the factual basis for such termination, and
such event, if capable of being cured, shall not have been cured
within sixty (60) days of the receipt of such notice.
(8) "Termination Without Cause" means any
termination of Executive's employment by Company other than:
(A) a termination due to Disability;
(B) a Termination for Cause; or
(C) a termination due to death.
(9) "Vested Benefits" means amounts that are
vested or that Executive is otherwise entitled to receive under the
terms of or in accordance with any plan, policy, practice or
program of, or any contract or agreement with, the Company, at or
subsequent to the performance by Executive of further services or
the resolution of a contingency.
(10) "Welfare Benefits" means:
(A) Coverage under the group medical and
life insurance plans of Company in which Executive participates on
the last day of the Employment Period, such coverage to be provided
on the same terms and conditions (including the same employee cost)
as are applicable to other executive employees of Company from time
to time; and
(B) Continuation without cost to Executive
of the term life insurance coverage specified in Paragraph 4. (a)
hereof
(e) Full Discharge of Company Obligations. The amounts
payable to Executive pursuant to this Paragraph 5., following
termination of Executive's employment (including amounts
payable with respect to Vested Benefits) shall be paid in full and
complete satisfaction of Executive's rights under this Agreement
and any other claims Executive may have in respect to Executive's
employment by the Company. Such amounts shall constitute liquidated
damages with respect to any and all such rights and claims and,
upon Executive's receipt of such amounts, Company shall be released
and discharged from any and all liability to Executive in
connection with this Agreement or otherwise in connection with
Executive's employment with the Company.
6. Noncompetition and Confidentiality.
-----------------------------------
(a) Noncompetition. During the Employment Period and
during the twelve (12) month period (the "Restriction Period") following
any termination of Executive's employment, Executive shall not become
associated with any entity, whether as a principal, partner, employee,
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consultant or shareholder (other than as a holder of not in excess
of five percent (5%) of the outstanding voting shares of any
publicly traded company), that is in direct competition with
Company in any area of the United States which is west of a
theoretical line drawn from the north to the south through Denver,
Colorado.
(b) Confidentiality. Without the prior written
consent of Company, except to the extent required by an order of a
court having competent jurisdiction or under subpoena from an
appropriate governmental agency, Executive shall not disclose any
trade secrets, customer lists, drawings, designs, information
regarding product development, marketing plans, sales plans,
manufacturing plans, management organization information (including
data and other information relating to members of management),
operating policies or manuals, business plans, financial records,
packaging design or other financial, commercial, business or
technical information relating to the Company or information
designated as confidential or proprietary that the Company may
receive belonging to suppliers, customers or others who do business
with the Company (collectively "Confidential Information") to any
third person, unless such Confidential Information has been
previously disclosed to the public by the Company or is in the
public domain (other than by reason of Executive's breach of this
Paragraph 6.(b). The provisions contained in this paragraph shall
not be construed to prohibit the use by Executive of Executive's
knowledge, experience and other business talents developed over the
years as an executive involved in business similar to the business
of the Company.
(c) Company Property. Promptly following
Executive's termination of employment, Executive shall return to
the Company all property of the Company and all copies thereof in
Executive's possession or under Executive's control, including
without limitation all Confidential Information, in whatever media.
(d) Non-Solicitation of Executives. During the
Employment Period and the Restriction Period, Executive shall not,
directly or indirectly, induce any employee of Company to terminate
employment with Company, and shall not, directly or indirectly,
either individually or as owner, agent, employee, consultant or
otherwise, employ or offer employment to any person who is or was
employ ed by Company, unless such person shall have ceased to be
employed by Company for a period of at least three (3) months.
(e) Injunctive Relief with Respect to Covenants.
Executive acknowledges and agrees that the covenants and
obligations of Executive with respect to noncompetition,
nonsolicitation, confidentiality and the Company's property relate
to special, unique and extraordinary matters and that a violation
of any of the terms of such covenants or obligations will cause the
Company irreparable injury for which adequate remedies may not be
available at law. Therefore, Executive agrees that the Company
shall be entitled to an injunction, restraining order or other
equitable relief (without the requirement to post bond therefore)
restraining Executive from committing any violation of the
covenants or obligations contained in this Paragraph 6.; provided,
however, that, with respect to Paragraphs 6.(a) or 6.(d), Executive
shall have no obligation to abide by such covenants at any time
while the Company is in breach of its obligations under this
Agreement. These injunctive remedies are cumulative and are in
addition to any other rights and remedies Company may have at law
or in equity. In connection with the foregoing provisions of this
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Paragraph 6, Executive represents that Executive's economic means
and circumstances are such that such provisions will not prevent
Executive from providing for Executive and Executive's family on a
basis satisfactory to Executive.
7. Miscellaneous
(a) Survival. Paragraphs 3 (c), 5, 6 and 7.(1) shall
survive the termination hereof, whether such termination shall be
by expiration of the Employment Period on the last day thereof
specified in Paragraph 1.(b) or by early termination of the
Employment Period pursuant to Paragraph 5.
(b) Binding Effect. This Agreement shall be binding
upon and shall inure to the benefit of the Company and any person
or entity that succeeds to the interest of the Company (regardless
of whether such succession occurs by operation of law or
otherwise). This Agreement shall also inure to the benefit of
Executive's heirs, executors, administrators and legal
representatives.
(c) Assignment . Except as provided under Paragraphs
3.(c) and 7.(b), neither this Agreement nor any of the rights or
obligations hereunder shall be assigned or delegated by any party
hereto without the prior written consent of the other party.
(d) Entire Agreement. This Agreement supersedes any
and all prior agreements between the parties hereto and constitutes
the entire agreement between the parties hereto with respect to the
matters referred to herein. No other agreement relating to the
terms of Executive's employment by the Company, oral or otherwise,
shall be binding between the parties unless it is in writing and
signed by the party against whom enforcement is sought. There are
no promises, representations, inducements or statements between the
parties relating to the terms of Executive's employment by the
Company, other than those that are expressly contained herein.
(e) Severability; Reformation. In the event that one
(1) or more of the provisions of this Agreement shall become
invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained
herein shall not be affected thereby. In the event that any of the
provisions of Paragraphs 6.(a) through 7.(d) are not enforceable in
accordance with the terms of those paragraphs, respectively,
Executive and the Company agree that such paragraph(s) shall be
reformed to make such paragraph(s) enforceable in a manner that
provides the Company with the maximum rights permitted at law.
(f) Waiver. Waiver by any party hereto of any breach
or default by the other party or any of the terms of this Agreement
shall not operate as a waiver of any other breach or default,
whether similar to or different from the breach or default waived.
No waiver of any provision of this Agreement shall be implied from
any course of dealing between the parties hereto or from any
failure by either party hereto to assert such party's rights
hereunder on any occasion or series of occasions.
(g) Notices. Any notice required or desired to be
delivered under this Agreement shall be made in writing; shall be
delivered personally, by courier service, by registered mail, return
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receipt requested, or by facsimile; shall be effective upon actual
receipt by the party to which such notice shall be directed; and
shall be addressed as follows (or to such other address as the
party entitled to notice shall hereafter designate in accordance
with the terms hereof):
If to Company:
If to Executive:
*____________*
*____________*
Facsimile: *____________*
(h) Amendments. This Agreement may not be altered,
modified or amended except by a written instrument signed by each
of the parties hereto.
(i) Heading . Headings to paragraphs in this Agreement
are for the convenience of the parties only and are not intended to
be part of or to affect the meaning or interpretation hereof
(j) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
(k) Withholding. Any payments provided for herein
shall be reduced by any amounts required to be withheld by the
Company from time to time under applicable federal, state or local
income or employment tax laws or similar statutes or other
provisions of law then in effect.
(l) Governing Law. This Agreement shall be governed by
the laws of the State of *_________* without reference to
principles or conflicts or choice of law under which the law of any
other jurisdiction would apply.
(m) Jurisdiction and Venue. The parties hereby agree
that any dispute which may arise between them as a result, of or in
connection with this Agreement shall be adjudicated before a court
located in *________* and such parties hereby submits to the
exclusive jurisdiction of the courts of the State of *___________*
and the federal courts in *________* with respect to any action or
legal proceeding commenced by any party, and irrevocably waive any
objection they now have or hereafter may have respecting the venue
of any such action or proceeding brought in such a court or
respecting the fact that such court is an inconvenient forum,
relating to or arising out of this Agreement or any performance
required hereunder, and consent to service of process in any such
action or legal proceeding by means of registered mail or certified
mail, return receipt requested, in care of the address set forth
herein or such other address as either party may furnish in writing
to the other, provided process is actually received.
(n) Costs and Expenses. The parties hereby agree that
in the event any dispute arises between them as a result of or in
connection with this Agreement then the prevailing party shall
be entitled to reimbursement of all costs and expenses incurred in
the resolution of any such dispute, including but not limited to
reasonable legal fees and costs.
(Signatures appear next page)
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IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed by its duly authorized officer and Executive has
hereunto set Executive's hand as of the day and year first above
written.
By: /s/
______________________________
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