EXHIBIT 10.11
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and
entered into effective as of February 6, 1997, by and between
Xxxxxx-Xxxx, Inc., a Delaware corporation (the "Company"), and
Xxxxxx X. Xxxxxx ("Executive"), and, for purposes of Section 6.3
only, Xxxxxxx X. Xxxxxx. The Company and Executive are
hereinafter collectively referred to as the "Parties," and may
individually be referred to as a "Party."
RECITALS
A. The Company desires assurance of the association and
services of Executive in order to retain Executive's experience,
skills, abilities, background and knowledge, and is willing to
engage Executive's services on the terms and conditions set forth
in this Agreement; and
B. Executive desires to be in the employ of the Company
and is willing to accept such an employment on the terms and
conditions set forth in this Agreement.
AGREEMENT
In consideration of the foregoing premises and the mutual
covenants herein contained, and for other good and valuable
consideration, the Parties, intending to be legally bound, agree
as follows:
1. EMPLOYMENT.
1.1 The Company hereby agrees to continue to employ
Executive, and Executive hereby accepts employment by the
Company, upon the terms and conditions set forth in this
Agreement, effective as of the date first set forth above
("Effective Date"), and terminating six (6) years from the
Effective Date.
1.2 Executive shall be the President and a director on the
Board of Directors ("Board") and shall serve in such other
capacity or capacities as the Board may from time to time
prescribe. Executive shall report directly to the Chairman of
the Board and Chief Executive Officer ("Chairman/CEO").
1.3 Executive shall do and perform all services, acts or
things necessary or advisable to manage and conduct the business
of the Company, provided, however, that at all times during his
employment Executive shall be subject to the direction and
policies from time to time established by the Board. Executive's
duties shall include, but not be limited to, overall management
of corporate finance assisting the Company with the closing of
the current merger, investor relations, management of corporate
financial assets, financial planning and influence on corporate
operations, corporate development and strategic planning,
assisting the company in commercializing the Company's core
technology, and assisting the Chairman of the Board in
strengthening and building a strong active Board of Directors.
1.4 Unless the Parties otherwise agree in writing, prior to
Executive's termination in accordance with this Agreement,
Executive shall perform the services he is required to perform
pursuant to this Agreement, reporting to the Company's offices
located at 000 X.X. Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxx
00000, or, with the consent of the Executive, at any other place
at which the Company maintains an office; provided, however, that
the Company may from time to time reasonably require Executive to
travel temporarily to other locations in connection with the
Company's business. Executive will not be required to relocate to
Portland, Oregon.
2. LOYAL AND CONSCIENTIOUS PERFORMANCE; NONCOMPETITION.
2.1 During his employment by the Company, Executive shall
devote his full business employment , interest, abilities and
productive time to the proper and efficient performance of his
duties under this Agreement. Executive shall not be employed by
another company or receive compensation for employment from any
other sources.
2.2 During his employment by the Company, Executive shall
not engage in competition with the Company, either directly or
indirectly, in any manner or capacity, as adviser, principal,
agent, partner, officer, director, employee, member of any
association or otherwise, in any phase of the business of
developing, manufacturing and marketing of products which are in
the same field of use or which otherwise directly compete with
the products or proposed products of the Company; provided,
however, that ownership by Executive, as a passive investment, of
less than one percent (1%) of the outstanding shares of capital
stock of any corporation with one or more classes of its capital
stock listed on a national securities exchange or publicly traded
in the over-the-counter market shall not constitute a breach of
this paragraph.
2.3 The Executive will assist the Company to raise an
additional $10,000,000 within twelve (12) months of the Date of
the Initial Financing (as defined in Section 3.1 hereof), or
develop other financial strategies that are consistent with the
Company's best interest.
2.4 Executive and the Chairman/CEO shall jointly establish
Executive's annual goals and objectives for each fiscal year.
3. COMPENSATION OF EXECUTIVE.
3.1 At such time as the Company obtains additional
financing of an aggregate of at least Six Million Dollars
($6,000,000.00) from one or more transactions (the "Initial
Financing"), the Company shall pay Executive a minimum salary of
One Hundred and Seventy Five Thousand Dollars ($175,000.00) per
year ("Base Salary")beginning from the date such financing is
completed, payable in regular periodic payments in accordance
with Company policy. Such salary shall be prorated for any
partial year of employment on the basis of a 365-day fiscal year.
3.2 Executive's compensation may be changed from time to
time by mutual agreement of Executive and the Board.
3.3 All of Executive's compensation shall be subject to
customary withholding taxes and any other employment taxes as are
commonly required to be collected or withheld by the Company.
3.4 Executive shall, in the discretion of the Board and in
accordance with Company policy, be entitled to participate in
benefits under any employee benefit plan or arrangement made
available by the Company now or in the future to its executives
and key management employees.
3.5 Executive's performance shall be reviewed by the
Chairman/CEO and the Board on a periodic basis (not less than
once each fiscal year) and Chairman/CEO and the Board may, in
their sole discretion, award such bonuses to Executive as shall
be appropriate or desirable based on Executive's performance.
The Company agrees that Executive shall be reviewed within twelve
months of commencing employment hereunder.
3.6 The parties intend and agree that Executive will be
granted options to purchase capital stock of the Company. The
number of options to be granted has been determined by the
parties and shall be set forth in a separate stock option
agreement, attached as Exhibit A. As of the Effective Date of
this Agreement, the Company agrees to grant Executive two million
four hundred thousand (2,400,000) shares of the Company's common
stock. The exercise price per share of this option (the "Option")
shall be equal to $5.00 per share. Each option shall vest as to
four hundred thousand (400,000) shares following twelve (12)
continuous months of service with the Company beginning on the
date of grant and each consecutive year thereafter.
3.7 Executive shall be entitled to receive prompt
reimbursement of all reasonable expenses incurred by Executive in
performing Company services, including expenses related to
relocation, travel, entertainment, parking and business meetings.
Such expenses shall be accounted for in accordance with the
policies and procedures established by the Company.
4. TERMINATION BY COMPANY. Executive's employment with the
Company may be terminated by the Company under the following
conditions:
4.1 TERMINATION ON DEATH OR DISABILITY. This Agreement
shall terminate without notice upon the date of Executive's death
or the date when Executive becomes completely disabled as defined
in Section 4.1.1.
4.1.1 The term "completely disabled" as used in
this Agreement shall mean the inability of Executive to perform
the essential functions of his position under this Agreement by
reason of any incapacity, physical or mental, for a period of 180
continuous days, which the Board, based upon medical advice or an
opinion provided by a licensed physician acceptable to the Board,
determines that Executive is prevented from satisfactorily
performing the essential functions of his position for the
Company during a period of 180 continuous days.
4.2 TERMINATION FOR CAUSE. The Company may terminate
Executive's employment under this Agreement "for cause" ("For
Cause") by delivery of written notice to Executive specifying the
cause or causes relied upon for such termination, and by
providing Executive with ten (10) business days to cure.
Termination shall occur for purposes of this Section 4.2 on the
last day Executive fails to cure.
Grounds for the Company to terminate this Agreement For
Cause shall be limited to the occurrence of any of the following
events:
4.2.1 Executive is in material breach of Sections
2.1, 2.2, 7.1 and 7.2 of this Agreement;
4.2.2 Executive's engaging or in any manner
participating in any activity which is directly competitive with
or intentionally injurious to the Company or which violates any
provision of Section 7 of this Agreement;
4.2.3 Executive's commission of any fraud against
the Company or use or appropriation for his personal use or
benefit of any funds or properties of the Company not authorized
by the Board to be so used or appropriated; or
4.2.4 Executive's conviction of any crime involving
dishonesty or moral turpitude.
4.3 TERMINATION WITHOUT CAUSE. The Company may terminate
the Executive's employment without cause ("Without Cause") upon
delivery of written notice to the Executive at any time, which
shall specify the effective date of termination. Any notice of
termination given pursuant to this Section 4.3 shall effect
termination as of the date specified in such notice or, in the
event no such date is specified, on the last day of the month on
which such notice is delivered or deemed deliverable as provided
in Section 10 below.
5. VOLUNTARY TERMINATION BY EXECUTIVE.
5.1 The executive may terminate his employment voluntarily
by giving the Company 30 days advance notice in writing, at which
time the provisions of Section 6.2 shall apply.
6. COMPENSATION UPON TERMINATION.
6.1 DEATH OR DISABILITY. Upon termination of Executive's
employment pursuant to Section 4.1, Executive or his estate or
personal representative, as the case may be, shall be entitled to
receive Executive's base salary for a period of one (1) year
following the date of death or the date when Executive becomes
completely disabled.
6.2 FOR CAUSE OR VOLUNTARY TERMINATION BY EXECUTIVE. If
Executive's employment shall be terminated by the Company For
Cause or voluntarily by Executive, the Company shall pay
Executive his base salary through the date of termination at the
rate in effect at the time of the notice of termination, and the
Company shall thereafter have no further obligations to Executive
under this Agreement.
6.3 WITHOUT CAUSE. If the Company shall terminate
Executive's employment Without Cause, Executive shall be entitled
to continuation of his base salary for one year from the date of
termination with such base salary continuation to be at the rate
set forth in Section 3.1 or, as the case may be, at the rate of
Executive's then current base salary in effect as of the date of
termination. In addition, (A) in the event the date of
termination is on or after February 6, 1999, in addition to the
shares already vested, vesting for an additional 400,000 shares
shall be accelerated and (B) in the event the date of termination
is prior to February 6, 1999, (i) the Option's vesting shall be
accelerated to the extent necessary to entitle Executive to an
aggregate of 800,000 shares upon exercise of the Option, in the
manner and to the extent provided in the stock option agreement
attached hereto as Exhibit A, and (ii) Executive shall have the
right to purchase up to 200,000 shares from Xxxxxxx X. Xxxxxx at
a price of $5.00 per share.
7. CONFIDENTIAL INFORMATION; NONSOLICITATION.
7.1 Executive recognizes that his employment with the
Company will involve contact with information of substantial
value to the Company, which is not old and generally known in the
trade, and which gives the Company an advantage over its
competitors who do not know or use it, including but not limited
to, techniques, designs, drawings, processes, inventions,
developments, equipment, prototypes, sales and customer
information, and business and financial information relating to
the business, products, practices and techniques of the Company
(hereinafter referred to as "Confidential Information").
Executive will at all times regard and preserve as confidential
such Confidential Information obtained by Executive from whatever
source and will not, either during his employment with the
Company or thereafter, publish or disclose any part of such
Confidential Information in any manner at any time, or use the
same except on behalf of the Company, without the prior written
consent of the Company; provided, however, that Executive may
disclose Confidential Information in the best interest of the
Company with properly executed Company confidentiality or secrecy
agreements with the third party. As a condition of this
Agreement, Executive will sign and return a copy of the Company's
Secrecy Agreement, attached as Exhibit B.
7.2 While employed by the Company and for one (1) year
thereafter, the Executive agrees that, in order to protect the
Company's confidential and proprietary information from
unauthorized use, Executive will not, either directly or through
others, solicit or attempt to solicit (i) any employee,
consultant or independent contractor of the Company to terminate
his or her relationship with the Company in order to become an
employee, consultant or independent contractor to or for any
other person or business entity; or (ii) the business of any
customer, vendor or distributor of the Company which, at the time
of termination or one (1) year immediately prior thereto, was
listed on the Company's customer, vendor or distributor list.
8. SUCCESSORS. The Company shall require any successor
(whether direct or indirect, by purchase, merger, or
consolidation) to all or substantially all of the business and/or
assets of the Company, by agreement in form and substance
reasonably satisfactory to the Executive, to expressly assume and
agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if
no such succession had taken place.
9. ASSIGNMENT AND BINDING EFFECT. This Agreement shall be
binding upon and inure to the benefit of Executive and
Executive's heirs, executors, personal representatives, assigns,
administrators and legal representatives. Because of the unique
and personal nature of Executive's duties under this Agreement,
neither this Agreement nor any rights or obligations under this
Agreement shall be assignable by Executive. This Agreement shall
be binding upon and inure to the benefit of the Company and its
successors, assigns and legal representatives.
10. NOTICES. All notices or demands of any kind required or
permitted to be given by the Company or Executive under this
Agreement shall be given in writing and shall be personally
delivered (and receipted for) or mailed by certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Company: Xxxxxx-Xxxx, Inc.
000 X.X. Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxx 00000.
With a copy to: Xxxx X. Xxxxxxx, Esq.
Xxxxxx Godward LLP
0000 Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
If to Executive: Xxxxxx X. Xxxxxx
000 Xxxxxxx Xxxxx Xxxxxxx, Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
With a copy to: Xxxxxx X. Xxxxx, Esq.
Manatt, Xxxxxx & Xxxxxxxx, LLP
00000 X. Xxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Any such written notice shall be deemed received when personally
delivered or three (3) days after its deposit in the United
States mail as specified above. Either Party may change its
address for notices by giving notice to the other Party in the
manner specified in this section.
11. CHOICE OF LAW. This Agreement shall be construed and
interpreted in accordance with the laws of the State of
California, without regard to the conflict of laws provision
thereof.
12. INTEGRATION. This Agreement contains the complete, final
and exclusive agreement of the Parties relating to the subject
matter of this Agreement, and supersedes all prior oral and
written employment agreements or arrangements between the
Parties.
13. AMENDMENT. This Agreement cannot be amended or modified
except by a written agreement signed by Executive and the
Company.
14. WAIVER. No term, covenant or condition of this Agreement or
any breach thereof shall be deemed waived, except with the
written consent of the Party against whom the wavier in claimed,
and any waiver or any such term, covenant, condition or breach
shall not be deemed to be a waiver of any preceding or succeeding
breach of the same or any other term, covenant, condition or breach.
15. SEVERABILITY. The finding by a court of competent
jurisdiction of the unenforceability, invalidity or illegality of
any provision of this Agreement shall not render any other
provision of this Agreement unenforceable, invalid or illegal.
Such court shall have the authority to modify or replace the
invalid or unenforceable term or provision with a valid and
enforceable term or provision which most accurately represents
the parties' intention with respect to the invalid or
unenforceable term or provision.
16. INTERPRETATION; CONSTRUCTION. The headings set forth in
this Agreement are for convenience of reference only and shall
not be used in interpreting this Agreement. This Agreement has
been drafted by legal counsel representing the Company, but
Executive has been encouraged, and has consulted with, his own
independent counsel and tax advisors with respect to the terms of
this Agreement. The Parties acknowledge that each Party and its
counsel has reviewed and revised, or had an opportunity to review
and revise, this Agreement, and the normal rule of construction
to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of
this Agreement.
17. REPRESENTATIONS AND WARRANTIES. Executive represents and
warrants that, to the best of Executive's knowledge, he is not
restricted or prohibited, contractually or otherwise, from
entering into and performing each of the terms and covenants
contained in this Agreement, and that his execution and
performance of this Agreement will not violate or breach any
other agreements between Executive and any other person or
entity.
18. COUNTERPARTS. This Agreement may be executed in two
counterparts, each of which shall be deemed an original, all of
which together shall contribute one and the same instrument.
19. ARBITRATION. If any dispute arises regarding the
application, interpretation, or enforcement of this Agreement,
including fraud in the inducement, such dispute shall be resolved
by final and binding arbitration before one arbitrator at the
Judicial Artibration and Mediation Service in San Diego,
California.
20. ATTORNEYS' FEES AND COSTS. The prevailing party in any
dispute arising out of this Agreement, shall be entitled to
reimbursement by the losing party of all of its or his attorneys'
fees and costs including, but not limited to, arbitrator's fees
and expert's fees.
IN WITNESS WHEREOF, the Parties have executed this Agreement as
of the date first above written.
THE COMPANY:
XXXXXX-XXXX, INC.
By:
-------------------------------
XXXXXXX X. XXXXXX
CHAIRMAN OF THE BOARD, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
EXECUTIVE:
---------------------------------
XXXXXX X. XXXXXX
(FOR PURPOSES OF SECTION 6.3 ONLY):
---------------------------------
XXXXXXX X. XXXXXX
