EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made this 4th day of April,
2001, between XXXX XXXXXXX INCORPORATED, a Utah corporation (the "Company"), and
Xxxxx van der Xxxxx ("Employee").
WHEREAS:
A. The Company desires to employ Employee as its Executive Vice
President; and
B. Employee wishes to accept such employment on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein set forth, the parties, intending to be legally bound, do hereby agree
and promise as follows:
1. EMPLOYMENT
----------
1.1 The Company hereby employs Employee and Employee hereby accepts
employment under the terms and conditions set forth below. Employee's initial
title shall be Executive Vice President.
1.2 Unless the parties agree otherwise in writing, during the term of
this Agreement, Employee shall perform the services required by this Agreement
at the Company's offices based in Texas; provided, however, that the Company,
from time to time, will require Employee to travel out-of-state in carrying out
Employee's duties and Company has the right to relocate the Texas office to
another state.
2. DUTIES
------
2.1 Employee shall be responsible for duties as set forth in EXHIBIT
"A" attached hereto and incorporated herein by reference:
2.2 Employee agrees to devote Employee's full business time, energy and
skills to such employment subject to absences and customary vacations and for
temporary illnesses.
2.3 Employee will not engage in other gainful occupation or perform or
render any services of a business, professional or commercial nature during the
term of this Agreement without prior written consent of the Company.
2.4 During the term of this Agreement, Employee will not engage in any
activity directly or indirectly in competition with or adverse to the Company.
1
2.5 Employee will not engage in any activity for purposes of
influencing or attempting to influence the Company's customers, either directly
or indirectly, to conduct business with any business enterprise in competition
with the Company.
2.6 Employee will not undertake or participate in any planning for or
organization of any business activity that is or will be in competition with the
Company in any field(s) or area(s) in which Employee has worked or with which
Employee has come into contact, or of which Employee has gained knowledge during
the term of his employment under this Agreement.
2.7 Employee will not engage in any other business activity that would
materially interfere with the performance of any of Employee's obligations and
duties under this Agreement.
2.8 Employee will not engage in any activities which result in a
conflict of interest between the Company and Employee.
2.9 Employee represents that he is not subject to any confidentiality,
non-competition, or other agreement with any other employer or other third party
that would conflict with this Agreement or prevent him from performing all his
assigned duties as an employee of the Company.
3. TERM
----
The term of Employee's employment hereunder will be for the period
commencing on the date of this Agreement and ending on the earliest of (i)
eighteen (18) months from the date of this Agreement; (ii) the date of
termination of Employee's employment in accordance with Section 5 of this
Agreement; or (iii) the date of Employee's death or disability (as defined in
Section 5 of this Agreement).
4. COMPENSATION
------------
4.1 Employee shall receive a base salary of Ten Thousand and 00/100
Dollars ($10,000.00) per month payable in equal installments on the Company's
regular payroll dates ("Base Salary"). Employee's Base Salary shall be reviewed
by the Company annually thereafter. Any increase in Employee's Base Salary shall
be in the sole discretion of the Company.
4.2 Employee shall be reimbursed by the Company only for amounts
actually expended by Employee in the course of performing duties for the Company
where:
4.2.1 Employee tenders receipts or other documentation
substantiating the amounts and the necessity for such expenditure as
required by the Company.
4.3 Employee shall be entitled to participate in all employee benefit
plans or programs including Paid Time Off (PTO), generally available to
employees of the Company, to the extent that his position, title, tenure,
salary, age, health and other qualifications make him eligible to participate
therein. Employee's participation in any such plan or program shall be subject
to the provisions, rules and regulations thereof that are generally applicable
2
to all participants therein. Employee shall carry out the duties assigned to
Employee in a trustworthy, businesslike and loyal manner.
4.3.1 Company shall pay for health insurance (PPO or better) to
cover employed and family.
4.4 If the Company does Twelve Million Dollars ($12,000,000.00) in
gross business (billed and in the Company books) in the SURREY line of products
(candles, soaps and related products) by December 31, 2001, then the Company
will pay Employee a Fifty Thousand Dollar ($50,000) bonus on January 2, 2002.
Once the SURREY manufacturing facility is successfully moved and operational in
Mexicali, the Company will pay Employee an additional Fifty Thousand Dollar
($50,000) bonus.
4.5 During the term of this Agreement, the Company shall pay each month
to Employee an amount equal to the monthly lease payment for a motor vehicle
equivalent to a "Chrysler Town and Country Minivan"; provided however that the
monthly payment shall not exceed $800. The lease will be in the name of the
employee.
4.6 During the term of this agreement, the Company shall purchase and
maintain a life insurance policy covering Employee in the amount of $1,000,000
and payable to the spouse of the Employee. In the event the Employee dies during
the term of this Agreement and Employee's spouse receives the proceeds of this
life insurance policy, Company shall be released from all further obligations
under this Agreement.
5. TERMINATION
5.1 Employee may terminate this Agreement and Employee's employment
hereunder upon 30 days' written notice to the Company. Employer may terminate
this agreement for cause as defined herein.
5.2 Benefits Received Upon Termination.
--------------------------
5.2.1 If Employee is terminated by the Company for Cause, or the
Employee terminates this Agreement for any reason other than a Change
of Control (as defined below), then the Company shall pay Employee his
Base Salary through the effective date of such termination plus credit
for any vacation accrued but not taken. Thereafter, the Company shall
have no further obligations to Employee under this Agreement; provided,
however, that the Company will continue to honor any obligations that
may have vested or accrued under any agreements or arrangements
applicable to Employee.
3
5.2.2 If Employee is terminated by the Company without Cause,
Employee is entitled to continue to receive all the compensation and
benefits set forth in Section 4 of the Agreement for the balance of the
term of this Agreement.
5.2.3 If Employee terminates this Agreement due to a Change of
Control, the Company shall pay to Employee within two (2) business days
following the date of termination (i) his Base Salary through the end
of the month during which such termination occurs plus credit for any
vacation accrued but not taken; and (ii) a lump-sum amount equal to
three (3) months' pay calculated on the basis of Employee's Base Salary
in effect as of the date of termination.
5.2.4 For purposes of this Agreement, "Cause" shall be defined as
follows: (i) actions by Employee during the term of this Agreement
involving willful malfeasance or gross negligence in the performance of
Employee's duties hereunder; (ii) Employee's willful failure or refusal
to perform his duties as required by this Agreement; and (iii)
Employee's material breach of the provisions of this Agreement.
5.2.5 For purposes of this Agreement, "Change of Control" shall be
defined as follows: (i) the acquisition, directly or indirectly, of the
beneficial ownership of securities of the Company possessing more than
fifty percent (50%) of the total combined voting power of all
outstanding securities of the Company by any person or group (within
the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended), different from the persons holding those securities on the
date hereof; (ii) a merger or consolidation in which the Company is not
the surviving entity, except for a transaction the principal purpose of
which is to change the state in which the Company is incorporated;
(iii) a reverse merger in which the Company is the surviving entity but
in which securities representing more than fifty percent (50%) of the
total combined voting power of the Company's outstanding securities are
transferred to or acquired by a person or persons different from the
persons holding those securities immediately prior to such merger; (iv)
the sale, transfer or other disposition of all or substantially all of
the assets of the Company; or (v) a complete liquidation or dissolution
of the Company.
5.3 Termination Because of Employee Disability. Should Employee become
mentally or physically disabled and such disability renders Employee unable to
perform Employee's duties under this Agreement for 90 consecutive days in any
12-month period, then Employee may be terminated and he shall be entitled to all
disability benefits on the same terms as are generally applicable to other
employees of the Company.
6. TERMINATION STATEMENT
---------------------
Employee shall, upon termination of Employee's employment with the
Company, execute a termination statement and shall fully comply with all of the
terms, conditions and representations contained therein. The form of termination
statement is attached as Exhibit "B."
4
7. WITHHOLDING TAXES AND OTHER DEDUCTIONS
--------------------------------------
To the extent required by law, the Company shall withhold from any
payments due Employee under this Agreement any applicable federal, state or
local taxes and such other deductions as are prescribed by law or Company
policy.
8. PROPRIETARY INFORMATION
-----------------------
8.1 Employee understands that the Company possesses and will continue
to possess information that has been created, discovered, developed or otherwise
become known to the Company (including, without limitation, information created,
discovered, developed or made known by Employee during the period of or arising
out of Employee's employment by the Company, whether prior to or after the date
hereof) or in which property rights have been assigned or otherwise conveyed to
the Company, which information has commercial value in the business in which the
Company is engaged. All such information is hereinafter called "Proprietary
Information." By way of illustration, but not limited to, Proprietary
Information includes recipes, processes, formulas, codes, data, programs,
know-how, improvements, discoveries, developments, designs, inventions,
techniques, marketing plans, strategies, forecasts, new products, unpublished
financial statements, budgets, projections, licenses, prices, costs, contracts
and customer and supplier lists which are not part of the public domain or
generally known or understood within the industry.
8.2 In consideration of the compensation received by Employee from the
Company and the covenants contained in this Agreement, Employee agrees as
follows:
8.2.1 All Proprietary Information shall be the sole property of the
Company and its assigns, and the Company and its assigns shall be the
sole owner of all patents, copyrights, and other rights in connection
therewith. Employee hereby assigns to the Company any and all rights he
may have or acquired in such Proprietary Information. This Agreement
does not require Employee to make an assignment of an invention that
qualifies fully for protection under any provision of Texas Law. At all
times, both during Employee's employment by the Company and after its
termination, Employee will keep in strictest confidence and trust all
Proprietary Information and will not use or disclose any Proprietary
Information without the written consent of the Company, except as may
be necessary in the ordinary course of performing Employee's duties
under this Agreement.
8.2.2 All documents, records, equipment and other physical
property, whether or not pertaining to Proprietary Information,
furnished to Employee by the Company or produced by Employee or others
in connection with Employee's employment with the Company shall be and
remain the sole property of the Company. In the event of the
termination of Employee's employment by Employee or Employer for any
5
reason, Employee will deliver to the Company all documents, notes,
drawings, specifications, programs, data, customer lists and other
materials of any nature pertaining to Employee's work with the Company
and Employee will not take with Employee or use any of the foregoing,
any reproduction of any of the foregoing, or any Proprietary
Information that is embodied in a tangible medium of expression.
8.3 Employee recognizes that the Company is engaged in a continuous
program of development and marketing respecting its present and future business.
Employee understands that as part of Employee's employment by the Company he has
been and is expected to make new contributions of value to the Company and that
Employee's employment has created a relationship of confidence and trust between
Employee and the Company with respect to certain information applicable to the
business of the Company or applicable to the business of any customer of the
Company, which has been or may be made known to Employee by the Company or by
any customer of the Company or which may have been or may be learned by Employee
during the period of Employee's employment by the Company.
8.4 Employee shall execute and deliver to the Company all such
documents, including applications for patents and copyrights and assignments of
inventions, patents and copyrights to be issued therefore, as the Company may
determine necessary or desirable to apply for and obtain letters, patents and
copyrights on such assignable inventions in any and all countries and/or to
protect the interest of the Company or its nominee in such inventions, patents
and copyrights, and to vest title thereto in the Company or its nominee, as the
Company may request from time to time, during or after the termination of
Employee's employment. Employee will cooperate with the Company and do whatever
is necessary or appropriate to obtain patents, copyrights and other legal
protections of inventions, Proprietary Information and other projects to which
Employee contributes, and Employee hereby authorizes the Company to act as his
agent and attorney-in-fact and to take whatever action is needed on his part to
carry out this Agreement if Employee is incapacitated for any reason from doing
so.
8.5 Employee will keep adequate records of inventions, all works of
authorship, other works and Proprietary Information to which Employee
contributes during his employment, and will immediately make such records
available to the Company.
8.6 Notwithstanding anything else in this Agreement, Proprietary
information shall only include such information disclosed to Employee after the
effective date of this Agreement and shall not include knowledge, information,
documents or materials that:
a. has entered the public domain without the Employee's breach of any
obligation under this Agreement;
b. is permitted to be disclosed by the prior written consent of the
Company;
c. has become known to Employee from a source other than the Company
by other than a breach of an obligation of confidentiality owed to
the Company;
6
d. is or has been disclosed by the Company to a third party without
restrictions on its disclosure; or
e. is independently developed by Employee without breach of this
Agreement.
9. COVENANT
--------
9.1 In consideration for the payments to be made under this Agreement,
Employee shall refrain from, for a period of one (1) year after termination of
Employee's employment with the Company, either alone or in conjunction with any
other person, or directly or indirectly through its present or future
affiliates:
(a) seeking to employ or engage any person who within the prior
six (6) months had been an officer or employee of the Company;
(b) causing or attempting to cause (i) any client, customer or
supplier of the Company to terminate or reduce its business with the
Company or (ii) any officer, employee or consultant of the Company to
resign, sever or reduce a relationship with the Company; or
(c) disclosing (unless compelled by judicial or administrative
process) or using any confidential or secret information relating to
the Company or any of their respective clients, customers or suppliers.
9.2 The parties hereto recognize that the laws and public policies of
the various states of the United States may differ as to the validity and
enforceability of covenants similar to those set forth in this Section. It is
the intention of the parties that the provisions of this Section be enforced to
the fullest extent permissible under the laws and policies of each jurisdiction
in which enforcement may be sought, and that the unenforceability (or the
modification to conform to such laws or policies) of any provisions of this
Section shall not render unenforceable, or impair, the remainder of the
provisions of this Section. Accordingly, if any provision of this Section shall
be determined to be invalid or unenforceable, such invalidity or
unenforceability shall be deemed to apply only with respect to the operation of
such provision in the particular jurisdiction in which such determination is
made and not with respect to any other provision or jurisdiction.
9.3 The parties hereto acknowledge and agree that any remedy at law for
any breach of the provisions of this Section would be inadequate, and Employee
hereby consents to the granting by any court of an injunction or other equitable
relief, without the necessity of actual monetary loss being proved, in order
that the breach or threatened breach of such provisions may be effectively
restrained.
9.4 The Company and Employee acknowledge that the foregoing restrictive
covenants in this Section 9 are essential elements of this Agreement and that,
but for the agreement of Employee to comply with those covenants, the Company
7
would not have agreed to enter into this Agreement. The covenants by Employee
shall be construed as agreements independent of any other provision in this
Agreement.
9.5 The Company and Employee intend that the covenants contained in
this Section 9 shall be construed as a series of separate covenants, one for
each county of the States of California and Texas and one for each State of the
United States.
9.6 The Company and Employee understand and agree that, if any portion
of the restrictive covenants set forth in this Section 9 is held to be
unreasonable, arbitrary, or against public policy, then that portion of those
covenants shall be considered divisible as to time and geographical area. The
Company and Employee agree that, if any court of competent jurisdiction
determines that the specified time period or the specified geographical area of
application in any covenant is unreasonable, arbitrary, or against public
policy, then a lesser time period, geographical area, or both, that is
determined to be reasonable, non-arbitrary, and not against public policy may be
enforced against Employee. The Company and Employee agree and acknowledge that
they are familiar with the present and proposed operations of the Company and
believe that the restrictive covenants set forth in this Section 9 are
reasonable with respect to their subject matter, duration, and geographical
application.
9.7 The parties acknowledge that the status of Employee in this
business and industry is unique and the success of the Company in said business
is materially and substantially dependent upon the continued employment of
Employee, and in the event the employment of Employee is terminated for any
reason, such business of The Company will be substantially and irrevocably
damaged. In view thereof, the parties acknowledge that monetary damages alone
will not fully compensate The Company in the event Employee fails or refuses to
comply with the terms of this Section 9 above when applicable, and agree that
The Company, in addition to all other remedies provided in law and in equity,
shall have the remedy of injunctive relief and specific performance to enforce
the terms of said Section.
10. LOCATION
--------
All obligations under this agreement are and shall be performable in
the county of Employees residence.
11. NOTICE
------
All notices, requests and other communications hereunder must be in
writing and will be deemed to have been duly given only if delivered personally
or by facsimile transmission or mailed (first class postage prepaid) to the
parties at the following addresses or facsimile numbers:
Xxxxx van der Xxxxx
00000 Xxxx Xxxx Xxxxx
Xxxxxxx, XX 00000
8
If to the Company, to:
XXXX XXXXXXX INCORPORATED
00000 Xxxxxx 00
Xxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
All such notices, requests and other communications will (i) if
delivered personally to the address as provided in this Section, be deemed given
upon delivery, (ii) if delivered by facsimile transmission to the facsimile
number as provided in this Section, be deemed given upon receipt, and (iii) if
delivered by mail in the manner described above to the address as provided in
this Section, be deemed given upon receipt (in each case regardless of whether
such notice, request or other communication is received by any other person to
whom a copy of such notice, request or other communication is to be delivered
pursuant to this Section). Any party from time to time may change its address,
facsimile number or other information for the purpose of notices to that party
by giving notice specifying such change to the other party hereto.
12. INVALID PROVISION
-----------------
The invalidity or unenforceability of any particular provision of this
Agreement in any jurisdiction shall not affect the other provisions hereof or
the validity of that particular provision in any other jurisdiction, and the
Agreement shall be construed in all respects as though such invalid or
unenforceable provisions were omitted only in the jurisdiction in which the same
is held to be invalid or unenforceable.
13. GOVERNING LAW
-------------
This Agreement shall be governed by and interpreted in accordance with
the laws of the State of Texas.
14. SUCCESSORS
----------
The rights and duties of Employee hereunder shall not be assignable by
Employee. This Agreement shall be binding upon and shall inure to the benefit of
any successor of the Company and Employee, and any such successor shall be
deemed substituted for the Company or Employee under the terms of this
Agreement. The term successor as used herein shall include any person, firm,
corporation or other business entity that at any time, by merger, purchase or
otherwise, acquires substantially all of the assets or business of the Company.
15. MODIFICATION
------------
This instrument constitutes the entire agreement between the parties,
and may be changed only by an agreement in writing signed by the parties.
9
16. INTERPRETATION
--------------
Sections and other headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretations of this Agreement.
17. COUNTERPARTS
------------
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument. Signatures may be exchanged by telecopy, with original
signatures to follow. Each of the parties hereto agrees that it will be bound by
its own telecopied signature and that it accepts the telecopied signatures of
the other parties to this Agreement. The original signature pages shall be
forwarded to the Company or its counsel and the Company or its counsel will
provide all of the parties hereto with a copy of the entire Agreement.
10
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officer of each party hereto as of the date first above
written.
THE COMPANY: EMPLOYEE:
XXXX XXXXXXX INCORPORATED,
a UTAH corporation
BY:---------------------------- -----------------------------
Xxxxx Xxxxxx, President Xxxxx van der Xxxxx
BY:-------------------------------
Xxxxxxx X. Xxxxxxxxx, Secretary
11
EXHIBIT "B"
TERMINATION STATEMENT
This is to certify that I do not have in my possession, nor have I
failed to return any records, documents, computer disks, tapes or printouts,
sound recordings, customer lists, photographs, data, specifications, drawings,
blueprints, reproductions, sketches, notes, reports, proposals, or copies of
them, or other documents or materials, equipment, samples, prototypes, models or
other property belonging to XXXX XXXXXXX INCORPORATED, its successors and
assigns (hereafter referred to as "the Company").
I further certify that I have complied with and will continue to comply
with all the terms of the Employment Agreement (the "Agreement") signed by me
with the Company, including the reporting of any inventions (as defined therein)
conceived or made by me covered by the Agreement.
I further agree that in compliance with the Agreement, I will preserve
as confidential all trade secrets, confidential or proprietary information (as
defined therein), knowledge, data, or other information relating to products,
inventions, processes, designs, customer lists, or other subject matter
pertaining to any business of the Company or any of its clients, customers,
consultants, licensees, or affiliates.
--------------------------------
Xxxxx van der Xxxxx
DATED:
--------------------------
12
