1
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made this 16th day of July, 2001, by and between JAE-TECH
Engineering, Inc., a Colorado corporation (hereinafter called "Company") and
Xxxx X. Xxxxxx (hereinafter called "Employee").
RECITALS:
WHEREAS, the Company, located in Colorado Springs, Colorado desires to enter
into an employment relationship with Employee pursuant to the terms and
conditions set forth herein; and
WHEREAS, Employee is willing to accept such employment with the Company,
pursuant to the terms and conditions set forth in this Agreement; and
NOW THEREFORE, the Parties hereto, in consideration of the mutual covenants and
promises hereinafter contained, do hereby agree as follows:
TERMS
1. EMPLOYMENT DUTIES. The Company hereby employs Employee as President of
the Company. Employee's duties shall include carrying out all of the
functions as President as defined in the By-laws of the Company and as
established by the Board of Directors and performing all duties as
President of the Company including: management of the day to day
operational affairs of the Company, scheduling of work, obtaining
additional projects, approval of all invoices, billing, collections,
preparing budgets and overall responsibility for meeting Income
Statement and Balance Sheet budgets as adopted by the Board of
Directors.
2. PERFORMANCE. Employee agrees to devote reasonable time and effort
necessary to perform the duties described in Section 1 above in a
manner reasonably satisfactory to the Company and to perform such other
reasonable duties as are assigned to him from time to time by the Board
of Directors of the Company.
3. TERM. The term of this Agreement shall be five (5) years from the
effective date hereof unless the Agreement is terminated earlier as
provided in Section 7 below. After the five (5) year term, this
Agreement shall automatically renew for periods of one year, unless
earlier terminated in accordance with the provisions of Section 7 below
or unless either party gives written notice, at least thirty days (30)
prior to the automatic renewal date, of their intention not to renew
this Agreement.
4. COMPENSATION.
In consideration for the services to be rendered by Employee in his capacity
hereunder, Employee shall be compensated as follows:
a. An annual salary (before deduction and withholding of any
taxes, social security or other necessary deductions) of:
o Year 1 - One Hundred Thousand Dollars ($100,000)
o Year 2 - One Hundred Twenty Five Thousand Dollars ($125,000) *
o Year 3 - One Hundred Fifty Thousand Dollars ($150,000) *
o Year 4 - One Hundred Sixty Five Thousand Dollars ($165,000) *
o Year 5 - One Hundred Eighty One Thousand Five Hundred Dollars ($181,500) *
*Annual salary in years two through year five is the lessor
of: the above annual salary or (ii) five and one half percent
(5.5%) of gross annual revenue, determined on an accrual basis
as reflected on the Company's financial statements as prepared
from time to time in accordance with generally accepted
accounting principles.
Employee's annual salary increases shall be effective on the
first full pay period in July of each year. Employee's salary
shall be payable in equal installments based on the Company's
normal pay periods.
b. Employee shall be paid a management bonus defined as follows:
Bonuses during the first three years of this Agreement shall
be based on a percentage of net income and paid monthly to
Employee within 15 days after month end. The bonus percentage
of annual adjusted net income (as reflected on the Company's
financial statements as prepared from time to time) is as
follows: 10% of adjusted net income less than or equal to
$1,000,000, and 5% of adjusted net income greater than
$1,000,000. The annual period for bonus purposes shall end on
June 30th of each year. Adjusted net income is based on
collections, and shall include payments made to parents or
affiliates that are based upon documented goods and services
provided to the Company, but shall be determined without
deduction for any undocumented payments for general management
fees.
c. Employee's annual salary may be adjusted by mutual consent of
the parties at any time during the term of this Agreement or
any subsequent extension hereof. In addition, the Company will
provide the Employee with other employment benefits as per
Section 5 below.
d. OPEC CORP., the owner of the Company (hereafter called OPEC),
agrees to sub-contract all existing and future engineering and
drafting projects to the Company as long as the Company
remains a wholly owned subsidiary of OPEC and if OPEC's
customers allow the use of subcontractors or the use of the
Company. OPEC agrees to accept and the Company agrees to
invoice OPEC at an amount equal to 85% of the amount OPEC
invoices its customers. Any and all invoice adjustments to
OPEC customers will require a related adjustment in the
corresponding Company invoice to OPEC.
e. The Company's portion for administrative, accounting and
payroll support services provided by OPEC (based on actual
expenses) are to have a maximum dollar limit of the greater of
$3,000 per month or 3% of monthly gross revenues.
5. EMPLOYEE BENEFITS. The Company will provide certain group benefits to
all full time executive employees and agrees that Employee will be
covered by any such plans adopted by OPEC while he is a full time
employee if the Company and Employee hereby agrees to submit to any
medical or other examination and to execute and deliver any application
or other instrument in writing, reasonably necessary to effectuate such
plans and benefits. The Company will provide employee life insurance in
the amount of one hundred fifty thousand dollars ($150,000), no later
than August 15, 2001. The Company will pay up to two hundred dollars
($200) per month for life insurance coverage. If life insurance
coverage can not be obtained for two hundred dollars ($200) or less per
month, the Company will pay the Employee an additional two hundred
dollars ($200) per month.
6. EXPENSES. The Company will reimburse Employee for all reasonable and
necessary business expenses, which are approved in advance by the
Company in writing.
7. TERMINATION. Employment under this Agreement may be terminated as
follows:
a. Death/Expiration of this Agreement without renewal. By
Employee's death or upon the expiration of this Agreement. In
the event of termination under Section 7(a), the Company shall
be obligated to pay Employee his prorated annual salary, a
prorated management bonus and benefits actually due Employee
up to the actual date of death or expiration of the Agreement.
b. Total Disability. For the purpose of this Agreement, the term
"total disability" means Employee's inability, because of
serious physical and/or mental injury, illness or impairment,
certified by a licensed medical doctor in Colorado and by
supporting documents as requested by the Company, to perform
his assigned duties under this Agreement for more than thirty
(30) consecutive days. In the event of termination under
Section 7(b), the Company shall be obligated to pay Employee
his prorated annual salary, a prorated management bonus and
benefits actually due up to the date of disability.
c. By Employee with Notice to Company. At the election of
Employee upon fifteen (15) days written notice to Company. In
the event of termination under Section 7(c), the Company shall
only be obligated to pay Employee his prorated annual salary
up to the actual date of termination and benefits actually due
Employee up to the date of termination. The Company shall not
be required to pay Employee any unpaid management bonus. Upon
receipt of such notice from Employee the Company, at its sole
discretion, may terminate this Agreement immediately and pay
Employee his prorated annual salary, a prorated management
bonus and benefits actually due Employee up to such date of
termination.
d. By the Company Without Cause. Company may terminate without
cause and for any reason Employee's employment with the
Company upon fifteen (15) days written notice to Employee. If
Employee is terminated under this Section 7(d), he shall be
entitled to be paid his prorated annual salary and prorated
management bonus up to the actual date of termination and
benefits actually due Employee up to the actual date of
termination, but not any additional management bonus. In
addition, employee shall be paid by the Company severance pay
of $150,000 over the subsequent twelve months payable in equal
installments based on the Company's normal pay periods.
e. By the Company With Cause. Employee's employment may be
terminated for cause at any time upon five (5) days written
notice to Employee. For the purpose of this Agreement "for
cause" is defined to include, but not be limited to the
following: (i) willful, malicious and grossly negligent acts
by Employee having the effect or causing significant harm to
the business interests of the Company; (ii) the failure of
Employee to devote full time energies and efforts to the
performance of his duties; (iii) the conviction of Employee of
any felony crime; (iv) the violation of any specific written
direction of the Board of Directors relating to services to be
rendered by him or the scope of his duties as contemplated by
this Agreement; (v) the commission of fraudulent or dishonest
act by Employee; (vi) Employees failure, refusal or negligence
to comply with the policies, procedures, standards and
regulations of the Company; (vii) failure of the Company to
meet minimum revenue objectives as reflected on the Company's
financial statements as prepared from time to time as follows:
o Year 1 - Total Revenue of One Million Two Hundred Thousand Dollars
($1,200,000) of which Four Hundred Thousand ($400,000) must be
generated from the Contract between the Company and QWEST dated May 1,
2001.
o Year 2 - Total Revenue of Two Million Dollars ($2,000,000) of which One
Million Dollars ($1,000,000) must be generated from the Contract
between the Company and QWEST dated May 1, 2001.
o Year 3 - Total Revenue of Two Million Seven Hundred Thousand Dollars
($2,700,000) o Year 4 - Total Revenue of Three Million Five Hundred
Thousand Dollars ($3,500,000) o Year 5 - Total Revenue of Four Million
Three Hundred Thousand Dollars ($4,300,000)
(viii) the commission by Employee of any other material breach
of this Agreement, and to the extent that this act is curable,
Employee has not cured it, or initiated a cure, within five
(5) business days following receipt of notice of said material
breach. Any notice to Employee shall specify the facts and
circumstances claimed to provide the basis for such
termination. In the event of termination of this Agreement
under this section, the Company shall only be obligated to pay
Employee his prorated annual salary and prorated management
bonus, and benefits earned or due up to the actual date of
termination.
f. Default. Employee shall have the option to immediately
terminate this Agreement if the Company materially breaches
this Agreement, but only if such breach of this Agreement is
not caused, directly or indirectly, by Employee in his
managerial and fiduciary capacity under this Agreement, and
where the Company is otherwise capable of tendering
performance, and whereby Employee's intentional or
unintentional acts have caused the Company, through lack of
work or excess expenditures, to be unable to meet its
financial obligations under this Agreement. Upon failure of
the Company to meet any of its material obligations due
Employee under this Agreement or there is material breach of
this Agreement by the Company, and to the extent that it is
curable, Employee shall give written notice to the Company and
shall specify the facts and circumstances claimed to be as
breach of this Agreement. The Company shall have five (5)
business days following receipt of such written notice of said
material breach to cure such breach. If said breach is not
cured by the Company within such time period than it shall be
deemed as if the Company has terminated this Agreement and
Employee shall be entitled to severance pay of $150,000 to be
paid over the subsequent twelve month period payable in equal
installments based on the Company's normal pay periods.
8. Agreement Not To Compete.
a. Covenant Not To Compete. The Company and Employee acknowledge
and agree that Employee's services will be of a special and
unusual character which have a unique value to the Company and
OPEC, the loss of which cannot be adequately compensated by
damages in an action at law and, if used in competition with
the Company or OPEC, could cause serious harm to the Company
and OPEC. Further, Employee and the Company also recognize
that an important part of Employee's duties will be to develop
good will for the Company and OPEC through Employee's personal
contact with individual and group subscribers of the Company's
services, participants, agents and other Persons having
business relationships with the Company and OPEC, and that
there is a danger that this good will, a proprietary asset of
the Company and OPEC, may follow Employee if and when his
relationship with the Company is terminated. Accordingly,
Employee agrees that he shall not, during the time period that
he is employed by the Company and for a period of one year
from the date of the termination of such employment for any
reason whatsoever, do any of the following: (i) directly or
indirectly, solicit or otherwise contact any Person who then
receives or has the right to receive or at any prior time
received or had the right to receive from the Company's
engineering services (a "Subscriber") for the purpose of
seeking to obtain any such Subscriber as a subscriber to or
beneficiary of a similar business conducted by any Person
other than the Company; (ii) directly or indirectly employ,
hire or otherwise engage the services of or associate in any
business with any Participant or other Person who is or has
been employed by either the Company or OPEC, or any Affiliate
of the Company or OPEC, unless such Participant or other
Person shall have ceased to be employed by the Company or OPEC
(as the case may be), or the Affiliate of the Company or OPEC,
for at least one year, or (iii) engage, directly or
indirectly, as a proprietor, stockholder, partner, director,
officer, employee, independent contractor or otherwise in the
business of providing services in competition with the Company
in any state in which the Company provides its services on the
date Employee's employment with the Company is terminated for
any reason whatsoever. For purposes of this Section 8.a,
"Person" means an individual, partnership, corporation, trust,
unincorporated organization, government, or agency or
political subdivision of a government and "Affiliate" has the
meaning ascribed to such term in Rule 405 promulgated under
the Securities Act, as such rule is in effect on the date
hereof.
b. Enforceability. The Parties hereto agree that to the extent
that any provision or portion of Section 8.a. of this
Agreement shall be held, found or deemed to be unreasonable,
unlawful or unenforceable by a court of competent
jurisdiction, then any such provision or portion thereof shall
be deemed to be modified to the extent necessary in order that
any such provision or portion thereof shall be legally
enforceable to the fullest extent permitted by applicable law;
and the parties hereto do further agree that any court of
competent jurisdiction shall, and the parties hereto do hereby
expressly authorize, request and empower any court of
competent jurisdiction to, enforce any such provision or
portion thereof or to modify any such provision or portion
thereof in order that any such provision or portion thereof
shall be enforced by such court to the fullest extent
permitted by applicable law.
c. Right to Enjoin. As the violation by Employee of the
provisions of Section 8.a. of this Agreement would cause
irreparable injury to the Company and OPEC, and there is no
adequate remedy at law for such violation, the Company and
OPEC shall have the right, in addition to any other remedies
available at law or in equity, to enjoin Employee in a court
of equity from violating such provisions
9. Proprietary Information. Employee shall treat as information
proprietary to the Company any and all data and/or Proprietary
Information (as defined below) discovered and/or disclosed and shall
not, directly or indirectly, use any such information and/or data for
his own benefit or disclose or fail to use its best efforts to prevent
the disclosure of the same to any other person or entity for any
purpose or reason whatsoever, during the term of this Agreement or at
any time thereafter.
10. Proprietary Information Defined. Proprietary Information includes but
is not limited to unique concepts, products, services,
company/corporate strategy and business development, including plans
relating to this acquisition, expansion, marketing, financials, client
lists and other business information, operating information, policies,
practices and processes, database and networking systems, information
relating to employees, customers, prospective customers and suppliers,
whether such information is documented, contained electronically and/or
contained on any other medium.
11. Reproduction of Proprietary Information. Employee stipulates that he
will not, at any time, make any reproduction, copy, abstract, summary
and/or precis of the whole or of any part of any Proprietary
Information without the prior express written consent of the Company,
except as necessary to perform his duties hereunder, in which case said
reproduction, copy, abstract, summary and/or precis shall remain the
property of the Company.
12. Confidentiality. Employee stipulates that he shall keep any and all
Proprietary Information obtained, during the term of this Agreement or
any time thereafter, in the strictest of confidence and secrecy and
shall not disclose Proprietary Information to third parties and
further, will not use said Proprietary Information in competition with
Employer.
13. Non-Disclosure. Employee stipulates that he shall not, during the term
of this Agreement or any time thereafter, in any way or by any means,
disclose, disseminate and /or distribute any Proprietary Information to
any third party without the prior express written consent of the
Company.
14. Non-Circumvention. Employee stipulates that he shall not, during the
term of this Agreement or any time thereafter, in any way or by any
means implement and /or use any Proprietary Information, circumvent,
usurp an opportunity, take advantage of and/or benefit from, through
the exclusion of the Company, any Proprietary Information obtained.
15. Injunctive Relief. The Employee recognizes and agrees that, a breach of
this Agreement will cause irreparable harm to the Company and no amount
of monetary damages can adequately compensate the Company for the
injury that would be caused by said breach. Accordingly, Employee
hereby stipulates that should the Company have a good faith reason to
believe that Employee is breaching or taking steps to breach any
material provision of this Agreement then the Company shall be entitled
to immediate issuance of an ex-parte temporary restraining order, by a
Court, enjoining the Employee from engaging in the opposed activities.
16. Waiver. A Party's failure to insist on compliance or enforcement of any
provision of this Agreement shall not effect the validity or
enforceability or constitute a waiver of future enforcement of that
provision or any other provision of this Agreement by that Party or any
other party.
17. Law, Jurisdiction and Venue. The Parties hereto stipulate that any
dispute arising out of this Agreement shall be submitted to binding
arbitration in Colorado Springs, Colorado pursuant to the arbitration
rules and regulations, as codified by the American Arbitration
Association.
18. Validity. The invalidity or unenforceability of any provision in this
Agreement shall not in any way effect the validity or enforceability of
any other provision and this Agreement shall be construed in all
respects as if such invalid or unenforceable provision had never been
in this Agreement.
19. Notice. All notices and other communications provided for or permitted
hereunder shall be made by hand delivery, overnight - courier,
certified or registered mail, postage prepaid and return receipt
requested, telex or facsimile transmission.
If to the Company If to Employee
0000 Xxxxxx Xxxx Xxxxxx 0000 Xxxxxxxx Xxxxxx
Xxxxxxxx Xxxxxxx, XX 00000 Xxxxxxxx Xxxxxxx, XX 00000
Fax: 000-000-0000 Fax: 000-000-0000
All such notices shall be deemed to have been duly given:
when delivered, by hand if personally delivered; and the next day,
after being sent by overnight courier; and when received, if by
certified or registered mail; and when received (as electronically
acknowledged), if by facsimile transmission.
20. Amendments. This Agreement may be amended, at any time, only by the
written mutual consent of the Parties hereto, with any such Amendment
to be invalid unless it is both written and signed by both Parties.
21. Legal Fees and Costs. The Parties hereby stipulate and agree that in
the event that a dispute arises between the Parties, relating to this
Agreement, and one or both of the Parties deem it necessary to hire an
attorney to protect its rights and/or resolve said dispute, then the
prevailing Party, in any action, shall be entitled to recover and
collect, from the non-prevailing Party, all reasonable attorney's fees
and costs incurred.
22. Entire Agreement. This Agreement contains the entire agreement and
understanding by and between the Parties and no representations,
promises, agreements and/or understandings, written or oral, relating
to this Agreement by either Party not contained herein shall be of any
force or effect.
23. Nonassignability. In light of the unique personal services to be
performed by the employee hereunder, it is acknowledged and agreed that
any proposed or attempted assignment or transfer by Employee of this
Agreement or any of Employee's duties, responsibilities, obligations,
hereunder, shall be void. The Company may assign this Agreement to any
parent, subsidiary, affiliate, or successor of the Company without the
prior written consent of the Employee.
24. Survivability. Employee hereby acknowledges that the provisions of
Sections 8-15 above shall survive termination of this Agreement.
SIGNATURE PAGE FOLLOWS
IN WITNESS WHEREOF, the Company and Employee have duly executed this Agreement
this ____ day of ________, 2001.
JAE-TECH Engineering , Inc. Employee
---------------------------- ---------------------------
By: Xxxxxx X. Xxxxxxxx Xxxx X. Xxxxxx
Its: CEO
