EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (this "Agreement") is made and entered
into effective as of February 2, 1998, by and between Xxxxxxx Xxxxx
("Executive") and XXXXXX-XXXXX INCORPORATED, a Nevada corporation ("Xxxxxx-
Xxxxx"), based on the following:
Premises
Executive and Xxxxxx-Xxxxx are parties to a Letter Agreement dated December
30, 1997 (the "Letter Agreement"), pursuant to which Executive is serving as the
Chief Operating Officer of Xxxxxx-Xxxxx and as a member of its board of
directors. Executive and Xxxxxx-Xxxxx wish to enter into this definitive
Executive Employment Agreement as contemplated by 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) Xxxxxx-Xxxxx hereby employs Executive and Executive hereby
accepts employment upon the terms and conditions set forth
herein. The term of the Executive's employment shall begin on
the effective date hereof and continue on a rolling basis for a
period of one (1) year. This Agreement shall always have 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 roll forward is hereinafter referred to as the
"Employment Period."
(b) During the Employment Period, Executive will serve as
Xxxxxx-Xxxxx' chief operating officer, and as a member of the
board of directors of Xxxxxx-Xxxxx. Executive also agrees to
serve in such positions with each of Xxxxxx-Xxxxx' subsidiaries
and such other or further offices or positions of substantially
consistent rank and authority as shall, from time to time, be
determined by Xxxxxx-Xxxxx' board of directors or its CEO.
Executive agrees to perform the duties appropriate for the chief
operating officer of Xxxxxx-Xxxxx as may be assigned to him from
time to time by the board of directors or the CEO and as
described in the bylaws of Xxxxxx-Xxxxx. 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
or the CEO to the best of his ability, to devote his full and
undivided business time, attention, and services to the
business of Xxxxxx-Xxxxx 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 Xxxxxx-Xxxxx or
the CEO; 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 Xxxxxx-Xxxxx
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 Xxxxxx-Xxxxx and
Executive.
(c) Executive shall observe and comply with the commercially
reasonable rules and regulations of Xxxxxx-Xxxxx respecting
its business and shall carry out and perform such commercially
reasonable orders, directions, and policies of Xxxxxx-Xxxxx
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 Xxxxxx-Xxxxx 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 Xxxxxx-Xxxxx or any of its affiliates
(the "Xxxxxx-Xxxxx 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
Xxxxxx-Xxxxx Group, any person who is a customer of the
business conducted by the Xxxxxx-Xxxxx Group at the date
hereof or a customer of the business conducted by the
Xxxxxx-Xxxxx Group at any time during the Employment Period;
and
(iii) he will not induce or attempt to persuade any employee
of the Xxxxxx-Xxxxx Group to terminate his or her employment
relationship in order to enter into employment with any
party.
(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 Xxxxxx-Xxxxx Group, except
to the extent authorized in writing by Xxxxxx-Xxxxx. Upon
termination of his employment hereunder, Executive will surrender
to Xxxxxx-Xxxxx all records and other documents obtained by him
or entrusted to him during the course of his employment by
Xxxxxx-Xxxxx (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 Xxxxxx-Xxxxx Group shall
be treated as confidential until it has been published or is
generally or publicly known outside the Xxxxxx-Xxxxx Group or
until it has been recognized as standard practice outside the
Xxxxxx-Xxxxx 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
Xxxxxx-Xxxxx Group is doing business at the termination
of the Employment Period and those markets in which the
Xxxxxx-Xxxxx 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 Xxxxxx-Xxxxx as will be
irreparable. Therefore, without limiting the right of
Xxxxxx-Xxxxx 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 Xxxxxx-Xxxxx Group for such a violation
and that Xxxxxx-Xxxxx and the Xxxxxx-Xxxxx Group shall be
entitled to injunctive relief to prevent any such violation
of continuing violation thereof.
(iii) It is the intent and understanding of each party
hereto that if, in any action before any court of 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 Xxxxxx-Xxxxx 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 Xxxxxx-Xxxxx, during the Employment
Period.
(b) Executive agrees that, during the Employment Period, he will:
(i) assign to Xxxxxx-Xxxxx all Business Ideas and promptly
execute all documents which Xxxxxx-Xxxxx may reasonably
require to protect its patent, copyright, and other rights
to such Business Ideas throughout the world; and
(ii) promptly disclose to Xxxxxx-Xxxxx all information
concerning all material Business Ideas originated by
Executive or any employee of Xxxxxx-Xxxxx, which come to
his attention and which concern the business of
Xxxxxx-Xxxxx.
(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
Xxxxxx-Xxxxx and which relate to the business of Xxxxxx-Xxxxx
and/or the Xxxxxx-Xxxxx Group.
5. Compensation and Benefits. For all services rendered by Executive
pursuant to this Agreement, Xxxxxx-Xxxxx shall compensate Executive
as follows:
(a) As annual compensation for Executive's services hereunder,
in accordance with its normal payroll practices, Xxxxxx-Xxxxx
agrees to pay Executive during the Employment period a base
salary of $140,000 per annum. This will be reviewed annually
but with the first review effective January 1st 1999.
(b) Beginning February 2, 1998, Xxxxxx-Xxxxx shall provide
to Executive an annual bonus of $60,000 based on commercially
reasonable performance standards mutually agreed to by Executive
and the board of directors of Xxxxxx-Xxxxx; provided that, the
bonus for the initial calendar year of January 1, to December 31,
1998, shall be partially fixed at $45,000 payable in three (3)
installments of $15,000 each on June 30, September 30, December
31, 1998. The remaining balance of $15,000 shall be payable if
the company achieves a break even trading performance in any
month of the current year, as defined by its management accounts
on the EBIT line. Thereafter, performance targets shall be
established at least 30 days prior to the beginning of the
calendar year for which they are applicable. Except for the fixed
element of the bonus, the bonus will be paid within 5 days of the
filing of the Form 10K for the appropriate year. The executive
must be in employment with the company at the time when the
payment is due.
(c) The grant of an option to acquire up to 300,000 shares of
common stock of Xxxxxx-Xxxxx, such an option to have an exercise
price based on the average of the closing price per share on
each of the 5 trading days beginning on February 2nd and ending
on February 6th. The right to exercise such option shall
immediately vest with respect to 75,000 shares of common stock.
The right to exercise such options will vest with regard to up to
an additional 75,000 shares on December 31, 1998, 1999, and 2000.
Of the shares to vest in the future, 37,500 shares shall vest on
December 31, 1998, 1999, and 2000, on the sole condition that
Executive is still an employee of Xxxxxx-Xxxxx as of that date.
The remainder of such shares, or 37,500 shares annually, shall
only vest if (i) Executive is an employee of Xxxxxx-Xxxxx as of
the vesting date, and (ii) the performance criteria established
by the board of directors of Xxxxxx-Xxxxx for the calendar year
then ended have been met. 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 Xxxxxx-Xxxxx 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) Xxxxxx-Xxxxx shall provide to Executive at the principal
executive offices of Xxxxxx-Xxxxx, 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 3 weeks vacation and sick
leave in accordance with the general policy of the Xxxxxx-Xxxxx
Group for executive level employees. Vacations shall be taken
by Executive at a time and with starting and ending dates
mutually convenient to Xxxxxx - Xxxxx and Executive. Vacations
or portion of vacation 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) Xxxxxx-Xxxxx 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 Xxxxxx-Xxxxx.
(h) Subject to the insurability of Executive, Xxxxxx-Xxxxx
shall provide Executive with health, medical, and disability
insurance policies on the same terms as offered to other
executive level employees of Xxxxxx-Xxxxx. Xxxxxx-Xxxxx shall
additionally provide to Executive incentives, retirement,
pension, profit sharing, stock options, or other employee
benefit plans which are consistent with and similar to such
plans provided by the Xxxxxx-Xxxxx Group to its executive level
employees generally. Executive shall also have the right to
participate in any other employee benefit programs provided by
the Xxxxxx-Xxxxx Group.
(i) Xxxxxx-Xxxxx 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 Xxxxxx-Xxxxx until the next
annual meeting of shareholders. Xxxxxx-Xxxxx 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 Xxxxxx Xxxxx for Cause. Xxxxxx-Xxxxx shall
have the right, without further obligation to Executive other
than for compensation previously accrued, to terminate the
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 Xxxxxx-
Xxxxx, 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 Xxxxxx-
Xxxxx.
(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 Executive, and a member of the board of directors
of Xxxxxx-Xxxxx.
(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 Xxxxxx-Xxxxx 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 Xxxxxx-Xxxxx to a single
purchaser that is not a wholly owned subsidiary of Xxxxxx-
Xxxxx 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
Xxxxxx-Xxxxx' common stock;
(iii) As a result of a merger, consolidation, sale of all or
substantially all of the assets of Xxxxxx-Xxxxx, a
contested election, or any combination of the foregoing, the
persons who were directors or Xxxxxx-Xxxxx immediately prior
thereto shall cease to constitute a majority of the board of
directors of Xxxxxx-Xxxxx or any successor to Xxxxxx-Xxxxx;
(iv) The decision by Xxxxxx-Xxxxx to terminate its business
and liquidate its assets;
(v) The merger or consolidation of Xxxxxx-Xxxxx in a
transaction in which the shareholders of Xxxxxx-Xxxxx
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 Xxxxxx-Xxxxx.
If, as a result of one of the foregoing events, Xxxxxx-Xxxxx 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)
Xxxxxx-Xxxxx' intentional breach of any covenant or term of this
Agreement, but only if Xxxxxx-Xxxxx fails to cure such breach
within twenty (20) days following the receipt of written notice
by Executive setting forth the conditions giving rise to such
breach; (ii) the exercise of Executive's rights under subsection
7(c).
(e) Termination Payment.
(i) Termination by Executive for Cause. In the event that
Executive terminates this Agreement for Cause, Xxxxxx-Xxxxx
shall:
(1) Pay to Executive all amounts accrued through the
date of termination, any unreimbursed expenses incurred
pursuant to this Agreement, and any other benefit
specifically provided to Executive under any benefit
plan.
(2) Pay to Executive the amount of salary that would
otherwise accrue to Executive during the remaining
Employment 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 112,500 shares
that vest on December 31, 1998, 1999, and 2000 based
solely on the executive remaining an employee of the
company, that are not then vested shall immediately
vest and be exercisable, the performance based options
will only have vested based on the full achievement
of the performance targets;
(ii) Termination by Xxxxxx-Xxxxx 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 Xxxxxx-Xxxxx terminates
this Agreement for Cause in accordance with subsection 7(a),
Xxxxxx-Xxxxx 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. Xxxxxx-Xxxxx shall have no further
obligation to Executive. The executive is required to give
reasonable notice of termination of employment.
(iii) Voluntary termination by Xxxxxx-Xxxxx. Xxxxxx-Xxxxx
may at any time terminate this agreement by giving 1 years
written notice of its intention to terminate this Agreement.
At the sole election of Xxxxxx Xxxxx, the Executive can
either continue to carry out his duties until the expiration
of the agreement or the Executive can be paid the amount of
salary that would otherwise accrue to Executive during the
remaining Employment Period or a pro-rata combination of
the above.
(f) Exit Interview. To insure a clear understanding of this
Agreement, including but not limited to the protection of the
business interests of Xxxxxx-Xxxxx, 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 Xxxxxx-Xxxxx at a time and
place designated by Xxxxxx-Xxxxx.
8. Indemnification. Xxxxxx-Xxxxx shall indemnify Executive and hold
Executive harmless from liability for acts or decisions made by
Executive while performing services for Xxxxxx-Xxxxx to the
greatest extent permitted by applicable law. Xxxxxx-Xxxxx 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 Xxxxxx-Xxxxx against such
liability. Executive agrees to indemnify and to hold Xxxxxx-Xxxxx
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: Xxxxxxx Xxxxx
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 and 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 Xxxxxx-Xxxxx 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 provision 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 in accordance with the laws of the state of Utah.
IN WITNESS WHEREOF, Xxxxxx-Xxxxx 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 Xxxxxxxxxx
Duly Authorized Officer
Executive:
/s/ Xxxxxxx Xxxxx
Xxxxxxx Xxxxx
