AGREEMENT OF EMPLOYMENT
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THIS AGREEMENT OF EMPLOYMENT ("Agreement") is effective as of October __, 2001
(the "Effective Date"), and is by and between Ultimate Security Systems
Corporation, a Nevada corporation ("Employer" or "Company"), and Xxxxx X. Xxxxxx
("Executive").
AGREEMENT
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THE MUTUAL COVENANTS, PROMISES, UNDERTAKINGS, AGREEMENTS, REPRESENTATIONS AND
WARRANTIES SPECIFIED IN THIS AGREEMENT, AND OTHER GOOD AND VALUABLE
CONSIDERATION ARE A SUBSTANTIVE PART OF THIS AGREEMENT. THE SUFFICIENCY OF THE
CONSIDERATION IS ACKNOWLEDGED AND RECEIVED WITH THE INTENT OF BEING LEGALLY AND
EQUITABLY OBLIGATED, THEREFORE, THE PARTIES DO HEREBY COVENANT, PROMISE, AGREE,
REPRESENT AND WARRANT AS FOLLOWS:
ARTICLE I.
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DEFINITIONS
For purposes of this Agreement, the following terms have the meanings specified
or referred to in this Article I.
SECTION 1.0 "AGREEMENT" -- employment agreement with an effective date of
October __, 2001 between Employer and Executive.
SECTION 1.1 "BASE SALARY" -- One Hundred Twenty Thousand Dollars
($120,000) per annum less applicable deductions and withholdings.
SECTION 1.2 "BASIC COMPENSATION" -- remuneration received by Executive from
Employer in the form of base salary and benefits.
SECTION 1.3 "BOARD" or "Board of Directors"-- Employer's Board of Directors.
SECTION 1.4 "CAUSE" -- termination for "Cause" shall mean termination because of
Executive's:
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(i) gross incompetence;
(ii) willful gross misconduct resulting in economic harm to Employer or its
affiliates or that brings discredit to Employer's or Employer's affiliates'
reputation;
(iii) insubordination , or failure to follow directions of the Board
of Directors that are consistent with Executive's duties pursuant to this
Agreement;
(iv) final, nonappealable conviction of a felony involving moral
turpitude; or
(v) material breach of any provision of this Agreement.
Section 1.5 "Confidential Information" -- information, regardless of manner of
documentation, used in Employer's and Employer's affiliates' business and:
(i)any and all trade secrets concerning the business and affairs of the Company,
product specifications, data, know-how, formulae, compositions, processes,
designs, sketches, photographs, graphs, drawings, samples, inventions and ideas,
past, current and planned research and development, current and planned
manufacturing and distribution methods and processes, customer lists, current
and anticipated customer requirements, price lists, market studies, business
plans, computer software and programs, including object code and source code,
computer software and database technologies, systems, structures and
architectures, and related processes, formulae, compositions, improvements,
devices, know-how, inventions, discoveries, concepts, ideas, designs, methods
and information, of the Company and any other information, however documented,
of the Company that is a trade secret within the meaning of applicable law;
(ii)any and all information concerning the business and affairs of the Company,
including historical financial statements, financial projections and budgets,
historical and projected sales, capital spending budgets and plans, the names
and backgrounds of key personnel, personnel training and techniques and
materials; and
(iii) any and all notes, analysis, compilations, studies,
summaries, and other material prepared by or for the Company containing or
based, in whole or in part, on any information included in the foregoing.
Confidential Information shall not include:
(i) information already in Executive's possession prior to the date of this
Agreement unless acquired or obtained from Employer or its affiliates or
pursuant to a confidentiality agreement;
(ii) information obtained or was previously obtained by the Executive
from a third Person who, insofar as is known to the Executive after reasonable
inquiry, is permitted to transmit the information to Executive by contractual,
legal or fiduciary obligation to Employer or its affiliates; or
(iii)information that is, or becomes, generally available to the public other
than as a result of a direct or indirect disclosure by the Executive.
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SECTION 1.6 "DATE OF TERMINATION" -- the date on which Notice of Termination is
sent or given pursuant to this Agreement.
SECTION 1.7 "DISABILITY" -- Executive's inability or failure to perform (as
determined by the Board of Directors in good faith) Executive's duties pursuant
to this Agreement due to Executive's ill health, physical or mental disability,
or any other reason beyond Executive's control, and notwithstanding reasonable
accommodations made by Employer for a period of thirty (30) consecutive days or,
for an aggregate of sixty (60) days in any twelve (12) month period.
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SECTION 1.8 "EFFECTIVE DATE" -- the date specified in the preamble of the
Agreement.
SECTION 1.9 "EMPLOYEE INVENTIONS" -- all discoveries, inventions, improvements,
designs, innovations and works of authorship, including all data and records
pertaining thereto, which relate to the business of Employer, whether or not
capable of being patented, copyrighted or reduced to writing, that Employee may
discover, invent or originate during the term of his employment pursuant to this
Agreement, and for a period of six (6) months following the termination of this
Agreement, either alone or with other persons and whether or not during working
hours or by the use of the facilities of Employer.
SECTION 1.10 "FISCAL YEAR" -- Employer's fiscal year, as it exists on the
Effective Date or as changed from time to time.
SECTION 1.11"PERSON" -- any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, or governmental body.
SECTION 1.12 "POST-AGREEMENT PERIOD"-- the period beginning on the date of
termination of Executive's employment with Employer, plus six (6) months.
SECTION 1.13 "SALARY" -- gross cash compensation paid in equal periodic
installments to Executive by Employer in the amount of One Hundred Twenty
Thousand Dollars ($120,000) per annum.
ARTICLE II.
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EMPLOYMENT TERMS AND DUTIES
SECTION 2.1 EMPLOYMENT. Employer hereby employs Executive, and Executive hereby
accepts employment by Employer, upon the terms and subject to the conditions set
forth in this Agreement.
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SECTION 2.2 TERM. Subject to the provisions of Article VI, the term of
Executive's employment pursuant to this Agreement will be five (5) years,
beginning on the Effective Date and ending on a date exactly five (5) years
after the Effective Date ("the First Term"). The term of this Agreement is
automatically renewable for succeeding periods of five (5) years each unless
either party gives notice to the other party of the noticing party's intention
not to renew the term of this Agreement. Notice must be received at least thirty
(30) days prior to the expiration of the First Term and at least sixty (60) days
prior to the expiration of any subsequent term. For purposes of this Agreement,
the word "Term" will include the First Term and any renewal terms.
SECTION 2.3 POSITION AND DUTIES. Executive will initially serve as Chief
Executive Officer of the Company and shall be assigned or delegated duties by
the Board of Directors. Executive shall have those duties and authority
customarily commensurate with one employed in Executive's position. Executive
shall perform, to the best of Executive's ability, all duties incident to
Executive's position with the highest degree of good faith and loyalty.
Executive shall use Executive's best efforts to promote the interests of the
Company.
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SECTION 2.4 OBLIGATION TO THE COMPANY. Executive represents and warrants to
Employer that Executive, is under no obligations or commitments, contractual or
otherwise, which is inconsistent with Executives obligations under this
Agreement. During the term of Executive's employment, Executive will comply
fully with the Company's policies and rules in effect. During the Term of this
Agreement, Executive will not engage in any competitive business activity
without the express written consent of the Board. Executive will:
(i) devote his entire business time, attention, skill, and energy exclusively to
the business of Employer;
(ii) use his best efforts to promote the success of
Employer's business; and
(iii) cooperate fully with the Board of Directors in the advancement of the best
interests of Employer. Executive will fulfill his duties as a member of
Employer's Board of Directors without additional compensation.
ARTICLE III.
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COMPENSATION AND BENEFITS
Section 3.1 Basic Compensation. During the Term, Executive's basic compensation
will consist of the following salary and benefits:
(a) BASE SALARY. Employer shall pay Executive as compensation for Executive's
services a base salary in the sum of One Hundred Twenty Thousand Dollars
($120,000) annually ("Base Salary"), less applicable deductions and
withholdings. Executive will receive equal periodic installments according to
Employer's customary payroll practices,
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but not less frequently than semi-monthly. Any earned but unpaid salary will
accrue interest at ten percent (10%) per annum until paid.
(b) BENEFITS. During the Term, Executive is eligible to participate in all
Company employee benefit plans applicable to other senior executives of the
Company of similar rank and status, according to the terms of such plans, as
such plans and terms exist from time to time. Benefits include, but are not
limited to, group health insurance, 401(K), and equity incentive plans
(collectively, "Core Benefits").
SECTION 3.2 BONUS. In addition to the Salary and the Core Benefits, Executive is
entitled to receive from Employer a cash bonus in an amount equal to one percent
(1%) of Employer's "gross income" for each of Employer's complete fiscal
quarters during the Term. For purposes of this Section 3.2, the term "gross
income" is defined as and shall mean all gross income from the operations of
Employer (other than capital gains). "Gross income" shall be determined in
accordance with generally accepted accounting principles utilized by the
certified public accountant(s) regularly employed by Employer, and the
determination of gross income by such accountant(s) shall obligate and be
conclusive on Employer and Executive. Payment of the bonus shall be made no
later than forty-five (45) days after the end of Employer's fiscal quarter for
which such bonus is due and payable.
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SECTION 3.3 HEALTH CARE BENEFITS. Employer shall, as part of Executive's Core
Benefit package, include Executive in the hospital, surgical, medical and dental
benefit plan maintained by Employer.
SECTION 3.4 ILLNESS. During the Term,
Executive shall be entitled to participate in Employer's sick leave policies.
SECTION 3.5 OTHER BENEFITS. In addition to those benefits available to other
senior executives of similar rank and status, Executive shall receive all other
benefits of employment available generally to other employees of Employer.
ARTICLE IV.
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FACILITIES AND EXPENSES
SECTION 4.1 OFFICE AND STAFF. Employer will furnish Executive office facilities,
equipment, supplies, and such other facilities and personnel, as Employer deems
necessary or appropriate for the performance of Executive's duties pursuant to
this Agreement.
SECTION 4.2 REIMBURSEMENT OF BUSINESS EXPENSES. During the Term,
Executive is authorized to incur necessary and reasonable travel and other
business expenses in connection with Executives duties. Employer will pay on
behalf of Executive (or reimburse the Executive for) reasonable business
expenses incurred by Executive at the request of, or on behalf of, Employer in
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the performance of the Executive's duties pursuant to this Agreement, and in
accordance with Employer's employment policies. Business and travel expenses
incurred must be consistent with policies and procedures established by the
Company. Executive will be reimbursed for such expenses according to Company
policies and procedures upon presentation of an itemized account and appropriate
supporting documentation.
ARTICLE V.
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VACATIONS AND HOLIDAYS
SECTION 5.1 ANNUAL VACATION. Executive will be entitled to participate in
Employer's vacation and holiday policies.
SECTION 5.2 PAID HOLIDAYS. Per Employer's policies, Executive will also be
entitled to paid holidays.
ARTICLE VI.
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TERMINATION
SECTION 6.1 (A) DISABILITY. Employer may terminate this Agreement for
Disability. Executive hereby consents to examination by a physician designated
by Employer, and Executive hereby waives any physician-patient privilege
resulting from any such examination, under the following conditions:
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(i) Employer must provide Executive with at least sixty (60) days prior written
notice of its intent to have Executive examined.
(ii) Employer must pay any and all expenses and costs related to such
examination, including, but not limited to, Executive's travel expenses.
(iii) Executive shall have the right to arrange for a second opinion examination
if he disagrees with Employer's physician's diagnosis. If the second opinion
materially contradicts the initial diagnosis, Employer and Executive shall
mutually agree on a third physician whose diagnosis shall be binding on the
parties. If Employer and Executive cannot mutually agree on a physician, one
shall be chosen by the first two physicians.
(iv) If Executive shall disagree with Employer's decision to order an
examination, Executive shall have the right to prevent such examination until
and unless a mutual third party mediator, mutually agreed upon by Executive and
Employer, recommends such an examination.
(b) CAUSE. Employer may terminate Executive's employment for Cause. Termination
of Executive for Cause requires either an action of at least a majority of the
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Company's Board of Directors at a meeting duly called and held upon at least
thirty (30) business days written notice to the Executive of the particulars of
the act or omission alleged to constitute cause, or an action of at least
two-thirds (2/3) of the Company's shareholders entitled to vote at a meeting
duly called and held upon at least thirty (30) business days written notice to
the Executive of the particulars of the act or omission alleged to constitute
cause. Executive may not be terminated for Cause if Executive cures such matter
within twenty (20) days after such notice is sent or given pursuant to this
Agreement. Executive is permitted to respond and defend himself before the Board
or any appropriate committee thereof within a reasonable time after written
notification of any proposed termination for Cause which involves an allegation
of gross incompetence, willful gross misconduct, insubordination, or a material
breach of any provision of this Agreement.
(c) SEVERANCE. If Executive is terminated for Cause, Executive will receive on
the Date of Termination, as compensation, the following:
(i) The Base Salary provided for in Section 3.1(a) as then in effect, due and
accrued through the Date of Termination;
(ii) On the Date of Termination,
Employer shall repurchase all shares, series and classes of Employer's stock
then held by Executive at the greater of either: (a) the prevailing market rate;
or (b) five dollars ($5.00) per share
(iii) Employer shall pay Executive all vacation pay accrued and unpaid through
the Date of Termination for the year in which such termination occurred; and
(iv) Executive shall also receive reimbursement for any attorney's fees related
to the Termination.
If Executive is terminated with or without cause, Executive will receive the
Base Salary provided for in Section 3.1(a) which is due but unpaid as of the
Date of Termination and shall be entitled to receive the Base Salary for an
additional thirty-six months (36) following the Date of Termination. Executive
will also receive (ii), (iii) and (iv) directly above.
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(d) WITHOUT GOOD REASON. During the Term, Executive may terminate his employment
Without Good Reason. Termination "Without Good Reason" shall mean termination of
the Executive's employment by the Executive other than termination for Employer
breach or resulting from the death of Executive.
(e) EXPLANATION OF TERMINATION OF EMPLOYMENT. Any party terminating this
Agreement shall give prompt written notice ("Notice of Termination") to the
other party hereto advising such other party of the termination of this
Agreement. Within ten (10) days after notification that this Agreement has been
terminated, the terminating party shall deliver to the other party hereto a
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written explanation, which shall specify in reasonable detail the basis for such
termination and shall indicate whether termination is being made for Cause,
Without Cause or for Disability (if Employer has terminated the Agreement) or
for Employer Breach or Without Good Reason (if Executive has terminated the
Agreement).
(f) GOLDEN PARACHUTE. Executive may elect to terminate his employment in the
event that:
(i) five percent (5%) or more of Employer's then issued and outstanding common
stock or five percent (5%) or more of any class of Employer's then issued and
outstanding preferred stock is acquired by any person or entity, or persons or
entities acting in concert as determined by Executive in his sole and absolute
discretion;
(ii) Employer loses its ability to exercise a controlling influence over
Employer's operations;
(iii) a hostile election of a majority of Employer's Board occurs; or
(iv) Employer is merged, sold or dissolved.
Such events shall be known as a "Change-In-Control". If Executive elects to be
retained, Executive will maintain that capacity and function occupied by
Executive at the time of such Change-In-Control. If Executive elects to
terminate his employment at such time, and under such conditions, Executive
shall be entitled to those severance arrangements as would be applicable under
Section 6.1(c). In addition to those severance arrangements applicable under
Section 6.1(c), Executive shall further receive a parachute payment consisting
of a one-time, lump sum payment totaling 2.99 times the average of Executives
Base Salary (even if such Base Salary was unpaid) over the past five taxable
years prior to the Change-In-Control ("Parachute Payment"). If the Executive has
not been employed with Employer for five taxable years, the calculation shall be
for the shorter period, with any partial taxable year annualized, excluding
one-time payments, such as relocation expenses. Executive's Parachute Payment
will be adjusted accordingly to avoid tax penalties imposed pursuant to Sections
280G and 4999 of the Internal Revenue Code, as amended. Executive shall also be
reimbursed for 150% of any golden parachute excise taxes. Executive shall also
receive reimbursement for any attorney's fees and other expenses incurred to
collect severance benefits and payments under this section because of a
Change-In-Control. All payments provided for in this Section 6.1(f) are due on
the date of Change-In-Control.
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SECTION 6.2 COMPENSATION DURING DISABILITY OR UPON TERMINATION.
(a) DURING DISABILITY. During any period that Executive fails to perform his
duties pursuant to this Agreement because of ill health, physical or mental
disability, or any other reason beyond Executive's control, Executive is
entitled to receive the sick pay specified by the provisions of Section 3.4 of
this Agreement.
(b) TERMINATION FOR DISABILITY. If Employer shall terminate Executive's
employment for Disability, Employer's obligation to pay Basic Compensation shall
terminate, except that Employer shall pay Executive:
(i) accrued but unpaid Basic Compensation through the Date of Termination,
including any interest accrued thereon; and
(ii) the benefits set forth in Section 3.1 (b) for a period not to exceed ninety
(90) days.
SECTION 6.3 DEATH OF EXECUTIVE. If Executive dies prior to the expiration of the
Term, Executive's employment and other obligations pursuant to this Agreement
shall automatically terminate and all compensation, to which Executive is or
would have been entitled pursuant to (including, without limitation, under
Section 3.1), shall terminate as of the date in which Executive's death occurs.
ARTICLE VII.
NON-DISCLOSURE COVENANT; EMPLOYEE INVENTIONS
SECTION 7.1 ACKNOWLEDGMENTS BY THE EXECUTIVE. Executive acknowledges that (a)
during the Term and as a part of his employment, Executive will have access to
Confidential Information; (b) public disclosure of such Confidential Information
could have an adverse effect on Employer and its business; (c) because Executive
possesses substantial technical expertise and skill with respect to Employer's
business, Employer desires to obtain exclusive ownership of each Employee
Invention, and Employer will be at a substantial competitive disadvantage if
Employer fails to acquire exclusive ownership of each Employee Invention; and
(d) the provisions of this Article VII are reasonable and necessary to prevent
the improper use or disclosure of Confidential Information and to provide
Employer with exclusive ownership of all Employee Inventions.
SECTION 7.2 AGREEMENTS OF THE EXECUTIVE. In consideration of the compensation
and benefits to be paid or provided to Executive by Employer pursuant to this
Agreement, Executive covenants as follows:
(a) CONFIDENTIALITY.
(i) During and following the Term, Executive will hold in confidence the
Confidential Information and will not disclose the Confidential Information, or
any portion thereof, to any Person, except with the specific prior written
consent of Employer or except as otherwise expressly permitted by the terms of
this Agreement.
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(ii) Any trade secrets of Employer or its affiliates will be entitled to all of
the protections and benefits pursuant to applicable law. If any information that
Employer or its affiliates deems to be a trade secret is determined by a court
of competent jurisdiction not to be a trade secret for purposes of this
Agreement, such information will, nevertheless, be considered Confidential
Information for purposes of this Agreement.
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(iii) None of the foregoing obligations and restrictions applies to any part of
the Confidential Information that Executive demonstrates was or became generally
available to the public other than as a result of a direct or indirect
disclosure by Executive.
(iv) The Executive will not remove from Employer's or Employer's affiliates'
premises (except to the extent such removal is for purposes of the performance
of the Executive's duties at home or while traveling, or except as otherwise
specifically authorized by Employer) any document, record, notebook, plan,
model, component, device, or computer software or code, whether embodied in a
disk or in any other form (collectively, the "Proprietary Items"). Executive
agrees that, as between Employer and Executive, all of the Proprietary Items,
whether or not developed by Executive, are the exclusive property of Employer.
Upon termination of this Agreement by either party, or upon the request of
Employer during the Term, Executive will return to Employer all of the
Proprietary Items in Executive's possession or subject to Executive's control,
and Executive shall not retain any copies, abstracts, sketches, or other
physical embodiment of any of the Proprietary Items.
(b) Employee Inventions. Each Employee Invention will belong exclusively to
Employer. Executive covenants that Executive will promptly:
(i) disclose to Employer in writing any Employee Invention;
(ii) assign to Employer or to a party designated by Employer, at Employer's
request and without additional compensation, all of Executive's right to the
Employee Invention for the United States and all foreign jurisdictions;
(iii) execute and deliver to Employer such applications, assignments, and other
documents as Employer may request in order to apply for and obtain patents or
other registrations with respect to any Employee Invention in the United States
and any foreign jurisdictions;
(iv) sign all other papers necessary to carry out the above obligations; and
(v) give testimony and render any other assistance in support of Employer's
rights to any Employee Invention.
SECTION 7.3 DISPUTES OR CONTROVERSIES.
Executive acknowledges that in the event that a dispute or controversy resulting
from or relating to this Agreement be submitted for adjudication to any court,
arbitration panel, or other third party, the preservation of the secrecy of
Confidential Information may be jeopardized. All pleadings, documents, testimony
and records relating to any such adjudication will be maintained in secrecy and
will be available for inspection by Employer, Executive, and their respective
attorneys and experts, who will agree, in advance and in writing, to receive and
maintain all such information in secrecy, except as may be limited by them in
writing.
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ARTICLE VIII.
NON-COMPETITION AND NON-INTERFERENCE
SECTION 8.1 ACKNOWLEDGMENTS BY EXECUTIVE. Executive acknowledges that
(a) the services to be performed by him pursuant to this Agreement are of a
special, unique, unusual, extraordinary, and intellectual character; (b)
Employer's business conducted nationally and Employer's services and products
are marketed throughout the United States; (c) Employer competes with other
businesses that are or could be located in any part of the United States; and
(d) the provisions of this Article VIII are reasonable and necessary to protect
Employer's business.
SECTION 8.2 COVENANTS OF EXECUTIVE. To the extent permissible pursuant to
California Business and Professions Code section 16600, and in consideration of
the acknowledgments by Executive, and the compensation and benefits to be
provided to Executive by Employer, Executive makes the following covenants.
(a) COVENANTS NOT TO COMPETE. Pursuant to this Agreement, and during the Term
and Post-Agreement Period, Executive shall not engage, invest, own, manage,
operate, finance, control, or participate in the ownership, management,
operation, financing, or control of any business whose products, services or
activities compete in whole or in part with the products, services or activities
of Employer or any affiliate of Employer anywhere in the United States
("Competitor").
(i) During the Term and Post-Agreement Period, Executive will not be employed
by, associated, or in any manner connected with, a Competitor. Executive may
purchase or otherwise acquire up to three percent (3%) of any class of
securities of any issuer if such securities are listed on any national or
regional securities exchange or have been registered pursuant to Section 12(g)
of the Securities Exchange Act of 1934. Executive may not, however, participate
in the activities of such issuer.
(ii) During the Term and Post-Agreement Period, Executive may not, for
Executive's own account or for the account of any other Person, solicit business
of the same or similar type as Employer from any Person known by Executive to be
a customer of Employer, whether or not Executive had personal contact with such
Person during and by reason of Executive's employment with Employer.
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(iii) During the Term and Post-Agreement Period, Executive may not, for
Executive's account or the account of any other Person, solicit, employ, or
otherwise engage as an employee, independent contractor, or otherwise, any
Person who is or was an employee of Employer at any time during the Term or in
any manner induce or attempt to induce any employee of Employer to terminate his
or her employment relationship with Employer, nor may Executive interfere with
Employer's relationship with any Person, who at any time during the Term was an
employee, contractor, supplier, or customer of Employer.
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(iv) During the Term and Post-Agreement Period, Executive many not, disparage
Employer or any of Employer's shareholders, directors, officers, employees, or
agents.
(b) DIVISIBILITY OF COVENANTS. If any covenant in this Section 8.2 is
determined by a court of competent jurisdiction to be unreasonable, arbitrary,
or against public policy, such covenant will be divisible with respect to scope,
time, and geographic area, and such lesser scope, time, or geographic area, or
all of them, as a court of competent jurisdiction may determine to be
reasonable, not arbitrary, and not against public policy, will be effective,
binding, and enforceable against Executive.
(c) TIME APPLICABLE TO COVENANTS. The period of time applicable to any covenant
in Section 8.2 is extended by the duration of any violation by Executive of such
covenant.
(d) NOTICE OF SUBSEQUENT EMPLOYMENT. While the covenant, pursuant to this
Section 8.2, is in effect, Executive will give notice of the identity of
Executive's subsequent employer to Company within ten (10) days after accepting
any other employment. Company may notify such employer that Executive is
obligated by this Agreement and, at Employer's election, furnish such employer
with a copy of this Agreement or relevant portions thereof.
ARTICLE IX.
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GENERAL PROVISIONS
SECTION 9.1 INJUNCTIVE RELIEF AND ADDITIONAL REMEDY. Executive acknowledges that
the damage that would be suffered by Employer as a result of a breach of the
provisions of this Agreement (including any provision of Articles VII and VIII)
would be irreparable and that an award of monetary damages to Employer for such
a breach would be an inadequate remedy. Consequently, Employer will have the
right, in addition to any other rights Employer may have, to obtain injunctive
relief to restrain any breach or threatened breach or otherwise to specifically
enforce any provision of this Agreement, and Employer will not be obligated to
post bond or other security in seeking such relief.
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SECTION 9.2 COVENANTS OF ARTICLES VII AND VIII ARE ESSENTIAL AND INDEPENDENT
COVENANTS. The covenants by Executive in Articles VII and VIII are essential
provisions of this Agreement, and without Executive's agreement to comply with
such covenants, Employer would not have entered into this Agreement or employed
or continued the employment of Executive. Employer and Executive have
independently consulted their respective counsel and have been advised in all
respects concerning the reasonableness and propriety of such covenants, with
specific regard to the nature of the business conducted by Employer.
Executive'scovenants in Articles VII and VIII are independent covenants and the
existence of any claim by Executive against Employer or any of its affiliates
under this Agreement or otherwise will not excuse Executive's breach of any
covenant in Articles VII or VIII.
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If Executive's employment pursuant to this Agreement expires or is terminated,
this Agreement will continue in full force and effect as is necessary or
appropriate to enforce the covenants and agreements of Executive in Articles VII
and VIII.
SECTION 9.3 OFFSET. Employer will be entitled to offset against any and all
amounts owing to Executive pursuant to this Agreement the amount of any
and all claims that Employer may have against Executive.
SECTION 9.4 REPRESENTATIONS AND WARRANTIES BY THE EXECUTIVE. Executive
represents and warrants to Employer that the execution and delivery by Executive
of this Agreement do not, and the performance by Executive of Executive's
obligations pursuant to this Agreement will not, with or without the giving of
notice or the passage of time, or both (a) violate any judgment, writ,
injunction, or order of any court, arbitrator, or governmental agency applicable
to Executive; or (b) conflict with, result in the breach of any provisions of or
the termination of, or constitute a default under, any agreement to which
Executive is a party or by which Executive is or may be obligated.
SECTION 9.5 OBLIGATIONS CONTINGENT ON PERFORMANCE. The obligations of Employer
pursuant to this Agreement, including Employer's obligation to pay the
compensation provided for in this Agreement, are contingent upon Executive's
performance of Executive's obligations pursuant to this Agreement.
SECTION 9.6 WAIVER. The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by either
party in exercising any right, power, or privilege pursuant to this Agreement
will operate as a waiver of such right, power, or privilege, and no single or
partial exercise of any such right, power, or privilege will preclude any other
or further exercise of such right, power, or privilege or the exercise of any
other right, power, or privilege. To the maximum extent permitted by applicable
law, (a) no claim or right resulting from this Agreement can be discharged by
one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable, except in the specific instance for which
it is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take additional action without notice or demand as provided
in this Agreement.
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SECTION 9.7 BINDING EFFECT; DELEGATION OF DUTIES PROHIBITED.
This Agreement shall inure to the benefit of, and shall obligate, the parties
hereto and their respective successors, assigns, heirs, and legal
representatives, including any entity with which Employer may merge or
consolidate or to which all or substantially all of its assets may be
transferred. The duties and covenants of Executive pursuant to this Agreement
are personal and may not be delegated.
SECTION 9.8 NOTICES. All notices, requests, demands or other communications
pursuant to this Agreement is in writing or by telex or facsimile transmission
and is deemed to have been duly given (i) on the date of service if delivered in
person or by telex or facsimile machine transmission (with the telex or
facsimile confirmation of transmission receipt acting as confirmation of service
when sent and provide telexed or telecopied notices are also mailed by first
class, certified or registered mail, postage prepaid); or (ii) seventy-two (72)
hours after mailing by first class, registered or certified mail, postage
prepaid, and properly addressed as follows:
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If to Executive: Xxxxx X. Xxxxxx
00000 Xxxx XxXxxxxxx, Xxxxx X
Xxxxxx, Xxxxxxxxxx 00000
Telephone: 000.000.0000
Facsimile: 949.251.0051
If to Employer: Ultimate Security Systems Corporation
00000 Xxxx XxXxxxxxx, Xxxxx X
Xxxxxx, Xxxxxxxxxx 00000
Telephone: 000.000.0000
Facsimile: 949.251.0051
With a copy to: MC LAW GROUP
0000 Xxxxxxx Xxxxx, Xxxxx 000 Xxxxxxx Xxxxx, Xxxxxxxxxx 00000 Telephone:
000.000.0000 Facsimile: 949.250.8656
or at such other address as the party affected may designate in a written notice
to such other party in compliance with this section.
SECTION 9.9 ENTIRE AGREEMENT; AMENDMENTS. This Agreement, constitutes the entire
agreement among the parties with respect to the (i) employment relationship by
and among Employer and Executive, and (ii) the terms and conditions of all other
relationships by and among Employer, in any capacity, and Executive, in any
capacity and supersede all prior agreements and understandings, oral or written,
among the parties hereto with respect thereto. This Agreement may not be amended
orally, but only by an agreement in writing signed by the parties hereto.
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SECTION 9.10 GOVERNING LAW. This Agreement will be governed by the laws of the
State of California, without regard to conflicts of laws principles.
SECTION 9.11 JURISDICTION. Any action or proceeding seeking to enforce any
provision of, or based on any right arising out of, this Agreement is brought
against either of the parties in the courts of the State of California, County
of Orange, and each of the parties consents to the jurisdiction of such courts
(and of the appropriate appellate courts) in any such action or proceeding and
waives any objection to venue. Process in any action or proceeding referred to
in the preceding sentence may be served on either party anywhere in the world.
SECTION 9.12 SECTION AND ARTICLE HEADINGS, CONSTRUCTION. The headings of
sections and articles in this Agreement are provided for convenience only and
will not affect its construction or interpretation. All references to "section"
or "sections" and "article" or "articles" refer to the corresponding section or
sections and article or articles of this Agreement unless otherwise specified.
All words used in this Agreement will be construed to be of such gender or
number as the circumstances require. Unless otherwise expressly provided, the
word "including" does not limit the preceding words or terms.
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SECTION 9.13 SEVERABILITY. If any provision of this Agreement, other than those
relating to Section 9.2, is held invalid or unenforceable by any court of
competent jurisdiction, the other provisions of this Agreement will remain in
full force and effect. Any provision of this Agreement determined to be invalid
or unenforceable only in part will remain in full force and effect to the extent
not determined to be invalid or unenforceable.
SECTION 9.14 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
SECTION 9.15 INDEMNIFICATION FOR NEGLIGENCE OR MISCONDUCT.
A. Employer shall save Executive harmless from and against and shall indemnify
Executive for any liability, loss, costs, expenses or damages howsoever caused
by reason of any injury (whether to body, property, or personal or business
character or reputation) sustained by any person or to any person or to property
by reason of any act, neglect, default or omission of Employer, and Employer
shall pay any and all amounts to be paid or discharged in case of an action for
any such damages or injuries. No provision of this section is intended to, nor
shall any provision of this section, relieve Executive from that Executive's own
act, omission or negligence.
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B. Executive shall save Employer harmless from and against and shall indemnify
Employer for any liability, loss, costs, expenses or damages howsoever caused by
reason of any injury (whether to body, property, personal or business character
or reputation) sustained by any person or to any person or to property by reason
of any act, neglect, default or omission of Executive, and Executive shall pay
any and all amounts to be paid or discharged in case of an action for any such
damages or injuries. No provision of this section is intended to, nor shall any
provision of this section, relieve Employer from Employer's own act, omission or
negligence.
IN WITNESS WHEREOF the parties have executed this Agreement of Employment in
duplicate and in multiple counterparts, each of which shall have the force and
effect of an original, effective as of the date specified in the preamble of
this Agreement.
"EMPLOYER" "EXECUTIVE"
Ultimate Security Systems Corporation
a Nevada corporation
By:
--------------------------------- -------------------------------
Xxxxx X. Xxxxxx Xxxxx X. Xxxxxx
Its: Chief Executive Officer
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ADDENDUM TO EMPLOYMENT
CONTRACT FOR XXXXX X. XXXXXX, PRESIDENT AND CHIEF EXECUTIVE OFFICER
Ultimate Security Systems Corporation, a Nevada corporation ("Employer"),
located at 00000 Xxxx XxXxxxxxx, Xxxxx X, Xxxxxx, XX 00000, and Xxxxx X. Xxxxxx
("Executive"), in consideration of the mutual promises made herein, and in the
Employment Agreement with an effective date of October 20, 2001, between the
parties (hereinafter the "Employment Agreement"), hereby agree to amend the
following sections of the Employment Agreement (amendments are underlined and
any sections of the Employment Agreement not specifically listed below remain as
written in the Employment Agreement):
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ARTICLE I.
DEFINITIONS
SECTION 1.1 "BASE SALARY" -- One Hundred Seventy Thousand Dollars ($170,000) per
annum less applicable deductions and withholdings.
SECTION 1.13 "SALARY" -- gross cash compensation paid in equal periodic
installments to Executive by Employer in the amount of One Hundred Seventy
Thousand Dollars ($170,000) per annum.
ARTICLE II.
EMPLOYMENT TERMS AND DUTIES
SECTION 2.2 TERM. Subject to the provisions of Article VI, the term of
Executive's employment pursuant to this Agreement will be five (5) years,
beginning on the Effective Date and ending on a date exactly five (5) years
after the Effective Date ("the First Term"). The term of this Agreement is
automatically renewable for succeeding periods of five (5) years each unless
either party gives notice to the other party of the noticing party's intention
not to renew the term of this Agreement. Notice must be received at least thirty
(30) days prior to the expiration of the First Term and at least sixty (60) days
prior to the expiration of any subsequent term. The term of this Agreement shall
be automatically renewed for an additional five (5) years upon the Company's
stock becoming eligible for quotation on an electronic quotation medium such as
the Over-the-Counter Bulletin Board or is listed on a national exchange,
including the NASDAQ SmallCap. For purposes of this Agreement, the word "Term"
will include the First Term and any renewal terms.
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ARTICLE III.
COMPENSATION AND BENEFITS
SECTION 3.1 BASIC COMPENSATION. During the Term, Executive's basic compensation
will consist of the following salary and benefits:
(a) BASE SALARY. Employer shall pay Executive as compensation for Executive's
services a base salary in the sum of One Hundred Seventy Thousand Dollars
($170,000) annually ("Base Salary"), less applicable deductions and
withholdings. Executive will receive equal periodic installments according to
Employer's customary payroll practices, but not less frequently than
semi-monthly. Any earned but unpaid salary will accrue interest at seventeen
percent (17%) per annum until paid.
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SECTION 3.2 BONUS. In addition to the Salary and the Core Benefits, Executive is
entitled to receive from Employer a cash bonus in an amount equal to one percent
(1%) of Employer's "gross income" for each of Employer's complete fiscal
quarters during the Term. For purposes of this Section 3.2, the term "gross
income" is defined as and shall mean all gross income from the operations of
Employer (other than capital gains). "Gross income" shall be determined in
accordance with generally accepted accounting principles utilized by the
certified public accountant(s) regularly employed by Employer, and the
determination of gross income by such accountant(s) shall obligate and be
conclusive on Employer and Executive. Payment of the bonus shall be made no
later than forty-five (45) days after the end of Employer's fiscal quarter for
which such bonus is due and payable. In addition, if the Company's stock is
eligible for quotation on an electronic quotation service or is listed on
national exchange and the Market Price of the Company's stock increases 200% or
more during any twelve (12) month period (the "Stock Increase Period"),
Executive shall be entitled to receive options to purchase Company common stock
equal to 5% of the Company's authorized common stock at a price that is
discounted 35% from the prevailing Market Price. For purposes of this Section
3.2, "Market Price" shall be determined by taking the average of the bid and ask
price within five (5) days of the date the price is determined. For purposes of
determining whether Executive is entitled to receive the options described
herein, Employer shall determine the Market Price at the beginning of the Stock
Increase Period and compare that to the Market Price at the end of the Stock
Increase Period.
SECTION 3.3 HEALTH CARE BENEFITS. Employer shall, as part of Executive's Core
Benefit package, include Executive and co-dependents in the hospital, surgical,
medical and dental benefit plan maintained by Employer.
ARTICLE V.
VACATIONS AND HOLIDAYS
SECTION 5.1 ANNUAL VACATION. Executive will be entitled to six (6) weeks paid
vacation per year which, if not used, shall carry over to the succeeding year.
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ARTICLE VI.
TERMINATION
SECTION 6.1 (A) DISABILITY. Employer may terminate this Agreement for
Disability. Executive hereby consents to examination by a physician designated
by Employer, and Executive hereby waives any physician-patient privilege
resulting from any such examination, under the following conditions:
(i) Employer must provide Executive with at least sixty (60) days prior written
notice of its intent to have Executive examined.
(ii) Employer must pay any and all expenses and costs related to such
examination, including, but not limited to, Executive's travel expenses.
(iii) Executive shall have the right to arrange for a second opinion examination
if he disagrees with Employer's physician's diagnosis. If the second opinion
materially contradicts the initial diagnosis, Employer and Executive shall
mutually agree on a third physician whose diagnosis shall be binding on the
parties. If Employer and Executive cannot mutually agree on a physician, one
shall be chosen by the first two physicians.
(iv) If Executive shall disagree with Employer's decision to order an
examination, Executive shall have the right to prevent such examination until
and unless a mutual third party mediator, mutually agreed upon by Executive and
Employer, recommends such an examination.
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(B) CAUSE. Employer may terminate Executive's employment for Cause. Termination
of Executive for Cause requires either an action of at least a majority of the
Company's Board of Directors at a meeting duly called and held upon at least
thirty (30) business days written notice to the Executive of the particulars of
the act or omission alleged to constitute cause, or an action of at least
two-thirds (2/3) of the Company's shareholders entitled to vote at a meeting
duly called and held upon at least thirty (30) business days written notice to
the Executive of the particulars of the act or omission alleged to constitute
cause. Executive may not be terminated for Cause if Executive cures such matter
within twenty (20) days after such notice is sent or given pursuant to this
Agreement. Executive is permitted to respond and defend himself before the Board
or any appropriate committee thereof within a reasonable time after written
notification of any proposed termination for Cause which involves an allegation
of gross incompetence, willful gross misconduct, insubordination, or a material
breach of any provision of this Agreement.
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(C) SEVERANCE. If Executive is terminated for Cause, Executive will receive on
the Date of Termination, as compensation, the following:
(i) The Base Salary provided for in Section 3.1(a) as then in effect, due and
accrued through the Date of Termination;
(ii) On the Date of Termination, Employer shall repurchase all shares, series
and classes of Employer's stock then held by Executive at the greater of either:
(a) 150% of the prevailing market rate; or (b) a minimum of five dollars ($5.00)
per share
(iii) Employer shall pay Executive all vacation pay accrued and unpaid through
the Date of Termination for the year in which such termination occurred; and
(iv) Executive shall also receive reimbursement for any attorney's fees related
to the Termination.
If Executive is terminated with or without cause, Executive will receive the
Base Salary provided for in Section 3.1(a) which is due but unpaid as of the
Date of Termination and shall be entitled to receive the Base Salary for an
additional thirty-six months (36) following the Date of Termination. Executive
will also receive (ii), (iii) and (iv) directly above.
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(F) GOLDEN PARACHUTE. Executive may elect to terminate his employment in the
event that:
(i) seven percent (7%) or more of Employer's then issued and outstanding common
stock or seven percent (7%) or more of any class of Employer's then issued and
outstanding preferred stock is acquired by any person or entity, or persons or
entities acting in concert as determined by Executive in his sole and absolute
discretion;
(ii) Employer loses its ability to exercise a controlling influence over
Employer's operations;
(iii) a hostile election of a majority of Employer's Board occurs; or
(iv) Employer is merged, sold or dissolved.
Such events shall be known as a "Change-In-Control". If Executive elects to be
retained, Executive will maintain that capacity and function occupied by
Executive at the time of such Change-In-Control. If Executive elects to
terminate his employment at such time, and under such conditions, Executive
shall be entitled to those severance arrangements as would be applicable under
Section 6.1(c). In addition to those severance arrangements applicable under
Section 6.1(c), Executive shall further receive a parachute payment consisting
of a one-time, lump sum payment totaling 2.99 times the average of Executives
Base Salary (even if such Base Salary was unpaid) over the past five taxable
years prior to the Change-In-Control ("Parachute Payment"). If the Executive has
not been employed with Employer for five taxable years, the calculation shall be
for the shorter period, with any partial taxable year annualized, excluding
one-time payments, such as relocation expenses. Executive's Parachute Payment
will be adjusted accordingly to avoid tax penalties imposed pursuant to Sections
280G and 4999 of the Internal Revenue Code, as amended. Executive shall also be
reimbursed for 150% of any golden parachute excise taxes. Executive shall also
receive reimbursement for any attorney's fees and other expenses incurred to
collect severance benefits and payments under this section because of a
Change-In-Control. All payments provided for in this Section 6.1(f) are due on
the date of Change-In-Control.
Executed on May __, 2003, at Irvine, California.
EMPLOYER
ULTIMATE SECURITY SYSTEMS
CORPORATION
By:
---------------------------
Xxx Xxxxxx
Its: Director
EXECUTIVE
By:
----------------------------
Xxxxx Xxxxxx
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