EXHIBIT 10.6
EMPLOYMENT AGREEMENT WITH
XXXXXXX XXXXXXX
EMPLOYMENT AGREEMENT
This agreement is effective on the 5th day of May, 1999, by and between
XXXXXXXXX.XXX, INC. a Nevada Corporation, hereinafter referred to as "Employer",
and XXXXXXX XXXXXXX, hereinafter referred to as "Employee", who, in
consideration of the mutual promises made herein, agree as follows:
EMPLOYMENT AND TITLE
1. Employer hereby employs Employee and Employee accepts employment as
Chairman of the Board, President and CEO, of XXXXXXXXX.XXX, INC., located at 000
Xxx Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxx Xxxx, Xxxxxxxxxx as more specifically
set forth below.
TERM
2. The term of employment hereunder shall be three (3) years commencing upon
May 5, 1999, and subject to earlier termination as provided in this Agreement,
terminating on the May 4, 2002. The term shall be extended on a year by year
basis starting May 5, 2002 unless Employer gives Employee three (3) months
notice in writing before the start of the next extension period that Employer is
not extending the term.
COMPENSATION
3.1 For the period from May 5, 1999 through December 31, 1999, Employer shall
pay Employee a gross monthly salary of Thirteen Thousand Seven Hundred and Fifty
Dollars ($13,750.00), payable twice each month on the 15th and last day thereof
in the gross amount of Six Thousand Eight Hundred and Seventy-Five Dollars
($6,875.00).
3.2 For each following year starting January 1, 2000, Employer shall increase
Employee's salary by a minimum of six percent (6%).
3.3 Employer shall pay Employee a bonus of four tenths of one percent (0.4%)
of all gross sales over the first Two Million Dollars ($2,000,000.00) that
Employer makes during each fiscal year. This payment shall be made as soon as
possible after Employer's yearly financials are prepared and shall be made no
later than ninety (90) days after the end of the Employer's fiscal year. The
maximum yearly bonus paid under this Paragraph shall be Two Hundred Thousand
Dollars ($200,000.00).
3.4 Employer shall have the right to deduct or withhold from any amounts paid
Employee under this agreement, any and all sums required by law for federal
income, social security, or other taxes or withholdings and all state and local
taxes or withholdings now applicable or that may be enacted and become
applicable in the future.
ADDITIONAL BONUS/SALARY INCREASE
4. Employer may increase Employee's Salary or pay Employee an additional
bonus at any time. However, the amount of salary increase or additional bonus,
in any, shall not be guaranteed but shall be determined in the sole subjective
and absolute discretion of the Employer. Employer makes no representations or
warranty as to any future additional salary increases or bonus payments except
as set forth in this Agreement.
HEALTH CARE BENEFITS/BUSINESS EXPENSES
5.1 Employer shall use its best efforts to obtain, and include Employee with
coverage under, a medical benefit insurance plan. Employer's obligation to
include Employee in its medical benefit insurance plan is subject to the prior
approval of health insurance coverage for Employee by Employer's medical benefit
insurance plan insurer. Employee may decline or waive coverage under Employer's
medical benefit insurance plan. If, while employed by Employer, Employee is not
covered under Employer's medical insurance plan for any reason, Employer shall
reimburse Employee One Thousand Dollars ($1,000.00) per month for costs incurred
by Employee to purchase his own health insurance.
1
5.2 Employer shall promptly reimburse Employee for all reasonable business
expenses incurred by Employee in connection with the business of Employer
including, without limitation, continuing education expenses, travel expenses
and entertainment and promotion expenses. Each such expenditure shall be
reimbursed only if it is of the nature qualifying it as a proper deduction on
the federal and state income tax returns of Employer. Each such expenditure
shall be reimbursed only if Employee furnishes Employer with adequate records
and other documentary evidence required by federal and state statues and
regulations issued by the appropriate taxing authority for the substantiation of
each expenditure as an income tax deduction.
VACATIONS/SABBATICAL
6.1 Each year during the term hereof (January 1 through December 31)
(hereinafter referred to as a "Term Year"), Employee shall be entitled to a
vacation equal to the number of days provided by Employer's standard vacation
policy or twenty (20) days, whichever is greater, without loss of compensation;
provided, however, Employee may be absent from his employment for vacation only
at such times as is reasonable, taking into the then current need for Employee's
presence or availability. In the event that Employee is unable for any reason to
take the total amount of vacation time authorized herein during any Term Year,
he may accrue such unused vacation time and add it to vacation time for any
following Term Year; providing however, such accrued vacation time shall never
exceed forty (40) days. Any accrued vacation time in excess of such forty (40)
days shall be deemed to be waived by Employee.
6.2 In the third (3rd) Term Year of this agreement, starting January 1, 2002,
Employee shall be entitled to a six (6) week sabbatical at full pay and
benefits. Employee must take his sabbatical by December 31, 2002 or lose it.
SUMS DUE DECEASED EMPLOYEE
7. If Employee dies prior to the expiration of the term of his employment,
Employer agrees to fully vest Employee's unvested stock options; additionally,
Employer agrees to promptly pay six (6) months salary at Employee's then current
rate and any other sums to be due Employee from Employer under this Agreement as
of the date of death or thereafter to Employee's executors, administrators,
heirs, personal representatives, successors, and assigns.
DUTIES
8.1 Employee shall report to Employer's Board of Directors regarding
performance of his duties hereunder. Employee shall do and perform all services,
acts, or other things necessary or advisable to manage the function of
Employer's business, subject at all times to policies set by Employer's Board of
Directors, and to the consent of the Boards when required by the terms of this
Agreement.
8.2 Employee shall, at all times, during the term hereof, comply with any and
all constraints or other limitations upon Employees discretion or authority to
enter into any agreement in the name of Employer or otherwise to obligate
Employer in any respect.
8.3 Notwithstanding anything to the contrary contained herein, Employee,
shall not, without the prior specific approval of Employer's Board of Directors,
terminate the services of any other officer of Employer who is employed full
time or hire any full time replacement of any officer whose services have been
terminated.
ADDITIONAL DUTIES ASSIGNED LATER
9. In addition to the foregoing duties, Employee shall perform any other
duties that may be assigned to him, subject to the instructions, directions, and
control of Employer's Board of Directors; provided, however, that Employee shall
be assigned only to duties consistent with his professional skills and
abilities.
DUTIES WHEN DISABLED
10. If Employee at any time during the term of this Agreement should be found
by a physician chosen by Employer and agreed to by Employee to be unable to
perform the duties required by this Agreement for a period of ninety (90)
2
days because of personal injury, physical or mental illness, or any other cause,
Employer may, in its sole and absolute discretion, either terminate this
Agreement or assign Employee to other duties, and the compensation to be paid
thereafter shall be adjusted to be commensurate with such duties. In the event
Employee does not accept the adjusted compensation offered by Employer
commensurate with such duties, Employee may terminate this Agreement. If
Employer or Employee terminates this Agreement under this Paragraph, all of
Employee's compensation as set forth herein shall terminate per section 19.
BEST EFFORTS
11. Employee agrees that to the best of his ability and experience he will at
all times loyally and conscientiously perform all of the duties and obligations
either expressly or implicitly required of him by the terms of this Agreement
and exert his best efforts and exercise the highest degree of professional
competence in discharging his duties of employment.
ADHERENCE TO EMPLOYER'S RULES
12. At all times during the performance of this Agreement, Employee shall
strictly adhere to and fulfill all of Employer's rules and regulations governing
the conduct of its employees now in effect or as subsequently modified.
COMPETITIVE ACTIVITIES
13. During the term of Employee's employment with Employer, Employee shall
not, directly or indirectly, own, manage, operate, join, perform any services of
a business, commercial, or professional natures for, control, be employed by, or
participate in the ownership, management operation, or control of, or be
connected in any manner with, any business that is directly competitive to the
business of Employer. However, the expenditure of reasonable amounts of time for
educational, charitable, religious, or professional activities shall not be
deemed a breach of this Agreement if those activities do not materially
interfere with the services required under this Agreement. This Agreement shall
not be interpreted to prohibit Employee from making passive personal investments
in organizations or entities whose equity interests are publicly traded. The
provisions of this Paragraph will not apply to those business relationships of
Employee specifically set forth in Exhibit 13, attached hereto and incorporated
by reference herein; provided, however, Employee represents, warrants, and
covenants to Employer that Employee's fulfillment of Employee's obligations
under those relationships set forth in Exhibit 13 will not interfere, in any
manner, with Employee's performance and fulfillment of Employee's obligations
and duties hereunder.
TRADE SECRETS
14.1 The parties acknowledge and agree that during the term of this Agreement
and in the course of this discharge of his duties hereunder, Employee shall have
access to and become acquainted with information concerning the assets,
processes and operations of Employer, including without limitation, intellectual
property, discoveries, ideas, concepts, customer lists, formulas, designs,
trademarks, copyrights, patents, logos, improvements, specifications, scientific
information, computer programs, source codes, inventions, techniques, trade
secrets, and other technical information that is owned by Employer, is regularly
used in the operation of Employer's business, has commercial value to Employer,
and is treated as confidential by Employer, and that all of this information
constitutes Employer's "Trade Secrets." Except as required in the course of his
employment with Employer, Employee will not, without prior written consent of
Employer's Board of Directors, either during his employment by Employer or at
any time after termination of that employment, directly or indirectly, disclose
to any third person/party any Trade Secret of Employer.
14.2 All files, drawings, records, documents, equipment, Trade Secrets and
similar items relating to the business of Employer, whether they are prepared by
Employer of come into Employee possession in any other way and whether or not
they contain or constitute Trade Secrets owned by Employer, are and shall remain
the exclusive property of Employer.
14.3 During the term of this Agreement and at all times after the termination
hereof, Employee shall keep in the strictest confidence and trust all Trade
Secrets and shall not use, utilize, circulate, copy, publish, disseminate,
3
appropriate, or disclose any such Trade Secrets, directly or indirectly, in any
way except as is required in the course of his employment for Employer.
14.4 Upon expiration or termination of this Agreement, Employee shall deliver
to Employer all copies of all files, records, documents, drawings, equipment,
Trade Secrets and similar items belonging to Employer, obtained during the
course of Employee's employment or pertaining to his employment, and Employee
shall not retain any of the foregoing or any reproduction of any of the
foregoing or any Trade Secret that is embodied in a tangible medium of
expression.
14.5 Paragraphs 14.1 and 14.3 shall not apply to information that: (i) is in
or enters the public domain through no fault of Employee or (ii) is released for
publication by Employer in writing.
OWNERSHIP OF TRADE SECRETS
15.1 All files, drawings, records, documents, equipment, Trade Secrets, and
other tangible or intangible rights that are conceived or developed by Employee,
either alone or with others, during the term of Employee's employment, whether
or not conceived during Employee's working hours, and that relate at the time of
conception or reduction to practice of the file, drawing, record, document,
equipment, Trade Secret, or other tangible or intangible to the business of the
Employer or to Employer's actual or reasonably anticipated research and
development, shall constitute "works made for hire" and shall be the sole
property of Employer. Employee shall execute all documents, including patent
applications and assignments, required by Employer to establish Employer's
rights under this Paragraph.
15.2 Paragraph 15.1 shall not apply to assign to Employer any of Employee's
rights in any file, drawing, record, document, equipment, process, intellectual
property, discovery, idea, concept, formula, design, improvement, specification,
scientific information, invention, technique, patent, copyright, trademark, or
other intangible right that Employee developed entirely on his own time, except
for that which relates, at the time it is conceived or reduced to practice, to
Employer's business or to actual or reasonable anticipated research or
development of Employer.
GROUNDS FOR TERMINATION
16.1 This Agreement shall terminate immediately on the occurrence of any
one (1) of the following events:
a. The death of Employee.
b. The willful breach of habitual neglect by Employee of his
obligations under this Agreement, unless waived by Employer in writing.
c. The incapacity for a period of ninety (90) days, whether due to
illness, physical or mental disability, or any other cause, on the part of
Employee which prevents Employee from performing his duties, unless waived by
Employer in writing.
d. The involuntary dissolution of Employer.
e. The merger of Employer, or the sale or other transfer of all or
substantially all of Employer's assets. In this event, Employee shall be deemed
to have earned a minimum of all monies due him through May 4, 2002 under Section
3 of this contract and have all his stock options fully vested.
16.2 Termination pursuant to Paragraph 16.1 shall be without prejudice to any
right remedy to which either party may be entitled either at law, in equity, or
under this Agreement.
16.3 Notwithstanding anything to the contrary contained herein, Employee may
terminate this Agreement for any reason whatsoever upon thirty (30) days' prior
written notice to Employer without any liability, obligation, or duty to, or
recourse by, Employer. Such termination by Employee shall not constitute a
breach of this Agreement.
4
COMPENSATION PRORATED TO DATE OF TERMINATION
17. In the event that this Agreement is terminated prior to the completion of
the term of employment specified herein, Employee shall be entitled to receive
any compensation earned, but unpaid, prior to the date of termination as
provided for in this Agreement, computed pro rata up to and including that date.
Such compensation earned and unpaid at the time of termination shall be paid
without abatement or reduction immediately upon termination of this Agreement.
Any yearly bonus due shall be prorated as a percentage of the year the Employee
was employed by Employer time the total bonus due and shall be paid to Employee
within ninety (90) days after the end of the fiscal year directly following
Employee's termination.
NOTICES
18. Any notices to be given hereunder by either party to the other shall be
in writing and may be transmitted by personal delivery or by mail, registered
and certified, postage prepaid with return receipt requested. Mailed notices
shall be addressed to Employer at 000 Xxx Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxx
Xxxx Xxxxxxxxxx 00000, and to Employee at 000 Xxxxxxxx Xxxxx, Xxx Xxxxx,
Xxxxxxxxxx 00000, but each party may change that address by written notice in
accordance with this Section. Notices delivered personally shall be deemed
communicated as of the date of actual receipt; mailed notices shall be deemed
communicated as of five (5) days after the mailing date.
ARBITRATION OF DISPUTES
19. Any dispute or claim in law or equity arising out of this Agreement or
any resulting transaction shall be decided by neutral binding arbitration in
accordance with the rules of the American Arbitration Association, and not by
court action except as provided by California law for judicial review of
arbitration proceedings. Judgement upon the award rendered by the arbitrator(s)
may be entered in any court having jurisdiction thereof. The parties all have
the right to discovery in accordance with Code of Civil Procedure 1283.05. The
filing of a judicial action to enable the recording of a notice of pending
action, for order of attachment, receivership, injunction, or other provisional
remedies, shall not constitute a waiver of the right to arbitrate under this
provision.
"NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE
ARISING OUT OF THE MATTERS INCLUDED IN THE 'ARBITRATION OF DISPUTES' PROVISION
DECIDED BY NEUTRAL ARBITRATORS AS PROVIDED BY CALIFORNIA LAW AND YOU ARE GIVING
UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY
TRIAL. BY INITIALING IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL RIGHTS
TO DISCOVERY AND APPEAL. UNLESS SUCH RIGHTS ARE SPECIFICALLY INCLUDED IN THE
'ARBITRATION OF DISPUTES' PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION
AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE
AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO THIS
ARBITRATION PROVISION IS VOLUNTARY.
"WE HAVE READ AND UNDERSTOOD THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING
OUT OF THE MATTERS INCLUDED IN THE 'ARBITRATION OF DISPUTES' PROVISION TO
NEUTRAL ARBITRATION."
MODIFICATIONS
20. Any modification of this Agreement will be effective only if it is in
writing and signed by both parties.
ATTORNEY'S FEES AND COSTS
21. If any action, at law or in equity, or any arbitration or other
proceeding is necessary to enforce or interpret the terms of this Agreement, the
prevailing party in such action, arbitration or other proceeding shall be
entitled to reasonable attorney's fees, costs and necessary disbursements in
addition to any other relief to which that party may be entitled. This provision
shall be construed as applicable to the entire contract.
5
ENTIRE AGREEMENT
22. This Agreement (including any Exhibit attached hereto) supersedes any and
all other agreements, either oral or in writing between parties hereto with
respect to the employment of Employee by Employer and contains all of the
covenants and agreements between the parties with respect to that employment in
any manner whatsoever. Each party to this Agreement acknowledges that no
representations, inducements, promises, or agreements, oral or otherwise, have
been made by any party or anyone acting on behalf of any party, which are not
embodied herein, and that no other agreement, statement, or promise not
contained in this Agreement shall be valid or binding on either party.
EFFECT OF WAIVER
23. The failure of either party to insist on strict compliance with any of
the terms, conditions, or covenants of this Agreement by the other party shall
not be deemed a waiver of that term, condition, or covenant, nor shall any
waiver or relinquishment of any right or power at any one time or times be
deemed a waiver or relinquishment of that right or power for all or any other
times.
PARTIAL INVALIDITY
24. If any provision of this Agreement is held by a court of competent
jurisdiction to be invalid, void, or unenforceable, the remaining provisions
shall nevertheless continue in full force and effect without being impaired or
invalidated in any way.
LAW GOVERNING AGREEMENT
25. This Agreement shall be governed by and construed in accordance with the
laws of the State of California.
COVENANT OF NONINTERFERENCE
26. Employee represents, warrants, and covenants to Employer that Employee's
performance of all of the terms of this Agreement and as an employee of Employer
does not and will not breach any agreement to keep in confidence any proprietary
or confidential information acquired by Employee in confidence or in trust prior
to Employee's employment with Employer. Employee also covenants to Employer that
Employee has not brought and will not bring with Employee to Employer or use in
the performance of Employee's responsibilities hereunder any materials or
documents of a former employer that are not generally available to the public,
unless Employee shall have obtained the prior written consent from the former
employer for their possession and use.
Executed effective the 5th day of May, 1999.
EMPLOYER:
XXXXXXXXX.XXX, a Nevada Corporation
By: /s/ Xxx Xxxxxxx
---------------------------------
Xxx Xxxxxxx, Secretary and C.O.O.
EMPLOYEE:
/s/ Xxxxxxx Xxxxxxx
---------------------------------
Xxxxxxx Xxxxxxx
6
