Exhibit 10.16
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EMPLOYMENT AGREEMENT
Effective Date: July 1,1996
EMPLOYMENT AGREEMENT initiated as of the day, month and year first written
above, but with an effective date established subject to any and all conditions
precedent contained herein, by and between
1. Columbine Financial Corporation (a Utah corporation) with offices
located at 00000 Xxx Xxxxxxx, Xxxxx 000, Xxxxxxxx Xxxxxxx, XX 00000,
hereinafter referred to as EMPLOYER, and
2. F. Xxxxxxx Xxxx (an individual) residing at 000 Xxxxx Xxxxx Xx.,
Xxxxxxxx Xxxxxxx, XX 00000, hereinafter referred to as EMPLOYEE.
Recitals
WHEREAS, EMPLOYER is, as of the date first written above, an underfunded company
with limited financial resources engaged in business activities that require
significant cash flows and financial resources in order to maintain the status
of an ongoing concern and in order to be successful in its business endeavors,
and
WHEREAS, EMPLOYEE represents that EMPLOYEE has considerable experience in
start-up business enterprises, and furthermore EMPLOYEE agrees to become bound
by this EMPLOYMENT AGREEMENT if and only if certain conditions precedent as
expressed herein are achieved, and
WHEREAS, both EMPLOYER and EMPLOYEE desire to continue the successful
development of Columbine Financial Corporation, its successors or assigns in a
manner that serves to produce benefits for equity shareholders of Columbine
Financial Corporation, its successors or assigns,
NOW, THEREFORE, in consideration of the promises hereof and the mutual covenants
and conditions hereinafter set forth, intending to be legally bound, hereby
agree as follows:
EMPLOYER employs the EMPLOYEE and EMPLOYEE accepts employment, upon terms,
conditions and covenants as follows:
Terms and Conditions
1. Effective Date of Agreement: The effective date shall be July 1, 1996.
2. Term: The term of employment shall be for the period starting as of the
effective date established herein and terminating at the end of the day, 31
December, 2000, unless terminated at an earlier date, subject to the terms
and conditions contained herein.
3. Base Salary: EMPLOYEE shall receive, for all services rendered, a base
salary of $240,000 per year, payable monthly and prorated for any
fractional month of employment. Any additional bonus or incentive
compensation shall be made pursuant to the terms and conditions of
appropriate bonus or incentive compensation agreements that may be issued
from time to time. Salary payments shall be subject to withholding and
other applicable deductions, as required by law. Base salary shall be
reviewed annually within 30 days of the anniversary date of this agreement
and adjusted based on EMPLOYER corporate performance and individual
performance as judged by the EMPLOYER'S compensation committee. Adjustments
to base salary shall not exceed 30% of the base salary in existence at the
time of review without the express written consent of a majority of the
Board of Directors. Base salary adjustments shall be based on performance
and become effective on the anniversary date of this agreement.
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Payment of the first year of base salary in amounts exceeding $150,000 per
year shall be deferred until the first anniversary date of this agreement.
This deferment shall be in effect unless altered by mutual consent of both
parties and memorialized in written form.
Deferred payments will be made either (a) as a lump sum payment or (b) as
twelve equal monthly payments commencing on the anniversary date of this
agreement as determined by EMPLOYER. The only interest due and payable on
the deferred payment amount shall be that incurred on the unpaid balance
with said interest calculated at a rate of 7% per year, compounded monthly,
with in initiation date for the interest-due calculation commencing on the
first day of the thirteenth (13th) month of the anniversary date of this
agreement.
4. Stock Options: Upon commencing full-time employment, and subject to the
approval of the Board of Directors, EMPLOYEE shall receive options to
purchase up to 750,000 shares of Company stock at a purchase price of $0.50
per share or at a price established by the Board of Directors, as required
by law. These options are vested 20% upon date of hire and 20% per year
thereafter. Vested options may be exercised anytime over a period of ten
(10) years from date of hire.
All non-vested options are forfeited by EMPLOYEE upon termination of
employment with the EMPLOYER. Upon termination, the EMPLOYEE shall have
ninety (90) days from the last date of employment, to purchase any vested
options. All options not purchased after ninety (90) days will be returned
to the EMPLOYER by the EMPLOYEE and such options shall be considered null
and void.
5. Incentive Bonus: EMPLOYEE shall, upon the effective date of this Agreement.
participate in any existing or future qualified incentive bonus plan that
has been approved or subsequently shall be approved by the Board of
Directors of Columbine Financial Corporation.
6. Duties: The duties of EMPLOYEE shall be Chief Technical Officer of
Columbine Financial Corporation.
7. Full Time Engagement: The EMPLOYEE shall devote his full and entire time
and attention to the EMPLOYER'S business.
8. Trade Secrets: EMPLOYEE shall not, except in the normal performance of his
duties, divulge to any person, firm or firms, corporation or corporations,
any trade secret having to do with the business of EMPLOYER that shall come
to the knowledge of EMPLOYEE by reason of this Agreement and the
relationship of EMPLOYEE and EMPLOYER created by this Agreement, during the
term of this Agreement and for one ( 1) year after the termination of this
Agreement.
9. Work For Hire: EMPLOYEE agrees that all inventions, computer programs and
products created by EMPLOYEE either for use by EMPLOYER or which could be
used by EMPLOYER in furtherance of EMPLOYER'S business activity, which are
created or conceived during the course of employment by EMPLOYER, shall be
considered as Works Made For Hire and all rights to said Works shall and do
vest in EMPLOYER and shall be duly and appropriately assigned to EMPLOYER.
10. Facilities: EMPLOYEE shall have an office, facilities and services that are
suitable to the position and appropriate for the performance of EMPLOYEE'S
duties at the EMPLOYER'S offices cited above or at some other mutually
agreeable and suitable location.
11. Reimbursable Expenses: EMPLOYER shall reimburse EMPLOYEE for all reasonable
expenses incurred in the performance of Employee's business, e.g.
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entertainment, travel, etc. Employee will be reimbursed upon submission of
an itemized account of such expenditures with receipts where practicable
and as required by law. Undocumented expenses shall not be considered
reimbursable expenses.
12. Medical Reimbursement Plan: As a part of the benefits due under this
EMPLOYMENT AGREEMENT, EMPLOYEE and his immediate family, shall receive, as
a part of the Executive Medical Reimbursement Plan of the EMPLOYER, a
EMPLOYER-paid preferred-provider health insurance plan. EMPLOYER agrees to
reimbursement for incidental and standard policy- deductible medical
expenses not paid by such plan, but in no case shall EMPLOYER be obligated
to reimburse for expenses exceeding the limits of the health insurance
policy or any deductible expenses exceeding 20% of incurred expenses. This
provision #12 is not required to become effective until and unless the
EMPLOYER has raised at least an additional $3 million in operating capital
from any non-debt generating mechanism, including but not limited to equity
sales, following the effective date of this Agreement.
13. Disability Income Plan: As a part of the benefits due under this EMPLOYMENT
AGREEMENT EMPLOYER shall purchase for the benefit of EMPLOYEE a disability
income policy in the maximum amount permitted by the insurance industry,
but such disability income policy is not required to exceed the actual base
salary income of EMPLOYEE. Such coverage shall be maintained by EMPLOYER
for as long as EMPLOYEE is in the employ of the EMPLOYER. This provision
#13 is not required to become effective until and unless the EMPLOYER has
raised at least an additional $3 million in operating capital from any
non-debt generating mechanism, including but not limited to equity sales,
following the effective date of this Agreement.
14. Failure to Perform: Notwithstanding any provision in this EMPLOYMENT
AGREEMENT to the contrary, if EMPLOYEE is unable to perform or is absent
from employment for a period of more than six calendar weeks, EMPLOYER may
terminate this EMPLOYMENT AGREEMENT, without further cause, and all
obligations of EMPLOYER hereunder shall terminate. Failure to perform shall
be determined solely by a majority vote of the Board of Directors. If such
Failure to Perform is caused by a health or disability problem then the
EMPLOYER will coordinate such termination with the waiting periods with the
Disability Income Plan mentioned if it is effective.
15. Termination and Severance: This EMPLOYMENT AGREEMENT may be terminated, at
will, at any time and without cause, by either party upon thirty (30) days
written notice to the other.
If EMPLOYER elects to terminate, EMPLOYER shall pay to EMPLOYEE severance
pay of twelve (12) months base salary, benefits and all accrued but unpaid
bonus plan compensation, subject to withholding and deductions. Severance
pay (including accrued bonus pay) shall be paid out in equal monthly
payments during the twelve months immediately following termination of
full-time employment with the EMPLOYER. The severance liability (including
accrued bonus pay) by the EMPLOYER is owed to the EMPLOYEE regardless of
EMPLOYEE'S status of employment with another company.
If EMPLOYEE elects to terminate, EMPLOYEE shall receive salary and benefits
up to the last day of employment and all accrued but unpaid bonus plan
compensation but no severance pay.
The severance liability of this provision #15, to the EMPLOYEE by EMPLOYER,
is valid only if the EMPLOYER successfully completes a major funding event
(i.e. Initial Public Offering, Venture Capital Funding, Over-the-Counter
Trading, etc.) that provides a minimum of $3,000,000 additional operating
capital from any non-debt generating mechanism, including but not limited
to equity sales, following the effective date of this Agreement.
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16. Death of EMPLOYEE: In the event EMPLOYEE dies during the term of
Employment, EMPLOYER shall pay to EMPLOYEE's estate, as a death benefit,
all amounts and benefits which would have been due had the EMPLOYEE been
terminated, as of the date of death, by the EMPLOYER. EMPLOYER agrees to
purchase a term life policy paying death benefits equal to one year's base
salary in effect at the time of death, subject to the terms and conditions
of said term life policy.
17. Arbitration: Any controversy or claim arising out of, or relating to this
EMPLOYMENT AGREEMENT, or the breach thereof, shall be settled by
arbitration in the City of Pasadena, State of California, in accordance
with the then governing rules of the American Arbitration Association.
Judgment upon the award rendered by the arbitrator(s) may be entered in any
court of competent jurisdiction.
18. Notice: Any notice required to be given shall be either:
a) personally delivered, or
b) sent by US Postal Service, postage pre-paid, Certified Mail, Return
Receipt Requested
to the EMPLOYER at the place of employment and to the EMPLOYEE at the last
residence address given to and on file with the EMPLOYER.
19. No Waiver of Defaults: A waiver of a breach of any provision of this
EMPLOYMENT AGREEMENT shall not operate or be construed as a waiver of any
subsequent breach.
20. Assignment: The services of EMPLOYEE are personal and unique and therefore
EMPLOYEE may not assign this EMPLOYMENT AGREEMENT nor delegate the duties
and obligations hereunder except in the normal course of business.
21. Headings and Captions: The headings and captions contained in this
Agreement are for convenience purposes only and are not determinative nor
are they to be considered in construction of the terms or provisions
herein.
22. Force Majeure: Both parties agree that neither party shall not be liable
for: any
a) losses;
b) damage, including consequential damages;
c) detention;
d) delay or failure to perform in whole or in part resulting from causes
beyond the control of either party, including but not limited to: acts
of God; acts or omissions of either party; fires; strikes;
insurrections; riots; embargoes; delays in transportation; inability
to obtain supplies; or requirements or regulations of the United
States government or any other civil or military authority.
Delays or non-performance excused by this provision shall not excuse
payment of any amount due hereunder owed at the time of the occurrence.
23. Entire Agreement: With the sole exceptions of any Compromise Agreements by
and between F. Xxxxxxx Xxxx and Synthonics Incorporated, dated prior to
this agreement, it is agreed between the parties hereto that there are no
other agreements or understandings between them relating to the subject
matter of this Agreement. This Agreement supersedes all other prior
agreements, oral or written, between the parties and is intended as a
complete and exclusive statement of the Agreement between the parties.
Neither this Agreement, nor its execution, have been induced by any
reliance, representation, stipulation, warranty, agreement or understanding
of any kind other than those herein expressed and those herein referenced
and hereto attached. No change or modification of this Agreement shall be
valid unless the same be in writing and signed by the parties.
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INTENDING TO BE LEGALLY BOUND, the parties have executed this EMPLOYMENT
AGREEMENT as of the date last entered below.
Columbine Financial Corporation
/S/ Xxxxxxx X. Palm
------------------------------ Date: 6/25/96
By: Xxxxxxx X. Palm
Its: President
/S/ F. Xxxxxxx Xxxx
------------------------------ Date: 6/25/96
F. Xxxxxxx Xxxx - Employee
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INCENTIVE COMPENSATION AGREEMENT
Effective Date: July 1,1996
This Agreement is made by and between
1. Columbine Financial Corporation (a Utah corporation) with offices
located at 00000 Xxx Xxxxxxx, Xxxxx 000, Xxxxxxxx Xxxxxxx, XX 00000,
hereinafter referred to as EMPLOYER, and
2. F. Xxxxxxx Xxxx (an individual) residing at 00000 Xxx Xxxxxxx, Xxxxx
000, Xxxxxxxx Xxxxxxx, XX 00000, hereinafter referred to as EMPLOYEE.
and is to be construed and interpreted only as part of and subject to the terms
and conditions of the preceding EMPLOYMENT AGREEMENT to which this Agreement is
attached as an integral part.
Recitals
WHEREAS, EMPLOYER is, as of the date first written above, an underfunded company
with limited financial resources that must conserve operating capital, but
nevertheless desires to provide adequate compensation and incentives to EMPLOYEE
for the purpose of achieving aggressive revenue and profit projections, and
WHEREAS, EMPLOYEE recognizes and acknowledges EMPLOYER's need to conserve
capital, and
WHEREAS, both EMPLOYER and EMPLOYEE acknowledge and agree that an aggressive
reward and incentive compensation plan serves the best interests of both parties
as well as the interests of the equity holders of EMPLOYER by virtue of a
rapidly expanding and highly profitable business operation,
NOW, THEREFORE, in consideration of the promises hereof and the mutual covenants
and considerations set forth herein, the parties hereto, intending to be legally
bound, EMPLOYER and EMPLOYEE hereby agree as follows:
Terms and Conditions
Integral Part of Previous Agreement: This Agreement is to be interpreted as an
integral part of and subject to the terms and conditions, including all
conditions precedent, of the preceding and attached EMPLOYMENT AGREEMENT.
Board Approval Required: This Incentive Bonus Agreement is subject to approval
by a majority vote of the Board of Directors of Columbine Financial Corporation
and without such approval, as evidenced by an attached copy of a Resolution
passed by said Board, this agreement is null and void, and will be considered to
have never been valid for any purpose.
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Incentive Bonus: In addition to EMPLOYEE'S regular base salary, EMPLOYEE shall
receive incentive compensation based on a fraction of total pre-tax profits
generated for Columbine Financial Corporation, its successors or assigns and all
affiliated subsidiaries as determined in accordance with generally accepted
accounting principles as applied to the Columbine Financial Corporation
Consolidated Financial Statements. The following table shall be used in
calculating the yearly incentive bonus:
Calendar Year Fraction of Pretax Profit
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1996 0.05
1997 0.04
1998 0.03
1999 0.02
2000 0.02
Calculation Examples: Examples of an incentive bonus payment calculation
follows, based on calendar years 1996 through 2000, assuming annual revenues of
$5M, $25M, $150M, $500M, $600M and pre-tax profits of $1.455M, $7.425M, $45.M,
$150M, and $180M, respectively:
Incentive Bonus = ($1.455M) x (0.05) = $ 72,750
Incentive Bonus = ($7.425M) x (0.04) = $ 297,000
Incentive Bonus = ($45M) x (0.03) = $1,350,000
Incentive Bonus = ($150M) x (0.02) = $3,000,000
Incentive Bonus = ($180M) x (0.02) = $3,600,000
Bonus Payment: All bonus moneys shall be determined by the EMPLOYER's
accountants and verified by independent auditors in accordance with generally
accepted accounting principles. Such additional compensation shall be
determined, and paid to Employee within ten (10) days after the fiscal year end
close is approved by an independent auditor with all payments subject to
withholding and other applicable deductions.
INTENDING TO BE LEGALLY BOUND, the parties hereto have caused this Incentive
Compensation Agreement to be executed as of the effective date of the preceding
and attached EMPLOYMENT AGREEMENT.
Columbine Financial Corporation
/S/ Xxxxxxx X. Palm
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By: Xxxxxxx X. Palm
Its: President
/S/ F. Xxxxxxx Xxxx
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F. Xxxxxxx Xxxx - Employee
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