EXHIBIT 10.19
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") dated March 25, 1998, between
Constant Power Manufacturing Incorporated, a Texas corporation ("Company"), and
Xxxx Xxxxxx, a Texas resident ("Employee"), evidences that, in consideration of
the mutual covenants and agreements contained herein, the Company hereby employs
Employee and Employee hereby accepts such employment and agrees to perform the
services specified herein upon the terms and conditions set forth in this
Agreement.
1. DUTIES AND RESPONSIBILITIES. During the Term of Employment (as defined
in Section 2), Employee shall:
(a) serve as the Vice-President-Sales and Marketing of the Company
promoting the products and services offered by the Company for sale, subject in
all events to the direction and control of the board of directors of the
Company;
(b) serve in such other capacities, perform such other services and have
such duties and responsibilities with the Company and its affiliates and
subsidiaries as are assigned to Employee, subject in all events to the direction
and control of the board of directors of the Company;
(c) be a full-time employee of the Company and devote Employee's full
business time, attention, efforts and energy to the affairs of the Company,
subject to Employee's right to vacations as provided herein, and subject to
absences on account of temporary illness;
(d) faithfully, diligently, competently and to the best of Employee's
ability perform all duties incident to Employee's employment hereunder;
(e) use Employee's best efforts to promote the interests of the Company;
and
2. TERM OF EMPLOYMENT. The "Term of Employment" as used in this Agreement shall
mean the two year period commencing on March 25, 1998 ("Effective Date"). The
Term of Employment shall be earlier terminated as follows:
(a) Should Employee die, the Term of Employment shall be terminated upon
Employee's death.
(b) Should Employee become disabled, as defined in Section 3 hereof, the
Term of Employment may, at the option of the Company, be terminated by the
Company upon ten days
written notice to Employee.
(c) Should Employee (i) violate any of the terms and provisions of this
Agreement or otherwise fail to satisfactorily perform any obligation due to the
Company hereunder or otherwise, (ii) engage in misrepresentation, dishonesty,
embezzlement, fraud or disloyalty in matters affecting the Company or the
employment relationship or usurpation of a benefit that rightfully belongs to
the Company, (iii) be negligent with respect to matters involving or affecting
the Company or the duties and responsibilities of Employee to the Company, or
(iv) engage in any crime (other than minor traffic violations), the Term of
Employment, at the option of the Company, may be terminated by the Company
immediately upon written notice to Employee. Any such termination by virtue of
this Section 2(c) shall be deemed "for cause" and shall not prejudice any remedy
that the Company may have at law, in equity, or under this Agreement for breach
hereof by Employee.
3. DISABILITY. If, because of illness or otherwise, Employee should
become physically or mentally disabled and is therefore unable to perform
Employee's duties hereunder, Employee shall be entitled to such paid temporary
leaves of absence as may be in the Company's policies and procedure. Should the
duration of any such disability exceed the Company's period of paid leave,
Employee shall be entitled to
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unpaid leave of up to twelve work weeks during any twelve month period. Should
Employee's disability exceed the period of paid leave plus twelve unpaid work
weeks during any twelve month period, Employee may be subject to termination at
the sole discretion of Company.
4. COMPENSATION. As compensation ("Compensation") for Employee's
services, during the Term of Employment, the Company shall pay the following
compensation or provide the following benefits, as the case may be, to Employee:
(a) Salary at the rate of $5,000 per month ("Salary") payable no less
frequently than in equal semi-monthly installments, less deductions for all
required federal and state income and social security taxes.
(b) Coverage for Employee under group medical, life, accidental death,
long-term disability, and dental insurance policies provided by the Company, if
any, all on such terms as the Company extends to its employees from time to
time. Employee shall not be entitled to be paid any additional cash Compensation
for accrued, unused sick leave, if any.
(c) Paid vacation in conformity with the Company's policies and
procedures, subject to written approval by the Company, and such other holidays
as the Company extends to its employees from time to time. Employee shall not be
entitled to be paid any additional cash Compensation for accrued, unused
vacation days or holidays.
(d) A cash bonus equal to one and one-half percent (1.5%) of the gross
collections from sales arising from operations of the Company for each twelve
month period measured by the annual anniversary date of this Agreement in which
Employee was a full time employee for the such year. Any bonus payable hereunder
shall be paid within thirty days following the end of each of employee's twelve
consecutive months of employment ending on each annual anniversary date of this
Agreement, provided that the Company, in its sole discretion, may estimate such
bonus and prepay all or portions of the bonus during the fiscal year.
Employee shall promptly repay any overpayment upon demand.
(e) Company shall pay a signing bonus to Employee as follows:
(1) Company shall pay employee a bonus of Two Hundred Thousand
and no/100ths Dollars ($ 200,000.00) cash at closing;
(2) Within 14 days of final maturity of certificate of deposit
#8675 issued by Prime Bank maturing on June 14, 1999, Company
shall pay Employee a bonus equal to the full value of the
certificate of deposit at maturity;
(3) Within 14 days of final maturity of certificate of deposit
#8827 issued by Prime Bank maturing on November 1, 1999, Company
shall pay Employee a bonus equal to the full value of the
certificate of deposit at maturity.
(f) For the twelve month period April 1, 1998 through March 31, 1999,
Employee shall be paid, in addition to all other compensation, a "Growth Bonus"
equal to two percent (2%) of the gross collections from sales of Company in
excess of Three Million Six Hundred Thousand and no/100ths Dollars
($3,600,000.00) for the twelve month period. For the twelve month period April
1, 1999 through March 31, 2000, Employee shall be paid, in addition to all other
compensation, a "Growth Bonus" equal to two percent (2%) of the gross
collections from sales of Company in excess of the Company's prior years gross
collections from sales multiplied by 1.35, provided, however; that in no event
shall Employee be entitled to a "Growth Bonus" in the second year if the
Company's gross collections from sales do not exceed Three Million Six Hundred
Thousand and no/100ths Dollars. Examples of the calculation of the "Growth
Bonus" are attached hereto as Exhibit "A".
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5. TERMINATION PAYMENTS. In the event of termination of the Term of
Employment, whether by action of the Company, Employee or by mutual agreement,
voluntary or involuntary, the Company shall no longer be obligated to make any
payments of any kind to Employee, except for salary and bonus (estimated if
necessary), if any, earned prior to the date of termination but not paid, and
reimbursable expenses not yet reimbursed, which payments shall be paid upon such
termination or as soon thereafter as is practicable (and the parties shall act
in good faith to make such payment within sixty days after termination). Upon
any termination, Employee shall pay the Company any amounts owed by Employee to
the Company by reason of the breach hereof or otherwise and the Company shall be
entitled to offset against any amounts owed to Employee any amounts owed by
Employee to the Company or any of its subsidiaries or affiliates, whether under
this Agreement or otherwise, without prejudice to any other rights or remedies
of the Company or its subsidiaries or affiliates available at law or equity.
6. NON-COMPETITION COVENANT. Employee represents that Employee is
subject to no obligation to any third party that would restrict or interfere
with Employee's ability to perform hereunder. Employee agrees that from the date
hereof and for the one year period following the termination of the Term of
Employment ("Covenant Trigger"), whether by action of the Company, Employee, or
by mutual agreement, voluntary or involuntary, other than by violation of this
agreement by the Company Employee will not, directly or indirectly, (i) own,
manage, operate, join, control, or participate in the ownership, management,
operation or control of, or be employed by, or otherwise engage in or become
interested in or be connected in any manner with any business located in the
United States of America which offers goods or services of the type offered by
the Company ("Competing Business"), (ii) solicit, on behalf of Employee or any
business in the same or similar business as that engaged in by the Company
("Competing Business"), any person or entity that has been a customer of the
Company, either directly or indirectly through a broker or otherwise, at any
time during the two year period preceding the Covenant Trigger ("Company
Customer"), to purchase or otherwise acquire or use any products or services of
the same or similar nature as products or services offered by the Company, (iii)
solicit any person who, at any time within the two year period preceding the
Covenant Trigger, has been an employee of the Company ("Company Employee"),
except a Company Employee who was terminated by the Company, to become an
employee of Employee or any Competing Business. Employee shall not be deemed to
be so competing solely by reason of purchasing stock of companies listed on the
New York Stock Exchange, the American Stock Exchange, or quoted on the National
Association of Securities Dealers Automatic Quotation System (NASDAQ), provided
that Employee's direct and beneficial ownership of any class of securities in
any of such entities is less than 5% of the aggregate number of outstanding
units, interests or shares of such class of securities. The term "solicit" as
used herein shall refer, in addition to its common usages, to communications or
transactions with intent to violate this paragraph whether initiated by Employee
or a third party. All parties acknowledge that the restrictions and restraints
contained in this covenant are reasonable. Should any court of competent
jurisdiction determine that, consistent with the established precedent of the
forum jurisdiction, the public policy of such jurisdiction requires a more
limited restriction, duration, nature of restricted activity, or any combination
thereof, it would be in furtherance of the intentions of the parties hereto for
the court to so interpret and construe the terms of this Section 6 to apply only
to the extent of such limited restriction. In the event of a breach of this
covenant the running of the non-competition period herein provided shall be
tolled for the duration of such breach. In the event of any breach or attempted
or threatened breach of this covenant any aggrieved party shall have the right
in addition to all other rights and remedies at law and in equity, to obtain an
injunction prohibiting such breach or attempted or threatened breach and
commanding compliance with this covenant merely by proving the existence of such
breach or threatened or attempted breach, and without the necessity of proving
irreparable harm or inadequacy of legal remedies.
7. CONFIDENTIALITY OF INFORMATION. Employee acknowledges that Employee
has had and will have access to certain confidential information of the Company
or its subsidiaries or affiliates, including, without limitation, product
designs, employee lists, customer lists, supplier lists, manuals, forms,
documentation, data, trade secrets, specifications, methods, procedures,
systems, plans, techniques, know-how, plans, and computer programs
("Information") and that such Information constitutes valuable, special and
unique assets of the Company or such other entities. Employee will cause the
Information obtained by Employee to be treated as strictly confidential.
Employee shall not use or knowingly permit others to use any
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such Information in a manner detrimental to the Company or its subsidiaries or
affiliates, or for Employee's own account and shall not directly or indirectly
disclose any such Information to any person, firm, corporation, association or
other entity for any reason or purpose, except to such parties to whom such
information is furnished in the normal course of business under established
policies approved by the Company, authorized representatives of the Company, or
upon the written consent of the Company, or as required by law, or to a
governmental agency pursuant to a valid subpoena or other order or pursuant to
applicable governmental regulations, rules or statutes unless such information
is otherwise available in the public domain. For purposes hereof, authorized
representatives of the Company shall be directors and officers of the Company to
which such Information is furnished in the normal course of business under
established policies approved by the Company. Employee further agrees that, upon
termination of the Term of Employment, Employee will not take with Employee or
retain, or disclose to others without written authorization from the Company,
any Information, papers, files or other documents or copies thereof of any kind
belonging to the Company or any of its subsidiaries or affiliates.
The obligations of this Section 7 shall continue as to each item
of such Information, both during and after termination of the Term of
Employment, until the Company's competitors have become cognizant of such item
of Information from published sources through no fault of or action by Employee.
8. PROPRIETARY DEVELOPMENTS. Employee agrees promptly to fully disclose
and assign and does hereby assign to the Company the entire right, title and
interest throughout the world in and to all product formulations, inventions,
improvements, discoveries, know-how, trade secrets, information, processes,
machines, manufactures, compositions, apparatus or products ("Proprietary
Information"), whether or not patentable, made or conceived or discovered or
developed or reduced to practice, solely or jointly, by Employee during the Term
of Employment:
(a) Regardless of whether or not during working time chargeable to the
Company, which relate in any manner to the Company's field of business interest
or are suggested by or to Employee or result from work performed by Employee for
the Company or are made by the use of the Company's materials or equipment, or
(b) While on the Company's time, regardless of the nature of the
Proprietary Information.
It shall be presumed, subject to clear and convincing proof to
the contrary, that all Inventions, whether or not patentable, relating to the
Company's business and developed by Employee during the six month period
beginning on the date of termination of the Term of Employment were, for the
purposes of this Agreement, conceived prior to the termination of the Term of
Employment.
Employee will cooperate with the Company in all lawful ways in
order to carry into effect the provisions of this Section 8, including the
execution of any papers or documents deemed by the Company to be desirable or
necessary to enable the Company to apply for, secure and maintain patent or
copyright protection thereon in the United States of America and in foreign
countries including, but not limited to applications, assignments and other
legal instruments.
9. ENFORCEMENT. Employee acknowledges that the rights reserved to
the Company under Sections 6, 7, and 8 hereof are necessarily of a special,
unique and extraordinary nature and that the loss arising from a breach or
threatened breach thereof cannot reasonably and adequately be compensated by
money damages and will cause the Company to suffer irreparable harm and that a
remedy at law for any breach thereof will be inadequate. Accordingly, Employee
hereby agrees that the Company shall be entitled to injunctive or other
extraordinary relief in case of any such breach or threatened breach, and
without the necessity of proving irreparable harm or inadequacy of legal
remedies, which shall, however, in no way limit any other rights, including the
recovery of damages, which the Company may have at law or in equity. In
addition, and without limitation of the foregoing or any other rights the
Company may have at law or in equity, if Employee shall at any time before,
during, or following the Term of Employment violate Sections 6, 7, and 8 or use
any Confidential Information or Proprietary
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Information for Employee's personal benefit or the benefit of any third party,
Employee agrees to pay to the Company immediately without demand seventy five
percent of the gross receipts therefrom.
10. NOTICES. All notices, requests, demands and other communications
under this Agreement or any instrument contemplated hereby shall be in writing
and shall be personally delivered or mailed by United States registered or
certified mail, first class, postage prepaid, return receipt requested, to the
address of the respective parties hereto as shown under their names on the
signature page hereof and shall be deemed given on the earlier of actual receipt
(as evidenced by return receipt if mailed) or the date five days after mailing.
Any party hereto may change his or its address for such notices by giving notice
of such change pursuant to this Section 10.
11. BINDING EFFECT. This Agreement shall inure to the benefit of and
shall be binding upon the Company and its successors and assigns and upon
Employee and Employee's personal representatives and heirs. The provisions of
Sections 5 through 18 hereof shall survive any termination of this Agreement. If
the Company has or adopts an employee manual or policies of a similar nature
that conflict with this Agreement the terms and provisions of this Agreement
shall control.
12. WAIVER. No failure to insist upon strict compliance
with any provision hereof shall be deemed a waiver of such provision or any
other provision hereof. No failure to exercise and no delay in exercising, on
the part of the Company, any right, power or privilege hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise of any right,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right power or privilege. The rights and remedies
herein provided are cumulative and not exclusive of any rights or remedies
provided by law or in any other agreement.
13. GOVERNING LAW: VENUE. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS (EXCEPT THOSE
RELATING TO THE CONFLICT OF LAWS) AND SHALL BE PERFORMABLE IN XXXXXX COUNTY.
EACH PARTY HERETO SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF
TEXAS AND THE FEDERAL COURTS IN AND FOR THE SOUTHERN DISTRICT OF TEXAS IN
CONNECTION WITH ANY DISPUTE ARISING UNDER THIS AGREEMENT OR ANY DOCUMENT OR
INSTRUMENT ENTERED INTO IN CONNECTION HEREWITH. ALL ACTIONS HEREUNDER MUST BE
BROUGHT IN THE STATE COURTS OF XXXXXX COUNTY, TEXAS OR THE FEDERAL COURTS IN AND
FOR THE SOUTHERN DISTRICT OF TEXAS.
14. SEVERABILITY. If any provision of this Agreement, or the application
thereof to any person or circumstance, is for any reason or to any extent,
invalid or unenforceable, the remainder of the Agreement and the application of
such provision to the other persons or circumstances shall not be affected
thereby, but rather is to be enforced to the greatest extent permitted by law.
15. ASSIGNMENT. The rights and interest of Employee under this Agreement
including Employee's right to receive Employee's Compensation hereunder, may not
be assigned, sold, transferred, pledged or hypothecated, nor may the duties and
obligations of Employee hereunder be delegated. The rights and interests of the
Company hereunder are freely assignable and delegable by the Company with
Employees consent which shall not be unreasonably withheld.
16. PRIOR AGREEMENTS SUPERSEDED. This Agreement constitutes the sole
agreement of the parties hereto concerning the within subject matter and
supersedes any prior understandings or written or oral agreements between the
parties respecting the within subject matter.
17. CAPTIONS. The captions used in this Agreement are for convenience
only and are not to be construed in interpreting this Agreement.
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18. AMENDMENT. This Agreement may be amended only by a written
instrument signed by each party hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement
effective as of the day and year first above written.
Company: Constant Power Manufacturing Incorporated
By: /s/ XXXXXXX X. XXXXXX
Name: Xxxxxxx X. Xxxxxx
Title: PRESIDENT
Address: 000 Xxxxxxx Xxxxx, Xxxx. 000
Xxxxxxx, Xxxxx 00000
Employee: /s/ XXXX XXXXXX
Name: XXXX XXXXXX
Address:______________________
______________________________
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