EXHIBIT 7b
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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and
entered into as of April 1, 2001, by and between Xxxxxxx ("Xxxxx")
X. Xxxxxx ("Employee") an individual resident of the State of
Nevada, and Specialized Energy Products, Inc., a Nevada corporation
(the "Employer") located at 000 Xxxxxx Xxxxxx Xxxx, Xxxxxx 00000,
based on the following:
Premises
Employee wishes to be employed by the Company and the Company
desires to provide employment to Employee, all on the terms and
conditions set forth in this Agreement.
Agreement
NOW, THEREFORE, based on the foregoing premises, which are
incorporated herein by this reference, and for and in consideration
of the mutual covenants and agreements hereinafter set forth and the
mutual benefit to the parties to be derived from herein, it is
hereby agreed as follows:
1. Employment and Term.
(a) The Company hereby employs Employee and Employee
hereby accepts employment upon the terms and conditions set
forth herein. The initial term of Employee's employment shall
be for a three (3) year period beginning on the date of this
Agreement. After the first anniversary, this Agreement shall
be automatically renewed so that it always has an unexpired
term of one (1) year, unless action is taken by one of the
parties to terminate this Agreement in accordance with the
other provisions of this Agreement. The initial term, plus the
automatic extension, is hereinafter referred to as the
"Employment Period." At any time during the Employment Period,
the Company may terminate the automatic renewal feature of this
Agreement by providing written notice to Employee, and Employee
may terminate the automatic renewal feature of this Agreement
by providing written notice to the Company.
(b) During the Employment Period, Employee will serve as
the Chief Operating Officer. Employee also agrees to serve in
such comparable positions for the Company and its subsidiaries
as shall, from time to time, be determined by the Company's
board of directors or authorized officers. Employee agrees to
perform such duties as are appropriate for an employee of the
Company and as may be assigned to him from time to time by the
Company. The job responsibilities of Employee shall not be
materially changed without the prior written mutual consent of
the Company and Employee. Employee shall comply with the
reasonable employee policies of the Company.
2. Performance of Services.
(a) During the Employment Period, Employee agrees to
perform faithfully the duties assigned to him by the Company,
to devote his full and undivided business time, attention, and
services to the business of the Company and not to engage in
any other substantial business activities; provided, however,
that nothing herein shall restrict Employee from conducting
other business that does not conflict with his obligations
under the terms of this Agreement.
(b) All duties hereunder shall be rendered in Reno,
Nevada and California, and, on a temporary basis, at such other
places as the interests, needs, business, and opportunities of
the Company shall require; provided, however, that (i) Company
shall pay all reasonable expenses incurred by Employee as a
result of such temporary duties, and (ii) Employee shall not be
required to relocate his residence without the prior written
mutual consent of the Company and Employee.
(c) Employee shall observe and comply with the
commercially reasonable rules and regulations of the Company
respecting its business and shall carry out and perform such
commercially reasonable orders, directions, and policies of the
Company as they may be from time to time communicated to
Employee either orally or in writing. Employee shall give
precedence to all applicable rules, regulations, and laws
governing the business of the Company known to Employee.
3. Exclusivity of Services and Nondisclosure of Confidential
Information.
(a) Employee agrees that for a period ending one (1) year
after the termination of the Employment Period, or for a period
ending two (2) years after the termination of the Employment
Period if the Company continues to pay Employee's salary as of
termination during said period of one (1) year, he will not:
(i) engage in any activity competitive with the
business of the Company or any of its affiliates, directly
or indirectly, in the market defined in subparagraph 3(c),
whether as employer, proprietary owner, partner,
stockholder (other than the holder of less than five
percent (5%) of the stock of an entity, the securities of
which are traded on a national securities exchange or in
the over-the-counter market), director, officer, employee,
consultant, or agent;
(ii) solicit, in competition with the Company, any
person who is a customer of the business conducted by the
Company at the date hereof or a customer of the business
conducted by the Company at any time during the Employment
Period; and
(iii) induce or attempt to persuade any employee
of the Company to terminate his or her employment
relationship in order to enter into employment with any
party in competition with the Company.
(b) Employee further agrees that he will not, at any time during
the Employment Period or at any time after the termination of
this Agreement, irrespective of the time, manner, or cause of
termination, use in a competitive way against the Company
during the non-compete period of subparagraph 3(a), disclose,
copy, or assist any other person or firm in the use, disclosure,
or copying of any trade secrets or other confidential
proprietary information of the Company, except to the extent
authorized in writing by the Company. Upon termination of his
employment hereunder, Employee will surrender to the Company
all records and other documents obtained by him or entrusted to
him during the course of his employment by the Company
(together with all copies thereof); provided, however,
that Employee may retain copies of such documents as are
necessary for Employee's personal records for income tax
purposes. For purposes of this subparagraph 3(b), proprietary
information about the business of the Company shall be treated
as confidential until it has been published or is generally or
publicly known outside the Company or has been recognized as
standard practice outside the Company or has been required by
law to be disclosed or has been lawfully received by Employee
from a third party not obligated to keep such information
confidential. The provisions of this paragraph 3(b) shall
remain in effect for a period of three (3) years subsequent to
the termination of the Employment Period.
(c) The following provisions shall apply to the covenants
of Employee contained in this section 3:
(i) The covenants contained in clauses (i) and (ii)
of subparagraph 3(a) shall apply to those markets in which
the Company is doing business at the termination of the
Employment Period and those markets in which the Company
has publicly issued written plans to enter prior to the
termination of the Employment Period.
(ii) Employee agrees that a breach or threatened
breach on his part of any covenant contained in this
section 3 will cause such damage to the Company as will be
irreparable. Therefore, without limiting the right of the
Company to pursue all other legal and equitable remedies
available for violation by Employee of the covenants
contained in this section 3, it is expressly agreed that
remedies other than injunctive relief cannot fully
compensate the Company for such a violation and that the
Company shall be entitled to injunctive relief to prevent
any such violation or continuing violation thereof.
(iii) It is the intent and understanding of each
party hereto that if, in any action before any court or
agency legally empowered to enforce the covenants
contained in this section 3, any term, restriction,
covenant, or promise contained therein is found to be
unreasonable and for that reason unenforceable, then such
term, restriction, covenant, or promise shall be deemed
modified to the extent necessary to make it enforceable by
such court or agency.
4. Business Ideas.
(a) Employee acknowledges that the Company will own all
rights in all "Business Ideas" (as hereinafter defined) which
are originated or developed by Employee, either alone or with
employees or consultants of the Company, during the Employment
Period.
(b) Employee agrees that, during the Employment Period,
he will:
(i) assign to the Company all Business Ideas and
promptly execute all documents which the Company may
reasonably require to protect its patent, copyright, and
other rights to such Business Ideas throughout the world;
and
(ii) promptly disclose to the Company all information
concerning all material Business Ideas originated by
Employee or any employee of the Company, which come to his
attention and which concern the business of the Company.
(c) For purposes of this section 4, "Business Ideas"
shall mean all ideas, whether or not patentable, which are
originated or developed by Employee in connection with his
employment by the Company and which relate to the business of
the Company.
5. Compensation and Benefits. For all services rendered by
Employee pursuant to this Agreement, the Company shall compensate
Employee as follows:
(a) As annual compensation for Employee's services
hereunder, in accordance with its normal and commercially
reasonable payroll practices, the Company agrees to pay
Employee during the Employment Period an initial base salary of
$96,000 per annum payable in arrears at a rate of $8,000 on the
last day of each month.
(b) Employee shall be entitled to participate in any
bonus program or other incentive compensation or retirement
programs established by the Company. The amount of any bonus
shall be determined in the sole discretion of the board of
directors or compensation committee, taking into consideration
the growth and profitability of the Company, the contribution
of Employee to the business and operations of the Company, the
performance of Employee measured against budgets and
performance goals established by the Company, and other factors
deemed relevant.
(c) Employee shall be entitled to vacation and sick leave
in accordance with the general policy of the Company for
executive level employees, but in any case not less than eight
(8) paid Federal Holidays, fifteen (15) paid vacation days per
annum, and up to five (5) personal days for use as sick days or
for other personal obligations per annum. Vacations shall be
taken by Employee at a time and with starting and ending dates
mutually convenient to the Company and Employee. Any Federal
Holiday which Employee does not take shall be converted into an
additional vacation day. Vacation days or portions of vacation
days not used in one employment year shall carry over to the
succeeding employment year, but shall thereafter expire if not
used within such succeeding year.
(d) The Company shall promptly reimburse Employee for all
proper expenses incurred by him on behalf of the Company in the
performance of his duties hereunder in accordance with the
commercially reasonable policies and procedures established by
the Company prior to Employee incurring said expenses. In any
event, the Employee shall be authorized and as such, limited to
incur or expense a maximum of $3,500.00 for any single item or
expenditure. Any expenditure exceeding $3,500.00 shall require
the approval of the Chief Executive Officer, Chairman of the
Board or Chief Financial Officer of the Employer.
(e) The Company shall provide Employee with health and
medical insurance policies, and other benefits on no worse
terms than those offered to any other person by the Company.
The Company shall additionally provide to Employee incentive,
retirement, pension, profit sharing, stock option, or other
employee benefit plans, which are consistent with and similar
to such plans provided by the Company to its directors,
officers, and executive level employees generally.
(f) The Company shall withhold from Employee's
compensation hereunder all proper federal and state payroll and
income taxes on compensation paid to Employee and shall in
every pay period provide an accounting to Employee for such
amounts withheld. The Company acknowledges that Employee is a
resident alien and a resident of Nevada, and the Company will
comply with all federal and state rules and regulations
concerning employees with this status.
(g) To the extent the Company offers benefits to the
spouses of employees, the Company shall offer the same benefits
to the Employee.
(h) Should the Employee receive options to purchase
shares of the Company's common stock under the Company's
incentive stock option plan, such shares shall be exercisable
and vest quarterly over a three year pro rata period coinciding
with the Employer's annual operating year. Such incentive stock
options shall be exercisable for three years from the date of
issuance, and fifty percent (50%) of unvested options shall
vest immediately upon the consummation of a Change of Control,
as such term is defined in the immediately following sentence.
As used in this Agreement, the term "Change of Control" shall
mean (i) any transaction or series of transactions in which any
person or group (within the meaning of Rule 13d-5 under the
Exchange Act and Sections 13(d) and 14(d) of the Exchange Act)
becomes the direct or indirect "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), by way of a stock
issuance, tender offer, merger, consolidation, other business
combination or otherwise, of greater than 50% of the total
voting power entitled to vote in the election of directors of
Company (including any transaction in which Company becomes a
wholly owned or majority owned subsidiary of another
corporation), (ii) any merger or consolidation or
reorganization in which Company does not survive, (iii) any
merger or consolidation in which Company survives, but the
shares of Company's Common Stock outstanding immediately prior
to such merger or consolidation represent 50% or less of the
voting power of Company after such merger or consolidation, and
(iv) any transaction in which more than 50% of Company's assets
are sold.
(i) In the event that any payment or benefit received or
to be received by Employee in connection with a Change of
Control, whether payable pursuant to the terms of this
Agreement or any other plan, arrangement or agreement
(collectively, the "Total Payments") is deemed to be an "Excess
Parachute Payment" (in whole or in part) to Employee as a
result of Section 280G and/or 4999 of the Internal Revenue Code
of 1986, as amended (the "Code"), as in effect at such time, no
change shall be made to the Total Payments to be made in
connection with the Change of Control, except that, in addition
to all other amounts to be paid to Employee by Company
hereunder, Company shall, within thirty (30) days of the date
on which any Excess Parachute Payment is made, pay to Employee,
in addition to any other payment, coverage or benefit due and
owing hereunder, an amount such that Employee's net after-tax
position will be identical to that which would have obtained
had Sections 280G and 4999 not been part of the Code. For
purposes of implementing this Section, no portion, if any, of
the Total Payments, the receipt or enjoyment of which Employee
shall have effectively waived in writing prior to the date of
payment of the Total Payments, shall be taken into account..
6. Termination of Agreement.
(a) Termination by the Company for Cause. The Company
shall have the right, without further obligation to Employee
other than for compensation previously accrued, to terminate
this Agreement for cause ("Cause") by showing that (i) Employee
has materially breached the terms hereof, but only if the
Employee fails to reasonably cure such breach within twenty
(20) days following the receipt of notice by Company setting
forth the conditions giving rise to such breach; (ii) Employee,
in the reasonable determination of the board of directors of
the Company by majority vote at a duly called meeting of the
board at which Employee shall have a right to be present and
represented by legal counsel and at least ten (10) days prior
to which Employee shall have received notice of the alleged
basis for such proposed termination, has materially and
consistently failed to perform Employee's duties, been
materially and consistently negligent in the performance of
Employee's duties, or has engaged in material willful or gross
misconduct in the performance of his duties, but only if the
Employee fails to cure such breach within twenty (20) days
following the receipt of notice by Company setting forth the
conditions giving rise to such breach; or (iii) Employee has
been convicted of fraud, embezzlement, theft, or dishonesty or
other criminal conduct against the Company.
(b) Termination upon Death or Disability of Employee.
This Agreement shall terminate immediately upon Employee's
death. This Agreement shall also terminate on the continued
disability of Employee for a consecutive period of ninety (90)
days. For purposes of this paragraph "disability" shall be
defined as the inability of Employee to substantially perform
his duties under this Agreement after the Company has made
commercially reasonable efforts to accommodate such
disabilities or offered Employee suitable alternative
employment
(c) Termination by Employee for Good Reason. Employee
shall have the right without further obligation to the Company
to terminate this Agreement for good reason ("Good Reason") in
the event of (i) the Company's breach of any covenant or term
of this Agreement, (ii) a determination by Employee that the
Company is engaged in any activity which Employee reasonably
believes, upon the advice of counsel, constitutes a violation
of applicable federal or state law, or (iii) the material
alteration or restriction of Employee's authority, duties and
responsibilities in a manner inconsistent with Employee's
position and status with the Company, but only if the Company
fails to cure such breach within twenty (20) days following the
receipt of notice by Employee setting forth the conditions
giving rise to such breach.
(d) Voluntary Termination by Employee. Employee may
voluntarily resign his employment at any time by giving 30 days
written advance notice to Company.
(e) Termination Payments.
(i) Termination for Any Reason. In the event that
Employee is terminated for any reason, the Company shall
deliver to Employee within thirty (30) days following the
effective date of such termination all amounts accrued
through the date of termination, any unreimbursed expenses
incurred pursuant to this Agreement, any other benefits
specifically provided to Employee under any benefit plan,
and any other benefits called for under this Agreement or
by operation of law.
(ii) Termination by the Company for Other Than Cause
or Voluntary Termination by Employee. In the event that
Employee is terminated other than by the Company for Cause
or voluntary termination, the Company shall within thirty
(30) days following the effective date of such termination
pay to Employee the annual amount of Employee's base
salary in the event of termination prior to the first
anniversary of this Agreement, or one half of the annual
amount of Employee's base salary in the event of
termination thereafter.
(f) Options Held by Employee. Any options held by
Employee at the time of termination of this Agreement shall be
treated as follows:
(i) In the event of voluntary termination or
termination by the Company for Cause, all unvested options
shall immediately terminate and be unexercisable and all
vested options may be exercised for a period of six-months
or, if shorter, the unexpired term of the options;
(ii) In the event of termination for any other
reason, all unvested options shall vest immediately upon
termination and shall remain exercisable for the unexpired
term of the options.
(iii) Notwithstanding the above, any initial
options granted to Employee at the commencement of his
employment with the Company shall, in the event of
termination for reasons other than Cause or voluntary
resignation, vest immediately upon termination and shall
remain exercisable for the unexpired term of the option.
However, restricted stock shall be issued in connection
with any such exercise restricting the sale of stock until
one year after the date of this Agreement.
(g) Exit Interview. To insure a clear understanding of
this Agreement, including but not limited to the protection of
the business interests of the Company, Employee agrees, upon
termination of this Agreement for any reason, or the expiration
of the Employment Period, at no additional expense to Employee,
to engage in an exit interview with the Company at a time and
place designated by the Company.
7. Indemnification. The Company shall indemnify Employee and
hold Employee harmless from liability for acts or decisions made by
Employee while performing services for the Company to the greatest
extent permitted by applicable law. The Company shall use its best
efforts to obtain coverage for Employee under any insurance policy
now in force or hereafter obtained during the term of this Agreement
and for six (6) years thereafter insuring officers and directors of
the Company against such liability. For the term of this Agreement
and for six (6) years thereafter, the Company shall (i) provide in
its charter and bylaws for mandatory indemnification of directors
and officers to the maximum extent permitted by law, (ii) provide in
its charter and bylaws that the personal liability of directors and
officers for monetary damages shall be limited to the maximum extent
permitted by law, and (iii) carry directors and officer liability
insurance in amounts and with terms appropriate to the Company and
its business as determined in the reasonable judgment of the board
of directors. Upon request by Employee the Company shall advance
within 10 business days of such request any and all expenses,
including reasonable attorneys' fees and the cost of any
investigation and preparation incurred in connection with any matter
for which Employee is or may be entitled to indemnification
hereunder. Company shall also indemnify Employee from and against
any and all Liabilities and Costs incurred in connection with any
claim or action brought to enforce Employee's rights under this
Section 7 or under applicable law or Company's charter or bylaws now
or hereafter in effect relating to indemnification, or for recovery
under directors' and officers' liability insurance policies
maintained by Company, such Liabilities and Costs to be reimbursed
to the Company within ninety days in the event Employee is not
successful in such attempt to enforce asserted rights. The
Company's reimbursement and indemnity obligations shall be in
addition to any liability the Company may otherwise have at law or
under any other agreement. Employee agrees to indemnify and to hold
the Company harmless from any and all damages, losses, claims,
liabilities, costs, or expenses arising from Employee's acts or
omissions in violation of his duties under this Agreement which
constitute fraud, gross negligence, material willful misconduct, or
material willful and knowing violations of the terms of this
Agreement.
8. Notice. Any notice or request required or permitted to be
given hereunder shall be sufficient if in writing and delivered
personally, sent by facsimile transmission, or sent by registered
mail, return receipt requested, to the addresses hereinabove set
forth or to any other address designated by either of the parties
hereto by notice similarly given. Such notice shall be deemed to
have been given upon such personal delivery, facsimile transmission,
or mailing, as the case may be, to the addresses set forth below:
If to Employee, to:
Fax: ( ) -
Confirmation: ( ) -
With a copy to: Xxxxx Xxxxxxxxxxxx
Xxxxxxxxxxxx & Xxxxxx, Inc.
Fax: (000) 000-0000
Confirmation: (000) 000-0000
If to the Company, to:
________________________
________________________
Fax: (___) ____-_____
Confirmation: (___) ____-_____
With a copy to: ________________________
________________________
________________________
________________________
Fax: (___) ____-_____
Confirmation: (___) ____-_____
9. Assignment. Except to any successor or assignee of the
Company as provided in subparagraph 6(c), neither this Agreement nor
any rights or benefits hereunder may be assigned by either party
hereto without the prior written consent of the other party.
10. Arbitration. In the event of any dispute under the terms
of this Agreement, the parties shall use their good faith efforts to
resolve such dispute. In the event that the parties cannot resolve
the dispute, it shall be submitted to binding arbitration in Reno,
Nevada under the rules of the American Arbitration Association.
11. Validity of Provisions and Severability. If any provision
of this Agreement is, or becomes, or is deemed invalid, illegal, or
unenforceable in any jurisdiction, such provision shall be deemed
amended to conform to the applicable jurisdiction, or if it cannot
be so amended without materially altering the intention of the
parties, it will be stricken. However, the validity, legality, and
enforceability of any such provisions shall not in any way be
affected or impaired thereby in any other jurisdiction and the
remainder of this Agreement shall remain in full force and effect.
12. Entire Agreement. This Agreement constitutes the entire
agreement and understanding between the parties pertaining to the
subject matter of this Agreement. This Agreement supersedes all
prior agreements, if any, any understandings, negotiations, and
discussions, whether oral or written. No supplement, modification,
waiver, or termination of this Agreement shall be binding unless
executed in writing by the party to be bound thereby.
13. Governing Law. This Agreement shall be governed by and
construed and interpreted in accordance with the laws of the state
of Nevada.
14. Attorneys' Fees. In the event that either party
institutes any action or suit to enforce this Agreement or to secure
relief from any default hereunder or breach hereof, the breaching
party shall reimburse the non-breaching party for all costs,
including reasonable attorneys' fees, incurred in connection
therewith and in enforcing or collecting any judgment rendered
therein.
15. Costs. Each of the parties shall bear its respective
costs associated with this Agreement and the transactions
contemplated hereby, including legal fees, and other costs and
expenses.
16. Amendment or Waiver. Every right and remedy provided
herein shall be cumulative with every other right and remedy,
whether conferred herein, at law, or in equity, and may be enforced
concurrently herewith, and no waiver by any party of the performance
of any obligation by the other shall be construed as a waiver of the
same or any other default then, theretofore, or thereafter occurring
or existing. This Agreement shall only be amended by a writing
signed by all parties hereto, with respect to any of the terms
contained herein, and any term or condition of this Agreement may be
waived, or the time for performance thereof may be extended, by a
writing signed by the party or parties for whose benefit the
Provision is intended.
17. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding on the parties and their successors,
assigns, heirs, executors, and administrators.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
signed by its duly authorized officer and Employee has signed this
Agreement as of the date first above written.
The Employer:
Specialized Energy Products, Inc.
By
Employee:
Xxxxxxx X. Xxxxxx
