EXECUTIVE EMPLOYMENT AGREEMENT
This EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement") is made and entered
into as of March 27, 1998, by and between XXXXXX XXXXXXXXXX ("Executive") and
XXXXXX XXXXX INCORPORATED, a Nevada corporation ("Xxxxxx Xxxxx"), based on the
following:
Premises
Executive and LarsonoDavis are parties to a Letter Agreement dated November
14, 1997 (the "Letter Agreement"), pursuant to which Executive is serving as the
President and Chief Executive Officer of LarsonoDavis and as a member of its
board of directors. Executive and LarsonoDavis wish to enter into this
definitive Executive Employment Agreement as contemplated by the Letter
Agreement and, in connection therewith, to amend certain terms of the Letter
Agreement.
Agreement
NOW, THEREFORE, based on the foregoing premises, which are incorporated
herein by this reference, and for and in consideration of the mutual covenants
and agreements hereinafter set forth and the mutual benefit to the parties to be
derived herefrom, it is hereby agreed as follows:
1. Employment and Term.
(a) LarsonoDavis hereby employs Executive and Executive hereby
accepts employment upon the terms and conditions set forth herein. The
initial term of Executive's employment shall begin on November 17, 1997,
and continue through December 31, 2000. After December 31, 1999, this
Agreement shall be automatically renewed so that it always has an unexpired
term of one year, unless action is taken by one of the parties to terminate
this Agreement in accordance with the other provisions of this Agreement.
The initial term, plus the automatic extension, is hereinafter referred to
as the "Employment Period."
(b) During the Employment Period, Executive will serve as
LarsonoDavis' president, chief executive officer, and as a member of the
board of directors of LarsonoDavis. Executive also agrees to serve in such
positions with each of LarsonoDavis' subsidiaries and such other or further
offices or positions of substantially consistent rank and authority as
shall, from time to time, be determined by LarsonoDavis' board of
directors. Executive agrees to perform the duties appropriate for the
chief executive officer of LarsonoDavis as may be assigned to him from time
to time by the board of directors and as described in the bylaws of
LarsonoDavis. Executive shall serve at the pleasure of the board of
directors, subject to the terms of this Agreement.
2. Performance of Services.
(a) During the Employment Period, Executive agrees to perform
faithfully the duties assigned to him by the board of directors to the best
of his ability, to devote his full and undivided business time, attention,
and services to the business of LarsonoDavis and not to engage in any other
substantial business activities other than at the direction or with the
approval of the board of directors of LarsonoDavis; provided, however, that
nothing herein shall restrict Executive from conducting incidental personal
business that does not conflict with his obligations under the terms of
this Agreement.
(b) All duties hereunder shall be rendered in Utah County, Utah, and,
on a temporary basis, at such other places as the interests, needs,
business, and opportunities of LarsonoDavis shall require; provided,
however, that after his move to the Utah County area, Executive shall not
be required to relocate his residence without the mutual consent of
LarsonoDavis and Executive.
(c) Executive shall observe and comply with the commercially
reasonable rules and regulations of LarsonoDavis respecting its business
and shall carry out and perform such commercially reasonable orders,
directions, and policies of LarsonoDavis as they may be from time to time
communicated to Executive either orally or in writing. Executive shall
further observe and comply with all applicable rules, regulations, and laws
governing the business of LarsonoDavis known to Executive.
3. Exclusivity of Services and Nondisclosure of Confidential Information.
(a) Executive agrees that for a period ending on the first
anniversary of the termination of the Employment Period:
(i) he will not engage in any activity competitive with the
business of LarsonoDavis or any of its affiliates (the "LarsonoDavis
Group"), directly or indirectly, in the market defined in subsection
3(c), whether as employer, proprietary owner, partner, stockholder
(other than the holder of less than five percent (5%) of the stock of
an entity, the securities of which are traded on a national securities
exchange or in the over-the-counter market), director, officer,
employee, consultant, or agent;
(ii) he will not solicit, in competition with the LarsonoDavis
Group, any person who is a customer of the business conducted by the
LarsonoDavis Group at the date hereof or a customer of the business
conducted by the LarsonoDavis Group at any time during the
Employment Period; and
(iii) he will not induce or attempt to persuade any employee
of the LarsonoDavis Group to terminate his or her employment
relationship in order to enter into employment with any party in
competition with the LarsonoDavis Group.
(b) Executive further agrees that he will not, at any time during the
Employment Period or at any time after the termination of this Agreement,
irrespective of the time, manner, or cause of termination, use, disclose,
copy, or assist any other person or firm in the use, disclosure, or copying
of any trade secrets or other confidential information of the LarsonoDavis
Group, except to the extent authorized in writing by LarsonoDavis. Upon
termination of his employment hereunder, Executive will surrender to
LarsonoDavis all records and other documents obtained by him or entrusted
to him during the course of his employment by LarsonoDavis (together with
all copies thereof); provided, however, that Executive may retain copies of
such documents as are necessary for Executive's personal records for income
tax purposes. For purposes of this section 3, proprietary information
about the business of the LarsonoDavis Group shall be treated as
confidential until it has been published or is generally or publicly known
outside the LarsonoDavis Group or until it has been recognized as standard
practice outside the LarsonoDavis Group. The provisions of this paragraph
3(b) shall remain in effect for a period of three (3) years subsequent to
the termination of the Employment Period.
(c) The following provisions shall apply to the covenants of
Executive contained in this section 3:
(i) The covenants contained in clauses (i) and (ii) of
subsection 3(a) shall apply to those markets in which the LarsonoDavis
Group is doing business at the termination of the Employment Period
and those markets in which the LarsonoDavis Group has publicly or
internally issued written plans to enter prior to the termination of
the Employment Period.
(ii) Executive agrees that a breach or threatened breach on his
part of any covenant contained in this section 3 will cause such
damage to LarsonoDavis as will be irreparable. Therefore, without
limiting the right of LarsonoDavis to pursue all other legal and
equitable remedies available for violation by Executive of the
covenants contained in this section 3, it is expressly agreed that
remedies other than injunctive relief cannot fully compensate the
LarsonoDavis Group for such a violation and that LarsonoDavis and the
LarsonoDavis Group shall be entitled to injunctive relief to prevent
any such violation or continuing violation thereof.
(iii) It is the intent and understanding of each party hereto
that if, in any action before any court or agency legally empowered to
enforce the covenants contained in this section 3, any term,
restriction, covenant, or promise contained therein is found to be
unreasonable and for that reason unenforceable, then such term,
restriction, covenant, or promise shall be deemed modified to the
extent necessary to make it enforceable by such court or agency.
4. Business Ideas.
(a) Executive acknowledges that LarsonoDavis will own all rights in
all "Business Ideas" (as hereinafter defined) which are originated or
developed by Executive, either alone or with employees or consultants of
LarsonoDavis, during the Employment Period.
(b) Executive agrees that, during the Employment Period, he will:
(i) assign to LarsonoDavis all Business Ideas and promptly
execute all documents which LarsonoDavis may reasonably require to
protect its patent, copyright, and other rights to such Business Ideas
throughout the world; and
(ii) promptly disclose to LarsonoDavis all information concerning
all material Business Ideas originated by Executive or any employee of
LarsonoDavis, which come to his attention and which concern the
business of LarsonoDavis.
(c) For purposes of this section 4, "Business Ideas" shall mean all
ideas, whether or not patentable, which are originated or developed by
Executive in connection with his employment by LarsonoDavis and which
relate to the business of LarsonoDavis and/or the LarsonoDavis Group.
5. Compensation and Benefits. For all services rendered by Executive
pursuant to this Agreement, LarsonoDavis shall compensate Executive as follows:
(a) As annual compensation for Executive's services hereunder, in
accordance with its normal payroll practices, LarsonoDavis agrees to pay
Executive during the Employment Period a base salary of $250,000 per annum.
(b) Beginning January 1, 1998, LarsonoDavis shall provide to
Executive an annual bonus of up to 50% of Executive's base salary based on
commercially reasonable performance standards mutually agreed to by
Executive and the board of directors of LarsonoDavis; provided that, the
bonus for the initial calendar year of January 1, to December 31, 1998,
shall be fixed at $100,000, payable in quarterly installments of $25,000
each on March 31, June 30, September 30, and December 31, 1998.
Thereafter, performance targets shall be established at least 30 days prior
to the beginning of the calendar year for which they are applicable.
(c) The grant of an option to acquire up to 1,000,000 shares of
common stock of LarsonoDavis, such option to have an exercise price of
$3.60 to $6.50 per share as set forth below. Such option shall be granted
in place of the previous option provided for under the terms of the Letter
Agreement and such previous option shall be of no further force or effect.
The right to exercise the option granted under the terms of this Agreement
shall immediately vest with respect to 250,000 shares of common stock,
which shares shall have an exercise price of $3.60 per share. The right to
exercise such option will vest with regard to an additional 250,000 shares
on each of December 31, 1998, 1999, and 2000; provided that, Executive is
still an employee of LarsonoDavis as of the vesting date. Of the shares to
vest in the future, 83,333 shares that vest on December 31, 1998, 1999, and
2000 shall have an exercise price of $3.60 per share. The remainder of
such shares shall have an exercise price of $4.50 per share for the 166,667
shares vesting December 31, 1998, $5.50 per share for the 166,667 shares
vesting December 31, 1999, and $6.50 per share for the 166,667 options
vesting December 31, 2000. The option shall be subject to such additional
terms and conditions as are set forth in Exhibit "A" attached hereto and
incorporated herein by this reference. All shares of common stock issuable
under the option shall be covered by an effective registration statement on
Form S-8 kept current by LarsonoDavis until December 31, 2005, or such
other date as the option may terminate.
(d) Reimbursement of Executive's reasonable relocation expenses as
set forth in Exhibit "B" attached hereto and incorporated herein by this
reference.
(e) LarsonoDavis shall provide to Executive, at the principal
executive offices of LarsonoDavis, suitable executive offices and
facilities appropriate for Executive's position and suitable for the
performance of Executive's responsibilities.
(f) Executive shall be entitled to vacation and sick leave in
accordance with the general policy of the LarsonoDavis Group for executive
level employees. Vacations shall be taken by Executive at a time and with
starting and ending dates mutually convenient to LarsonoDavis and
Executive. Vacations or portions of vacations not used in one employment
year shall carry over to the succeeding employment year, but shall
thereafter expire if not used within such succeeding year.
(g) LarsonoDavis shall reimburse Executive for all proper expenses
incurred by him on behalf of the Company in the performance of his duties
hereunder in accordance with the policies and procedures established by
LarsonoDavis.
(h) Subject to the insurability of Executive, LarsonoDavis shall
provide Executive with health, medical, and disability insurance policies
on the same terms as offered to other executive level employees of
LarsonoDavis. LarsonoDavis shall additionally provide to Executive
incentive, retirement, pension, profit sharing, stock option, or other
employee benefit plans which are consistent with and similar to such plans
provided by the LarsonoDavis Group to its executive level employees
generally. Executive shall also have the right to participate in any other
employee benefit programs provided by the LarsonoDavis Group.
(i) LarsonoDavis shall assume and pay reasonable dues of Executive in
local, state, and national societies and associations, and in such other
clubs and organizations, as shall be approved and authorized by the board
of directors of LarsonoDavis.
(j) LarsonoDavis shall withhold from Executive's compensation
hereunder all proper federal and state payroll and income taxes on
compensation paid to Executive and shall provide an accounting to Executive
for such amounts withheld.
6. Nomination to Board of Directors. Executive shall be appointed to
serve on the board of directors of LarsonoDavis until the next annual meeting of
shareholders. LarsonoDavis shall include Executive as a nominee of the Company
to be presented to the shareholders for election to a position on the board of
directors at the next annual meeting of shareholders and shall recommend his
approval by the shareholders.
7. Termination of Agreement.
(a) Termination by LarsonoDavis for Cause. LarsonoDavis shall have
the right, without further obligation to Executive other than for
compensation previously accrued, to terminate this Agreement for cause
("Cause") by showing that (i) Executive has materially breached the terms
hereof; (ii) Executive, in the reasonable determination of the board of
directors of LarsonoDavis, has been grossly negligent or engaged in
material willful or gross misconduct in the performance of his duties; or
(iii) Executive has committed or been convicted of fraud, embezzlement,
theft, or dishonesty or other criminal conduct against LarsonoDavis.
(b) Termination Upon Death or Disability of Executive. This
Agreement shall terminate immediately upon Executive's death, subject to
the payment of Executive's base salary for a 90 day period after death.
This Agreement shall also terminate on the continued disability of
Executive for a consecutive period of 90 days. For purposes of this
paragraph "disability" shall be defined as the inability of Executive to
substantially perform his duties as president, chief executive officer, and
a member of the board of directors of LarsonoDavis.
(c) Termination Upon Change of Control. Notwithstanding any
provision of this Agreement to the contrary, Executive may terminate this
Agreement by providing written notice of such termination to LarsonoDavis
within sixty days (60) days of the occurrence of any of the following
events:
(i) The sale, lease, exchange or other transfer in one
transaction or a series of transactions of all or substantially all of
the assets of LarsonoDavis to a single purchaser that is not a wholly
owned subsidiary of LarsonoDavis or to a group of associated
purchasers;
(ii) The sale, lease, exchange, or other disposition to a single
person or group of persons under common control in one transaction or
a series of related transactions resulting in such person or persons
owning, directly or indirectly, greater than twenty-five percent (25%)
of the combined voting power of the outstanding shares of
LarsonoDavis' common stock;
(iii) As a result of a merger, consolidation, sale of all or
substantially all of the assets of LarsonoDavis, a contested election,
or any combination of the foregoing, the persons who were directors of
LarsonoDavis immediately prior thereto shall cease to constitute a
majority of the board of directors of LarsonoDavis or any successor to
LarsonoDavis;
(iv) The decision by LarsonoDavis to terminate its business and
liquidate its assets;
(v) The merger or consolidation of LarsonoDavis in a transaction
in which the shareholders of LarsonoDavis immediately prior to such
merger or consolidation receive less than fifty percent (50%)
of the outstanding voting securities of the new or continuing
corporation; or
(vi) A person (within the meaning of Section 3(a)(9) or Section
13(d)(3), as in effect on the date hereof, of the Securities Exchange
Act of 1934 (the "Exchange Act")) shall become the beneficial owner
(within the meaning of rule 13d-3 of the Exchange Act as in effect on
the date hereof) of fifty percent (50%) or more of the outstanding
voting securities of LarsonoDavis.
If, as a result of one of the foregoing events, LarsonoDavis is not
the surviving entity, the provisions of this Agreement shall inure to the
benefit of and be binding upon the surviving or resulting entity. If as a
result of the merger, consolidation, transfer of assets, or other event
listed above, the duties of Executive are increased, then the compensation
of Executive provided for by this Agreement shall be reasonably adjusted
upward to compensate for the additional duties and responsibilities
assumed.
(d) Termination by Executive for Cause. Executive shall have the
right to terminate this Agreement in the event of (i) LarsonoDavis'
intentional breach of any covenant or term of this Agreement, but only if
LarsonoDavis fails to cure such breach within twenty (20) days following
the receipt of notice by Executive setting forth the conditions giving rise
to such breach; or (ii) the exercise of Executive's rights under subsection
7(c).
(e) Termination Payments.
(i) Termination by Executive for Cause. In the event that
Executive terminates this Agreement for Cause, LarsonoDavis shall:
(1) Pay to Executive all amounts accrued through the date
of termination, any unreimbursed expenses incurred pursuant to
this Agreement, and any other benefits specifically provided to
Executive under any benefit plan.
(2) Pay to Executive an amount equal to the greater of (i)
the amount of salary that would otherwise accrue to Executive
during the remaining Employment Period, or (ii) the amount of
Executive's base salary for a one-year period.
(3) If Executive terminates this Agreement for Cause on the
basis set forth in subsection 7(d)(ii) of this Agreement, all of
the options to acquire shares that are not then vested shall
immediately vest and be exercisable. Such options shall have the
exercise price determined under the provisions of subsection
5(c).
(iii) Termination by LarsonoDavis for Cause or Voluntary
Termination by Executive. If Executive terminates this Agreement for
any reason other than in accordance with the provisions of subsection
7(e), or if LarsonoDavis terminates this Agreement for Cause in
accordance with subsection 7(a), LarsonoDavis shall deliver to
Executive, within ten (10) days following the effective date of such
termination, all amounts accrued through the date of termination, any
unreimbursed expenses incurred pursuant to this Agreement, and any
other benefits specifically provided to Executive under any benefit
plan. LarsonoDavis shall have no further obligation to Executive.
(f) Exit Interview. To insure a clear understanding of this
Agreement, including but not limited to the protection of the business
interests of LarsonoDavis, Executive agrees, upon termination of this
Agreement for any reason or the expiration of the Employment Period,
at no additional expense to Executive, to engage in an exit interview with
LarsonoDavis at a time and place designated by LarsonoDavis.
8. Indemnification. LarsonoDavis shall indemnify Executive and hold
Executive harmless from liability for acts or decisions made by Executive while
performing services for LarsonoDavis to the greatest extent permitted by
applicable law. LarsonoDavis shall use its best efforts to obtain coverage for
Executive under any insurance policy now in force or hereafter obtained during
the term of this Agreement insuring officers and directors of LarsonoDavis
against such liability. Executive agrees to indemnify and to hold LarsonoDavis
harmless from any and all damages, losses, claims, liabilities, costs, or
expenses arising from Executive's acts or omissions in violation of his duties
under this Agreement which constitute fraud, gross negligence, or willful and
knowing violations of the terms of this Agreement.
9. Notice. Any notice or request required or permitted to be given
hereunder shall be sufficient if in writing and delivered personally, sent by
facsimile transmission, or sent by registered mail, return receipt requested, to
the addresses hereinabove set forth or to any other address designated by either
of the parties hereto by notice similarly given. Such notice shall be deemed to
have been given upon such personal delivery, facsimile transmission, or mailing,
as the case may be, to the addresses set forth below:
If to Executive, to: Xxxxxx Xxxxxxxxxx
0000 Xxxx 000 Xxxxx
Xxxxx, Xxxx 00000
Fax: (000) 000-0000
Confirmation: (000) 000-0000
If to Xxxxxx Xxxxx, to: Xxxxxx Xxxxx Incorporated
Attn: Xxxxxx Xxxxxxxxxx, President
0000 Xxxx 000 Xxxxx
Xxxxx, Xxxx 00000
Fax: (000) 000-0000
Confirmation: (000) 000-0000
With a copy to: Xxxxx X. Xxxx, Esq.
Xxxxx, Xxxxx & Xxxxxxx, L.L.C.
Eighth Floor, Bank Xxx Xxxxx
00 Xxxx Xxxxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Fax: (000) 000-0000
Confirmation: (000) 000-0000
10. Assignment. Except to any successor or assignee of LarsonoDavis as
provided in subsection 7(c), neither this Agreement nor any rights or benefits
hereunder may be assigned by either party hereto without the prior written
consent of the other party.
11. Attorneys' Fees. In the event that any action, suit, arbitration, or
other proceeding is instituted concerning or arising out of this Agreement, the
prevailing party shall be entitled to recover all of such party's costs,
including reasonable attorneys' fees, incurred in each and every such action,
suit, arbitration, or other proceeding, including any and all appeals or
petitions therefrom.
12. Validity of Provisions and Severability. If any provision of this
Agreement is, or becomes, or is deemed invalid, illegal, or unenforceable in any
jurisdiction, such provision shall be deemed amended to conform to the
applicable jurisdiction, or if it cannot be so amended without materially
altering the intention of the parties, it will be stricken. However, the
validity, legality, and enforceability of any such provisions shall not in any
way be effected or impaired thereby in any other jurisdiction and the remainder
of this Agreement shall remain in full force and effect.
13. Entire Agreement. This Agreement constitutes the entire agreement and
understanding between the parties pertaining to the subject matter of this
Agreement. This Agreement supersedes all prior agreements, if any, any
understandings, negotiations, and discussions, whether oral or written. No
supplement, modification, waiver, or termination of this Agreement shall be
binding unless executed in writing by the party to be bound thereby.
14. Governing Law. This Agreement shall be governed by and construed and
interpreted in accordance with the laws of the state of Utah.
IN WITNESS WHEREOF, LarsonoDavis has caused this Agreement to be signed by
its duly authorized officer and Executive has signed this Agreement as of the
date first above written.
Xxxxxx Xxxxx:
XXXXXX XXXXX INCORPORATED
By /s/ Xxxxxx X. Xxxxxx
Duly Authorized Officer
Executive:
/s/ Xxxxxx Xxxxxxxxxx
Xxxxxx Xxxxxxxxxx
