EMPLOYMENT AGREEMENT
This Employment Agreement is entered into and effective the 1st day of
August, 2001 (the "Effective Date") by and between Xxxxxx Marketing, Inc., a
Delaware Corporation (the "Company") and Xxxxx X. Xxxxxxxx, (the "Employee").
WITNESSETH:
WHEREAS, the Company and Employee desire to enter into an agreement to
set forth certain of the terms and conditions of Employee's employment as the
President and Chief Executive Officer of the Company;
WHEREAS, the Company requires a substantial amount of funding in order
to continue to survive and grow; and
WHEREAS, it is the desire of the parties that Employee's benefits under
this Agreement be greatly dependant upon the timely obtaining of this funding,
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, the parties hereto agree as follows:
1. Employment; Duties: The Company shall employ Employee as the President
and Chief Executive Officer of the Company to perform such duties
generally associated with such office. In such capacity, Employee shall
report to and be under the direction of the Board of Directors of the
Company and its Executive Committee. The Company reserves the right to
have Employee serve in only one of such offices or in any other
capacity.
2. Term of Agreement: This Agreement shall be effective as of the
Effective Date and Employee's services shall continue for a term of
thirty six (36) months, subject to earlier termination in accordance
with Section 5.
3. Duties and Restrictions: Employee shall perform, on behalf of the
Company, all duties and services as directed by the Board of Directors
and/or its Executive Committee. Employee shall devote his full time,
effort, and attention during regular business hours to the business and
affairs of the Company and shall perform his duties and services
hereunder to the best of his ability. Employee may serve as a director,
as a trustee or in a similar position with the Company or one or more
other additional entities, provided that such service is consented to
in advance by the Board. Any fees or other compensation received by
Employee for service as a director, as a trustee or in a similar
position with another entity shall be retained by Employee.
4. Compensation: In consideration of the services to be performed by
Employee hereunder, the Company shall pay Employee and Employee agrees
to accept the salary and other benefits described below in this Section
4, as may be modified by Section 10.
4.1 Salary: Employee shall receive a base salary of $200,000 per
year (the "Base Salary"), payable equally over each fiscal
year of the Company at such times as the other employees of
the Company are paid. The amount of Base Salary shall be
adjusted each fiscal year of this Agreement for such fiscal
year by such amount as is necessary so that the buying power
of the adjusted amount equals the buying power of the initial
Base Salary based upon the appropriate Consumer Price Index as
prepared by the U. S. Department of Labor.
4.2 Bonuses: Employee shall earn a cash bonus of $50,000, payable
upon the timely receipt by the Company of the "Funding", as
such term is defined in Section 10. Payment to be made within
30 days after the Company has received the Funding. Employee
shall also be eligible to earn performances bonuses in the
form of cash and other compensation based upon performance
benchmarks. The Board or its Executive Committee, in its sole
discretion, shall from time to time determine the amount of
such bonuses and the applicable performance benchmarks.
4.3 Executive Benefits: Employee shall be entitled to receive, as
described more fully in the Executive Compensation and
Benefits section of the Company's Human Resources Handbook,
for both he and his dependents medical and dental insurance
coverage with all benefits of care and hospitalization
associated thereto, the full cost of which will be borne by
the Company. Additionally, Employee shall be entitled to
receive and designate the beneficiary of a "Term Life" life
insurance plan in the face amount of $1,000,000, Disability
insurance plan with a monthly benefit of $10,000 per month,
(assuming coverage is available for cost for a male in good
heath of Employee's age) the cost of which will also be borne
by the Company, and any other retirement plans or other
employee benefits plans which are generally available to
employees of the Company. The Company shall be under no
obligation to institute or continue the existence of any
employee benefit plans described above and may from time to
time amend, modify or terminate any of such employee benefit
plans.
4.4 Reimbursement of Expenses: Employee shall be authorized to
incur and shall be reimbursed by the Company for reasonable
business expenses, provided that such expenses are
substantiated in accordance with Company policies and fall
within the Company's general business expense limitations. The
Company may from time to time require pre approval for such
expenses.
4.5 Stock Options: Employee is hereby granted qualified incentive
stock options to acquire 300,000 shares of common stock, the
options shall vest quarterly over thirty-six months. The
options are subject to the Company's Stock Option Plan
regarding incentive stock options and the Employee and Company
shall enter into the Company's standard Adoption Agreement
that will include the following. The vesting schedule for the
options requires continuous employment with the Company until
the following dates for the shares indicated unless earlier
terminated as a result of failing to obtain Funding as
provided in Section 10, below: 25,000 shares on October 1,
2001; 25,000 shares on January 1, 2002; 25,000 shares on April
1, 2002; 25,000 shares on July 1, 2002; 25,000 shares on
October 1, 2002; 25,000 on January 1, 2003; 25,000 on April 1,
2003; 25,000 on July, 1 2003; 25,000 on October 1, 2003;
25,000 on January 1, 2004; 25,000 on April 1, 2004; 25,000 on
July, 1 2004. Strike price will be $1.00 per share (which is
greater than the fair market value of the stock). All vested
options will expire upon the earliest of three (3) years from
vesting date or three months following termination of
employment with the Company. All options currently held and
vested by the Employee will expire on December 31, 2004. In
the event the Company or substantially all of its assets is
purchased or acquired outright or a controlling interest is
purchased or acquired, all outstanding options vest
immediately.
5. Termination and Termination Payments and Rights: Subject to
modification by Section 10, below the following, the parties shall have
the following termination rights:
5.1 Employee has the right to terminate his employment by the
Company upon not less than one (1) month prior written notice
to the Company. In the event of such election, Employee's
employment shall terminate effective upon the date set forth
in such notice. In such event, the Company shall pay Employee
all compensation (including Base Salary, as well as any bonus
or other compensation that has been earned on or prior to the
date of termination) due him to the date of termination.
5.2 The Company has the right to terminate Employee's employment
without Cause (as defined below) upon not less than one (1)
month prior written notice to Employee. If the Company shall
terminate the Employee's employment without Cause, the Company
shall pay Employee all compensation (including Base Salary, as
well as any bonus and other compensation that has been earned
on or prior to the date of termination) and shall in addition
unless Funding was not timely achieved as provided in Section
10, pay Employee the lesser of one (1) year's Base Salary or
the Base Salary for the remainder of the term of this
Agreement, which is in either event payable over the one (1)
year following termination. Provided, however, if such
termination without Cause occurs after more than 50% of the
voting control of the Company has been acquired by a single
entity, then instead of paying the above, the Company shall
pay to Employee the less of two (2) year's Base Salary or the
Base Salary for the remainder of the term of this Agreement,
which is in either event payable over one (1) year following
termination.
5.3 The Company shall have the right to terminate Employee's
employment with Cause upon written notice to Employee. In such
even, the Company shall pay Employee all compensation
(including Base Salary as well as any bonus and other
compensation that has been earned on or prior to the date of
termination) due him to the date of his termination.
6. Definitions: Cause" shall mean (A) willful and repeated failure to
comply with a lawful written direction of the Board of Directors,
Executive Committee, and/or Employee's supervisor, (B) gross negligence
or willful misconduct in the performance of duties to the Company
and/or its subsidiaries, (C) commission of any act of fraud with
respect to the Company and/or it's subsidiaries, or (D) conviction of a
felony or a crime involving moral turpitude causing material harm to
the standing and reputation of the Company and/or its subsidiaries, in
each case as determined in good faith by the Company's Board of
Directors or the Executive Committee.
7. Vacation: Employee shall be entitled to the following vacation time:
three weeks during the first fiscal year of this Agreement and four
weeks during each of the second and third fiscal years of this
Agreement
8. Indemnification: In the event Employee is made, or threatened to be
made, a party to any legal action or preceding, whether civil or
criminal, by reason of the fact that Employee is or was a director or
officer of the Company or serves or served any other corporation fifty
percent (50%) or more owned or controlled by the Company in any
capacity at Company's request, Employee shall be indemnified by the
Company, and the Company shall pay Employee's related expenses when and
as incurred, all to the full extent permitted by law. If a situation
arises that appears as though the Employee would be entitled to
indemnification, the Employee will immediately inform the Company of
the same and permit the Company to direct the all aspects of the legal
defense to such situation and the Employee will cooperate fully with
the Company in his defense.
9. Non-competition and Confidentiality Covenant: During the period
specified below, Employee hereby agrees that he/she shall not do any of
the following:
9.1 Compete: Carry on anywhere in the United States any business
or activity (whether directly or indirectly, as a partner,
shareholder, owner, principal, agent, director, affiliate,
employee, advisor or consultant) which is competitive with the
business conducted by the company at the time of termination
of Employee's employment or which the Company, at or prior to
such termination, has considered or contemplated conducting
and the Employee is aware of this possibility. Ownership of no
more than five percent (5%) of the outstanding voting stock of
a publicly traded corporation shall not constitute a violation
of this provision.
9.2 Solicit Business: Solicit or influence or attempt to influence
any client, customer, or other persons, either directly or
indirectly, to direct such client's, customer's or other
person's purchase of the Company's products and/or services
away from the Company or to any person, firm, corporation,
institution, or other entity other than the Company.
9.3 Solicit Personnel: Solicit any employee of the Company for
employment by anyone other than the Company. For purposes of
this Section, the term "solicit" shall not include the
following activities by Employee: (i) advertising for
employment in any bulletin board (including electronic
bulletin boards), newspaper, trade journal, or other
publication available for general distribution to the public;
(ii) participation in any hiring fair or similar event open to
the public not targeted at the Company's employees, (iii) use
of recruiting or employee search firms that have been
instructed by Employee not to target any such employee, and
(iv) negotiating with and/or offering employment to any such
employee who initially contact Employee or one of its
affiliates or who engages in discussions with Employee or one
of its affiliates as a result of any of the activities
included in clauses (i)-(iii). Employee may employ any such
employee provided that neither it nor any of its affiliates
has solicited such employee in contravention of this Section
9.3
9.4 Confidentiality. The Employee agrees that in performing under
the terms of this Agreement he will have access to
confidential and proprietary information and records of the
Company. The Employee agrees that he shall keep all such
information and records confidential and shall not give or
provide such information or records to any third party or use
them in any way to compete or allow a third party to compete
with the Company.
9.5 Termination: The covenants set forth in this Section 9 shall
be effective commencing as of the date hereof and shall
continue for a period of two (2) years following termination
of Employee's employment with the Company, except that the
covenant of confidentiality shall continue indefinitely after
the termination of this Agreement.
10. Funding: The success of the Company is conditioned upon its raising of
at least $5,000,000 of debt or equity funding during the period
commencing on the Effective Date of this Agreement and ending on
January 31, 2002 (the "Funding"). In the event the Funding is raised,
then the Funding Bonus described above shall be paid and the Base
Salary, executive benefits, stock options and monetary termination
benefits provided for above shall continued to be available to
Employee. However, if the Funding is not timely achieved, then the
Company cannot afford to provide Employee such benefits. Therefore, if
the Funding is not timely achieved, this Agreement shall continue,
however, then for the period after January 1, 2002 (1) the Base Salary
shall be $150,000, (2) none of the executive benefits provided in
Section 4.3 shall be made available to Employee, (3) all of Employee's
non-vested stock options provided in Section 4.5 shall terminate and
(4) Employee shall not receive the additional consideration provided
for in Section 5.2, above for termination by the Company without Cause.
11. Successors: Any successor to the Company (whether direct or indirect
and whether by purchase, lease, merger, consolidation, liquidation or
otherwise) to all or substantially all of the Company's business and/or
assets shall receive the benefits of this Agreement and assume the
obligations under this Agreement and agree expressly to perform the
obligations under this Agreement in the same manner and to the same
extent as the Company would be required to perform such obligations in
the absence of a succession. The terms of this Agreement and all of the
rights of the parties hereunder shall inure to the benefit of, and be
enforceable by, Employee's personal or legal representatives,
executors, administrators, successors, heirs, distributes, devisees and
legatees.
12. Notice: Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered or sent by facsimile or three days
after the date when mailed by U.S. registered or certified mail, return
receipt requested and postage prepaid. Mailed notices to Employee shall
be addressed to Employee at the address recorded in Employee's
personnel file. In the case of the Company, mailed notices shall be
addressed to its corporate headquarters, and all notices shall be
directed to the attention of its Secretary.
13. Miscellaneous Provisions:
13.1 Waiver: No provision of this Agreement shall be modified,
waived or discharged unless the modification, waiver or
discharge is agreed to in writing and signed by Employee and
by an officer of the Company (other than Employee) authorized
by the Board to sign such modification, waiver or discharge.
No waiver by either party or any breach of, or of compliance
with, any condition or provision of this Agreement by the
other party shall be considered a waiver of any other
condition or provision or of the same condition or provision
at another time.
13.2 Entire Agreement: No agreements, representations or
understanding (whether oral or written and whether express or
implied) which are not expressly set forth in this Agreement
have been made or entered into by either party with respect to
the subject matter hereto.
13.3 Choice of Law: The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of
the State of Utah applicable to contracts wholly made and
performed in such state.
13.4 Severability: If any term or provision of this Agreement or
the application thereof to any circumstance shall, in any
jurisdiction and to any extent, be invalid or unenforceable,
such terms or provision shall be ineffective as to such
jurisdiction to the extent as such invalidity or
unenforceability without invalidating or rendering
unenforceable the remaining terms and provisions of this
Agreement or the application of such terms and provisions to
circumstances other than those as to which it is held invalid
or unenforceable, and a suitable and equitable term or
provision shall be substituted therefore to carry out, insofar
as may be valid and enforceable, the intent and purpose of the
invalid or unenforceable term or provision.
13.5 Employment Taxes: All payments made pursuant to this Agreement
will be subject to withholding of applicable income and
employment taxes.
13.6 Assignment of Company: The Company may assign its rights under
this Agreement. In the case of any such assignment, the term
"Company" when used in a Section of this Agreement shall mean
the corporation that actually employs Employee.
13.7 Counterparts: This Agreement may be executed in counterparts,
each of whom shall be deemed an original, but all of this
together will constitute one and the same instrument.
14. Arbitration of Disputes: Any controversy, dispute or claim arising out
of or relating to this Agreement, the breach thereof, or the employment
relationship between the parties which cannot be resolved amicably by
the parties shall be settled by arbitration in Salt Lake City, Utah,
before a single arbitrator, in accordance with the rules of the
American Arbitration Association. This arbitration shall be binding on
the parties and the arbitration decision may be enforced in a court of
competent jurisdiction in accordance with the laws of the State of
Utah. The only exception to this provision is in Section 15 below,
relating to injunction proceedings. Each party shall share equal in the
arbitration costs incurred in arbitrating any said dispute, except that
each party shall be responsible for the payment of their own attorney's
fees and related expenses incurred in the course of the arbitration.
15. Injunctive Relief: Employee stipulates that the services to be
performed by him/her under this Agreement are of special, unique,
unusual, extraordinary, and intellectual character, that such services
give this Agreement particular value and that the loss of such services
cannot reasonably or adequately be compensated in damages. Accordingly,
Employee agrees that any breach of this Agreement by Employee will
entitle the Company to injunctive or other equitable relief to prevent
such breach, either before an arbitrator as provided in Section 14
above, or before any court having jurisdiction over the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written:
Xxxxxx Marketing, Inc. Employee
Xxxxxxx X. Xxxxx Xxxxx X. Xxxxxxxx
Its: Chief Financial Officer/agent
