EMPLOYMENT AGREEMENT
DATE: November 26, 1997
BETWEEN: X.XXX INTERNATIONAL, INC., an Oregon corporation "Employer"
AND: XXXXXXXX X. XXXXX "Employee"
R E C I T A L S
WHEREAS, Employer desires to employ Employee as its Executive Vice
President according to the terms and conditions of this Agreement; and,
WHEREAS, Employee has the skills, ability, background and desire to be
employed as Executive Vice President of Employer;
IT IS HEREBY AGREED:
1.0 EMPLOYMENT
1.1 Employer agrees to employ Employee, and Employee agrees to become
employed by Employer, as Executive Vice President of Employer, pursuant to the
terms and conditions set forth herein.
2.0 TERM
2.1 The term of this Agreement commences on November 25, 1997, the date
Employee commenced his period of employment, and this Agreement shall continue
indefinitely until terminated by either party as provided herein.
3.0 DUTIES
3.1 Employee shall work under the direction of Employer's President.
Employee will serve Employer faithfully, professionally, and to the best of his
ability. Employee will devote his entire working time and best efforts working
for Employer on a full-time basis. Employee shall be charged with the
management of Employer's finance and accounting functions, purchasing
department, and of management of Employer's engineering and manufacturing
departments. Employee shall carry out such additional services and duties as
may be assigned to him by Employer's President.
3.2 Employee shall not be precluded from engaging in appropriate civic,
charitable or religious activities or from devoting a reasonable amount of time
to private investments, as long as such activities and service do not interfere
or conflict with his responsibilities to Employer and are consistent with
Employer's policies.
-1-
4.0 COMPENSATION
4.1 BASE SALARY. Employee shall be entitled to a base salary of $7,500
per month commencing on the date specified in paragraph 2.0.
4.2 BONUS. Additionally, Employee shall be eligible for payment of
$10,000 bonus during his first year of employment based on specific objectives
to be set forth in writing by Employee and Employer's President. Employee must
remain employed continuously during the entire first year of employment to be
eligible for the bonus. The terms of such objectives are incorporated herein by
reference.
4.3 STOCK OPTION PLAN. Upon execution of this Agreement, Employee will
be granted a qualified incentive stock option to acquire 100,000 shares of
common stock at the market rate for such shares as of the date of grant pursuant
to the X.Xxx International, Inc. 1997 Incentive Compensation Plan. The option
grant will be memorialized by an Incentive Stock Option Agreement to be entered
into between Employer and Employee. The option shall be exercisable as to
40,000 shares of common stock on the six (6) month anniversary of this
Agreement, assuming Employee remains continuously employed by Employer during
that 6-month period. The option as to the remaining 60,000 shares shall be
exercisable at a rate of 20,000 shares per year. The 3-year term for the
exercise of the additional 60,000 shares shall commence when the option has
become exercisable as to the first 40,000 shares.
4.4 BENEFITS. During his period of employment, Employee shall be
entitled to such other benefits in effect from time to time which Employer
provides to its other employees.
5.0 EXPENSES AND TRAVEL
5.1 During the term of his employment under this Agreement, Employee is
authorized to incur necessary and reasonable travel, entertainment and other
business expenses in connection with his duties hereunder. Employer shall
reimburse Employee for such expenses upon presentation of an itemized account
and appropriate supporting documents all in accordance with Employer's general
applicable policies. Expenses must be reasonable and customary, have a business
purpose, be comparable to the same type of expense incurred by similarly sized
and related businesses, and meet the requirement of deductibility as business
expenses under Federal tax law.
6.0 TRADE SECRETS
6.1 Employee acknowledges and agrees that Employer's Proprietary
Information constitutes trade secrets developed by Employer and constitutes the
exclusive property of Employer. Employee, therefore, agrees that for and during
the entire term of this Agreement any Proprietary Information shall be
considered and kept as the private, privileged and proprietary records of
Employer, and Employee will not divulge the contents of such records to any
firm, individual or institution except upon the direct authorization of Board of
Directors of Employer.
-2-
6.2 Upon termination of this Agreement for any cause, Employee agrees he
will continue to treat as private and privileged Employer's Proprietary
Information and will not release any such information to any person, firm or
institution, either by statement, deposition or witness, or use Employer's
Proprietary Information for his own monetary gain, except upon the direct
written authority of the Board of Directors of Employer, and Employer shall be
entitled to an injunction by any competent court to enjoin and restrain the
unauthorized disclosure of such information. Any and all copies of any
Proprietary Information shall be returned to Employer by Employee upon
termination for whatever cause.
6.3 "Proprietary Information" is defined as all inventions, products,
techniques, processes, experimental or developmental work, marketing
information, customer lists and other such information disclosed to Employee
including, but not limited to, any idea, invention, patent or product derived
from or arising out of such information or from Employee's performance under
this Agreement. Proprietary Information shall not include any product,
discovery or information which is known or available to the general public or in
the public domain as of the date of this Agreement, or is known by Employee from
sources other than Employer, or which becomes known to Employee or publicly
known other than from Employer, unless the Proprietary Information includes a
new application or use for any product, discovery or information known or
available to the general public in which case the new use or application will
constitute Proprietary Information.
7.0 COVENANT NOT TO COMPETE
7.1 Employee agrees that during the term of this Agreement he will not
compete directly or indirectly with Employer's business activities.
7.2 Except as may be allowed pursuant to paragraph 7.3, in the event
either Employer or Employee should terminate Employee's employment relationship
with Employer, with or without cause, Employee agrees that he will not, for a
period of one (1) year after the termination of such employment relationship,
engage in any business or enterprise which competes with the business of
Employer, anywhere in the world, as an individual proprietor, partner,
stockholder of a closely-held corporation, director or officer of any
corporation, as an agent or employee of any other party, or by any other direct
or indirect means. In the event Employee should compete with Employer during
the time period stated above, such time period shall be extended by a period of
time equal to the time Employee is so engaged in competition.
7.3 In the event Employee's employment relationship with Employer is
terminated, Employee shall give Employer ten days written notice if Employee
proposes to engage in any business or enterprise which could be construed as
violating paragraph 7.2. Any notice provided under this subparagraph shall
include a description of the new business or enterprise in which Employee, or
his new employer, is engaged. Employer will advise Employee within the ten-day
period if it objects or consents to Employee's proposed new employment or
business enterprise. Any failure by Employer to respond within the ten-day
period will be construed as an objection to Employee's proposed new competing
business or enterprise in which case paragraph 7.2 will
-3-
remain fully enforceable. Employer agrees it will not, however, unreasonably
withhold its consent to any new business or enterprise in which Employee
proposes to be engaged.
7.4 Employee agrees that, during the one-year time period provided in
paragraph 7.2, he will not solicit any customers or suppliers of Employer with
whom he had contact in person, by telephone, or by any other means while
employed by Employer, or whose names or business locations were contained on any
customer or supplier list of Employer to which Employee had access during his
period of employment.
7.5 During the one-year term beginning on the termination of his
employment with Employer, Employee agrees not to solicit for hire or participate
in the solicitation for hire of any employee of Employer.
7.6 Employer may assign this Agreement in connection with the transfer of
Employer's business, or in connection with the transfer of that portion of
Employer's business operations in which Employee is employed, and this Agreement
shall inure to the benefit of Employer's successors and assigns.
7.7 The provisions of this Agreement shall continue to be effective
notwithstanding any change in Employee's duties or change in the amount or
method of determining Employee's compensation.
7.8 If the length of time or the areas covered by this Agreement shall be
determined to be unreasonable, this Agreement shall be enforceable for a
reasonable time and within a reasonable area, as determined by a court. If
Employee violates any of the provisions of this Agreement, Employer shall be
entitled to an injunction enjoining and restraining Employee from continuing
such violation, and in addition, Employer shall be entitled to recover such
damages as Employer may have suffered as a result of such violation.
8.0 TERMINATION
8.1 DEFINITIONS. As used herein, the following definitions shall apply:
8.1.1 "Cause" shall mean the termination of the employment of
Employee as a result of (i) fraud or dishonesty in connection with the business
of Employer; (ii) gross negligence as to the performance of Employee's duties
for Employer; (iii) willful failure of Employee to carry out his duties as an
employee of Employer; (iv) any act or acts of dishonesty undertaken by Employee
and intended to result in gain or personal enrichment of Employee at the expense
of Employer; (v) persistent failure by Employee to perform the duties and
obligations of Employee's employment which are not remedied in a reasonable
period of time after receipt of written notice from Employer; or (vi) Employee's
conviction, after exhaustion of all appeals, of a felony involving moral
turpitude whether or not in connection with the business of Employer.
8.1.2 "Disability" shall mean that Employee, at the time notice is
given, has been unable to perform his duties under this Agreement for a period
of not less than 45 consecutive
-4-
days as a result of his incapacity due to physical or mental illness. In the
event that Employee resumes the performance of substantially all of his duties
hereunder before the termination of his employment, the notice of termination
shall automatically be deemed to have been revoked.
8.1.3 "Voluntary Termination of Employment" shall mean Employee
voluntarily terminates his employment with Employer.
8.2 TERMINATION BY EMPLOYER. Employer may terminate Employee's
employment at any time for cause. Employer may terminate Employee's employment
at any time, for any reason, or for no reason, provided thirty (30) days'
advance notice in writing of termination is given to Employee.
8.3 TERMINATION ON DEATH OR DISABILITY. If Employer terminates
Employee's employment as a result of Employee's death or disability (as defined
in paragraph 8.1.2), Employee shall receive any severance or disability payments
to which he may be entitled under Employer's standard benefit plans then in
effect. Employee acknowledges that Employer has no existing severance or
disability benefit plans in effect as of the date of this Agreement except as
otherwise set forth in this Agreement.
8.4 VOLUNTARY TERMINATION BY EMPLOYEE. Employee may terminate his
employment voluntarily by giving Employer thirty (30) days advance notice in
writing.
8.5 WIND UP AND TRANSFER. Following any notice of termination of
employment, Employee shall fully cooperate with Employer in all matters relating
to the winding up of his pending work on behalf of Employer and the orderly
transfer of any such pending work to other employees of Employer as may be
designated by Employer. Employer shall be entitled to such full or part-time
services of Employee as Employer may reasonably require during all or any part
of the thirty (30) day period following any notice of termination.
8.6 RETURN OF EMPLOYER PROPERTY. On termination or whenever requested by
Employer, Employee shall immediately return to Employer all of Employer's
property used by Employee in rendering services hereunder or otherwise, that is
in Employee's possession or under his control.
8.7 SEVERANCE COMPENSATION. In the event Employee's employment is
terminated for any reason other than (i) Employee's voluntary resignation, (ii)
death, (iii) disability, or (iv) "cause" as defined in paragraph 7.1.1 hereof,
Employee shall be paid, as Employee's exclusive remedy for such termination,
Employee's base salary in effect as of the date of termination for a period of
three (3) months from the date of termination, and shall continue to receive any
health or other insurance benefits in effect as of the date of termination
during the same three (3) month period. Such severance compensation shall be
payable in three equal monthly installments; provided, however, that such
installments shall be reduced by the amount of any compensation paid to or
earned by Employee during such three month period.
-5-
9.0 NOTICE
9.1 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 five (5) days after being mailed by U.S. Registered or Certified
Mail, Return Receipt Requested, and postage prepaid. In the case of Employee,
mailed notices shall be addressed to him at the home address which he most
recently communicated to Employer in writing. In the case of Employer, mailed
notices shall be addressed to its corporate headquarters, and all notices shall
be directed to the attention of Employer's President, with a copy to Xxxxxxx X.
Englund, Hooper, Xxxxxxx & Well LLP, Suite 1507 Standard Plaza, 0000 X.X. Xxxxx
Xxxxxx, Xxxxxxxx, Xxxxxx 00000.
10.0 MISCELLANEOUS
10.1 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 the Employee and by the President of Employer. No waiver by
either party of any breach of, or of compliance with, any condition or provision
of this Agreement by the other party shall be considered the waiver of any other
condition or provision or of the same condition or provision at another time.
10.2 ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding of the parties. It may not be changed orally, but only by an
agreement in writing, signed by the party against whom the enforcement of any
waiver, change, modification, extension or discharge is sought.
10.3 INVALID PROVISION. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be construed as if such invalid or
unenforceable provisions were omitted.
10.4 ASSIGNMENT. This Agreement shall be binding and inure to the benefit
of Employer, Employee and their respective heirs, legal representatives,
executors, administrators, successors and assigns; provided, however, that
Employee may not assign or delegate any of the rights or obligations hereunder
without first obtaining the written consent of Employer.
10.5 CHOICE OF LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Oregon.
10.6 EMPLOYMENT TAXES. All payments made pursuant to this Agreement will
be subject to withholding of applicable taxes.
10.7 PARAGRAPH HEADINGS. The paragraph headings contained herein are for
convenience only and shall in no manner be construed as part of the Agreement.
10.8 COUNTERPARTS. This Agreement may be executed in two counterparts,
each of which shall be deemed an original and together shall constitute one and
the same Agreement with one counterpart being delivered to each party hereto.
-6-
10.9 INCORPORATION OF RECITALS. The recitals are intended to be
contractual in nature and are incorporated herein by reference.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
herein first above written.
X.XXX INTERNATIONAL, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx /s/ Xxxxxxxx X. Xxxxx
----------------------- ---------------------------
Name: Xxxxxxx X. Xxxxxxxx Xxxxxxxx X. Xxxxx
-----------------------
Title: President
-----------------------
Date: 11/26/97 Date: November 26, 1997
----------------------- ----------------------
-7-
