EMPLOYMENT AGREEMENT
This Employment Agreement, effective as of January 3, 2001 (the "Agreement"), is
entered into by and between MAXXON, INC., a Nevada corporation (the "Company"),
the principal offices of which are located at 0000 Xxxxx Xxxx Xxxxxx, Xxxxx 000,
Xxxxx, Xxxxxxxx, 00000, and XXXXXXX X. XXXXX ("Xxxxx"). In consideration of the
mutual covenants and conditions contained in this Agreement, the parties agree
to the following:
ARTICLE 1
DUTIES AND COMPENSATION
1.01. Term of Employment and Duties. The Company and Xxxxx agree that for the
period commencing on January 3, 2001, and terminating on January 3,
2002 (the "Termination Date"), the Company shall employ Xxxxx and Xxxxx
shall perform duties ("duties") for the Company as Chief Executive
Officer and President of the Company as set forth in the Company's
Bylaws and shall report to the Company's Board of Directors (the
"Board").
1.02. Commitment to the Company. During the term of this Agreement, Xxxxx
shall devote such working time, attention and energies to the business
of the Company, as is necessary or appropriate for the performance of
his duties as Chief Executive Officer and President of the Company.
However, this commitment shall not be construed as preventing Xxxxx
from participating in other businesses or from investing Xxxxx'x
personal assets in such form or manner as may require occasional or
incidental time on the part of Xxxxx in the management, conservation
and protection of such investments and provided that such investments
or business cannot be construed as being competitive or in conflict
with the business of the Company.
1.03. Renewal of Term. Upon each Termination Date this Agreement shall renew
and continue in effect for an additional two-year period, and each
successive Termination Date shall thereafter be designated as the
"Termination Date" for all purposes under this Agreement.
1.04. (a) Compensation. Xxxxx shall receive a salary of $100,000.00 per
year, payable in 24 semi-monthly installments. Each January the Board
shall review Xxxxx'x salary and shall make such increases in salary as
it considers appropriate. Xxxxx'x salary during the term of this
Agreement shall never be less than $100,000.00 per year. Effective at
the beginning of each calendar year Xxxxx shall be entitled to at least
an increase in salary that is equal to the percentage increase in the
Consumer Price Index during the previous calendar year.
(b) Bonus. During the term of this Agreement Xxxxx shall be entitled to
participate in all executive bonuses as the Board, in its sole
discretion, shall determine.
(c) Fringe Benefits. During the term of this Agreement the Company
shall provide to Xxxxx each of the following: (i) all reasonable and
customary executive "fringe benefits," including, but not limited to,
participation in pension plans, profit-sharing plans, employee stock
ownership plans, stock option plans (whether statutory or not), stock
appreciation rights plans, hospitalization insurance, medical
insurance, dental insurance, disability insurance, life insurance, and
such other benefits that are granted to or provided for executives now
in the employ of the Company or that may be granted to or provided for
them during the term of Xxxxx'x employment under this Agreement; and
(ii) paid vacation and sick leave, as determined by the Board.
(d) Reimbursement of Expenses. (i) During the term of this Agreement
the Company shall pay directly or reimburse Xxxxx for all reasonable
and necessary travel, entertainment, or other
1
related expenses incurred by him in carrying on his duties and
responsibilities under this Agreement. In addition, the Company shall
furnish Xxxxx with a cellular telephone and suitable office space and
facilities for the performance of his duties. (ii) During the term of
this Agreement the Company shall pay for Xxxxx'x membership dues in
professional organizations and for any seminars and conferences
related to Company business.
1.05. (a) Indemnification. Xxxxx shall be indemnified by the Company for all
legal expenses and all liabilities incurred in connection with any
proceeding involving him by reason of his being or having been an
officer, director, employee, or agent of the Company to the fullest
extent permitted by the laws of the State of Nevada.
(b) Payment of Expenses. In the event of any action, proceeding or
claim against Xxxxx arising out of his serving or having served in a
capacity specified in Section 1.01 above, which in Xxxxx'x sole
judgment requires him to retain counsel (such choice of counsel to be
made by Xxxxx with the prior consent of the Company, which may not
unreasonably withhold its consent) or otherwise expend his personal
funds for his defense in connection therewith, the Company shall pay
for or reimburse Xxxxx for all reasonable attorney's fees and expenses
and other costs associated with Xxxxx'x defense of such action as such
fees and costs are incurred.
ARTICLE II
TERMINATION OF EMPLOYMENT
2.01. Termination Procedure. Either party to this Agreement may terminate
Xxxxx'x employment under this Agreement by giving the other party
written notice of the intent to terminate at least thirty days prior to
the proposed termination date except as set out in section 2.02. A
decision by the Company to terminate Xxxxx'x employment under this
Agreement shall require an affirmative vote of more than 66-2/3% of the
Board except as set out in Section 2.02.
2.02. Death. This Agreement shall terminate on the date of Xxxxx'x death. If
this Agreement is terminated as a result of Xxxxx'x death, the Company
shall pay to Xxxxx'x estate, not later than the 30th day following his
death, a lump sum severance payment consisting of (1) Xxxxx'x salary
and accrued salary through the date of his death, (2) all amounts Xxxxx
would have been entitled to upon termination of his employment under
the Company's employee benefit plans and (3) a pro rata amount of bonus
Xxxxx was eligible to receive under any Company bonus plan.
2.03. Disability. The Company shall have the right to terminate this
Agreement if Xxxxx incurs a permanent disability during the term of
his employment under this Agreement. For purposes of this Agreement,
"Permanent Disability" shall mean inability of Xxxxx to perform the
services required hereunder due to physical or mental disability which
continues for either (i) a total of 180 working days during any
12-month period or (ii) 150 consecutive working days. In the event
that either party disputes whether Xxxxx has a permanent disability,
such dispute shall be submitted to a physician mutually agreed upon by
Xxxxx or his legal guardian and the Company. If the parties are unable
to agree on a mutually satisfactory physician, each shall select a
reputable physician, who, together, shall in turn select a third
physician whose determination of Xxxxx'x ability to perform his job
duties shall be conclusive and binding to the parties. Evidence of
such disability shall be conclusive notwithstanding that a disability
policy or clause in an insurance policy covering Xxxxx shall contain a
different definition of "permanent disability." If Xxxxx'x employment
under this Agreement is terminated by the Company because he has a
permanent disability, the Company shall pay Xxxxx, not later than the
30th day following the date of termination, a lump sum severance
payment consisting of (1) Xxxxx'x salary through the date of
2
his termination, (2) all amounts Xxxxx is entitled to upon termination
of employment under the Company's employee benefit plans, (3) Xxxxx'x
undiscounted salary through the Termination Date, or if greater for a
period of 24 months, and (4) a pro rata amount of bonus he is eligible
to receive under any Company bonus program.
2.04. Termination With Cause. The Company shall have the right to terminate
this Agreement for cause. For purposes of this Agreement, "for cause"
shall exclusively be defined to mean (a) conviction of a felony which
is materially detrimental to the Company, (b) proof beyond a
reasonable doubt of the gross negligence or willful misconduct which
is materially detrimental to the Company, or (c) proof beyond a
reasonable doubt of a breach of a fiduciary duty which is materially
detrimental to the Company. If the Company terminates Xxxxx'x
employment "for cause" the Company shall pay Xxxxx, not later than the
30th day following the date of termination, a lump sum severance
payment consisting of (1) Xxxxx'x salary and accrued salary through
the date of his termination and (2) all amounts Xxxxx is entitled to
upon termination of employment under the Company's employee benefits
plans.
2.05. Termination Without Cause. If the Company terminates Xxxxx'x employment
for any reason other than for cause as that term is defined in section
2.04, the Company shall pay Xxxxx, not later than the 30th day
following the date of termination, a lump sum severance payment
consisting of (1) Xxxxx'x salary and accrued salary through the date of
his termination, (2) all amounts Xxxxx is entitled to upon termination
of employment under the Company's employee benefits plans, (3) Xxxxx'x
undiscounted salary through the Termination Date, or if greater for a
period of 24 months, and (4) a pro rata amount of bonus he is eligible
to receive under any Company bonus program.
2.06. Resignation. If Xxxxx resigns from his employment under this Agreement
other than for a reason of change of control as defined in section
2.07, the Company shall pay Xxxxx, not later than the 30th day
following the effective date of his resignation, a lump sum severance
payment consisting of (1) Xxxxx'x salary and accrued salary through the
date of his termination, (2) all amounts Xxxxx is entitled to upon
termination of employment under the Company's employee benefit plans,
(3) Xxxxx'x undiscounted salary for a period of 90 days after his
resignation and (4) a pro rata amount of bonus he is eligible to
receive under any Company bonus program.
2.07. Change of Control. Xxxxx shall have the right to resign from his
employment under this Agreement if there is a change of control. For
purposes of this Agreement a Change of Control shall be deemed to have
occurred if any of the following occur: (i) at any time during any
period of 12 consecutive months, at least a majority of the directors
serving on the Board ceases to consist of individuals who have served
continuously on such Board since the beginning of such 12 month
period, unless the election of directors during such period, or
nomination for election by the shareholders of the Company, was
approved by a vote of at least two-thirds of the members of such Board
at such time still in office and who shall have served continuously on
such Board since the beginning of such 12-month period by reason of
death or disability; or (ii) a merger or consolidation occurs to which
the Company is a party unless following such merger or consolidation
(A) more than 50% of the then outstanding shares of voting capital
stock of the corporation surviving such merger or resulting from such
consolidation is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were the
beneficial owners of the outstanding voting capital stock of the
Company immediately prior to such merger or consolidation in
substantially the same proportions as their ownership, immediately
prior to such merger or consolidation, of the outstanding voting
capital stock of the Company, and (B) at least a majority of the
members of the Board surviving such merger or resulting from such
consolidation were members of the Board immediately prior to such
merger
4
or consolidation; or (iii) the sale of all, or substantially all, of
the assets of the Company; or (iv) a person or entity who is not an
owner of voting capital stock of the Company as of the date of this
Agreement acquires more than 50% of the voting capital stock of the
Company. Notwithstanding the foregoing, however, a Change of Control
shall not be deemed to have occurred upon the consummation of an
Initial Public Offering of the capital stock of the Company. If Xxxxx
exercises his right to terminate his employment following a Change of
Control, he shall receive, not later than the 30th day following the
date of termination, a lump sum severance payment consisting of (1)
Xxxxx'x salary through the date of his termination, (2) all amounts
Xxxxx is entitled to upon termination of employment under the
Company's employee benefits plans, (3) Xxxxx'x undiscounted salary
through the Termination Date, or if greater for a period of 24 months,
and (4) a pro rata amount of bonus he is eligible to receive under any
Company bonus program.
2.08. Mitigation. Xxxxx shall have no obligation to mitigate any damages or
payments made to him under Article II of this Agreement.
2.09. Excess Parachute Payments. In the event that payment of the amounts
this Agreement requires the Company to pay Xxxxx would cause Xxxxx to
be the recipient of an excess parachute payment (within the meaning of
Section 280G(b) of the Internal Revenue Code of 1986), the amount of
the payments to be made to Xxxxx pursuant to this Agreement shall be
reduced to an amount equal to one dollar less than the amount that
would cause the payments hereunder to be excess parachute payments. The
manner in which such reduction occurs, including the items of payment
and amounts thereof to be reduced, shall be agreed to by Xxxxx and the
Company.
ARTICLE III
RESTRICTIONS DURING AND AFTER EMPLOYMENT
3.01. Non-Compete. During Xxxxx'x employment by the Company under this
Agreement and for a one-year period following the termination of
Xxxxx'x employment by the Company, except if such termination is
pursuant to sections 2.05 or 2.07 of this Agreement, Xxxxx shall not
work for or provide any services in any capacity to any individual or
business entity that is in direct competition with the business of the
Company as it exists during Xxxxx'x employment with the Company.
3.02. Soliciting Customers Or Accounts After Termination of Employment.
During the one-year period immediately following the termination of
Xxxxx'x employment with the Company, except if such termination is
pursuant to sections 2.05 or 2.07 of this Agreement, Xxxxx shall not
either directly or indirectly: (a) Make known to any person, firm, or
corporation the names and addresses of any of the customers or accounts
of the Company; or (b) Call on, solicit, or take away, or attempt to
call on, solicit, or take away any of the customers or accounts of the
Company on whom Xxxxx called or with whom he became acquainted during
his employment with the Company, either for himself or for any other
person, firm, or corporation.
3.03. Company Records and Documents. All Company-related records and
documents are considered to be the exclusive property of the Company.
Upon the termination of Xxxxx'x employment by the Company for any
reason, he shall promptly return to the Company all such records and
documents in his possession or under his control. Xxxxx shall have the
right to retain copies of Company records and documents that he
believes are reasonably necessary for him to retain to be able to
exercise his rights under the Indemnification Provisions of this
Agreement.
4
ARTICLE IV
MISCELLANEOUS
4.01. Notice. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and sent by certified mail
by the Company to the residence of Xxxxx, or by Xxxxx to the Company's
principal office.
4.02. Further Assurances. Each party agrees to perform any further acts and
to execute and deliver any further documents that may be reasonably
necessary to carry out the provisions of this Agreement.
4.03. Severability. In the event that any of the provisions, or portions
thereof, of this Agreement are held to be unenforceable or invalid by
any court of competent jurisdiction, the validity and enforceability
of the remaining provisions or portions thereof, shall not be affected
thereby.
4.04. Construction. Whenever used herein, the singular number shall include
the plural, and the plural number shall include the singular.
4.05. Headings. The headings contained in this Agreement are for purposes of
reference only and shall not limit or otherwise affect the meaning of
any of the provisions contained herein.
4.06. Multiple Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original but all
of which together shall constitute one and the same instrument.
4.07. Governing Law. This Agreement has been executed in and shall be
governed by the laws of the State of Oklahoma.
4.08. Inurement. Subject to the restrictions against transfer or assignment
as herein contained, the provisions of this Agreement shall inure to
the benefit of, and shall be binding on, the assigns, successors in
interest, personal representatives, estates, heirs and legatees of each
of the parties hereto.
4.09. Waivers. No waiver of any provision or condition of this Agreement
shall be valid unless executed in writing and signed by the party to be
bound thereby, and then only to the extend specified in such waiver. No
waiver of any provision or condition of this Agreement shall be
construed as a waiver of any other provision or condition of this
Agreement, and no present waiver of any provision or condition of this
Agreement shall be construed as a future waiver of such provision or
condition.
4.10. Amendment. This Agreement may be amended only by a written document
signed by the parties and stating that the document is intended to
amend this Agreement.
4.11. Disputes. In any dispute or proceeding to construe this Agreement, the
parties expressly consent to the exclusive jurisdiction of state and
federal courts in Tulsa County, Oklahoma, the principal place of
business for Maxxon. The prevailing party in any suit brought to
interpret this Agreement shall be entitled to recover reasonable
attorney's fees and expenses in addition to any other relief to which
it is entitled.
5
4.12. Payment of Xxxxx'x Attorney's Fees and Expenses in Advance in
Connection with this Agreement. If the Company brings a suit against
Xxxxx in connection with this Agreement or if Xxxxx brings suit against
the Company in connection with this Agreement, the Company shall pay
Xxxxx'x reasonable attorney's fees and expenses as incurred. If a
determination is made in a court of competent jurisdiction in favor of
the Company, then the Company shall be entitled to be reimbursed by
Xxxxx for his attorney's fees and expenses which were paid by the
Company.
4.13. Execution. Each party to this Agreement hereby represents and warrants
to the other party that such party has full power and capacity to
execute, deliver and perform this Agreement.
IN WITNESS WHEREOF, the parties to this Agreement have executed this Agreement
effective this 3rd day of January, 2001.
XXXXXXX X. XXXXX MAXXON, INC.
/s/ XXXXXXX X. XXXXX /s/ XXXXXXX X. XXXXX
-------------------------------------- ----------------------------------------
Xxxxxxx X. Xxxxx, an Individual By: Xxxxxxx X. Xxxxx
President and Chief Executive Officer
6
