AMENDED EMPLOYMENT AGREEMENT
This Amended Employment Agreement, effective as of August 8th, 2001
(the "Agreement"), is entered into by and between MAXXON, INC., a Nevada
corporation (the "Company"), the principal offices of which are located at 0000
Xxxxx Xxxx Xxxxxx, Xxxxx 000, Xxxxx, Xxxxxxxx, 00000, and XXXXXXX X. XXXXX
("Xxxxx"). This Amended Employment Agreement is intended to amend the original
Employment Agreement between Xxxxx and Maxxon dated January 3, 2001. In
consideration of the mutual covenants and conditions contained in this
Agreement, the parties agree to the following:
WITNESSETH
Whereas, the Employee has agreed to perform services for and on behalf
of the Company, as well as to devote his time, attention and energies to the
business of the Company during the term of this Agreement; and
Whereas, the Company and the Employee have mutually agreed upon the
remuneration the Employee shall receive from the Company as an employee during
the term of this Agreement; and
Whereas, the Company and the Employee have agreed it is in their best
interest to set forth in this Agreement the specific manner in which such
remuneration is to be paid the Employee by the Company; and
Whereas, the Parties hereby recognize that the Employee has served
without pay or other non-equity compensation since the Company's inception in
August of 1996. The fair market value of these services has been estimated by
management of the Company and recognized as a capital contribution.
Whereas, it is the intention of both the Company and the Employee that
this Agreement be entered into with strict adherence to the definition of
Employee Benefit Plan as set forth in Rule 405 of the Securities Act of 1933, as
amended;
Whereas the parties agree that any portion of this Agreement which
conflicts with the Company's Articles of Incorporation or By-Laws shall be void
and the rest of this Agreement shall remain effective.
Whereas, the Company represents that by executing this contract that
they have taken all necessary steps to have the legal authority to bind the
Company;
Whereas, the Employee recognizes that he is an affiliate of the Company
and that any and all securities acquired under this Agreement are subject to the
same resale limitations that applied to the Company.
Whereas, the parties recognize that Xxxxx is currently the sole
Director.
Whereas, the parties acknowledge the following inside and/or related
transactions:
(i) During 2000, Maxxon loaned Xxxxx a total of $57,000 pursuant to three
unsecured promissory notes. Each note bears interest at an annual rate
of 8% and is due 12-31-02.
(ii) During 2000 and 1999, Maxxon loaned $47,852 to Xxxxx. As of 12-31-00,
a balance of $5,352 is owed to Maxxon.
1
(iii)On January 3, 2001, Xxxxx purchased 850,000 shares of common stock at
$0.15 per share pursuant to an unsecured promissory note which bears
an annual interest rate of 8% and is due 1-3-08. The shares were
issued pursuant to an exemption from registration under Section 4(2)
of the Securities Act of 1933, as amended.
The Company hereby agrees to employ Xxxxx as its Employee, and Xxxxx
agrees to be employed by the Company upon the terms and conditions hereinafter
set forth.
ARTICLE 1
DUTIES AND COMPENSATION
1.01 Term of Employment and Duties. The Company and Xxxxx agree that for
the period commencing on January 3rd, 2001 and terminating on January
3, 2002 (the "Termination Date"), the Company shall employ Xxxxx and
Xxxxx shall perform duties ("duties") for the Company as Chief
Executive Officer and President of the Company as set forth in the
Company's Articles of Incorporation and Bylaws and shall report to the
Company's Board of Directors (the "Board").
1.02 Commitment to the Company. During the term of this Agreement, Xxxxx
shall devote such working time, attention and energies to the business
of the Company, as is necessary or appropriate for the performance of
his duties as Chief Executive Officer and President of the Company.
However, this commitment shall not be construed as preventing Xxxxx
from participating in other businesses or from investing Xxxxx'x
personal assets in such form or manner as may occasionally require
substantial time on the part of Xxxxx in the management, conservation
and protection of such investments and provided that such investments
or business cannot be construed as being competitive or in conflict
with the business of the Company.
1.02.1 SEC Reporting. Xxxxx shall be responsible for the Company's
substantive and financial reporting requirements of the Securities
Exchange Act of 1934 as amended. Xxxxx is specifically allowed to hire
any and all professionals necessary to assist this process.
1.03 Renewal of Term. Upon each Termination Date this Agreement shall renew
and continue in effect for an additional two-year period, and each
successive Termination Date shall thereafter be designated as the
"Termination Date" for all purposes under this Agreement.
1.04 (a) Compensation. Xxxxx shall receive a salary of $100,000.00 per
year, payable in 24 semi-monthly installments. Each January the Board
shall review Xxxxx'x salary and shall make such increases in salary,
as it considers appropriate. Xxxxx'x salary during the term of this
Agreement shall never be less than $100,000.00 per year. Effective at
the beginning of each calendar year Xxxxx shall be entitled to at
least an increase in salary that is equal to the percentage increase
in the Consumer Price Index during the previous calendar year.
(b) Bonus. During the term of this Agreement Xxxxx shall be entitled
to participate in all executive bonuses, as the Board, in its sole
discretion, shall determine. During such period as Xxxxx is the sole
director the fairness of the bonus shall be opined by an independent
third party, shareholder vote or as set forth in the Company by-laws.
(c) Fringe Benefits. During the term of this Agreement the Company
shall provide to Xxxxx each of the following: (i) all reasonable and
customary executive "fringe benefits," including, but not limited to,
participation in pension plans, profit-sharing plans, employee stock
ownership plans, stock option plans (whether statutory or not), stock
appreciation rights plans, hospitalization insurance, medical
insurance, dental insurance, disability insurance, life insurance, and
such other
2
benefits that are granted to or provided for executives now in the
employ of the Company or that may be granted to or provided for them
during the term of Xxxxx'x employment under this Agreement; and (ii)
paid vacation and sick leave, as determined by industry standards.
(d) Reimbursement of Expenses. (i) During the term of this Agreement
the Company shall pay directly or reimburse Xxxxx for all reasonable
and necessary travel, entertainment, or other related expenses
incurred by him in carrying on his duties and responsibilities under
this Agreement. In addition, the Company shall furnish Xxxxx with a
cellular telephone and suitable office space and facilities for the
performance of his duties. (ii) During the term of this Agreement the
Company shall pay for Xxxxx'x membership dues in professional
organizations and for any seminars and conferences related to Company
business.
1.05 Assistance of Xxxxx. Xxxxx agrees to assist the Company during any and
all investigatory matters, threatened or pending litigation during and
after his employment. After employment assistance shall not be
required in matters to which he is personally a party or which he has
written opinion and advise of counsel that the same would be
personally damaging.
1.06 (a) Indemnification. Xxxxx shall be indemnified by the Company for all
legal expenses and all liabilities incurred in connection with any
proceeding involving him by reason of his being or having been an
officer, director, employee, or agent of the Company to the fullest
extent permitted by the laws of the State of Nevada.
(b) Payment of Expenses. In the event of any action, proceeding or
claim against Xxxxx arising out of his serving or having served in a
capacity specified in Section 1.01 above, which in Xxxxx'x sole
judgment requires him to retain counsel (such choice of counsel to be
made by Xxxxx with the prior consent of the Company, which may not
unreasonably withhold its consent) or otherwise expend his personal
funds for his defense in connection therewith, the Company shall pay
for or reimburse Xxxxx for all reasonable attorney's fees and expenses
and other costs associated with Xxxxx'x defense of such action as such
fees and costs are incurred.
1.07 Director and Officer Liability Insurance. The Company shall provide
reasonable D&O and/or Warranty and Representations insurance coverage
for Xxxxx. The terms and extent of such insurance shall be dictated by
industry standard and circumstance.
ARTICLE II
TERMINATION OF EMPLOYMENT
2.01. Termination Procedure. Either party to this Agreement may terminate
Xxxxx'x employment under this Agreement by giving the other party
written notice of the intent to terminate at least thirty days prior
to the proposed termination date except as set out in section 2.02. A
decision by the Company to terminate Xxxxx'x employment under this
Agreement shall require an affirmative vote of more than 66-2/3% of
the Board except as set out in Section 2.02.
2.02. Death. This Agreement shall terminate on the date of Xxxxx'x death.
If this Agreement is terminated as a result of Xxxxx'x death, the
Company shall pay to Xxxxx'x estate, not later than the 30th day
following his death, a lump sum severance payment consisting of (1)
Xxxxx'x salary and accrued salary through the date of his death, (2)
all amounts Xxxxx would have been entitled to upon termination of his
employment under the Company's employee benefit plans and (3) a pro
rata amount of bonus Xxxxx was eligible to receive under any Company
bonus plan.
3
2.03. Disability. The Company shall have the right to terminate this
Agreement if Xxxxx incurs a permanent disability during the term of
his employment under this Agreement. For purposes of this Agreement,
"Permanent Disability" shall mean inability of Xxxxx to perform the
services required hereunder due to physical or mental disability which
continues for either (i) a total of 180 working days during any
12-month period or (ii) 150 consecutive working days. In the event
that either party disputes whether Xxxxx has a permanent disability,
such dispute shall be submitted to a physician mutually agreed upon by
Xxxxx or his legal guardian and the Company. If the parties are unable
to agree on a mutually satisfactory physician, each shall select a
reputable physician, who, together, shall in turn select a third
physician whose determination of Xxxxx'x ability to perform his job
duties shall be conclusive and binding to the parties. Evidence of
such disability shall be conclusive notwithstanding that a disability
policy or clause in an insurance policy covering Xxxxx shall contain a
different definition of "permanent disability." If Xxxxx'x employment
under this Agreement is terminated by the Company because he has a
permanent disability, the Company shall pay Xxxxx, not later than the
30th day following the date of termination, a lump sum severance
payment consisting of (1) Xxxxx'x salary through the date of his
termination, (2) all amounts Xxxxx is entitled to upon termination of
employment under the Company's employee benefit plans, (3) Xxxxx'x
undiscounted salary through the Termination Date, or if greater for a
period of 24 months, and (4) a pro rata amount of bonus he is eligible
to receive under any Company bonus program.
2.04. Termination With Cause. The Company shall have the right to terminate
this Agreement for cause. For purposes of this Agreement, "for cause"
shall exclusively be defined to mean (a) conviction of a felony which
is materially detrimental to the Company, (b) proof beyond a
reasonable doubt of the gross negligence or willful misconduct which
is materially detrimental to the Company, or (c) proof beyond a
reasonable doubt of a breach of a fiduciary duty which is materially
detrimental to the Company. If the Company terminates Xxxxx'x
employment "for cause" the Company shall pay Xxxxx, not later than the
30th day following the date of termination, a lump sum severance
payment consisting of (1) Xxxxx'x salary and accrued salary through
the date of his termination and (2) all amounts Xxxxx is entitled to
upon termination of employment under the Company's employee benefits
plans.
2.05. Termination Without Cause. If the Company terminates Xxxxx'x
employment for any reason other than for cause as that term is defined
in section 2.04, the Company shall pay Xxxxx, not later than the 30th
day following the date of termination, a lump sum severance payment
consisting of (1) Xxxxx'x salary and accrued salary through the date
of his termination, (2) all amounts Xxxxx is entitled to upon
termination of employment under the Company's employee benefits plans,
(3) Xxxxx'x undiscounted salary through the Termination Date, or if
greater for a period of 24 months, and (4) a pro rata amount of bonus
he is eligible to receive under any Company bonus program.
2.06. Resignation. If Xxxxx resigns from his employment under this
Agreement other than for a reason of change of control as defined in
section 2.07, the Company shall pay Xxxxx, not later than the 30th day
following the effective date of his resignation, a lump sum severance
payment consisting of (1) Xxxxx'x salary through the date of his
termination, (2) all amounts Xxxxx is entitled to upon termination of
employment under the Company's employee benefit plans, (3) Xxxxx'x
undiscounted salary for a period of 90 days after his resignation and
(4) a pro rata amount of bonus he is eligible to receive under any
Company bonus program. Xx. Xxxxx'x accrued salary shall be paid within
thirty days if the Company has available funds, if the Company does
not have said funds then the accrued salary shall be paid in a
reasonable time after his severance in no case shall that time period
extend over six months.
4
2.07. Change of Control. Xxxxx shall have the right to resign from his
employment under this Agreement if there is a change of control. For
purposes of this Agreement a Change of Control shall be deemed to have
occurred if any of the following occur: (i) at any time during any
period of 12 consecutive months, at least a majority of the directors
serving on the Board ceases to consist of individuals who have served
continuously on such Board since the beginning of such 12 month
period, unless the election of directors during such period, or
nomination for election by the shareholders of the Company, was
approved by a vote of at least two-thirds of the members of such Board
at such time still in office and who shall have served continuously on
such Board since the beginning of such 12-month period by reason of
death or disability; or (ii) a merger or consolidation occurs to which
the Company is a party unless following such merger or consolidation
(A) more than 50% of the then outstanding shares of voting capital
stock of the corporation surviving such merger or resulting from such
consolidation is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were the
beneficial owners of the outstanding voting capital stock of the
Company immediately prior to such merger or consolidation in
substantially the same proportions as their ownership, immediately
prior to such merger or consolidation, of the outstanding voting
capital stock of the Company, and (B) at least a majority of the
members of the Board surviving such merger or resulting from such
consolidation were members of the Board immediately prior to such
merger or consolidation; or (iii) the sale of all, or substantially
all, of the assets of the Company; or (iv) a person or entity who is
not an owner of voting capital stock of the Company as of the date of
this Agreement acquires more than 50% of the voting capital stock of
the Company. Notwithstanding the foregoing, however, a Change of
Control shall not be deemed to have occurred upon the consummation of
an Initial Public Offering of the capital stock of the Company. If
Xxxxx exercises his right to terminate his employment following a
Change of Control, he shall receive, not later than the 30th day
following the date of termination, a lump sum severance payment
consisting of (1) Xxxxx'x salary through the date of his termination,
(2) all amounts Xxxxx is entitled to upon termination of employment
under the Company's employee benefits plans, (3) Xxxxx'x undiscounted
salary through the Termination Date, or if greater for a period of 24
months, and (4) a pro rata amount of bonus he is eligible to receive
under any Company bonus program.
2.08. Mitigation. Xxxxx shall have no obligation to mitigate any damages or
payments made to him under Article II of this Agreement.
2.09. Excess Parachute Payments. In the event that payment of the amounts
this Agreement requires the Company to pay Xxxxx would cause Xxxxx to
be the recipient of an excess parachute payment (within the meaning of
Section 280G(b) of the Internal Revenue Code of 1986), the amount of
the payments to be made to Xxxxx pursuant to this Agreement shall be
reduced to an amount equal to one dollar less than the amount that
would cause the payments hereunder to be excess parachute payments.
The manner in which such reduction occurs, including the items of
payment and amounts thereof to be reduced, shall be agreed to by Xxxxx
and the Company.
ARTICLE III
RESTRICTIONS DURING AND AFTER EMPLOYMENT
3.01. Non-Compete. During Xxxxx'x employment by the Company under this
Agreement and for a one-year period following the termination of
Xxxxx'x employment by the Company, except if such termination is
pursuant to sections 2.05 or 2.07 of this Agreement, Xxxxx shall not
work for or provide any services in any capacity to any individual or
business entity that is in direct competition with the business of the
Company as it exists during Xxxxx'x employment with the
5
Company. Direct Competition is herein defined as effort to develop,
market, promote or sell any syringe, which would compete with or
replace the Maxxon Safety Syringe.
3.02. Soliciting Customers Or Accounts After Termination of Employment.
During the one-year period immediately following the termination of
Xxxxx'x employment with the Company, except if such termination is
pursuant to sections 2.05 or 2.07 of this Agreement, Xxxxx shall not
either directly or indirectly: (a) Make known to any person, firm, or
corporation the names and addresses of any of the customers or
accounts of the Company; or (b) Call on, solicit, or take away, or
attempt to call on, solicit, or take away any of the customers or
accounts of the Company on whom Xxxxx called or with whom he became
acquainted during his employment with the Company, either for the
benefit of himself or for any other person, firm, or corporation in
efforts to market a competing product.
3.03. Company Records and Documents. All Company-related records and
documents are considered to be the exclusive property of the Company.
Upon the termination of Xxxxx'x employment by the Company for any
reason, he shall promptly return to the Company all such records and
documents in his possession or under his control. Xxxxx shall have the
right to retain copies of Company records and documents that he
believes are reasonably necessary for him to retain to be able to
exercise his rights under the Indemnification Provisions of this
Agreement.
ARTICLE IV
MISCELLANEOUS
4.01. Notice. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and sent by certified mail
by the Company to the residence of Xxxxx, or by Xxxxx to the Company's
principal office.
4.02. Further Assurances. Each party agrees to perform any further acts and
to execute and deliver any further documents that may be reasonably
necessary to carry out the provisions of this Agreement.
4.03. Severability. In the event that any of the provisions, or portions
thereof, of this Agreement are held to be unenforceable or invalid by
any court of competent jurisdiction, the validity and enforceability
of the remaining provisions or portions thereof, shall not be affected
thereby.
4.04. Construction. Whenever used herein, the singular number shall include
the plural, and the plural number shall include the singular.
4.05. Headings. The headings contained in this Agreement are for purposes
of reference only and shall not limit or otherwise affect the meaning
of any of the provisions contained herein.
4.06. Multiple Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original but all
of which together shall constitute one and the same instrument.
4.07.1. Governing Law. This Agreement has been executed in and shall be
governed by the laws of the State of Oklahoma.
4.07.2. Assignment. This Agreement shall be assignable and binding upon any
purchasers or successors in interest of the Company.
6
4.08. Inurement. Subject to the restrictions against transfer or assignment
as herein contained, the provisions of this Agreement shall inure to
the benefit of, and shall be binding on, the assigns, successors in
interest, personal representatives, estates, heirs and legatees of
each of the parties hereto.
4.09. Waivers. No waiver of any provision or condition of this Agreement
shall be valid unless executed in writing and signed by the party to
be bound thereby, and then only to the extend specified in such
waiver. No waiver of any provision or condition of this Agreement
shall be construed as a waiver of any other provision or condition of
this Agreement, and no present waiver of any provision or condition of
this Agreement shall be construed as a future waiver of such provision
or condition.
4.10. Amendment. This Agreement may be amended only by a written document
signed by the parties and stating that the document is intended to
amend this Agreement.
4.11. Disputes. In any dispute or proceeding to construe this Agreement,
the parties expressly consent to the exclusive jurisdiction of state
and federal courts in Tulsa County, Oklahoma, the principal place of
business for Maxxon. The prevailing party in any suit brought to
interpret this Agreement shall be entitled to recover reasonable
attorney's fees and expenses in addition to any other relief to which
it is entitled.
4.12. Payment of Xxxxx'x Attorney's Fees and Expenses in Advance in
Connection with this Agreement. If the Company brings a suit against
Xxxxx in connection with this Agreement or if Xxxxx brings suit
against the Company in connection with this Agreement, the Company
shall pay Xxxxx'x reasonable attorney's fees and expenses as incurred
as limited by Nevada law. If a determination is made in a court of
competent jurisdiction in favor of the Company, then the Company shall
be entitled to be reimbursed by Xxxxx for his attorney's fees and
expenses, which were paid by the Company.
4.13. Execution. Each party to this Agreement hereby represents and
warrants to the other party that such party has full power and
capacity to execute, deliver and perform this Agreement.
IN WITNESS WHEREOF, the parties to this Agreement have executed this
Agreement effective this 8th day of August, 2001.
XXXXXXX X. XXXXX MAXXON, INC.
-------------------------------- ----------------------------------
Xxxxxxx X. Xxxxx, an Individual By: Xxxxxx Xxxxxxx
Financial Reporting Manager
7
