EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made effective as of January 1,
1997, between Ontro, Inc., a California corporation, (hereinafter sometimes
referred to as "Ontro" or the "Corporation") and Xxxxx X. Xxxxxxx ("Employee").
1. TERM OF EMPLOYMENT
Ontro hereby employs Employee and Employee hereby accepts employment with
Ontro for the period beginning on January 1, 1997 and terminating on December
31, 1997. As used herein, the phrase "employment term" refers to the entire
period of employment of Employee by Ontro hereunder, whether for the period
provided above, or whether terminated earlier as hereinafter provided, or
extended by mutual agreement of Ontro and Employee.
2. DUTIES OF EMPLOYEE
2.01 GENERAL DUTIES. Employee shall serve as the Chief Financial
Officer of Ontro. Notwithstanding the foregoing, the precise services of
Employee may be specified or changed from time to time at the discretion of the
Board of Directors of Ontro.
2.02 SPECIFIC DUTIES. Employee shall serve as Chief Financial
Officer of the Company. The responsibilities of the Chief Financial Officer
("CFO") shall be to manage all of the financial affairs, including but not
limited to, all record keeping and reporting systems. The CFO shall be
responsible for the development and coordination of all financial and management
reporting systems, and management and procurement of financing sources for the
Company's projects. The CFO shall keep and maintain, or cause to be kept or
maintained, adequate and correct books and records of account of the properties
and business transactions of the Company, including accounts of its assets,
liabilities, receipts, disbursement, gains, losses, capital, retained earnings
and shares. The books of account shall at all reasonable times be open to
inspection by any Director. The Chief Financial Officer shall deposit all
monies or other valuables in the name and to the credit of the Company with such
depositories as may be designated by the Board of Directors. He shall disburse
the funds of the Company as may be ordered by the Board of Directors, shall
render to the President and Directors, whenever they request it, an account of
all his transactions as Chief Financial Officer and of the financial condition
of the Company, and shall have other powers and perform such other duties as may
be prescribed by the Board of Directors or the Bylaws. Notwithstanding the
foregoing, the precise services of Employee may be reasonably specified or
reasonably changed from time to time at the discretion of the Board of Directors
of the Company.
2.03 DEVOTION OF ENTIRE TIME TO ONTRO'S BUSINESS. Employee shall
devote his entire productive time, ability and attention to the business of
Ontro during the term of this Agreement. Employee shall not directly or
indirectly render any services of a business, commercial, or
professional nature to any other person or organization, whether for
compensation or otherwise, without the prior written consent of the Board of
Directors of Ontro. Those entities or organizations which the Board of
Directors approve and the nature of the service to such entity which is approved
shall be listed on Exhibit "A" to this agreement, which shall be signed by a
member of the Board of Directors. Notwithstanding the foregoing, this paragraph
shall not be construed as preventing Employee from investing his assets in such
other manner as will not require anything other than incidental services on the
part of Employee in the operation of the affairs of any entity in which the
investments are made.
2.04 UNIQUENESS OF EMPLOYEE'S SERVICES. Employee hereby agrees the
services to be performed by him under the terms of this Agreement are of
special, unique, unusual, extraordinary, and intellectual character which gives
them a peculiar value, the loss of which cannot be reasonably or adequately
compensated by monetary damages in an action at law. Employee therefore
expressly agrees that Ontro, in addition to any other rights or remedies which
Ontro may possess, shall be entitled to injunctive and other equitable relief to
prevent a breach of this Agreement by Employee.
2.05 LOYAL AND CONSCIENTIOUS PERFORMANCE OF DUTIES. Employee agrees,
to the best of his ability and experience, he will at all times loyally and
conscientiously perform all of the duties and obligations either expressly or
implicitly required of him by the terms of this Agreement.
3. COMPENSATION OF EMPLOYEE
3.01 BASE SALARY. As compensation for services hereunder, Ontro shall
pay Xx. Xxxxxxx a salary of eight thousand dollars ($8,000) per month, until
such time as the Corporation has completed an initial public offering of its
securities and has received a minimum of $3.2 million in proceeds therefrom.
Upon the completion of said initial public offering, Employee's monthly salary
shall increase to ten thousand dollars ($10,000) per month for the duration of
the term hereof, commencing on the first day of the calendar month following the
completion of the initial public offering and continuing thoughout the remainder
of the term hereof.
3.02 SALARY CONTINUATION DURING DISABILITY. If Employee for any
reason whatsoever becomes permanently disabled, so that he is unable to perform
his duties hereunder, Ontro agrees to pay Employee his annual salary, payable in
the same manner for the remainder of the employment term less any amounts
received by Employee under any employer, group disability, or similar insurance
plan provided by Ontro.
3.03 VACATION PAY. Employee shall be entitled to a vacation of two
(2) weeks at full pay for each twelve (12) months of employment. The time or
times for such vacation shall be proposed by Employee and approved in advance by
the Chief Executive Officer.
3.04 PAID SICK LEAVE. Employee, shall be entitled to six (6) days
sick leave with full pay for each twelve (12) months of employment. Such sick
leave may not be accumulated beyond the calendar year in which it is granted.
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3.05 ADDITIONAL BONUSES. Nothing herein shall imply any limitation
on the authority of the Board of Directors to authorize any additional bonus(es)
which in their discretion they deem reasonable.
4. EMPLOYEE BENEFITS
MEDICAL, DENTAL INSURANCE COVERAGE. Ontro agrees to include Employee
in any hospital, surgical, medical and dental benefit plan adopted by Ontro for
other employees, and to include Employee in all additional medical and dental
benefit plans provided to other executives of the Corporation. Ontro further
agrees to provide reimbursement for such other medical or dental expenses
incurred by Xx. Xxxxxxx as are approved by the Board of Directors.
5. BUSINESS EXPENSES
5.01 BUSINESS EXPENSES. Ontro will promptly reimburse Employee for
business expenses reasonably incurred by Employee in connection with the
business of Ontro, provided that:
(1) Each such expenditure is of a nature qualifying it as a
allowable deduction from gross income in the determination of taxable income on
the federal and state income tax returns
of Ontro; and
(2) Employee furnishes to Ontro adequate records and other
documentary evidence required by federal and state statutes and regulations
issued by the appropriate taxing authorities where the substantiation of each
such expenditure as an income tax deduction is required; and
6. TERMINATION OF EMPLOYMENT
6.01 TERMINATION BY ONTRO FOR CAUSE. If Employee willfully breaches
or habitually neglects the duties which he is required to perform under the
terms of this Agreement, Ontro may at its option terminate this Agreement by
giving written notice of termination to Employee without prejudice to any other
remedy to which Ontro may be entitled either at law, in equity, and/or pursuant
to this Agreement.
6.02 EFFECT OF ONTRO'S MERGER, TRANSFER OF ASSETS, OR DISSOLUTION.
Upon the event of any of the following, these special provisions of this
Paragraph 6.02 shall apply:
(1) Merger or consolidation where Ontro is not the consolidated
or surviving corporation;
(2) Transfer of all or substantially all of the assets of Ontro,
or
(3) Voluntary or involuntary dissolution of Ontro.
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In the event of any such merger or consolidation, transfer of assets, or
dissolution of Ontro, Employee at his sole option, and at any time may elect one
of the following provisions:
(a) Continued employment by Ontro, and/or the surviving or
resulting corporation, said successor to be bound by all the provisions of this
Agreement;
(b) Voluntary termination of this Agreement and payment to
Employee as severance pay or liquidated damages, or both, a lump sum payment
("Severance Payment") equal to one hundred percent (100%) of the Employee's
average annual Base Salary or such greater amount as the Board of Directors
determines from time to time pursuant to terms which may not be revoked or
reduced thereafter. However, the total of any payment pursuant to this Section
6.02 shall be limited to the extent necessary, in the opinion of legal counsel
acceptable to Employee and Ontro, to avoid the payment of an "excess parachute"
payment within the meaning of Internal Revenue Code Section 280 G or any similar
successor provision.
The Severance Payment shall be made not later than the fifth (5th) day
following the effective date of the events specified in Section 6.02 (1-3)
herein; provided, however, that if the amount of such payments cannot be finally
determined on or before such date, Ontro shall pay to Employee on such date a
good faith estimate of the minimum amount of such payments, and shall pay the
remainder of such payments (together with interest at the rate provided in
Internal Revenue Code Section 1274(b)(2)(B) of the Code), as soon as the amount
thereof can be determined, but in no event later than the thirtieth (30th) day
after the applicable termination date. In the event the amount of the estimated
payments exceeds the amount subsequently determined to have been due, such
excess shall constitute a loan by Ontro payable on the fifth (5th) day after
receipt by Employee of a written demand for payment from Ontro (together with
interest calculated as above).
6.03 DAMAGES FOR BREACH OF AGREEMENT. In the event of the breach of
this Agreement by either Ontro or Employee resulting in damages to the other
party, that party may recover from the party breaching the Agreement any and all
damages that may be sustained.
6.04 OPTION TO TERMINATE IF EMPLOYEE PERMANENTLY DISABLED. If
Employee becomes permanently disabled for a continuous period of six (6) months
or more because of sickness, physical or mental disability, or any other reason,
so that it reasonably appears he will be unable to complete his duties under
this Agreement, at that time, Ontro shall then have the option to immediately
terminate this Agreement by giving written notice of the termination to
Employee.
7. COVENANT NOT TO COMPETE
7.01 SCOPE OF COVENANT. Employee agrees that he shall not, either
directly or indirectly, carry on, participate, or engage in, either as employee,
employer, principal, agent, consultant, owner, part-owner, co-venturer, officer,
director, shareholder, partner, manager, operator, financier, employee,
salesman, or in any other individual or representative or participating
capacity, with any business which is a customer of Ontro at any time during the
term of this Agreement, or
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is in negotiations with Ontro with respect to the supplying of goods or the
performance of services by Ontro for such potential customer, for a period of
two (2) years after the termination of this Agreement.
7.02 INTERPRETATION. SHOULD ANY PORTION OR PROVISION OF THIS
COVENANT NOT TO COMPETE BE FOUND BY A COURT OF COMPETENT JURISDICTION TO BE
OVERLY BROAD, IT IS THE EXPRESS INTENT OF THE PARTIES HERETO THAT SUCH
PROVISIONS SHALL NEVERTHELESS BE ENFORCED TO THE MAXIMUM EXTENT PERMITTED BY LAW
AND SHALL GOVERN AND APPLY TO AS MUCH GEOGRAPHICAL AREA AND/OR TIME DURATION,
NOT TO EXCEED THAT WHICH IS SET FORTH ABOVE, AS POSSIBLE.
7.03 CONSIDERATION. Employee hereby acknowledges that the
consideration set forth herein shall fully support this Covenant.
7.04 REMEDIES. The remedy at law for breach of this Covenant being
inadequate, Ontro shall be entitled, in addition to such other remedies as it
may have, to temporary or injunctive relief for any breach or threatened breach
hereof without proof of actual damages that have been or may have been caused to
it by such breach.
7.05 BREACH. This Covenant shall be deemed to be part of this
Agreement, and a breach of this Covenant shall be deemed to be a breach of this
Agreement and all of its attendant obligations, undertakings, and promises.
8. CONFIDENTIALITY PROVISION
8.01 PROPRIETARY INFORMATION DEFINED. The following terms shall have
the meanings respectively set forth for them below:
(a) "Proprietary Information" shall mean any and all inventions,
research, designs, products, financing sources, processes, formulae, know-how,
customer lists, customer requirements information, trade secrets and/or other
non-public information or data comprising or related to the business of Company
as the same is carried on from time to time;
(b) "Proprietary Rights" shall mean all trademarks, patents,
copyrights, rights of creators and/or similar rights and privileges, whether
domestic or foreign, statutory or at common law, filed or not filed, perfected
or unperfected, or otherwise, relating to any Proprietary Information;
(c) "Proprietary Proceeds" shall mean all proceeds and products
of any Proprietary Information and/or Proprietary Rights; and
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(d) "Proprietary Assets" shall mean Proprietary Information
and/or Proprietary Rights and/or Proprietary Proceeds, considered collectively
or separately.
8.02 ACKNOWLEDGMENT OF ONTRO'S PROPRIETARY INFORMATION. Employee
agrees and acknowledges that any and all Proprietary Information (together with
all Proprietary Rights and/or Proprietary Proceeds relating thereto) wholly or
partially created, developed or further developed, perfected and/or completed by
Employee, acting alone or jointly with others at any time during Employee's
employment with Ontro, shall immediately upon creation, completion and/or
development become or have become, and shall at all times thereafter remain, the
sole and exclusive property of Ontro.
8.03 ONTRO'S PROPERTY. Employee specifically agrees and acknowledges
that (a) any and all Proprietary Assets, however, whenever and from whomever
acquired by Ontro, are and shall at all times remain the sole and exclusive
property of Ontro, (b) Employee shall not use, possess, disclose, transfer
and/or otherwise deal with any such Proprietary Assets at any time during his
employment with Ontro other than specifically within the scope of his employment
and in furtherance of the business and affairs of Ontro, and (c) Employee shall
not use, possess, disclose, transfer and/or otherwise deal with any Proprietary
Assets at any time after the termination of his employment with Ontro under any
circumstances whatsoever.
8.04 EMPLOYEE'S DUTIES. Employee agrees that he shall, both
throughout the term of his employment with Ontro and at any and all times
following the termination thereof, execute and deliver all such further
instruments and documents, and do and perform all such further acts and things,
as may be necessary or helpful and/or as may be reasonably requested by Ontro in
furtherance of the purposes and intent of this Agreement. By way of illustration
and not by way of limitation of the foregoing, Employee specifically agrees that
he shall:
(a) immediately communicate and thoroughly describe to Ontro in
writing any and all such Proprietary Information as is described in Section 8.01
above;
(b) promptly execute and deliver all such instruments or
agreements of assignment and/or transfer as Ontro may from time to time request
to carry out the purposes and intent of Section 8.01 above;
(c) assist Ontro, at such times and in such manner as Ontro may
request, in connection with Ontro's efforts to secure, apply for, renew or
otherwise perfect Proprietary Rights with respect to any and all Proprietary
Information; and
(d) upon the termination of his employment with Ontro,
immediately deliver to Ontro any and all written recorded or other physical
evidence of any and all Proprietary Assets in his possession or under his
control;
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PROVIDED, that in consideration of the foregoing, Ontro agrees that all
reasonable costs and expenses incurred by Employee, including reasonable
compensation for his time (except if Employee is otherwise being compensated as
a consultant) in complying with the provisions of this Section 8 shall be for
Ontro's account.
8.05 DISCLOSURE OF INFORMATION. Employee will not, during the
employment term or after, disclose or use any Proprietary Information or permit
disclosure to any person, firm, corporation, association or other entity if such
disclosure would be detrimental to Ontro.
8.06 EMPLOYEE REPRESENTATION. Employee represents and covenants that
he is not presently and will not hereafter become a party to any contract or
agreement which contravenes any of the terms, provisions, purposes or intent of
this Agreement.
8.07 SURVIVAL. It is specifically understood and agreed by both such
parties that this Agreement shall survive Employee's employment with Ontro
and/or the making and/or termination of any contract or agreement with respect
thereto.
8.08 REMEDIES. The parties hereto mutually acknowledge that the
representations, warranties, covenants and other agreements of Employee
contained in this Agreement are of special and unique importance to Ontro and
are not readily susceptible to dollar valuation. As such, in the event of the
actual or potential breach of any of such representations, warranties, covenants
or other agreements, the parties hereto specifically agree that Ontro, in
addition to any and all other rights and remedies available to it, shall be
entitled to injunctive and/or other equitable relief in furtherance of the
enforcement thereof.
9. GENERAL PROVISIONS
9.01 NOTICES. Any notices to be given hereunder by each party to the
other may be effected by personal delivery in writing or by mail, registered or
certified, postage prepaid with return receipt requested. Notices delivered
personally shall be deemed communicated as of actual receipt; mailed notices
shall be deemed communicated as of two (2) days after mailing.
9.02 TERMINATION/VIOLATION OF OTHER AGREEMENTS. Any previous written
or oral Employment Agreements between Ontro and Employee are hereby terminated.
Ontro hereby warrants to Employee that the execution of this Agreement will not
violate any outstanding agreements or covenants to which Ontro is a party.
Further, Ontro hereby warrants that the execution of this Agreement and the
performance of its terms hereunder do not violate any provisions of the By-Laws
of Ontro.
9.03 APPLICABLE LAW. This Agreement shall be construed under the laws
of the State of California and may not be altered or modified except by an
agreement in writing, signed by both parties.
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9.04 ATTORNEYS' FEES. 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 he may be entitled.
9.05 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 Ontro and contains all of the covenants and
agreements between the parties with respect to such employment in any manner
whatsoever.
9.06 PARTIAL INVALIDITY. If any provision of 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.
9.07 MERGER OR CONSOLIDATION. Ontro hereby agrees that it shall not
merge or consolidate into or with or sell substantially all its assets to any
firm, entity, company or person until such other firm, entity, company or person
expressly agrees, in writing, to assume and discharge the duties and obligations
of the Ontro under this Agreement. This Agreement shall be binding upon the
parties hereto, their successors, beneficiaries, heirs and personal
representatives.
9.08 AMENDMENTS AND WAIVERS. This Agreement shall not be varied,
altered, waived, modified, changed or in any way amended in any of its parts
except by an instrument in writing, executed by the parties hereto, or by their
legal representatives. A waiver by either party of any of the terms of this
Agreement in any instance shall not be deemed or construed to be a waiver of
such term or condition for the future or of any subsequent breach thereof.
Executed at Poway, California.
EMPLOYER:
ONTRO, INC.
a California corporation
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------
Xxxxx X. Xxxxxxx, President
EMPLOYEE:
/s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
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Exhibit "A"
Permitted Outside Activities
