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EXHIBIT 10.42
THE SLED DOGS COMPANY
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into effective as of
April 1, 1997, by and between Xxxxxxx X. Xxxx (hereinafter referred to as
"Employee") and Sled Dogs Company, a Colorado corporation (hereinafter referred
to as the "Company").
RECITALS
A. The Company is duly organized and operated under the laws of the State
of Colorado and is engaged in the business of the manufacture, marketing and
sale of a snowskate marketed and sold under the trademark "Sled Dogs."
B. Employee is currently employed by the Company and performs the duties
and responsibilities described herein.
C. The Company desires to continue the retention of Employee for the
position and to perform the duties and responsibilities described herein.
D. The parties desire to evidence the existing employment arrangement of
Employee and to enter into certain additional agreements as set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises and covenants of
the parties hereto and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound, agree as follows:
1. Employment. The Company hereby continues the employment of Employee,
and Employee hereby accepts such continued employment from the Company, upon
the terms and conditions set forth in this Agreement. Employee agrees to devote
all time necessary to such employment as the Company shall direct. Such
employment shall be on a full-time basis and Employee shall not engage in any
other activities which materially interfere with Employee's performance of the
duties and responsibilities of Employee's position with the Company under this
Agreement.
2. Term. The employment of the Employee shall continue until December 31,
1997 (the "Term") unless earlier terminated pursuant to paragraph 11 hereof.
Upon the expiration of the Term of Employee's employment hereunder and on each
anniversary of such expiration, the term of employment of Employee shall
automatically renew for successive terms of one year each unless either party
has given the other written notice of nonrenewal as provided in paragraph 11 or
unless earlier terminated pursuant to paragraph 11.
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3. Compensation.
(a) Base Salary. For all services rendered by Employee under this
Agreement, the Company shall pay Employee an annual base salary, determined on
a calendar year basis ("Base Salary"), to be determined from time to time by
the Board of Directors. The initial Base Salary of Employee shall be the amount
set forth on Exhibit A hereto. The Base Salary shall be payable in accordance
with the payroll procedures of the Company then in effect, subject to normal
and customary withholding. The Base Salary may be adjusted from time to time by
the Board of Directors on the basis of the value of Employee's services to the
Company and for unusual absences because of illness or accident or leaves of
absence.
(b) Bonuses. In addition to the Base Salary, Employee shall be entitled to
receive such bonus compensation as may be determined to be payable by the Board
of Directors of the Company from time to time in the exercise of its sole
discretion.
4. Employee's Position and Duties. Employee shall be employed on behalf of
the Company with the title and duties set forth on Exhibit A hereto. Subject to
paragraph 1 hereof, Employee shall devote his full business time and attention
to the business of the Company and to the furtherance of the Company's best
interests. Employee further agrees that he will perform such acts and duties
as the Company may assign to him in the Company's discretion; provided,
however, that notwithstanding anything contained in this Agreement to the
contrary, in no event shall Employee be required to perform any duties which
are unlawful. Employee agrees that he will at all times faithfully,
industriously, and to the best of his ability, experience and talents, perform
all of the duties that may be required of and from him pursuant to the express
and implicit terms hereof, to the reasonable satisfaction of the Company.
5. Working Facilities. The Company shall furnish Employee with a private
office, secretarial assistance, and such other facilities and services as are
considered customary, consistent with his position and adequate for the proper
performance of his duties.
6. Benefits.
(a) General. Employee shall receive all of the customary benefits as
offered to employees of the Company generally from time to time. The cost of
such benefits shall be borne by the Company unless otherwise determined by the
Board of Directors. Employee shall be entitled to receive such additional
benefits not available generally to employees of the Company as may from time
to time be determined by the Board of Directors.
(b) Insurance. The Company shall provide to Employee and dependents of
Employee at the expense of the Company major medical, hospital, surgical and
dental and long-term disability benefits and insurance.
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7. Non-Liability of the Company. All matters of eligibility for coverage
or benefits under any plan or plans of health, hospitalization, life or other
insurance shall be determined in accordance with the provisions of such
insurance policies. The Company shall not be liable to the Employee, his
family, heirs, executors, personal representatives or beneficiaries, for any
payment payable or claimed to be payable under any plan of insurance or benefit
plan.
8. Expenses. In the event that Employee incurs any expenses in the
performance of the duties on behalf of the Company, the Company shall reimburse
Employee for such expenses in accordance with its customary reimbursement
policies and procedures in effect from time to time.
9. Vacations. Employee shall be entitled each calendar year to three weeks
of vacation time, provided that such Employee shall arrange any vacations to
avoid seriously interfering with the business of the Company.
10. Leaves of Absence. The Company may, from time to time, approve leaves
of absence with full or partial payment of salary and/or expenses for other
purposes in the sole and absolute discretion of the Board of Directors.
11. Termination. The employment of Employee hereunder may be terminated as
follows:
(a) Upon expiration of the Term of Employee's employment hereunder and
each anniversary thereof, the term of employment of Employee shall
automatically renew for successive terms of one year each unless either party
has given the other written notice of nonrenewal not fewer than 30 days prior
to any such date.
(b) By the Company without cause, for any reason or no reason, provided
that Employee shall receive notice of such termination and severance payments
equaling six months in the aggregate as provided in paragraph 12 below.
(c) Automatically upon death of Employee; or
(d) Automatically upon disability of Employee (as defined in and
determined under paragraph 11(f) hereof; or
(e) Immediately by the Company for "cause" upon written notice by the
Company to Employee. For purposes of this Agreement, "cause" shall mean:
(i) Failure to Comply with Policies. The willful and continual
failure or refusal by Employee to comply with the policies, standards and
regulations of the Company as established from time to time by the Board of
Directors of the Company, after a written demand for compliance is delivered to
Employee that specifically identifies the manner in which the Company believes
that Employee is not complying, and Employee has failed to
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commence or resume compliance on a continuous basis within seven (7) days of
receiving the demand; or
(ii) Injurious Conduct. Willfully engaging in conduct which is
demonstrably and materially injurious to the financial condition or business
reputation of the Company; or
(iii) Failure to Perform. The willful and continual failure or
refusal by Employee to substantially perform his duties hereunder (other than
any such failure resulting from his disability), after a written demand for
substantial performance is delivered to Employee that specifically identifies
the manner in which the Company believes that Employee has not substantially
performed his duties, and Employee has failed to resume substantial performance
of his duties on a continuous basis within twenty (20) days of receiving such
demand.
(f) Determination of Disability. Employee shall be deemed to be
disabled for purposes of this Agreement on such date as: (i) Employee is
eligible for and receiving disability benefits under any disability insurance
policy; (ii) Employee is eligible for and receiving disability benefits under
the Social Security Act; or (iii) the Company, in the sole and absolute
discretion of the Board of Directors of the Company, determines that Employee is
disabled (for this purpose, the Company may rely on the opinion of one or more
licensed physicians).
12. Obligation of the Company Upon Termination of Employment.
(a) Termination Upon Notice of Nonrenewal or Without Cause by the
Company. If the Company at any time gives a notice of nonrenewal or terminates
the employment of Employee without cause under paragraph 11 hereof, the Company
shall be obligated to continue the Base Salary and benefits of Employee then in
effect for a period of six months or such lesser time as is the difference
between the time period of any notice given to Employee and twelve months (e.g.,
if the Company gives Employee 2 months notice of such termination, the Company
is obligated to continue Employee's Base Salary and benefits for a period of 4
months following termination of employment).
(b) Termination Upon Notice By Employee. Upon termination of
employment by Employee by notice of nonrenewal under paragraph 11(a) or
otherwise, the Company shall be obligated to pay Employee the Base Salary and
benefits then in effect through the effective date of termination (determined on
a prorated annual basis).
(c) Termination Under Death. If employment of Employee is terminated
upon death of Employee under paragraph 11(c) hereof, the Company shall be
obligated to pay to the estate of Employee the unpaid Base Salary up to and
including the date of death.
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(d) Termination Upon Disability. If the employment of Employee is
terminated upon disability of Employee under paragraph 11(d) hereof, the Company
shall be obligated to pay Employee the Base Salary and benefits then in effect
through the date of determination of disability.
(e) Termination for Cause. Upon termination of employment of Employee
under paragraph 11(e) hereof, the Company shall be obligated to pay Employee his
Base Salary and benefits then in effect through the date of termination.
(f) COBRA. Notwithstanding a provision herein to the contrary,
continuation of medical benefits will be offered to Employee by the Company
beyond the date of termination of employment as required by The Consolidated
Omnibus Budget Reconciliation Act of 1986, as amended ("COBRA"). The Company
will continue to contribute funds toward the cost of benefits at the same level
as provided other employees who are currently employed by the Company for the
same benefits through any mandatory continuation of coverage period as required
by COBRA.
13. Restrictive Covenants.
(a) In consideration of the severance payments granted to Employee
under paragraph 12(a) hereof (which were unavailable to Employee prior to the
date hereof), and the benefits granted to Employee pursuant to Section 14
hereof, during the term of his employment by the Company hereunder, Employee
shall not, without the prior written consent of the Company, engage, as a
proprietor, partner, employee, officer or holder of a five percent (5%) or
greater equity interest, in any business or in any activities in competition
with the business of the Company. The foregoing covenant not to compete shall
also apply following termination of Employee's employment by the Company
hereunder until a date twelve (12) months after such termination, insofar as
such activities of Employee may during such period relate to the business of the
Company as of the date of termination of employment. Employee expressly agrees
and acknowledges that the covenant not to compete is reasonable both as to time
and to area and is necessary for the Company's protection because of the nature
and scope of the business of the Company and of Employee's employment with the
Company. Employee also expressly agrees and acknowledges that any breach of the
covenant not to compete contained herein would injure the Company irreparably
and therefore the Company may, in addition to pursuing any and all remedies
provided by law, obtain an injunction against Employee restraining any violation
of the covenant not to compete. The period, the area and the scope of the
restrictions on Employee's activities are divisible so that if any provision of
the restriction is invalid, that provision shall be automatically modified to
the extent necessary to make it valid.
(b) For a period of twelve (12) months after termination of his
employment with the Company for any reason, neither Employee nor any business of
which he is a proprietor, partner, principal officer or significant equity owner
shall employ any person who possesses confidential or proprietary business,
technical or customer information of the
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Company or any of its subsidiaries, and who is presently an employee or becomes
an employee of the Company or any of its subsidiaries while Employee is so
employed, without the written consent of the Company, which shall not be
unreasonably withheld; and during such period Employee will refrain from any
action intended to influence or result in the employment of any such persons by
any business with which Employee is otherwise employed, affiliated or has an
ownership interest.
14. Stock Options. Employee has been granted certain stock options from
the Company, which stock options were scheduled to vest on the date(s) specified
in the agreements granting said options (the "Option Agreements"). The Option
Agreements are hereby modified as follows:
(a) Accelerated Vesting. The rights granted in the Option Agreements
will fully vest on the earlier of (a) six-months from the date of this
Agreement, or (b) the scheduled maturity date.
(b) Exercise Price. The Option Agreements are hereby amended to
provide for an exercise price of twenty-five cents ($0.25) per share.
15. Corporate Property/Confidentiality. Regardless of the circumstances of
the termination of employment, Employee shall not communicate to any person,
firm or corporation any confidential knowledge or trade secrets which he might
from time to time acquire with respect to the business of the Company. Upon
termination of employment, Employee shall not remove any files, documents, or
any other property of the Company relating to the business of the Company from
the Company's place of business.
16. Violations. In the event of the violation or anticipated violation of
this Agreement by Employee, the Company may, in addition to other remedies
available to it, obtain an injunction to prohibit such violation. The dispute
may be judicially determined; or in the alternative, if both parties agree, the
matter may be submitted to arbitration (and if so submitted such arbitration
shall be binding and non-appealable) pursuant to the rules of the American
Arbitration Association, provided that such arbitration shall not restrict the
Company's right to obtain an injunction or continue an injunction previously
obtained. The parties hereto acknowledge and agree that an injunction is a
proper, but not exclusive, remedy available to the Company, and that the harm
from any violation of the covenants set forth herein would be irreparable and
immediate.
17. Relationship of Parties. The relationship between the Company and
Employee is that of an employer and employee.
18. No Vested Interests. Nothing herein contained shall be construed to
give Employee any interest in the tangible or intangible assets of the Company
or any ownership interest or right to receive any ownership interest in the
Company.
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19. Communication to the Company. From the time this Agreement commences
until the termination hereof, Employee shall communicate and channel to the
Company all knowledge regarding business opportunities which could concern or
be in any way beneficial to the business of the Company, whether acquired by
Employee before or during the term of this Agreement; provided, however, that
nothing hereunder shall be construed as requiring such communications where the
information is lawfully protected from disclosure. Any such information
communicated to the Company shall be and remain the property of the Company,
notwithstanding subsequent termination of this Agreement.
20. Notices. Any notices required or permitted to be given under this
Agreement shall be sufficient if in writing and if delivered personally or sent
by registered or certified mail to the residence of Employee as shown on the
books and records of the Company or to the principal office of the Company, as
the case may be.
21. Entire Agreement. This Agreement contains the entire agreement of the
parties with respect to the subject matter hereof and supersedes all prior
agreements.
22. Severability. It is the desire and intent of the parties that the
provisions of this Agreement be enforced to the fullest extent permissible
under the laws and the applicable public policies of the State of Minnesota.
Accordingly, the terms of this Agreement are determined to be severable, and if
any particular portion shall be adjudicated or determined to be invalid or
unenforceable, such determination shall only apply to that portion of the
Agreement and the remaining portion of the Agreement shall nevertheless be
enforceable to the fullest extent permissible under the laws and public
policies applying thereto.
23. Notification of Contract. No waiver of any breach or violation hereof
shall be implied from forbearance or failure by any party to take action
thereon. No waiver or modification of this Agreement or any covenant, condition
or limitation herein contained shall be valid unless in writing and duly
executed by the party to be charged therewith.
24. Choice of Law. It is the intention of the parties hereto that this
Agreement and the performance hereunder and all suits and special proceedings
hereunder should be construed in accordance with, under and pursuant to the
laws of the State of Minnesota, and that any action, special proceeding or
other proceeding that may be brought arising out of, in connection with or by
reason of this Agreement, the laws of the State of Minnesota shall be
applicable and shall govern to the exclusion of the laws of any other forum,
without regard to the jurisdiction in which any action or special proceeding
may be instituted. Further, the parties hereby agree that the venue for any
action brought by either party against the other shall be in the District Court
in and for the City and County of Xxxxxx, or other court of competent
jurisdiction, and any other venue is hereby waived. The prevailing party to any
dispute arising out of this Agreement shall be entitled to recover from the
non-prevailing party all reasonable attorneys' fees and costs connected with
such action.
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25. Inurement. This Agreement shall inure to the benefit of and be binding
upon the Company, its successors and assigns. The rights and benefits of
Employee under this Agreement are personal to him and no such right or benefit
shall be subject to voluntary or involuntary alienation, assignment or
transfer, except as otherwise provided.
IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto
on the date set forth below effective as of the day and year first above
written.
"THE COMPANY"
THE SLED DOGS COMPANY,
a Colorado corporation
By: ______________________________________
Title: _______________________________
Date: ____________________________________
"EMPLOYEE"
_________________________________________
Xxxxxxx X. Xxxx
Date:_____________________________________
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EXHIBIT A
TITLE, DUTIES AND BASE SALARY OF EMPLOYEE
TITLE: Chief Financial Officer; Treasurer; Secretary
DUTIES: Employee shall be principally responsible for, and shall
undertake the duties incident to, the supervision of the
Company's finance, administration, production planning,
purchasing and distribution, subject to the direction and control
of the Company's Chairman of the Board and/or Chief Executive
Officer and to the modification from time to time of such duties
and responsibilities by the Company's Chief Executive Officer
and/or Board of Directors.
BASE SALARY: $75,000 until April 1, 1997, then $84,000
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