EMPLOYMENT AGREEMENT
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This Employment Agreement (the "Agreement") is entered into on December
21, 2005 by and between Xxxx X. Xxxxxxxx (the "Executive") and US Global
Nanospace, Inc., a Delaware corporation (the "Company").
WHEREAS, the Company believes that Executive's service, experience, and
knowledge are valuable to the Company in connection with its business; and
WHEREAS, the Company desires to employ Executive, and Executive desires to
be employed by the Company, as the President and Chief Executive Officer of the
Company and the Chairman of its Board of Directors.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties hereto agree as follows:
1. Employment. The Company hereby employs Executive and Executive accepts
such employment upon the terms and conditions hereinafter set forth.
2. Term of Employment. Subject to the provisions of Section 6, the term of
Executive's employment pursuant to this Agreement shall commence on and as of
the date hereof and shall terminate on December 31, 2006. Subject to the
provisions of Section 6, this Agreement will be automatically renewed for
successive periods of one year after December 31, 2006, unless Executive is
otherwise notified in writing during the Term. In this Agreement the word "Term"
shall, depending on the context used, refer to the initial term or to any
renewal period.
3. Duties; Extent of Service. During Executive's employment under this
Agreement, Executive (i) shall serve as an employee of the Company with the
titles and positions of President, Chief Executive Officer and Chairman of the
Board of Directors, reporting to the Board of Directors of the Company, and
shall have such executive responsibilities as the Board of Directors of the
Company shall from time to time designate, provided that, in all cases Executive
shall be subject to the oversight and supervision of the Board of Directors of
the Company in the performance of his duties, and (ii) shall render all services
reasonably incident to the foregoing. Executive hereby accepts such employment,
agrees to serve the Company in the capacities indicated, and agrees to use
Executive's best efforts in, and shall devote Executive's full working time,
attention, skill and energies to, the advancement of the interests of the
Company and the performance of Executive's duties and responsibilities
hereunder.
4. Salary and Stock Options.
(a) Salary. Effective as of October 1, 2005 and continuing during
Executive's employment under this Agreement, the Company shall pay Executive a
salary at the rate of three hundred ninety-five thousand dollars ($395,000) per
annum (the "Salary"). Such Salary shall be subject to withholding under
applicable law, shall be prorated for partial years and shall be payable in
periodic installments not less frequently than monthly in accordance with the
Company's usual practice for its executive officers as in effect from time to
time. Until the Company enters into a contract (or contracts) for the sale or
licensing of its products or provision of its services, which contract(s) must
have a total value of at least ten million dollars ($10,000,000), the Salary
shall be paid in registered shares of the Company's common stock, $0.01 par
value ("Common Stock"), issued from the US Global Nanospace, Inc. Amended and
Restated 2002 Stock Plan or any other employee equity incentive plan the
securities of which are registered on a Form S-8 registration statement filed
with the Securities and Exchange Commission. Once the Company has received an
executed, legally binding contract(s) having a total value of at least ten
million dollars ($10,000,000) or in the event the Company is sufficiently
capitalized as determined by the Board of Directors, the Company shall pay the
Salary in cash.
(b) Stock Grant and Options. On January 2, 2006 the Company shall
grant to Executive, from the US Global Nanospace, Inc. Amended and Restated 2002
Stock Plan (the "Plan"), a stock bonus under Section 8 of the Plan of one
million (1,000,000) shares of Common Stock. The Company agrees that it shall
increase the number of shares in the Plan or adopt a new employee equity
incentive plan that will include at least four million (4,000,000) shares of
Common Stock, and shall register such shares on a Form S-8 registration
statement filed with the Securities and Exchange Commission, as soon as
commercially practicable after the date of this Agreement. On the date that the
Company increases the number of shares of Common Stock in the Plan or,
alternatively, adopts a new employee equity incentive plan, the Company shall
grant to Executive, from the Plan or from the newly adopted employee equity
incentive plan, an option to purchase 4,000,000 shares of Common Stock. The per
share exercise price will be no less than 85% of the last trading price of the
Common Stock on the date that the grant is made. The option shall have a term of
seven years. The option shall vest as follows:
(i) upon the completion of the MAPSANDS technology and a
government sponsored demonstration completed in any country,
Executive shall be entitled to purchase one million (1,000,000)
shares of Common Stock;
(ii) upon the receipt of a purchase order accepted by the
Company, or the execution by the Company of an agreement, for the
MAPSANDS technology or other products, which purchase order or
agreement has a value to the Company of no less than one million
dollars ($1,000,000), Executive shall be entitled to purchase five
hundred thousand (500,000) shares of Common Stock;
(iii) upon the receipt of a purchase order accepted by the
Company, or the execution by the Company of an agreement, for the
MAPSANDS technology or other products, which purchase order or
agreement has a value to the Company of no less than five million
dollars ($5,000,000), Executive shall be entitled to purchase five
hundred thousand (500,000) shares of Common Stock;
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(iv) upon the receipt of a purchase order accepted by the
Company, or the execution by the Company of an agreement, for the
MAPSANDS technology or other products, which purchase order or
agreement has a value to the Company of no less than ten million
dollars ($10,000,000), Executive shall be entitled to purchase one
million (1,000,000) shares of Common Stock;
(v) if, for two consecutive quarters, the Company shows
positive cash flow in its quarterly filings with the Securities and
Exchange Commission without further dilution of its Common Stock
(with the exception of shares of Common Stock issued from the Plan
or from the newly adopted employee equity incentive plan), Executive
shall be entitled to purchase five hundred thousand (500,000) shares
of Common Stock;
(vi) if, for two consecutive quarters, the Company reports
profitability in its quarterly filings with the Securities and
Exchange Commission, Executive shall be entitled to purchase five
hundred thousand (500,000) shares of Common Stock;
provided, however, that upon the termination of Executive's employment as a
result of the occurrence of a corporate transaction as described in Section 19.1
of the Plan (a "Corporate Transaction"), any portion of the option which is
unvested shall immediately vest. Executive shall be entitled to this benefit,
even if the newly adopted employee equity incentive plan does not include a
comparable provision.
5. Benefits.
(a) Regular Benefits. During Executive's employment under this
Agreement, Executive shall be entitled to participate in any and all medical,
pension, dental and life insurance plans and disability income plans, retirement
arrangements and other employment benefits as in effect from time to time for
executive officers of the Company generally. Such participation shall be subject
to (i) the terms of the applicable plan documents (including, as applicable,
provisions granting discretion to the Board of Directors of the Company or any
administrative or other committee provided for therein or contemplated thereby)
and (ii) generally applicable policies of the Company.
(b) Vacation. During Executive's employment under this Agreement,
Executive shall receive paid vacation annually in accordance with the Company's
practices for executive officers, as in effect from time to time, but in any
event not less than two (2) weeks per calendar year.
(c) Expenses. The Company shall reimburse Executive for all
reasonable business expenses incurred by Executive during Executive's employment
hereunder to the extent in compliance with the Company's business expense
reimbursement policies in effect from time to time and upon presentation by
Executive of such documentation and records as the Company shall from time to
time require.
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(d) Taxation of Payments and Benefits. The Company shall undertake
to make deductions, withholdings and tax reports with respect to payments and
benefits under this Agreement to the extent that it reasonably and in good faith
believes that it is required to make such deductions, withholdings and tax
reports. Payments under this Agreement shall be in amounts net of any such
deductions or withholdings. Nothing in this Agreement shall be construed to
require the Company to make any payments to compensate the Executive for any
adverse tax effect associated with any payments or benefits or for any deduction
or withholding from any payment or benefit.
(e) Exclusivity of Salary and Benefits. The Executive shall not be
entitled to any payments or benefits other than those provided under this
Agreement. Compliance with the provisions of this Section 5 shall in no way
create or be deemed to create any obligation, express or implied, on the part of
the Company or any of its affiliates with respect to the continuation of any
particular benefit or other plan or arrangement maintained by them or their
subsidiaries as of or prior to the date hereof or the creation and maintenance
of any particular benefit or other plan or arrangement at any time after the
date hereof.
6. Termination and Termination Benefits. Notwithstanding the provisions of
Section 2, Executive's employment under this Agreement shall terminate under the
following circumstances set forth in this Section 6.
(a) Termination by the Company for Cause. Executive's employment
under this Agreement may be terminated for Cause without further liability on
the part of the Company other than for accrued but unpaid Salary through the
date of termination effective immediately upon written notice to Executive.
"Cause" shall mean the following:
(i) the commission by Executive of any act of embezzlement,
fraud, larceny or theft on or from the Company or an affiliate of
the Company;
(ii) the commission by Executive of, or indictment of
Executive for a felony or any misdemeanor, which misdemeanor
involves moral turpitude, deceit, dishonesty or fraud;
(iii) failure to perform, or materially poor performance of,
Executive's duties and responsibilities assigned or delegated under
this Agreement, or any material misconduct or violation of the
Company's policies, in either case, which continues for a period of
thirty (30) days after written notice given to Executive; or
(iv) a material breach by Executive of any of the covenants,
terms or provisions of this Agreement or any agreement between the
Company and Executive regarding confidentiality, non-competition or
assignment of inventions.
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(b) Termination by Executive. Executive's employment under this
Agreement may be terminated by Executive by written notice to the Board of
Directors at least sixty (60) days prior to such termination.
(c) Termination by the Company Without Cause. Subject to the payment
of Termination Benefits pursuant to Section 6(d), Executive's employment under
this Agreement may be terminated without Cause by the Company upon written
notice to Executive at least thirty (30) days prior to such termination.
(d) Certain Termination Benefits. Unless otherwise specifically
provided in this Agreement or otherwise required by law, all compensation and
benefits payable to Executive under this Agreement shall terminate on the date
of termination of Executive's employment under this Agreement. Notwithstanding
the foregoing, in the event of termination of Executive's employment with the
Company pursuant to Section 6(c) above or as the result of a Corporate
Transaction, the Company shall pay to Executive the Salary for the remainder of
the Term, payable in the manner set forth in Section 4 (the "Severance
Benefits").
The parties hereto agree that the Severance Benefits are to be in
full satisfaction, compromise and release of any claims arising out of any
termination of the Executive's employment pursuant to Section 6(c) or as the
result of a Corporate Transaction, and such amounts shall be contingent upon the
Executive's delivery of a general release of such claims upon termination of
employment in a form reasonably satisfactory to the Company, it being understood
that no Severance Benefits shall be provided unless and until the Executive
determines to execute and deliver such release.
(e) Death; Disability. Upon the death of the Executive, or upon the
permanent disability (as defined below) of the Executive continuing for a period
in excess of sixty (60) consecutive days, all obligations of the Company under
this Agreement shall immediately terminate other than any obligation of the
Company with respect to earned but unpaid Salary and earned benefits
contemplated hereby to the extent accrued or vested through the date of
termination. As used herein, the terms "permanent disability" or "permanently
disabled" shall mean the inability of the Executive, by reason of injury,
illness or other similar cause, to perform a major part of his duties and
responsibilities in connection with the conduct of the business and affairs of
the Company, as determined reasonably and in good faith by the Company.
(f) Notwithstanding termination of this Agreement as provided in
this Section 6 or any other termination of Executive's employment with the
Company, Executive's obligations under Section 7 hereof shall survive any
termination of Executive's employment with the Company at any time and for any
reason.
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7. Non-Competition, Non-Solicitation; Confidentiality; Proprietary Rights.
(a) Noncompetition. Executive agrees that he shall not, during the
term of this Agreement, and for a period of one (1) year thereafter:
(i) directly or indirectly own, engage in, manage, operate,
join, control, or participate in the ownership, management,
operation, or control of, or be connected as a stockholder, partner,
member, joint venturer, director, officer, employee, consultant,
agent, beneficiary, or otherwise with, any corporation, limited
liability company, partnership, sole proprietorship, association,
business, trust, or other organization, entity or individual which
develops, manufactures or markets products or performs services
which are competitive with or similar to the products or services of
the Company or its subsidiaries in the Territory (defined below);
provided, that Executive may own, directly or indirectly, securities
of any entity traded on any national securities exchange or listed
on the National Association of Securities Dealers Automated
Quotation System if Executive does not, directly or indirectly, own
1% or more of any class of equity securities, or securities
convertible into or exercisable or exchangeable for 1% or more of
any class of equity securities, of such entity;
(ii) call upon, solicit, direct, take away, provide products
or services to, or attempt to call upon, solicit, direct, take away
or provide products or services to, or accept any orders of business
from any customers or clients of the Company for products or
services which are competitive with or similar to the products or
services of the Company or its subsidiaries in the Territory;
(iii) solicit any employee of the Company to terminate such
employee's employment with the Company, or agree to hire any such
employee or former employee of the Company (unless at least 12
months have passed since the termination of such employee's
employment with the Company); or
(iv) directly or indirectly request or advise any present or
future supplier, service provider or financial resource of the
Company to withdraw, curtail or cancel the furnishing of such
service or resource to the Company.
As used herein, "Territory" means the United States, Saudi Arabia or
any member nations of the Gulf Cooperation Council.
(b) Confidential Information. As used in this Agreement, the term
"Confidential Information" shall mean information belonging to the Company (for
purposes of this Section 7 including all predecessors of the Company) of value
to the Company or with respect to which Company has right in the course of
conducting its business and the disclosure of which could result in a
competitive or other disadvantage to the Company. Confidential Information
includes information, whether or not patentable or copyrightable, in written,
oral, electronic or other tangible or intangible forms, stored in any medium,
including, by way of example and without limitation, trade secrets, ideas,
concepts, designs, configurations, specifications, drawings, blueprints,
diagrams, models, prototypes, samples, flow charts processes, techniques,
formulas, software, improvements, inventions, domain names, data, know-how,
discoveries, copyrightable materials, marketing plans and strategies, sales and
financial reports and forecasts, customer lists, studies, reports, records,
books, contracts, instruments, surveys, computer disks, diskettes, tapes,
computer programs and business plans, prospects and opportunities (such as
possible acquisitions or dispositions of businesses or facilities) which have
been discussed or considered by the management of the Company. Confidential
Information includes information developed by Executive in the course of
Executive's employment by the Company, as well as other information to which
Executive may have access in connection with Executive's employment.
Confidential Information also includes the confidential information of others
with which the Company has a business relationship. Notwithstanding the
foregoing, Confidential Information does not include information in the public
domain, unless due to breach of Executive's duties under Section 7(c).
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(c) Confidentiality. In the course of performing services hereunder
on behalf of the Company and its affiliates, Executive has had and from time to
time will have access to Confidential Information. Executive agrees (i) to hold
the Confidential Information in strict confidence, (ii) not to disclose the
Confidential Information to any person (other than in the regular business of
the Company or its affiliates), and (iii) not to use, directly or indirectly,
any of the Confidential Information for any purpose other than on behalf of the
Company and its affiliates. All documents, records, data, apparatus, equipment
and other physical property, whether or not pertaining to Confidential
Information, that are furnished to Executive by the Company or are produced by
Executive in connection with Executive's employment will be and remain the sole
property of the Company. Upon the termination of Executive's employment with the
Company for any reason and as and when otherwise requested by the Company, all
Confidential Information (including, without limitation, all data, memoranda,
customer lists, notes, programs and other papers and items, and reproductions
thereof relating to the foregoing matters) in Executive's possession or control,
shall be immediately returned to the Company.
(d) Third Party Agreements and Rights. Executive hereby confirms
that Executive is not bound by the terms of any agreement with any previous
employer or other party that restricts in any way Executive's use or disclosure
of information or Executive's engagement in any business. Executive represents
to the Company that Executive's execution of this Agreement, Executive's
employment with the Company and the performance of Executive's proposed duties
for the Company will not violate any obligations Executive may have to any such
previous employer or other party. In Executive's work for the Company, Executive
will not disclose or make use of any information in violation of any agreements
with or rights of any such previous employer or other party, and Executive will
not bring to the premises of the Company any copies or other tangible
embodiments of non-public information belonging to or obtained from any such
previous employment or other party.
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(e) Litigation and Regulatory Cooperation. During and after
Executive's employment, Executive shall cooperate fully with the Company in the
defense or prosecution of any claims or actions now in existence or which may be
brought in the future against or on behalf of the Company that relate to events
or occurrences that transpired while Executive was employed by the Company.
Executive's full cooperation in connection with such claims or actions shall
include, but not be limited to, being available to meet with counsel to prepare
for discovery or trial and to act as a witness on behalf of the Company at
mutually convenient times. During and after Executive's employment, Executive
also shall cooperate fully with the Company in connection with any investigation
or review of any federal, state or local regulatory authority as any such
investigation or review relates to events or occurrences that transpired while
Executive was employed by the Company. The Company shall reimburse Executive for
any reasonable out-of-pocket expenses incurred in connection with Executive's
performance of obligations pursuant to this Section 7(e).
(f) Inventions. Executive recognizes that the Company and its
affiliates possess a proprietary interest in all of the Confidential Information
and have the exclusive right and privilege to use, protect by copyright, patent
or trademark, or otherwise exploit the processes, ideas and concepts described
therein to the exclusion of Executive, except as otherwise agreed between the
Company and Executive in writing. Executive expressly agrees that any products,
inventions, discoveries or improvements made by Executive in the course of
Executive's employment, including any of the foregoing which is based on or
arises out of the Confidential Information, shall be the property of and inure
to the exclusive benefit of the Company. Executive further agrees that any and
all products, inventions, discoveries or improvements developed by Executive
(whether or not able to be protected by copyright, patent or trademark) during
the course of his employment, or involving the use of the time, materials or
other resources of the Company or any of its affiliates, shall be promptly
disclosed to the Company and shall become the exclusive property of the Company,
and Executive shall execute and deliver any and all documents necessary or
appropriate to implement the foregoing.
(g) Business Opportunities. Executive agrees, while he is employed
by the Company, to offer or otherwise make known or available to it, as directed
by the Board of Directors of the Company and without additional compensation or
consideration, any business prospects, contracts or other business opportunities
that Executive may discover, find, develop or otherwise have available to
Executive in the Company's general industry and further agrees that any such
prospects, contacts or other business opportunities shall be the property of the
Company.
(h) Acknowledgment. Executive acknowledges that the provisions of
this Section 7 are an integral part of Executive's employment arrangements with
the Company.
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8. Parties in Interest; Certain Remedies. It is specifically understood
and agreed that this Agreement is intended to confer a benefit, directly or
indirectly, on the Company and its direct and indirect subsidiaries and
affiliates, and that any breach of the provisions of this Agreement by the
Executive or any of the Executive's affiliates will result in irreparable injury
to the Company and its subsidiaries and affiliates, that the remedy at law alone
will be an inadequate remedy for such breach. Accordingly, the Executive agrees
that if the Executive breaches, or proposes to breach, any portion of this
Agreement, the Company or its subsidiaries and affiliates shall be entitled, in
addition to any other remedy it may have, to enforce the specific performance of
this Agreement by the Executive through both temporary and permanent injunctive
relief without the necessity of posting a bond or proving actual damages, but
without limitation of their right to damages and any and all other remedies
available to them, it being understood that injunctive relief is in addition to,
and not in lieu of, such other remedies.
9. Integration. This Agreement constitutes the entire agreement between
the parties with respect to the subject matter hereof and supersedes all prior
agreements between the parties with respect to any related subject matter,
including that certain letter agreement dated August 3, 2005, outlining the
terms of Executive's employment (the "Letter Agreement"), provided, however,
that Executive will continue to receive the Shares (as defined in the Letter
Agreement), in accordance with the terms as set forth in the Letter Agreement.
10. Assignment; Successors and Assigns, etc. Neither the Company nor the
Executive may make any assignment of this Agreement or any interest herein
without the prior written consent of the other party; provided that the Company
may assign its rights under this Agreement without the consent of the Executive
in the event that the Company shall effect a reorganization, consolidate with or
merge into any other corporation, partnership, organization or other entity, or
transfer all or substantially all of its properties or assets to any other
corporation, partnership, organization or other entity. This Agreement shall
inure to the benefit of and be binding upon the Company and the Executive, their
respective successors, executors, administrators, heirs and permitted assigns.
11. Enforceability. If any portion or provision of this Agreement
(including, without limitation, any portion or provision of any section of this
Agreement) shall to any extent be declared illegal or unenforceable by a court
of competent jurisdiction, then the remainder of this Agreement, or the
application of such portion or provision in circumstances other than those as to
which it is so declared illegal or unenforceable, shall not be affected thereby,
and each portion and provision of this Agreement shall be valid and enforceable
to the fullest extent permitted by law.
12. Waiver. No waiver of any provision hereof shall be effective unless
made in writing and signed by the waiving parry. The failure of any party to
require the performance of any term or obligation of this Agreement, or the
waiver by any party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.
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13. Notices. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and delivered
in person or sent by a nationally recognized overnight courier service or by
registered or certified mail, postage prepaid, return receipt requested, to the
Executive at the last address the Executive has filed in writing with the
Company or, in the case of the Company, at 0000 Xxxx Xxxxxx Xxxx, Xxxxxxxxx,
Xxxxx 00000.
14. Amendment. This Agreement may be amended or modified only by a written
instrument signed by the Executive and by a representative of the Company duly
authorized by the Board of Directors.
15. Governing Law. This contract shall be construed under and be governed
in all respects by the laws of the State of Texas, without giving effect to the
conflict of laws principles thereof.
16. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be taken to be
an original and all of which taken together shall constitute one and the same
document.
17. Certain Definitions. For purposes of this Agreement, the term "person"
means an individual, corporation, limited liability company, partnership,
entity, association, trust or any unincorporated organization; a "subsidiary"
means any corporation more than 50 percent of whose outstanding voting
securities, or any limited liability company, partnership, joint venture or
other entity more than 50 percent of whose total equity interest, is directly or
indirectly owned by such person; and an "affiliate" of a person shall mean, with
respect to a person or entity, any person or entity which directly or indirectly
controls, is controlled by, or is under common control with such person or
entity.
18. Attorneys' Fees and Costs. If any action at law or in equity is
necessary to enforce or interpret any of the rights or obligations under this
Agreement, the prevailing party shall be entitled to reasonable attorneys' fees,
costs, and disbursements in addition to any other relief to which the prevailing
party may be entitled.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
COMPANY:
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US GLOBAL NANOSPACE, INC.
By: /s/ Xxxxx Xxxxxx
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Name: Xxxxx Xxxxxx
Title: Chief Financial Officer
EXECUTIVE:
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/s/ Xxxx X. Xxxxxxxx
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Xxxx X. Xxxxxxxx
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