EMPLOYMENT AGREEMENT
BETWEEN
DBS INDUSTRIES, INC.,
NEWSTAR LTD.
AND X. XXXX XXXX
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of the
1st day of June, 1999, by and between DBS Industries, Inc., a Delaware
corporation (hereafter referred to as "Employer"), Newstar Ltd, a company
organized under the laws of Bermuda and a wholly owned subsidiary of Employer,
and X. Xxxx Xxxx, an individual (hereafter referred to as "Employee"), in
consideration of the mutual promises made herein. (the "Agreement"):
TERM OF EMPLOYMENT
SECTION 1.1. EMPLOYMENT AND TERM. Employer hereby employs Employee and
Employee hereby accepts employment with Employer, upon the terms and conditions
hereinafter set forth, from June 1, 1999 until June 1, 2000, and thereafter from
month to month or until the employment relationship is sooner terminated by
either party in accordance with the terms of this Agreement.
SECTION 1.2. "EMPLOYMENT TERM" DEFINED. As used in this Agreement, the
phrase "Employment Term" refers to the entire period of employment of Employee
by Employer hereunder.
DUTIES OF EMPLOYEE AS PRESIDENT AND CHIEF OPERATING OFFICER
SECTION 2.1. GENERAL DUTIES. Employee shall serve as the President and
Chief Executive Officer of Newstar. In his capacity as President and Chief
Executive Officer, Employee shall do and perform all services, acts, or other
things necessary or advisable to manage, conduct, and operate the business of
Newstar, including, but not limited to, the supervision, direction, and
control of the business and other employees of Newstar, subject at all times
to the policies and directions set by Employer's Board of Directors (the
"Board"). Employee shall also have such other powers, duties, and
responsibilities as may be prescribed by the Board and Newstar's corporate
charter. Finally, Employee shall serve as a director of Newstar, and serve on
the Executive Committee of Newstar, if one exists now or in the future, and
shall be nominated as a director on the Newstar's slate of directors from
year to year and subject only to the continued approval of the stockholders
of Newstar as required by law. As President and Chief Executive
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Officer of Newstar, Employee shall report directly to the Chief Executive
Officer of Employer.
SECTION 2.2. DEVOTION TO EMPLOYER'S BUSINESS. During the Employment Term,
Employee shall devote his full time, efforts and attention to the performance of
the duties specified in Section 2.1 above and to such other services as may be
reasonably requested by the Board. Employee shall not engage in any other
business duties or pursuits or directly render any services of a business,
commercial, or professional nature to any other person or organization, other
than serving as a director (but not an employee) of other companies, limited
business consulting relating to Employee's consulting practice, and passive
investments and endeavors provided hereinbelow, without obtaining the prior
consent of the Board. Notwithstanding the foregoing, activities by Employee
which do not materially interfere with the services required of Employee under
this Agreement shall not be deemed a breach of this Section 2.2 and shall not
require the prior consent of the Board.
SECTION 2.3. PASSIVE INVESTMENTS AND ENDEAVORS. This Agreement shall not be
interpreted to prohibit Employee from making passive personal investments or
conducting private business affairs if those activities do not materially
interfere with the services required of Employee under this Agreement. However,
Employee shall not directly or indirectly acquire, during the Employment Term, a
controlling interest in any business competing with the business of Employer
without the prior consent of the Board.
OBLIGATIONS OF EMPLOYER
SECTION 3.1. GENERAL OBLIGATIONS. Employer shall provide Employee with the
compensation, incentives, benefits, and business expense reimbursements
specified elsewhere in this Agreement. Employer shall also provide Employee with
an office located in Mill Valley, California, stenographic help, office
equipment, a cellular phone, supplies, and other facilities and services,
suitable to Employee's position and adequate for the performance of his duties.
Employer may not change the domicile of Employee's office without Employee's
prior consent.
SECTION 3.2. INDEMNIFICATION. Employer shall indemnify and hold Employee
harmless from and against any actions taken or decisions made by him in good
faith while performing services in his capacity as President and Chief Executive
Officer of Newstar during the Employment Term. To the extent permitted by law,
Employer shall pay, indemnify, and hold Employee harmless from any liability,
cost, or expense (including, without limitation, reasonable attorney's fees)
incurred by him in the defense of any claim, proceeding, or action arising out
of his performance of services for Employer or out of his status as an officer
and director of Newstar. Employer will use its best efforts to obtain coverage
for Employee under any insurance now in force or hereafter obtained during the
term of this Agreement covering any employee, officer or director of Employer or
Newstar. Notwithstanding the foregoing, Employer does not intend to and shall
not indemnify Employee against any act or omission by him constituting fraud,
willful misconduct or
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gross negligence.
COMPENSATION OF EMPLOYEE
SECTION 4.1. ANNUAL SALARY. As compensation for the services to be
performed hereunder Employee shall receive a salary at the rate of two
hundred thousand dollars ($200,000) per annum, payable not less frequently
than the regular payroll schedule of Employer during the Employment Term.
SECTION 4.2. ANNUAL BONUS. Employee shall be entitled to a annual bonus
based upon the performance by the Employee measured against performance criteria
mutually agreed upon between the Employee and the Employer. In this respect,
Employee shall propose performance criteria to the Chief Executive Officer of
Employer within sixty days from the date this Agreement is entered into by
Employee and Employer. Final performance criteria shall be agreed to by Employer
and Employee within thirty days from the date Employee submits Employee's
proposed performance criteria. The maximum amount of the annual bonus provided
for hereunder shall equal fifty percent (50%) of the Employee's annual salary
provided for in Section 4.1.
SECTION 4.3. SIGNING BONUS. Upon execution of this Agreement, Employer
shall pay Employee a signing bonus of fifty thousand dollars ($50,000).
SECTION 4.4. STOCK OPTIONS. Employer shall grant to Employee two hundred
thousand (200,000) options to purchase shares of Employer's common stock at
an exercise price based on the closing price of Employer's common stock on
September 1, 1999. The options shall expire ten years from the date of grant
and shall vest in accordance with the following schedule:
50,000 September 1, 1999
75,000 on the first anniversary of this Agreement
75,000 on the second anniversary of this Agreement
In the event of a "change of control" of the employer, all of Employee's stock
options shall immediately vest. For purposes of this Agreement, a "change in
control" of the Employer shall mean a merger, consolidation, or reorganization
wherein the shareholders of Employer immediately prior to the transaction hold
less than fifty one percent (51%) of the voting securities of the combined
entity after the transaction, a sale of substantially all of the assets of the
Employer, a new issuance, in one or more related transactions, of the voting
securities of the Employer in an amount greater than fifty percent (50%) of the
issued and outstanding shares of the Employer measured immediately after the
transaction, or a change in the majority of the Board of Directors in any one
year. For purposes of the definition of a "change in control," the calculation
of the total shares issued and outstanding shall be made on a fully diluted
basis using
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the rules provided for under generally accepted accounting principles.
SECTION 4.5. TAX WITHHOLDING. Employer shall have the right to deduct or
withhold from the compensation due to Employee hereunder any and all sums
required for federal income and Social Security taxes and all state or local
taxes now applicable or that may be enacted and become applicable in the future.
EMPLOYEE BENEFITS
SECTION 5.1. ANNUAL VACATION. Employee shall be entitled to fifteen (15)
days vacation time each year without loss of compensation. Accrued unused
vacation shall accumulate from year to year up to a maximum of thirty (30) days.
SECTION 5.2. ILLNESS. Employee shall be entitled to sick leave with full
pay in an amount equal to the accrual for senior executives of Employer.
SECTION 5.3. EMPLOYEE BENEFITS GENERALLY. During the Employment Term,
Employee shall be entitled to participate in and to receive benefits from all
present and future accident, disability, medical, dental, and similar plans,
pension plans, savings plans, profit sharing plans, stock option plans or other
similar employee benefit plans available generally to all other officers or
employees of Employer or Newstar. The amount and extent of these benefits,
including employee paid premiums, co-payments and deductibles, shall be governed
by the specific benefit plan, as it may be amended from time to time.
BUSINESS EXPENSES
SECTION 6.1. REIMBURSEMENT OF BUSINESS EXPENSES. Employer shall promptly
reimburse Employee for all reasonable business expenses incurred by Employee in
connection with the business of Employer. Employee shall furnish to Employer
adequate records and other documentary evidence required by federal and state
tax statutes and regulations for the substantiation of each such expenditure
prior to reimbursement.
TERMINATION OF EMPLOYMENT
SECTION 7.1. TERMINATION FOR CAUSE. Employer reserves the right to
terminate this Agreement upon: (a) Employee's willful and continued failure to
substantially perform his duties with Employer (other than such failure
resulting from his incapacity due to physical or mental illness) after there is
delivered to Employee by Employer's Chief Executive Officer, a written demand
for substantial performance which sets forth in detail the specific respects in
which the Employer believes Employee has not substantially performed his duties,
and giving Employee not less than thirty (30) days to correct the deficiencies
specified in the written demand, (b)
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Employee's willful engagement in gross misconduct as determined by the
Employer's Chief Executive Officer which is materially and demonstrably
injurious to Employer and/or Newstar, or (c) Employee's commission of a felony
or an act of fraud against Employer, Newstar or their affiliates. No act, or
failure to act, by Employee shall be considered "willful" if done, or omitted to
be done, by Employee in good faith and with the reasonable belief that the act
or omission was in the best interest of Employer, Newstar and/or required by
applicable law. Termination under this Section 7.1 shall be considered "for
cause" for the purposes of this Agreement.
SECTION 7.2. TERMINATION WITHOUT CAUSE. This Agreement shall terminate upon
the death of Employee. Employer reserves the right to terminate this Agreement
after three (3) continuous months of physical or mental disability suffered by
Employee that would prevent the performance of Employee's duties under this
Agreement. Such a termination shall be effected by giving thirty (30) days
written notice of termination to Employee. Notwithstanding anything else to the
contrary, physical or mental disability shall not include periods of bona fide
illness for which Employee is entitled to sick leave pursuant to Section 5.2 of
this Agreement. Other than on death or upon the physical or mental disability of
Employee, Employer reserves the right at any time to terminate this Agreement
upon thirty (30) days written notice to Employee and, in such an event, Employee
shall be paid his severance benefit hereinafter provided.
SECTION 7.3. TERMINATION BY EMPLOYEE. Employee may terminate this Agreement
at any time upon sixty (60) days written notice to Employer. Other than upon
Employee's termination of this Agreement pursuant to Section 7.5, Employer shall
not be obligated to pay any severance benefit if Employee terminates this
Agreement pursuant to this Section 7.3.
SECTION 7.4. SEVERANCE BENEFIT UPON TERMINATION WITHOUT CAUSE.
Notwithstanding any other provision of this Agreement, if Employer terminates
this Agreement prior to the first anniversary of this Agreement, other than for
cause as defined in Section 7.1, Employer shall pay Employee a lump sum cash
payment equal to the remainder of the annual salary and any accrued unpaid
bonuses to which Employee would be entitled under this Agreement for the period
up to and including May 31, 2000, as provided for in this Agreement. If this
Agreement is terminated by the Employer after May 31, 2000, Employee shall not
be entitled to a severance benefit under this Section 7.4.
GENERAL PROVISIONS
SECTION 8.1. NOTICES. Any notice to be given hereunder by either party to
the other shall be in writing and may be transmitted by personal delivery,
facsimile transmission, overnight courier or by mail, registered or certified,
postage prepaid with return receipt requested. Mailed notices shall be addressed
to the parties at the following addresses:
EMPLOYER DBS Industries, Inc
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000 Xxxxxxxxx Xxxxxxx, Xxxxx 000X
Xxxx Xxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx, CEO
FAX No.: (000) 000-0000
EMPLOYEE X. Xxxx Xxxx
X.X. Xxx 0000
Xxxxxxxx, XX 00000-0000
(000) 000-0000
Any party may change the address at which notice is to be provided by providing
a written notice to the other party specifying a new address. Notices delivered
personally or by facsimile transmission shall be deemed communicated as of the
date of actual receipt; notices mailed shall be deemed communicated as of the
third day after mailing.
SECTION 8.2. ARBITRATION. Any controversy between Employer and Employee
involving the construction or application of any of the terms, provisions, or
conditions of this Agreement shall on the written request of either party
which is served on the other be submitted to arbitration. Arbitration shall
comply with and be governed by the provisions of the American Arbitration
Association. Employer and Employee shall each appoint one person who shall
then choose a third person, all three of which shall hear and determine the
dispute. The decision of the arbitrators shall be final and conclusive upon
both parties. Arbitration shall take place in the County of Marin, State of
California.
SECTION 8.3. ATTORNEYS' FEES AND COSTS. If any action at law or in equity
is necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs and necessary
disbursements in addition to any other relief to which that party may be
entitled.
SECTION 8.4. ENTIRE AGREEMENT. This Agreement supersedes any and all other
agreements, either oral or in writing, between the parties hereto with respect
to the employment of Employee by Employer and contains all of the covenants and
agreements between the parties with respect thereto. Each party to this
Agreement acknowledges that no representation, inducements, promises, or
agreements, orally or otherwise, have been made by any party, or anyone acting
on behalf of any party, which are not embodied herein, and that no other
agreement shall be valid or binding on either party.
SECTION 8.5. MODIFICATION. Any modification of this Agreement will be
effective only if it is in writing and signed by the party to be charged.
SECTION 8.6. EFFECT OF WAIVER. The failure of either party to insist on
strict compliance with
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any of the terms, covenants, or conditions, of this Agreement by the other party
shall not be deemed a waiver of that term, covenant, or condition, nor shall any
waiver or relinquishment of any right or power at any one time or times be
deemed a waiver or relinquishment of that right or power for all or any other
time.
SECTION 8.7. PARTIAL INVALIDITY. If any provision in this Agreement is held
by a court of competent jurisdiction to be invalid, void, or unenforceable, the
remaining provisions shall nevertheless continue in full force without being
impaired or invalidated in any way.
SECTION 8.8. LAW GOVERNING AGREEMENT. This Agreement shall be governed by
and construed in accordance with the laws of the State of California.
SECTION 8.9. COUNTERPARTS AND SIGNATURES. This Agreement may be executed in
two or more counterparts, each of which shall be an original but all of which
together shall constitute one instrument. A signature of a party transmitted to
the other party via facsimile transmission shall have equal dignity with
original signatures.
IN WITNESS WHEREOF, Employer and Employee have duly executed this
Agreement as of the day and year first above written.
EMPLOYER
DBS Industries, Inc.
/s/ Xxxx X. Xxxxxxxx
--------------------------------------------
By: Xxxx X. Xxxxxxxx
Its: Chief Executive Officer
EMPLOYEE
/s/ X. Xxxx Xxxx
--------------------------------------------
X. Xxxx Xxxx
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