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EXHIBIT 10.7
XXXXXXXXXX.XXX, INC.
EXECUTIVE EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is entered into as of
this 16th day of November, 1998, by and between XxxxxxXxxx.xxx, Inc., a Utah
corporation (the "Company"), and Xxxxxx Xxxxx, a resident of the State of Utah
(the "Employee"), collectively referred to hereinafter as the "Parties" or
individually as a "Party."
In consideration of the foregoing and of the promises and mutual
covenants contained herein, the Parties hereto agree as follows:
27. Employment; Location
The Company hereby employs Employee and Employee hereby accepts such
employment in Utah, Salt Lake, and Summit Counties, State of Utah, or in such
other location or locations as may be mutually agreed between the Parties.
28. Term
The Company agrees to employ Employee and Employee agrees to accept
employment with the Company for the three-year period beginning November 16,
1998 through November 15, 2001, unless this Agreement is sooner terminated
pursuant to Section 6 below (the "Employment Term").
29. Duties
Employee's employment hereunder shall be in the capacity of the Vice
President of Marketing, Products, and Operations. Employee hereby agrees to
faithfully execute, to the best of his ability, such duties in connection with
such office and to otherwise devote his full time, skills, and best efforts to
such duties. Employee shall perform such duties subject to the general
supervision and control of the Company's President, Chief Executive Officer, and
Board of Directors. Employee agrees that during the Employment Term, he shall
not carry on outside work of any nature (including, without limitation,
charitable work, civic activities, consulting work, or directorships) that is
reasonably determined by the Board of Directors to substantially interfere with
Employee's duties and responsibilities hereunder.
30. Compensation and Benefits
During the Employment Term, the Company shall pay Employee, and
Employee accepts as full compensation for all services to be rendered to the
Company, the following compensation and benefits:
30.1 Salary. The Company shall pay Employee a base salary equal to
One Hundred Thousand ($100,000) per year ("Base Salary") plus such annual
additional compensation or performance bonus as will be determined by the Board
of Directors at the end of each fiscal year. Such compensation shall be paid to
Employee in accordance with the Company's payroll practices in effect from time
to time during the Employment Term.
30.2 Grant of Option. Effective at the commencement of the
Employment Term, the Company hereby grants to Employee an option ("Option") to
acquire 300,000 shares of its common stock at an exercise price of $1.00 per
share. Effective with the commencement of the Employment Term, the
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Option shall vest immediately with respect to 150,000 shares. With respect to
the remainder of the Option, the Option shall vest in three (3) successive equal
annual installments of 50,000 shares each, with the first installment vesting
one (1) year from the date of this Agreement. Notwithstanding the foregoing, if
Employee's employment is terminated by the Company without Cause (as defined
below), the Option shall immediately vest and become exercisable with respect to
all of the shares of Common Stock subject to the Option. The Option or any
portion thereof shall expire if not exercised within five (5) years from the
date hereof. The Option shall be governed by and shall be subject to the
provisions of the Company's 1998 Stock Option Plan ("Plan"). The Company shall
prepare and deliver to Employee a separate grant of the Option in accordance
with the Plan in the form attached hereto as Exhibit "A."
30.3 Vehicle Allowance. The Company shall reimburse Employee for up
to $500 per month for expenses incurred from the operation and maintenance of a
vehicle to be used in connection with Employee's duties herein. Employee hereby
agrees to provide such evidence of expenses as may reasonably be required by the
Company.
30.4 Additional Benefits. Employee shall be eligible to participate
in the Company's employee benefit plans for employees, including any such
benefits made available to similarly situated executives of the Company, if and
when any such plans may be adopted. Such benefit plans may include, without
limitation, the following: bonus plans, pension or profit sharing plans,
incentive stock plans and those plans covering life, disability, health, and
dental insurance in accordance with the rules established in the discretion of
the Board of Directors for individual participation in any such plans as may be
in effect from time to time.
30.5 Vacation, Sick Leave, and Holidays. During the Employment Term,
Employee shall be entitled to vacation, sick leave and holidays at full pay for
a minimum of two (2) weeks or such other period as established by the Board of
Directors.
30.6 Deductions. During the Employment Term, the Company shall have
the right to deduct from Employee's Base Salary and other compensation due to
Employee hereunder any and all sums required for social security and withholding
taxes and for any other federal, state, or local tax or charge which may be
hereafter enacted or required by law as a charge on any such amounts paid to
Employee.
31. Business Expenses
The Company shall promptly reimburse Employee for all reasonable
out-of-pocket business expenses incurred in fulfilling Employee's duties
hereunder, in accordance with the general policy of the Company in effect from
time to time, provided that Employee furnishes to the Company adequate records
and other documentary evidence required by all federal and state statutes and
regulations issued by the appropriate taxing authorities for the substantiation
of each such business expense as a deduction on the federal or state income tax
returns of the Company.
32. Termination
32.1 Generally. During the Employment Term, either the Company or
Employee may terminate Employee's employment with the Company hereunder at any
time, with or without Cause or Good Reason, in its or his sole discretion, upon
thirty (30) days prior written notice. Without limiting the foregoing, Employee
may immediately terminate his employment with the Company at any time for Good
Reason, and the Company may immediately terminate Employee's employment for
Cause. In the event Employee's employment is terminated hereunder, all
obligations of the Company and all obligations of Employee shall cease except as
provided in this Section 6 and in Sections 7-19 below. For purposes of this
Agreement:
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(a) "Cause" shall mean (i) Employee's material breach of any
of the terms, covenants, representations, or warranties contained in
this Agreement which continues following not less than two (2) weeks
written notice from the Company of such breach; (ii) the Executive
being guilty of willful misconduct on the Company's premises or
elsewhere, whether during the performance of his duties or not,
which materially and negatively affects the business or reputation
of the Company; (iii) Employee's being found guilty or entering a
plea of guilty or nolo contendre in a criminal court of a felony; or
(iv) Employee's willful breach of duty or habitual neglect of duty,
or refusal to comply with any reasonable or proper direction given
by on behalf of the President, Chief Executive Officer, or Board of
Directors.
(b) "Good Reason" shall mean the termination of employment
by Employee as a result of (i) a material breach of this Agreement
by the Company, or (ii) a relocation of Employee outside of Utah,
Salt Lake, and Summit Counties.
(c) "Termination Date" shall mean (i) if this Agreement is
terminated on account of death, the date of death; (ii) if this
Agreement is terminated for Disability (as defined below), the date
on which a notice of termination due to Disability is delivered to
the Employee (or such later date as may be set forth in such
notice); (iii) if this Agreement is terminated by the Company, the
date on which a notice of termination is delivered to the Employee
(or such later date as may be set forth in such notice); (iv) if the
Agreement is terminated by the Employee, the earlier of (x) the date
on which the Employee delivers the notice of termination (or such
later date as may be set forth in such notice) to the Company and
(y) the date he ceases work; or (v) if this Agreement expires by its
terms, on the last day of the term of this Agreement.
(d) "Disability" shall mean the Employee is unable to
perform the essential functions of his job and render services of
the character previously performed in the ordinary course and that
such inability continues for a period of at least three (3)
consecutive months (or for shorter periods totaling more than four
(4) months during any period of twelve (12) consecutive months).
32.2 Severance Pay.
(a) If (i) the Company terminates the employment of the
Employee without Cause, or (ii) the Employee terminates his
employment for Good Reason, the Employee shall be entitled to
receive Base Salary until six (6) months following the Termination
Date, or until such time as the Employee has obtained new employment
at an annual salary equal to or greater than ninety percent (90%) of
Employee's Base Salary hereunder, whichever comes first (such
payment after the Termination Date is referred to as "Severance
Pay"). During this time, the Employee agrees to make a good faith
effort to find new employment. The Severance Pay outlined above
shall be paid in accordance with the Company's regular payroll
schedule in effect at the time that Severance Pay is due.
(b) If (i) the Employee voluntarily terminates his
employment other than for Good Reason, or (ii) the Employee is
terminated by the Company for Cause, then the Employee shall be
entitled to receive Base Salary (excluding any accrued vacation)
through the Termination Date only, and no other compensation shall
be payable.
(c) If the Employee's employment is terminated due to death
or Disability, the Employee shall be entitled to receive Base Salary
and accrued vacation through the Termination Date only, and no other
compensation shall be payable.
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(d) In addition to the provisions of Section 6.2(a) and
6.2(b) hereof, to the extent COBRA shall be applicable to the
Company, the Employee shall be entitled to continuation of group
health plan benefits for such period as may then be required by law
if the Employee satisfies all applicable conditions to the receipt
of such continuation of benefits, including any required elections
or payments.
(e) Employee acknowledges that, upon termination of his
employment, he is entitled to no other compensation, severance or
other benefits other than those specifically set forth in this
Agreement.
(f) The provisions of this Section 6.2 are intended to be
and are exclusive and in lieu of any other rights or remedies to
which the Employee or the Company may otherwise be entitled, either
at law, tort or contract, in equity, or under this Agreement, as a
result of any termination of the Employee's employment. The Employee
shall be entitled to no benefits, compensation or other payments or
rights upon termination of employment other than those benefits
expressly set forth in this Section 6.2.
32.3 Option to Retain as Consultant. Upon termination of Employee's
employment, other than for reason of Employee's death, the Company shall have an
option to retain the services of Employee as a consultant for a period of one
year from the Termination Date. The Company shall exercise such option by giving
written notice thereof to Employee within ten (10) days after the Termination
Date, and the obligations of Employee as a consultant upon such exercise shall
be effective from the Termination Date. If the Company elects to exercise such
option, Employee shall make himself available to the Company during the period
of consultancy at least 2 hours during any one-month period. Employee agrees to
accept as consideration for such services as a consultant a fee of $100 per
hour. In addition, the Company shall reimburse Employee for any reasonable
expenses paid or incurred by Employee in connection with the performance of
duties as a consultant of the Company. Employee shall be entitled to no
compensation as a consultant other than the above fees and expenses. Employee
acknowledges and agrees to be bound by the obligation not to compete with the
Company as set forth in Section 7 below during the period for which Employee is
a consultant for the Company.
33. Covenant Not to Compete
33.1 Covenant. Employee acknowledges that his services are of a
special, unique, and extraordinary value to the Company and that he has access
to the Company's trade secrets, Confidential Information, and strategic plans of
the most valuable nature. Accordingly, Employee hereby agrees that, while
employed by the Company as either an employee or as a consultant pursuant to
this Agreement, and, in any event, during the two (2) year period following the
termination of Employee's employment hereunder, Employee will not directly or
indirectly compete (as defined in Section 7.2 below) with the Company in any
geographic area in which the Company does or has done business, and will not (i)
induce or attempt to induce any employee of the Company or any entity controlled
by or in common ownership with the Company ("Affiliates") to leave the employ of
the Company or any of its Affiliates or in any way interfere with the
relationship between the Company or any of its Affiliates and any employee
thereof, (ii) hire directly or through another entity any person who was an
employee of the Company or any of its Affiliates at any time during the six
month period preceding the termination of Employee's employment hereunder, (iii)
induce or attempt to induce any customer, supplier, licensee, or other business
relation of the Company or any of its Affiliates to cease doing business with
the Company or any of its Affiliates, as the case may be, or in any way
interfere with the relationship between any such customer, supplier, licensee,
or business relation and the Company or any of its Affiliates, or (v) authorize
or assist in the taking of any of the foregoing actions by any third party.
33.2 Direct and Indirect Competition. As used herein, the phrase
"directly or indirectly compete" shall include owning, managing, operating or
controlling, or participating in the ownership,
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management, operation or control of, or being connected with or having any
interest in, as a stockholder, director, officer, employee, agent, consultant,
assistant, advisor, sole proprietor, partner or otherwise, any business (other
than the Company's) which is the same as or competitive with any business
conducted or to be conducted by the Company or any of the Company's
subsidiaries; provided, however, that this prohibition shall not apply to
ownership of less than one percent (1%) of the voting stock in companies whose
stock is traded on a national securities exchange or in the over-the-counter
market.
33.3 Enforceability. If any of the provisions of this Section 7 is
held unenforceable, the remaining provisions shall nevertheless remain
enforceable, and the court making such determination shall modify, among other
things, the scope, duration, or geographic area of this Section to preserve the
enforceability hereof to the maximum extent then permitted by law. In addition,
the enforceability of this Section is also subject to the injunctive and other
equitable powers of a court as described in Section 11 below.
34. Confidential Information
Employee acknowledges that during Employee's employment or
consultancy with the Company, Employee will develop, discovery, have access to,
and become acquainted with technical, financial, marketing, personnel, and other
information relating to the present or contemplated products, services
(including prices, costs, sales, or content), or the conduct of business of the
Company or an Affiliate, computer programs, computer systems, operations,
processes, knowledge of the organization or the industry, research and
development operations, future business plans, customers (including identities
of customers and prospective customers, identities of individual contracts at
business entities which are customers or potential customers), business
relationships, or other information, which is of a confidential and proprietary
nature ("Confidential Information"). Employee agrees that all files, data,
records, reports, documents, and the like relating to such Confidential
Information, whether prepared by him or otherwise coming into Employee's
possession, shall remain the exclusive property of the Company (or its
Affiliates as the case may be), and Employee hereby agrees to promptly disclose
such Confidential Information to the Company upon request and hereby assigns to
the Company any rights which Employee may acquire in any Confidential
Information. Employee further agrees not to disclose or use any Confidential
Information and to use Employee's best efforts to prevent the disclosure or use
of any Confidential Information either during the term of employment or
consultancy or at any time thereafter, except as may be necessary in the
ordinary course of performing Employee's duties under this Agreement. Upon
termination of Employee's employment or consultancy with the Company for any
reason, Employee shall promptly deliver to the Company all materials, documents,
data, equipment, and other physical property of any nature containing or
pertaining to any Confidential Information, and Employee shall not take from the
Company's premises any such material or equipment or any reproduction thereof.
35. Invention Assignment
35.1 Disclosure of Inventions. Employee hereby agrees that if he
conceives, learns, makes, or first reduces to practice, either alone or jointly
with others, any inventions, improvements, original works of authorship,
formulas, processes, computer programs, sales or marketing techniques, know-how,
or data (hereinafter referred to as "Inventions") relating to the business
and/or technology of the Company while he is employed by the Company, he will
promptly disclose such Inventions to the Company or to any person designated by
the Company.
35.2 Ownership, Assignment, Assistance, and Power of Attorney. All
Inventions relating to the Company's business, operations, or research and
development which result from work performed by Employee for the Company shall
be the sole and exclusive property of the Company, and the Company shall have
the right to use and to apply for patents, copyrights, or other statutory or
common law protections for such Inventions in any country. Employee hereby
assigns to the Company any rights which Employee has acquired or which Employee
may acquire in such Inventions. Furthermore, Employee agrees
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to assist the Company in every proper way at the Company's expense to obtain
patents, copyrights, and other statutory or common law protections for such
Inventions in any country and to enforce such rights from time to time.
Specifically, Employee agrees to execute all documents as the Company may use in
applying for and in obtaining or enforcing such patents, copyrights, and other
statutory or common law protections, together with any assignments thereof to
the Company or to any person designated by the Company. Employee's obligations
under this paragraph shall continue beyond the termination of his employment
with the Company, but the Company shall compensate Employee at a reasonable rate
after such termination for the time which Employee actually spends at the
Company's request in rendering such assistance. In the event the Company is
unable for any reason whatsoever to secure Employee's signature to any lawful
document required to apply for or to enforce any patent, copyright, or other
statutory or common law protections for such Inventions, Employee hereby
irrevocably and severally designates and appoints the Company and its duly
authorized officers and agents as Employee's agents and attorneys-in-fact to act
in Employee's stead to execute such documents and to do such other lawful and
necessary acts to further the issuance or prosecution of such patents,
copyrights, and other statutory or common law protections, and Employee hereby
declares that such documents or such acts shall have the same legal force and
effect as if such documents were executed by Employee or such acts were done by
Employee.
35.3 Exclusion of Prior Inventions. Employee has identified on
Exhibit B attached hereto a complete list of all Inventions which Employee has
conceived, learned, made or first reduced to practice, either alone or jointly
with others, prior to Employee's employment with the Company and which Employee
desires to exclude from the operation of this Agreement. If no Inventions are
listed on this Exhibit B, Employee represents that he has made no such
Inventions at the time of signing this Agreement.
36. No Conflicts
Employee hereby represents that, to the best of Employee's
knowledge, Employee's performance of all the terms of this Agreement and work as
an employee or consultant of the Company does not breach any oral or written
agreement which Employee has made prior to employment with the Company
hereunder.
37. Equitable Remedies
Employee acknowledges that Employee's obligations hereunder are
special, unique, and extraordinary, and that a breach by Employee of certain
provisions of this Agreement, including without limitation Sections 7 through 9
above, would cause irreparable harm to the Company for which damages at law
would be an inadequate remedy. Accordingly, Employee hereby agrees that in any
such instance the Company shall be entitled to seek injunctive or other
equitable relief in addition to any other remedy to which it may be entitled.
All of the rights of the Company from whatever source derived, shall be
cumulative and not alternative.
38. Assignment
This Agreement is for the unique personal services of Employee and
is not assignable or delegable in whole or in part by Employee without the
consent of the Board of Directors of the Company. This Agreement may be assigned
or delegated in whole or in part by the Company and, in such case, the terms of
this Agreement shall inure to the benefit of, be assumed by, and be binding upon
the entity to which this Agreement is assigned.
39. Waiver or Modification
Any waiver, modification, or amendment of any provision of this
Agreement shall be effective only if in writing in a document that specifically
refers to this Agreement and such document is signed by the Parties hereto.
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40. Resolution of Disputes.
The Parties hereby agree that all disputes concerning this Agreement
shall be subject to binding arbitration by an independent arbitrator to be
jointly selected and agreed upon by the Parties hereto. In the event that the
Parties cannot agree upon an independent arbitrator, the Parties hereby consent
to subject any such dispute to binding arbitration in accordance with the rules
of the American Arbitration Association. Judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof. The Parties
agree that the Company and Employee shall equally bear the costs of any such
arbitration under this Section 14.
41. Entire Agreement
This Agreement constitutes the full and complete understanding and
agreement of the Parties hereto with respect to the subject matter covered
herein and supersedes all prior oral or written understandings and agreements
with respect thereto.
42. Employee Acknowledgment.
Employee acknowledges that (i) he was consulted with or has had the
opportunity to consult with independent counsel of his own choice concerning
this Agreement, and has been advised to do so by the Company, and (ii) that he
has read and understands the Agreement, is fully aware of its legal effect, and
has entered into it freely based upon his own judgement.
43. Severability
If any provision of this Agreement is found to be unenforceable by a
court of competent jurisdiction, the remaining provisions shall nevertheless
remain in full force and effect.
44. Notices
Any notice required hereunder to be given by either party shall be
in writing and shall be delivered personally or sent by certified or registered
mail, postage prepaid, or by private courier, with written verification of
delivery, or by facsimile transmission to the other party to the address or
telephone number set forth below or to such other address or telephone number as
either party may designate from time to time according to this provision. A
notice delivered personally shall be effective upon receipt. A notice sent by
facsimile transmission shall be effective twenty-four hours after the dispatch
thereof. A notice delivered by mail or by private courier shall be effective on
the third day after the day of mailing.
(a) To Employee at: Xxxxxx Xxxxx
000 Xxxx, 000 Xxxxx
Xxxx, Xxxx 00000
(b) To the Company at: XxxxxxXxxx.xxx, Inc.
000 Xxxxx 0000 Xxxx
Xxxxx, Xxxx 00000
Attention: Xxxxxxx X. Xxxxx
45. Governing Law; Venue
This Agreement shall be governed by and construed in accordance with
the laws of the State of Utah without regard to the conflict of laws. The
Parties further agree that proper venue and jurisdiction for any dispute under
this agreement shall be the courts in the State of Utah.
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IN WITNESS WHEREOF, Employee has signed this Agreement personally
and the Company has caused this Agreement to be executed by its duly authorized
representative to be effective as of the date first given above.
XXXXXXXXXX.XXX, INC. EMPLOYEE
/s/Xxxxxxx Xxxxxxx /s/Xxxxxx Xxxxx
----------------------------------- -----------------------------------
Xxxxxxx Xxxxxxx Xxxxxx Xxxxx
President
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EXHIBIT A
STOCK OPTION GRANT
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EXHIBIT B
LIST OF INVENTIONS
None.
Initialed by Employee:_______________________________
