Exhibit 10.11
CONFIDENTIAL
EMPLOYMENT AGREEMENT
This Retention Bonus and Stock Option Agreement (the "Agreement")
sets forth the terms of the employment of Xxxx X. Xxxxxx with Maximum
Dynamics, Inc. or one of its affiliates ("MXDY") commencing on the 8th
of October, 2002. Xx. Xxxxxx is referred to in this Agreement as
"you" or "the executive," and MXDY and its affiliates are referred to
collectively as the "Company." Congratulations on joining the MXDY
team.
1. Duration. The term of this Agreement will begin on the 8th of
October 2002 and end three years later, unless sooner terminated
(the "Employment Term").
2. Title. You will be employed as Chief Executive Officer. You
will devote your best efforts and all of your business time,
attention and skill to the performance of the duties associated
with this position. You will report to the Board of Directors.
You will also perform such other duties as the Board of Directors
may in good faith assign to you, which shall not be inconsistent
with your position with MXDY. Your principal place of employment
will be Denver, CO or Colorado Springs, CO.
3. Compensation. Your annual base salary will be $108,000, which
will be paid to you in accordance with MXDY normal payroll
procedures as set forth in your employment agreement. You will be
eligible to receive a target bonus equal to 80% of your base
salary each year with said bonus subject to approval by the Board
of Directors. Salary compensation shall commence whenever the
first of any of the following occurs: the Company receives at
least $1 million in financing OR when the Company receives
generates its first $250,000 in revenue. In addition, to this
salary, Employee will receive any bonuses, incentives, stock
options, or other compensated items based upon performance as set
forth in sections 3 and 5. The initial base salary may be
increased every 3 months at the discretion of the Board of
Directors of the Company.
You will be eligible to participate in the MXDY Stock-Based
Incentive Plan upon its formation. You will also be eligible for
an annual option target grant of approximately $750,000 at a
forty percent discount off of the bid price. Annual option target
grant shall begin one year from the date of this agreement.
Additional stock option grants are discretionary and must be
approved by the Board of Directors of MXDY Inc. on an annual
basis. Other than your annual option target grant, MXDY is not
obligated to make any kind of option grant to you.
4. Benefits. During your employment, you will be eligible to
participate in the applicable benefit plans and programs
generally made available to other MXDY executives of similar
status, primary place of employment and title to you. You
recognize that these plans and programs may change at any time.
5. Retention Bonus. You will be eligible for a retention bonus of
up to $291,600 subject to the terms described below. One third
of that amount (i.e., $97,200) will be paid to you only if you
are employed by MXDY on the first anniversary of the date of this
Agreement. Another third of that amount will be paid to you only
if you are employed by MXDY on the second anniversary of the date
of this Agreement. And, the last third of that amount will be
paid to you only if you are employed by MXDY on the third
anniversary of the date of this Agreement. All such amounts will
be paid as soon as reasonably practicable following the
respective anniversary dates. The amounts may be paid with shares
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of Common Stock of MXDY. The share price used to convert such
payment shall be the share price upon the day of payment.
6. Termination. If your employment is terminated by MXDY without
"Cause" (as defined below) or you terminate your employment with
"Good Reason" (as defined below), MXDY sole obligation to you
hereunder shall be to pay or provide to you (i) any accrued and
unpaid base salary earned through the date of termination, (ii)
an amount equal to $291,600, less the amount of all payments
theretofore paid to you pursuant to Section 5 hereof and (iii)
for the duration of the three-year Employment Term, medical,
dental and life insurance benefits as if your employment had
not been terminated; provided, however, that if you become
reemployed with another employer and are eligible to receive
medical or other welfare benefits under another employer-
provided plan, the medical and other welfare benefits
described herein shall be secondary to those provided under such
other plan during such applicable period of eligibility. You
may terminate your employment for Good Reason only if you provide
MXDY written notice of such termination within ninety days of
the occurrence of Good Reason.
If your employment with MXDY terminates for "Cause" or you
terminate without "Good Reason," MXDY sole obligation to you
hereunder shall be to pay to you any accrued and unpaid base
salary earned through the date of termination.
For purposes of this Agreement "Cause" shall mean:
(i) Your willful and continued failure to perform
substantially your duties with MXDY (other than any such failure
resulting from incapacity due to physical or mental illness)
which has not been cured within thirty days after a written
demand for substantial performance is delivered to you by the
Board of Directors of MXDY which specifically identifies the
manner in which you have not substantially performed your duties,
or
(ii) Your willfully engaging in illegal conduct or gross
misconduct, which is materially and demonstrably injurious to
MXDY.
For purposes of this provision, no act or failure to act on your
part shall be considered "willful" unless it is done, or omitted
to be done, by you in bad faith or without reasonable belief that
your action or omission was in the best interests of MXDY.
For purposes of this Agreement "Good Reason" shall mean:
(i) Your base salary is reduced below $108,000;
(ii) Your duties and responsibilities as Chief Executive
Officer are materially and adversely diminished, excluding
for this purpose an isolated, insubstantial and inadvertent
action not taken in bad faith and which is remedied by MXDY
promptly after written notice thereof is given by you to
MXDY; or
(iii) You are required to be based at a location more than
60 miles from the location where your employment is based
pursuant to this Agreement.
The severance pay and benefits provided for in this Section 6
shall be in lieu of any other severance pay to which you may be
entitled under any severance policy; employment agreement or
other policy, plan or program with MXDY or any of its affiliates.
Your entitlement to any compensation or benefits other than as
provided herein shall be determined in accordance with the
employee benefit plans of MXDY as in effect from time to time and
as may be modified.
Any termination by MXDY for Cause, or by you for Good Reason,
shall be communicated by a Notice of Termination to the other
party hereto. For purposes of this Agreement, a "Notice of
Termination" means a written notice which (i) indicates the
specific termination provision in this Agreement relied upon, and
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(ii) to the extent applicable, sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated.
The failure by you or MXDY to set forth in the Notice of
Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of
yours or MXDY, respectively, hereunder or preclude you or MXDY,
respectively, from asserting such fact or circumstance in
enforcing yours or MXDY rights hereunder.
7. Employment At-Will. At the end of the three year term of this
Agreement, you will be employed on an at-will basis, such that
you may terminate your employment at any time and MXDY may
terminate your employment at any time for any reason.
8. Confidentiality or Proprietary Information. You agree, during or
after the term of this employment for a period of 24 months, not
to reveal confidential information, or trade secrets to any
person, firm, corporation, or entity. Should you reveal or
threaten to reveal this information, the Company shall be
entitled to an injunction restraining you from disclosing same,
or from rendering any services to any entity to whom said
information has been or is threatened to be disclosed.
9. Reimbursement of Expenses. You may incur reasonable expenses for
furthering the Company's business, including expenses for
entertainment, travel, and similar items. The Company shall
reimburse you for all business expenses after you present an
itemized account of expenditures, pursuant to Company policy.
10. Vacation. You shall be entitled to a yearly vacation of 3
weeks at full pay. Should you not take vacation time in a given
year, the time shall roll-over to the following year until
termination of employment with the Company.
11. Disability. If you cannot perform the duties because of
illness or incapacity for a period of more than 2 weeks, the
compensation otherwise due during said illness or incapacity will
be reduced by 20 percent. Your full compensation will be
reinstated upon return to work. However, if you are absent from
work for any reason for a continuous period of over 3 months, the
Company may terminate your employment, and the Company's
obligations under this agreement will cease on that date.
12. Death Benefit. Should you die during the term of
employment, the Company shall pay to your estate any compensation
due for 3 months at the end of the month in which death occurred.
13. Restriction on Post Employment. For a period of 24 months
after the end of employment, you shall not control, consult to or
be employed by any business similar to that conducted by the
company, either by soliciting any of its accounts or by operating
within Employer's general trading area.
14. Entire Agreement. This Agreement sets forth the entire
agreement of the parties with respect to your employment with
MXDY and any of its affiliates and the termination thereof, and
supercedes any and all agreements, oral or written, with respect
thereto, and any offer letters or other employment terms and
conditions, which are hereby superceded and rendered null and
void.
15. Effective Date. The rights and obligations of the parties
under this Agreement will be effective on the date of signing of
this Agreement by both parties.
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16. Governing Law. The validity, interpretation, construction
and performance of this Agreement shall in all respects be
governed by the laws of Colorado, without reference to principles
of conflict of law.
17. Disclosure. From and after the date of execution of this
Agreement, you will not disclose this Agreement, or any of its
contents, to any person, entity or corporation other than your
spouse, immediate family, attorney, tax advisor or financial
advisor. You may discuss this Agreement with Executive Officers
in MXDY Human Resources or Legal departments.
18. Taxes. All payments and benefits hereunder shall be
subject to all applicable taxes required to be withheld by MXDY
pursuant to federal, state or local laws.
19. Cooperation. In the event of your termination, for
whatever reason, you shall cooperate with MXDY and be reasonably
available to MXDY with respect to continuing and/or future
matters arising out of your employment or any other relationship
with MXDY, whether such matters are business-related, legal or
otherwise. You shall be compensated for such services at hourly
rates approximately proportionate to your weekly salary divided
by forty plus expenses. Any testimony you give must be truthful
and accurate.
20. Non-Waiver of Rights. The failure to enforce at any time
the provisions of this Agreement or to require at any time
performance by the other party of any of the provisions hereof
shall in no way be construed to be a waiver of such provisions or
to affect either the validity of this Agreement or any part
hereof, or the right of either party to enforce each and every
provision in accordance with its terms.
21. Solicitation of Employees. You agree that for the one (1)
year period following your termination of employment with MXDY,
you will not, either directly or indirectly, alone or in
conjunction with another party, solicit, employ, or attempt to
employ, any individual who on the date of termination is, or
within one year prior thereto was, an employee of MXDY.
22. Non-Assignment. You shall not assign all or any portion of
this Agreement without the prior written consent of MXDY.
23. Modification. No provision of this Agreement may be
modified, altered or amended except by an instrument in writing
executed by the parties hereto.
24. Full Settlement. MXDY obligation to make the payments
provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action
which MXDY may have against you. In no event shall you be
obligated to seek other employment or take any other action by
way of mitigation of the amounts payable to you under any of the
provisions of this Agreement and such amounts shall not be
reduced whether or not you obtain other employment.
25. Confidential Information. You shall hold in a fiduciary
capacity for the benefit of MXDY all secret or confidential
information, knowledge or data relating to MXDY, and its
businesses, which shall have been obtained by you during your
employment by MXDY and any of its affiliates and which shall not
be or become public knowledge (other than by acts by you or
representatives of you in violation of this Agreement). After
termination of your employment, you shall not, without the prior
written consent of MXDY or as may otherwise be required by law or
legal process, communicate or divulge any such information,
knowledge or data to anyone other than MXDY and those
designated by it. In no event shall an asserted violation of the
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provisions of this Section 20 constitute a basis for deferring or
withholding any amounts otherwise payable to you under this
Agreement.
26. Arbitration. By signing this Agreement, you agree that all
claims or disputes covered by this Agreement or otherwise arising
out of or relating to your employment during the term of the
Agreement must be submitted to binding arbitration and that this
arbitration will be the sole and exclusive remedy for resolving
any such claim or dispute. This promise to resolve claims by
arbitration is equally binding upon both you and MXDY.
Any arbitration will be administered by the American Arbitration
Association under its Commercial Arbitration Rules. The
arbitrator shall apply the Federal Rules of Evidence. The
arbitrator shall have jurisdiction to hear and rule on pre-
hearing disputes and is authorized to hold pre-hearing
conferences by telephone or in person, as the arbitrator deems
necessary.
The Company shall pay the costs of arbitration and each party
shall bear its own expenses; provided, that if you are the
prevailing party in any such proceeding, the Company shall
reimburse you for your reasonable costs and expenses, including
attorney's fees, incurred in connection with such proceeding.
This Agreement is dated the 8th of October, 2002.
If you accept the terms of this Agreement, please sign below in the
space provided.
Maximum Dynamics, Inc.
By: /s/ Xxxxxx Xxxxxx
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Name: Xxxxxx Xxxxxx
Title: President and Director
By:/s/ Xxxx X. Xxxxxx
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Name: Xxxx X. Xxxxxx
Executive Signature
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