EXHIBIT 10.11
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement"), dated as of November 25, 2002
by and between Advantage Marketing Systems Inc., an Oklahoma corporation (the
"Company"), and Xxxxx X'Xxxxxxxxx ("Executive") is set forth below.
IN CONSIDERATION of the premises and the mutual covenants set forth
below, the parties hereby agree as follows:
1. Employment. The Company hereby agrees to employ Executive as
its President and Executive hereby accepts such employment, on the terms and
conditions set forth in this Agreement.
2. Term. The period of employment of Executive by the Company
under this Agreement (the "Initial Term") shall commence on November 25, 2002
(the "Commencement Date") and shall continue through November 24, 2003; provided
that this Agreement shall be automatically renewed for two (2) successive one
(1) year terms (the "Extended Terms") unless either party elects not to renew
this Agreement by delivering written notice of its election to the other party
no later than thirty (30) days prior to the end of the current term. The Initial
Term and the Extended Terms, if any, shall collectively constitute the
"Employment Period." The Employment Period may be terminated before the end of
the Initial Term or the Extended Terms, if any, in accordance with Section 6 of
this Agreement.
3. Position and Duties. During the Employment Period, Executive
shall report directly to the Chairman of the Company's board of directors (the
"Chairman"). Executive shall have those powers and duties normally associated
with the position of a President. Executive shall devote substantially all of
his working time, attention and energies (other than absences due to illness or
vacation) to the performance of his duties for the Company. Notwithstanding the
above, Executive shall be permitted, to the extent such activities do not
interfere with the performance by Executive of his duties and responsibilities
under this Agreement or violate Sections 9(a), (b) or (c) of this Agreement, to
(i) serve on civic or charitable boards or committees and (ii) serve on the
board of directors or other similar governing body of any other corporation or
other business entity or trade organization.
4. Place of Performance. The principal place of employment and
performance of duties by Executive shall be at the Company's principal executive
offices in Oklahoma City, Oklahoma. The Executive shall be permitted to commute
between San Diego, California and Oklahoma City, Oklahoma for up to six (6)
months of the Initial Term and shall review with the Chairman his continuing
residence plan if he has not relocated in the greater Oklahoma City metropolitan
area at the end of six months.
5. Compensation and Related Matters.
(a) Base Salary. During the Initial Term, the Company
shall pay Executive a base salary at the rate of $180,000 per
year ("Base Salary"). Executive's Base Salary shall be paid at
$10,000 per month for the first 90 days, $20,000 per month for
the second 90 days and $15,000 per month thereafter in
accordance with the Company's customary payroll practices.
Executive's Base Salary shall be subject to increase, but not
decrease, pursuant to annual review by and in the discretion
of the Board or on about the end of anniversaries of the
Commencement Date. Such increased Base Salary shall then
constitute the Base Salary for all purposes of this Agreement.
(b) The Company shall pay the Executive an annual
incentive bonus of up to $200,000 contingent upon meeting
certain performance goals, as follows: The Company shall pay
Executive $50,000 in the event that the average closing price
for the Company's common stock over any ten (10) trading days
is $2.50 or more; The Company shall pay Executive $50,000 in
the event that the Company has monthly revenue of $2,500,000
or more for two consecutive
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months; The Company shall pay Executive $50,000 in the event
that the Company has quarterly earnings (before interest,
income taxes, depreciation, amortization, stock expense and
non-recurring charges) of $ 0.75 per share or more for two
(2) consecutive quarters; and the Company shall pay Executive
$50,000 for every twelve (12) months of employment hereunder.
(c) Stock Option. The Company shall grant Executive a
non-statutory option to purchase up to 700,000 shares of the
Company's common stock at an exercise price of $1.40 per
share, such price representing closing price for the common
stock on the date of this Agreement. The option shall be on
the terms and subject to the conditions set forth in the
Option Agreement between Executive and the Company of even
date herewith.
(d) Expenses. The Company shall promptly reimburse
Executive for all reasonable business expenses upon the
presentation of reasonably itemized statements of such
expenses in accordance with the Company's policies and
procedures now in force or as such policies and procedures may
be modified with respect to executive officers of the Company
or, alternatively, as approved by the Chairman.
(e) Vacation And Sick Leave. Executive shall be entitled
to four (4) weeks vacation per every twelve (12) month period
of employment hereunder. Executive shall also be entitled to
leaves for illness or other incapacitation as is consistent
with Executive's title and Employer's needs for Executive's
services, except as otherwise provided for in Section 8(a).
(f) Welfare, Pension and Incentive Benefit Plans; Related
Benefits. During the Employment Period, Executive (and his
spouse and/or dependents to the extent provided the applicable
plans and programs) shall be entitled to participate in and be
covered under any welfare benefit plans or programs maintained
by the Company from time to time for the benefit of its
similarly situated employees pursuant to the terms of such
plans and programs, including, without limitation, any
medical, life, hospitalization, dental, disability, accidental
death and dismemberment and other insurance plans and
programs. During the Employment Period, Executive shall also
be eligible to participate in any pension, retirement, savings
and other employee benefit plans and programs maintained from
time to time by the Company for the benefit of similarly
situated employees. .
(g) Company Vehicle. The Company shall reimburse
Executive for the continuing monthly lease payment, insurance
and operating expenses of his Jaguar XK8 currently in his
possession. At the end of the lease period the Company will
provide, at its expense, a Company vehicle commensurate with
the current vehicle.
6. Termination. Executive's employment under this Agreement may
be terminated during the Employment Period under the following
circumstances:
(a) Death. Executive's employment under this Agreement
shall terminate upon his death.
(b) Disability. If, as a result of Executive's incapacity
due to physical or mental illness, Executive shall have been
substantially unable to perform his duties under this
Agreement (with or without reasonable accommodation, as
defined under the Americans With Disabilities Act), for a
period of three (3) consecutive months, and the Company shall
have the right to terminate Executive's employment under this
Agreement for "Disability", by providing a thirty (30) day
Notice of Termination to Executive pursuant to Section 7(a)
and such termination in and of itself shall not be, nor shall
it be deemed to be, a breach of this Agreement by the Company.
(c) Cause. The Company shall have the right to terminate
Executive's employment at any time for Cause, and such
termination in and of itself shall not be, nor shall it be
deemed to be, a
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breach of this Agreement by the Company. For purposes of this
Agreement, the Company shall have "Cause" to terminate
Executive's employment upon:
(i) an act of dishonesty taken by Executive
which results or is intended to result in improper
personal enrichment of Executive and/or expense to
the Company; or
(ii) Executive's failure to follow a direct,
reasonable and lawful written order from the Board
and/or the Chairman, within the reasonable scope of
Executive's duties, which failure, if curable, is not
cured within fifteen (15) days.
Cause shall not exist under paragraphs (i)or (ii) above
unless and until the Company has delivered to Executive a copy
of a resolution duly adopted by not less than three-fourths
(3/4ths) of the Board (excluding Executive) at a meeting of
the Board called and held for such purpose finding that in the
good faith opinion of the Board, Executive was guilty of the
conduct set forth in paragraphs (i) or (ii) and specifying the
particulars thereof in detail. Such resolution may be sent to
Executive prior to or contemporaneously with a Notice of
Termination under Section 7(a).
(d) Voluntarily. Executive shall have the right to
voluntarily terminate his employment under this Agreement.
7. Termination Procedure.
(a) Notice of Termination. Any termination of Executive's
employment by the Company or by Executive during the
Employment Period (other than termination due to death
pursuant to Section 6(a)) shall be communicated by written
Notice of Termination to the other party in accordance with
Section 12. For purposes of this Agreement, a "Notice of
Termination" shall mean a written notice which shall indicate
the specific termination provision in this Agreement relied
upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of
Executive's employment under the provision so indicated.
(b) Date of Termination. "Date of Termination" shall mean
(i) if Executive's employment is terminated by his death, the
date of his death, (ii) if Executive's employment is
terminated for Disability pursuant to Section 6(b), thirty
(30) days after Notice of Termination (provided that Executive
shall not have returned to the substantial performance of his
duties on a full-time basis during such thirty (30) day
period), (iii) if Executive's employment is terminated for
Cause pursuant to Section 6(c), the date the Notice of
Termination is sent to Executive, or (iv) if Executive's
employment is terminated by Executive pursuant to Section
6(d), the date that the Company receives Executive's Notice of
Termination or such later termination date as is set forth in
such Notice of Termination.
8. Compensation Upon Termination or During Disability. In the
event of Executive's Disability or termination of his employment under this
Agreement during the Employment Period, the Company shall provide Executive with
the payments and benefits set forth below. Executive acknowledges and agrees
that the payments set forth in this Section 8, and the other agreements and
plans referenced in this Agreement, constitute the sole compensation and damages
for termination of his employment during the Employment Period. Executive also
agrees that the Company shall have the right to deduct any amounts owed by
Executive to the Company for any reason, including, without limitation, due to
Executive's misappropriation of Company funds, from the payments set forth in
this Section 8.
(a) Disability. During any period that Executive fails to
perform his duties under this Agreement as a result of
incapacity due to physical or mental illness ("Disability
Period"),
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Executive shall continue to receive his full Base Salary set
forth in Section 5(a) until his employment is terminated
pursuant to Section 6(b). In the event Executive's employment
is terminated for Disability pursuant to Section 6(b):
(i) the Company shall pay to Executive (A) his
Base Salary and accrued vacation pay through the Date
of Termination, as soon as practicable following the
Date of Termination, and (B) provide Executive with
disability benefits pursuant to the terms of any
Company disability programs;
(ii) the Company shall reimburse Executive
pursuant to Section 5(d) for reasonable business
expenses incurred, but not paid, prior to such
termination of employment; and
(iii) Executive shall be entitled to any other
rights, compensation and/or benefits as may be due to
Executive following such termination to which he is
otherwise entitled in accordance with the terms and
provisions of any plans or programs of the Company.
(b) Termination By Company without Cause. If Executive's
employment is terminated by the Company without Cause:
(i) the Company shall pay to Executive (A) his
Base Salary and accrued vacation pay through the Date
of Termination, as soon as practicable following the
Date of Termination, and (B) Severance Pay, in equal
monthly installments or a lump sum at the Company's
discretion, according to the following schedule:
---------------------------------------------------------
Length of Employment Months of Base Salary
---------------------------------------------------------
1 - 6 months 1 month
---------------------------------------------------------
7 - 12 months 5 months
---------------------------------------------------------
13 - 24 months 6 months
---------------------------------------------------------
25 - 36 months 12 months
---------------------------------------------------------
(ii) provided that if Executive has relocated his
residence from San Diego, California to the greater
Oklahoma City, Oklahoma metropolitan area prior to
the date of the Notice of Termination, he shall be
deemed to have and shall be paid Severance Payments
as if he were employed by the Company at least seven
(7) months;
(iii) the Company shall reimburse Executive
pursuant to Section 5(d) for reasonable business
expenses incurred, but not paid, prior to such
termination of employment; and
(iv) Executive shall be entitled to any other
rights, compensation and/or benefits as may be due to
Executive following such termination to which he is
otherwise entitled in accordance with the terms and
provisions of any plans or programs of the Company.
(c) Cause, Death or Voluntarily By Executive. If
Executive's employment is terminated by the Company for Cause,
due to Executive's death or voluntarily by Executive:
(i) the Company shall pay Executive (or his
legal representative or estate) his Base Salary and
his accrued vacation pay (to the extent required by
law or the Company's vacation policy) through the
Date of Termination, as soon as practicable following
the Date of Termination;
(ii) the Company shall reimburse Executive (or
his legal representative or estate) pursuant to
Section 5(d) for reasonable business expenses
incurred, but not paid, prior
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to such termination of employment, unless such
termination resulted from a misappropriation of
Company funds; and
(iii) Executive (or his legal representative or
estate) shall be entitled to any other rights,
compensation and/or benefits as may be due to
Executive following such termination to which he is
otherwise entitled in accordance with the terms and
provisions of any plans or programs of the Company.
9. Confidential Information, Ownership of Documents and Other
Items; Non-Solicitation of Employees and Business.
(a) Confidential Information. During the Employment
Period and thereafter, Executive shall hold in a fiduciary
capacity for the benefit of the Company all trade secrets and
confidential information, knowledge or data relating to the
Company and its businesses and investments and its affiliates,
which shall have been obtained by Executive during Executive's
employment by the Company and which is not generally available
public knowledge (other than by acts by Executive in violation
of this Agreement). Except as may be required or appropriate
in connection with his carrying out his duties under this
Agreement, Executive shall not, without the prior written
consent of the Company or as may otherwise be required by law
or any legal process, or as is necessary in connection with
any adversarial proceeding against the Company (in which case
Executive shall use his reasonable best efforts in cooperating
with the Company in obtaining a protective order against
disclosure by a court of competent jurisdiction), communicate
or divulge any such trade secrets, information, knowledge or
data to anyone other than the Company and those designated by
the Company or on behalf of the Company in the furtherance of
its business or to perform duties under this Agreement.
(b) Removal of Documents; Rights to Products; Other
Property. All records, files, drawings, documents, models,
equipment, and the like relating to the Company's business and
its affiliates, which Executive has control over shall not be
removed from the Company's premises without its written
consent, unless such removal is in the furtherance of the
Company's business or is in connection with Executive's
carrying out his duties under this Agreement and, if so
removed, shall be returned to the Company promptly after
termination of Executive's employment under this Agreement, or
otherwise promptly after removal if such removal occurs
following termination of employment. Executive shall assign to
the Company all rights to trade secrets and other products
relating to the Company's business developed by him alone or
in conjunction with others at any time while employed by the
Company. Executive shall also return to the Company all
Company-provided vehicles in his possession or control.
(c) Protection of Business. During the Employment Period
and until the first anniversary of Executive's Date of
Termination (regardless of the reason for termination of
employment), the Executive will not, directly or indirectly,
on his own behalf or behalf of any third party, solicit or
attempt to induce any existing customers or accounts of the
Company or its affiliates to cease doing business with the
Company or its affiliates. During the same time period,
Executive will not, directly or indirectly, on his own behalf
or on behalf of any third party, solicit or attempt to induce
any employee of the Company to terminate his or her employment
with the Company to be employed by Executive or a third party.
(d) Injunctive Relief. In the event of a breach or
threatened breach of this Section 9, Executive agrees that the
Company shall be entitled to injunctive relief in a court of
appropriate jurisdiction to remedy any such breach or
threatened breach, Executive acknowledging that damages would
be inadequate and insufficient.
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(e) Continuing Operation. Except as specifically provided
in this Section 9, the termination of Executive's employment
or of this Agreement shall have no effect on the continuing
operation of this Section 9.
(f) Additional Related Agreements. Executive agrees to
sign and to abide by the provisions of any additional
agreements, policies or requirements of the Company related to
the subject of this Section 9.
10. Arbitration. The parties agree that Executive's employment and
this Agreement relate to interstate commerce, and that any disputes, claims or
controversies between Executive and the Company which may arise out of or relate
to the Executive's employment relationship or this Agreement shall be settled by
arbitration. This agreement to arbitrate shall survive the termination of this
Agreement. Any arbitration shall be in accordance with the Rules of the American
Arbitration Association or another national arbitration service that is mutually
agreeable to the parties. The arbitration shall be undertaken pursuant to the
Federal Arbitration Act. Arbitration will be held in Oklahoma City, Oklahoma
unless the parties mutually agree on another location. The decision of the
arbitrator(s) will be enforceable in any court of competent jurisdiction. The
parties agree that the arbitrator(s) may allocate administrative and arbitrator
fees, the parties' other costs and expenses of arbitration and the parties'
attorneys' fees and require that such items be paid in any manner in which such
item would have been allocated and ordered to be paid by a court of competent
jurisdiction. The parties agree that punitive, liquidated or indirect damages
shall not be awarded by the arbitrator(s) unless such damages would have been
awarded by a court of competent jurisdiction. Nothing in this agreement to
arbitrate, however, shall preclude the Company from obtaining injunctive relief
from a court of competent jurisdiction prohibiting any on-going breaches by
Executive of this Agreement including, without limitation, violations of Section
9.
11. Successors Binding Agreement.
(a) Company's Successors. No rights or obligations of the
Company under this Agreement may be assigned or transferred
except that the Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or
assets of the Company 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.
(b) Executive's Successors. No rights or obligations of
Executive under this Agreement may be assigned or transferred
by Executive other than his rights to payments or benefits
under this Agreement, which may be transferred only by will or
the laws of descent and distribution. Upon Executive's death,
this Agreement and all rights of Executive under this
Agreement shall inure to the benefit of and be enforceable by
Executive's beneficiary or beneficiaries, personal or legal
representatives, or estate, to the extent any such person
succeeds to Executive's interests under this Agreement.
Executive shall be entitled to select and change a beneficiary
or beneficiaries to receive any benefit or compensation
payable under this Agreement following Executive's death by
giving the Company written notice thereof. In the event of
Executive's death or a judicial determination of his
incompetence, reference in this Agreement to Executive shall
be deemed, where appropriate, to refer to his
beneficiary(ies), estate or other legal representative(s). If
Executive should die following his Date of Termination while
any amounts would still be payable to him under this Agreement
if he had continued to live, all such amounts unless otherwise
provided shall be paid in accordance with the terms of this
Agreement to such person or persons so appointed in writing by
Executive, or otherwise to his legal representatives or
estate.
12. Notice. For the purposes of this Agreement, notices, demands
and all other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given when delivered
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either personally or by United States certified or registered mail,
return receipt requested, postage prepaid, addressed as follows:
If to Executive:
At his last known address
evidenced on the Company's
payroll records.
If to the Company:
0000 Xxxxx Xxxx Xxxxxxxxxx Xxxxx 0000 Xxxx
Xxxxxxxx Xxxx XX 00000
or to such other address as any party may have furnished to the others in
writing in accordance with this Agreement, except that notices of change of
address shall be effective only upon receipt.
13. Taxes and Withholding. All payments hereunder shall be subject
to tax in accordance with the federal Internal Revenue Code, as amended from
time to time, and any applicable rules or regulations promulgated thereunder and
in accordance with applicable state statutes, rules and regulations. All
payments shall be subject to any required withholding of Federal, state and
local taxes pursuant to any applicable law, rule or regulation.
14. Miscellaneous. No provisions of this Agreement may be amended,
modified, or waived unless such amendment or modification is agreed to in
writing signed by Executive and by a duly authorized officer of the Company, and
such waiver is set forth in writing and signed by the party to be charged. No
waiver by either party hereto at any time of any breach by the other party
hereto of any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. The respective rights
and obligations of the parties under this Agreement shall survive Executive's
termination of employment and the termination of this Agreement to the extent
necessary for the intended preservation of such rights and obligations. The
validity, interpretation, construction and performance of this Agreement shall
be governed by the laws of the State of Oklahoma without regard to its conflicts
of law principles.
15. Validity. The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force and
effect.
16. Entire Agreement. Except as provided elsewhere herein, this
Agreement sets forth the entire agreement of the parties with respect to its
subject matter and supersedes all prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral or
written, by any officer, employee or representative of any party to this
Agreement with respect of such subject matter.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
XXXX X XXXX
By: /S/ XXXX X. XXXX
----------------
Chairman of the Board
/S/ XXXXX X. X'XXXXXXXXX
------------------------
XXXXX X'XXXXXXXXX
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