EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (as amended, supplemented or extended from time
to time, this "Agreement") is entered into as of May 31, 2002 by and between
BriteSmile, Inc., a Utah corporation (the "Employer" or "Company"), and Xxxxx
Xxxxxxx ("Employee").
WHEREAS, the Employer desires to engage Employee as an employee, and
Employee desires to accept employment by the Employer, on the terms of this
Agreement;
WHEREAS, the Employer and the Employee currently contemplate that the
Company may relocate its principal executive office sometime within the twelve
months following the Start Date as hereinafter defined; and
WHEREAS, it is contemplated that during Employee's temporary employment in
Walnut Creek he will work both out of his home office in New Jersey and at the
Company's principal offices in Walnut Creek; and
WHEREAS, the Employer and the Employee further desire to make arrangements
for the Employee's travel expenses from his home office in New Jersey that would
be applicable in certain other circumstances;
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and other valuable consideration, the receipt and adequacy of which are hereby
acknowledged, and intending to be legally bound hereby, the parties do hereby
agree as follows:
1. Employment and Employment Period.
(a) Position and Duties.
(i) Subject to the terms and conditions of this Agreement, the
Employer agrees to employ Employee, and Employee agrees to be employed
by the Employer, during the Employment Term (as defined in Section
l(b)).
(ii) During the Employment Term, Employee will serve as President
of the Employer and the Employee shall report to and carry out the
lawful directions of the Chief Executive Officer of the Company and
the Company's Board of Directors.
(iii) At all times during the Employment Term, Employee agrees to
(A) perform all services related to Employee's employment hereunder
faithfully and diligently and to discharge the responsibilities
thereof to the best of Employee's ability, (B) devote full business
time, attention and energies to the duties of Employee's employment
under this Agreement, (C) subject to Section 1(a)(v), ensure that the
performance of his services hereunder is his sole business endeavor,
and (D) use Employee's best efforts to promote the business of the
Employer.
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(iv) During the Employment Term Employee shall be appointed as a
member of the Company's Management Committee. Employee shall also be
nominated at the earliest possible opportunity to serve as a member of
the Company's Board of Directors and agrees to serve as such during
the Employment Term if elected or appointed and, if so elected or
appointed as a Director, Employee shall be appointed to and agrees to
serve as a member of the Company's Executive Committee.
(v) Notwithstanding Section 1(a)(iii) but subject to Section 5(a)
hereof, during the Employment Term, the Employee shall be permitted to
act on a limited basis that does not interfere with his duties to the
Employer as a consultant to, or officer, director or owner of a
business enterprise that is engaged in activities in an area that has
been disclosed by the Employee to the Employer pursuant to a
confidentiality agreement between them.
(b) Employment Term. The Employee shall begin his employment on such
date (the "Start Date"), not later than July 1, 2002, as the Employee and
the Company shall reasonably agree. Subject to Section 4, the term of
Employee's employment (the "Employment Term") shall commence on the Start
Date and shall continue until the day prior to the second anniversary
thereof; provided, however, that commencing on the second anniversary of
the Start Date and on each anniversary thereafter the Employment Term shall
be automatically extended for an additional period of one year unless, not
later than 45 days prior to such automatic extension date, either party
shall have given notice to the other that it does not wish to extend the
Employment Term; in which case the Employment Term shall end on the day
prior to such automatic extension date.
(c) Place of Employment. The Employee will perform his duties at the
Company's principal Executive Offices which are now located in Walnut
Creek, California. The Employee acknowledges that such location can change.
Until the earlier of the date the Employee completes his relocation with
his family to the area where the Company's principal Executive Offices are
located or the Relocation Date (as defined in Section 6(b)), the Executive
may spend approximately six business days per month at an office, which may
be his personal home office, in New Jersey. In addition, the Employee
acknowledges that the performance of his duties may require substantial
business travel.
(d) Confidentiality Agreement. As a condition to Employee's employment
by the Employer as contemplated by this Agreement, Employee hereby
acknowledges that he shall continue to be bound by the Confidentiality and
Rights Ownership Agreement by and between Employer and Employee, dated as
of the date hereof (the "Confidentiality Agreement").
2. Compensation.
(a) Salary. During the Employment Term, in consideration for the
services to be rendered hereunder, and subject to the terms and conditions
of this Agreement, the Employer hereby agrees to pay Employee, in
accordance with its normal payroll practices, an annual base salary of
$350,000 (the "Annual Base Salary"), with such annual increases thereafter
as the Employer shall decide. All compensation shall be subject to all
applicable tax withholding and similar requirements under applicable law.
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(b) Incentive Compensation. In addition to the Annual Base Salary,
Employee shall be eligible to receive a performance bonus of up to $300,000
per year the entitlement to which shall be based on the achievement of
three objectives per year, each of which, if achieved, shall entitle the
Executive to $100,000. These objectives shall be set annually by the Chief
Executive Officer with the approval of the Executive Committee. The
objectives for the first year (which shall run from the Start Date to the
day prior to the first anniversary thereof) are attached as Exhibit A. The
amount of any such performance bonus earned shall be paid to the Employee
within 60 days of the end of the employment year to which it relates.
(c) Options. The Employee has been granted Options to purchase up to
1,000,000 shares of BriteSmile stock. Such Options have been granted under
the Company's Stock Option Plan (the "Plan"). The Company represents to the
Employee that the shares issuable pursuant to the Plan are subject to a
presently effective registration statement on Form S-8 filed with the
United States Securities and Exchange Commission. The options will have the
following terms in addition to the terms set forth in the Plan:
o The Exercise Price of the Options will be equal to $3.91 which is
the closing price of BriteSmile's common stock on May 31, 2002.
Such date is the date the Term Sheet referred to below was
executed and delivered by Employer and Employee.
o Options on 200,000 shares will vest upon the Start Date subject
to Employee's commencing his employment hereunder on such date.
o Options on an additional 200,000 shares will vest on each of the
next four anniversaries of the Start Date, subject to Employee's
continuing employment hereunder on such dates. For clarification,
if either party gives a notice under Section 1(b) prior to the
second, third or fourth anniversaries of the Start Date that it
does not wish to extend the Employment Term or if the Employee's
employment and the Employment Term are terminated pursuant to
Section 4, the Options that would otherwise vest on any of the
said anniversaries which follow the giving of such notice or such
termination will not vest and will be automatically cancelled and
of no further effect.
o The Options will be forfeitable as provided in Section 6(d).
o No Options will be exercisable unless and until the Employee
relocates during the Employment Term by the Relocation Date with
his family to the area of the Employer's principal Executive
Offices; provided, however, this provision shall not apply to
vested Options if the Employee's employment and the Employment
Term are terminated pursuant to Section 4(b) or 4(d) prior to
(but not after) a Forfeiture Event, (as defined in Section 6(d)).
For clarification, vested Options shall be exercisable as
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provided in the Plan in the event that, prior to a Forfeiture
Event, the Employee's employment and the Employment Term are
terminated pursuant to Section 4(b) or 4(d).
o All unvested Options shall vest upon the termination of
Employee's employment and the Employment Term pursuant to a
notice given by the Company under Section 1(b) or without Cause
for any reason or no reason by the Company pursuant to Section
4(d) if such termination occurs within one year after a Change of
Control and prior to a Forfeiture Event. A "Change of Control"
shall be deemed to have occurred if (a) individuals who are
directors of the Company immediately prior to a Control
Transaction shall cease, within one year after such Control
Transaction, to constitute a majority of the Board of Directors
of the Company (or of the Board of Directors of any successor to
the Company, or of any company to which all or substantially all
of the Company's assets may have been sold or transferred), or
(b) any entity, person or Group (other than the Company or a
subsidiary corporation of the Company and any company directly or
indirectly controlled by Xxxxxxx X. Xxxxxx and/or trusts whose
beneficiaries include Xxxxxxx X. Xxxxxx and/or Xxxxx X. Xxxxxx
and/or their descendants) acquires shares of the Company in a
transaction or series of transactions that result in such entity,
person or group directly or indirectly owning beneficially
fifty-one percent (51%) or more of the outstanding share of the
Company. As used herein, "Control Transaction" shall mean (i) any
tender offer for or acquisition of capital stock of the Company,
(ii) any merger, consolidation, reorganization or sale of all or
substantially all of the assets of the Company which has been
approved by the shareholders, (iii) any contested election of
directors of the Company, or (iv) any combination of the
foregoing which results in a change in voting power sufficient to
elect a majority of the Board. As used herein, "Group" shall mean
persons who act in concert as described in Sections 13(d)(3)
and/or 14(d)(2) of the Securities Exchange Act of 1934, as
amended.
3. Benefits. During the Employment Term, Employee shall be entitled to
participate in all medical, profit sharing and other benefit plans made
available to senior executives of the Company on the same terms as offered to
the Company's other senior executives. The Employer reserves the right to alter,
revise or eliminate any prior practice, policy or benefit in whole or in part,
without notice.
4. Termination of Employment.
(a) Termination for Cause. This Agreement (and the Employment Term)
may be terminated at any time by the Employer for Cause, by written notice
to the Employee specifying in reasonable detail the reasons therefor. The
term "Cause" shall mean willful misconduct or dishonesty or conviction of
or failure to contest prosecution for a felony, or excessive absenteeism
unrelated to illness.
(b) Death or Permanent Disability of Employee. Employee's employment
hereunder and the Employment Term shall terminate upon Employee's death. In
addition, the Employer shall have the right to terminate Employee's
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employment hereunder and the Employment Term upon 15 days' written notice
if and when Employee becomes permanently disabled within the meaning of any
permanent disability insurance policy which may be maintained by the
Employer for the benefit of Employee and under which the Employee is
entitled to benefits under Section 3; provided, however, that if Employer
does not maintain such a permanent disability insurance policy for the
benefit of Employee, Employee shall be deemed permanently disabled if
Employee, by reason of injury, illness or similar cause was unable to
perform his duties for a period of 90 consecutive days or 120 days in any
360-day period.
(c) Compensation Upon Death, Disability, Termination for Cause. If (i)
Employee dies during the Employment Period or the Employer terminates
Employee's employment upon Employee's becoming permanently disabled, as
described in Section 4(b), or (ii) the Employer terminates Employee's
employment for Cause, as described in Section 4(a), then (A) the Employer
will pay to Employee (or Employee's estate or representatives, as the case
may be) within 30 days following such termination of employment, the unpaid
Annual Base Salary and vacation earned by Employee before the date of such
event as provided for in this Agreement (computed pro rata up to and
including such date of such event) (the "Accrued Obligations"); and (B) the
Employee shall continue to be bound by the Confidentiality Agreement in
accordance with its terms. Except as expressly provided in this Agreement,
such payments will be in lieu of any and all other compensation, benefits
and claims of any kind, excepting only such additional amounts as may be
provided for under the express terms of any applicable benefit plans or be
required by law to be paid (which amounts will be paid in accordance with
such terms or requirements, as the case may be).
(d) Termination Without Cause. The Employer, by written notice to
Employee, shall have the right to terminate Employee's employment without
Cause for any reason or for no reason. If the Employer terminates
Employee's employment without Cause for any reason or for no reason, as
described in this Section 4(d), then (A) the Employer will pay to Employee
(i) within 30 days following such termination, the Accrued Obligations, and
(ii) except as otherwise provided in Section 6(d), twelve month's Annual
Base Salary, payable in accordance with the Company's normal payroll
practices; and (B) the Employee shall continue to be bound by the
Confidentiality Agreement in accordance with its terms. Except as expressly
provided in this Agreement, such payments will be in lieu of any and all
other compensation, benefits and claims of any kind, excepting only such
additional amounts as may be provided for under the express terms of any
applicable benefit plans or be required by law to be paid (which amounts
will be paid in accordance with such terms or requirements, as the case may
be).
5. Non-Competition; Solicitation of Employees.
(a) Non-Competition. During the Employment Term and to the extent
permitted by applicable law for one year thereafter, the Employee shall not
participate in the management or act as a consultant or employee of, or
acquire any financial interest (other than less than 2% of the outstanding
stock of any public company) in, any enterprise that is engaged in the
business of light activated teeth whitening (the "Restricted Business") in
the United States or in any other area of the world where the Company
conducts the Restricted Business during the Employment Term, or where, as
of the end of the Employment Term, the Company has undertaken substantial
activities to conduct the Restricted Business.
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(b) Solicitation. For two years after the termination of the
Employment Term, the Employee will not employ, solicit or recommend to any
other person that they employ or solicit for employment any person who is,
or was at any time within six months prior to such termination, an employee
of the Company, provided that the Employee may respond in accordance with
ordinary business practices to requests for references from a prospective
employer of any such person.
(c) Access to Confidential Information. Employee is a key employee of
the Company. Employee acknowledges that during the Employment Term he will
have access to and knowledge of confidential information as defined in the
Confidentiality Agreement ("Confidential Information"), and has and will be
responsible for, or instrumental in creating or maintaining, certain
business relations and goodwill that are valuable to the Company. Employee
acknowledges that the Confidential Information and goodwill belong to the
Company.
(d) Necessary Restrictions. Employee acknowledges that the covenants
and restrictions of this Section 5 are necessary to protect the Company's
Confidential Information and to preserve the value of the Company's good
will for the Company. Employee agrees and acknowledges that the time, scope
and geographic limitations of this Section 5 are reasonable. Employee also
agrees and acknowledges that the terms of this Section 5 are reasonably
necessary for the protection of the Company's Confidential Information and
goodwill, and they provide a reasonable means of protecting the Company's
business value.
(e) Adequate Consideration. Employee acknowledges that the
consideration received and to be received by him during the Employment Term
is adequate for the covenants of this Section 5.
6. Timing of Relocation; Interim Lodging and Commuting Expenses; Moving
Expenses.
(a) Relocation and Interim Lodging and Commuting Expenses. It is
acknowledged that the Employer has been studying the possibility of moving
its principal Executive Offices to an area other than Walnut Creek. The
Employee shall be informed of the progress of those studies and permitted
to participate in those studies. It is understood that the Employee will be
entitled to delay his relocation with his family as provided herein. Until
the Relocation Date, as defined below, the Employer shall pay for an
apartment and rental car for the Employee in the area of the Employer's
principal Executive Office, and the Employer shall reimburse the Employee
for his reasonable expenses of commuting to and from his home in New Jersey
on a reasonable basis, in any event including air transportation and
airport parking.
(b) Relocation Date. "Relocation Date" shall be a date agreed upon by
the Employer and the Employee that shall be within twelve months from the
Start Date or if later, 30 days after the Relocation Notice Date, as
defined below, but in any event the Relocation Date shall be no earlier
than the latest of: (i) twelve months after the Start Date, (ii) 90 days
after the Relocation Notice Date, and (iii) if the Employer decides to move
its principal Executive Office from the Walnut Creek area to another
specified area, 30 days after the end of any school term of the Employee's
children in progress at the time the Employer actually relocates its
principal Executive Office.
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(c) Relocation Notice Date. The "Relocation Notice Date" is the date
determined as follows: (A) the date the Company provides written notice to
the Employee that it has made a decision to retain its principal Executive
Offices in the Walnut Creek area, or (B) the date the Company provides
written notice to the Executive that it has made a decision to move its
principal Executive Offices from the Walnut Creek area to another specified
area.
(d) Relocation Notice Decision. Within thirty days of the Relocation
Notice Date, or if later, within twelve months after the Start Date, the
Employee shall notify the Company whether he will promptly relocate with
his family to the area of the Company's principal Executive Offices. In the
event that (i) the Employee fails to so notify the Company or (ii) he
notifies the Company at any time that he will not so relocate or (iii) he
notifies the Company that he will relocate but fails to do so by the
Relocation Date or (iv) he voluntarily terminates his employment hereunder
prior to the Relocation Date (any of the occurrences in subclauses (i),
(ii), (iii) or (iv) being a "Forfeiture Event") and his employment and the
Employment Term have not been terminated pursuant to Section 4(b) or 4(d)
prior to the Forfeiture Event, (A) the Employee shall automatically forfeit
all Options, vested and unvested, except those, if any, which the Company
may elect to allow him to continue to own and (B) the Company or the
Employee may terminate this Agreement without Cause in which case the
Employee shall be entitled to six months' Base Salary (payable monthly
during the six months following such termination).
(e) Moving Expenses. The Company shall reimburse the Employee for the
reasonable expenses of moving his family and household possessions from his
present home in New Jersey to a new residence in the area of the Company's
principal Executive Offices.
7. Miscellaneous.
(a) Representations. The Employee represents that his employment by
the Company pursuant to this Agreement and the observance of his
obligations under the Confidentiality Agreement will not conflict with any
other agreements or understanding to which he is subject.
(b) Waivers. No waiver of any terms or conditions or of the breach of
any covenant, representation or warranty of this Agreement or the
Confidentiality Agreement in any one instance shall operate as or be deemed
to be or construed as a further or continuing waiver of any other breach of
such term, condition, covenant, representation or warranty or any other
term, condition, covenant, representation or warranty nor shall any failure
or delay at any time or times to enforce or require performance of any
provision hereof operate as a waiver of or affect in any manner such
party's right at a later time to enforce or require performance of such
provision or of any other provision hereof.
(c) Modification. Except as otherwise provided in this Agreement,
neither this Agreement, the Confidentiality Agreement nor any term hereof
or thereof may be changed, amended, modified, waived, discharged or
terminated except to the extent that the same is effected and evidenced by
the written consent of the party against whom enforcement of such change or
modification is sought.
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(d) Injunctive Relief. Employee acknowledges and agrees that it is
fair and reasonable that he make the covenants and undertakings set forth
in Section 5 of this Agreement and in the Confidentiality Agreement and has
done so with the benefit of the advice of counsel. Furthermore, Employee
agrees that any breach or attempted breach by him of such provisions will
cause the Company irreparable damage for which a monetary award would be
inadequate remedy. Accordingly, the Employer shall be entitled to apply for
and obtain, in addition to monetary awards, injunctive relief (temporary,
preliminary and permanent) in order to restrain the breach or threatened
breach of, or otherwise to specifically enforce, any of the provisions of
Section 5 of this Agreement or the Confidentiality Agreement, without the
requirement to post a bond or provide other security. Employee hereby
consents to the entry of mandatory injunctive relief to assure his specific
performance of the terms of Section 5 of this Agreement and the
Confidentiality Agreement by a court or arbitrator of competent
jurisdiction. Nothing herein shall be construed as a limitation or waiver
of any other rights or remedies that may be available to the Employer for
such breach or threatened breach. Employee further agrees that the subject
matter and duration of the restrictions in Section 5 of this Agreement and
the Confidentiality Agreement are reasonable in light of the facts as they
exist today.
(e) Governing Law. This Agreement and the Confidentiality Agreement
shall be governed by, and interpreted in accordance with, the laws of the
State of Utah applicable to agreements made and to be performed entirely
within such State.
(f) Notices. All notices, requests, demands and other communications
required or permitted under this Agreement shall be in writing and sent as
follows:
If to Employee:
Xxxxx Xxxxxxx
00 Xxxxxxxx Xxx
Xxxxxxxxxx, X.X. 00000
If to the Employer:
BriteSmile, Inc.
000 Xxxxx Xxxxx Xxxx
Xxxxxx Xxxxx, XX 00000
Attn: Chief Executive Officer
All notices and other communications required or permitted under this
Agreement which are addressed as provided in this Section 7(f), (A) if
delivered personally against proper receipt shall be effective upon receipt
and (B) if sent (1) by certified or registered mail with postage prepaid or
(2) by Federal Express or similar courier service with courier fees paid by
the sender, shall be effective upon delivery. The parties hereto may from
time to time change their respective addresses for the purpose of notices
to that party by a similar notice specifying a new address, but no such
change shall be deemed to have been given unless it is sent and received in
accordance with this Section 7(f).
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(g) No Set-Off. Employer's obligation to make payments pursuant to
this Agreement shall be unconditional and shall be made without reduction
of set off of any kind other than applicable tax withholding and similar
requirements under applicable law.
(h) Entire Understanding; No Third Party Beneficiaries. This
Agreement, with the Confidentiality Agreement, represents the entire
understanding of the Employer and Employee with respect to Employee's
employment with the Employer and Employee's compensation therefor. The Term
Sheet (the "Term Sheet") dated as of May 31, 2002 between Employer and
Employee relating to Employee's employment shall be deemed to be merged
into and superseded by this Agreement and of no further force or effect.
Nothing in this Agreement, express or implied, is intended to confer on any
person, other than the parties hereto and their respective heirs, permitted
representatives, successors and permitted assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
(i) Severability. If any of the provisions of this Agreement or the
Confidentiality Agreement are found by any court of competent jurisdiction
(or legally empowered agency) to be in violation of applicable law or
unenforceable for any reason whatsoever, then it is the intention of the
parties that such provision or provisions be deemed to be automatically
amended to the extent necessary to comply with applicable law and permit
enforcement. If any of the provisions of this Agreement or the
Confidentiality Agreement shall be deemed by any court of competent
jurisdiction (or legally empowered agency) to be wholly or partially
invalid, such determination shall not affect the binding effect of the
other provisions of this Agreement or the Confidentiality Agreement.
(j) Counterparts. This Agreement and the Confidentiality Agreement may
be executed in two or more counterparts, including facsimile counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
(k) Headings; Interpretation. The various headings contained herein
are for reference purposes only and do not limit or otherwise affect any of
the provisions of this Agreement. It is the intent of the parties that
neither this Agreement nor the Confidentiality Agreement be construed more
strictly with regard to one party than with regard to any other party.
(l) Successors and Assigns. This Agreement and the Confidentiality
Agreement shall be binding upon and inure to the benefit of any successor
or assigns of the Employer, whether by merger, consolidation, sale of
assets or otherwise, and reference herein to the Employer shall be deemed
to include any such successor or assigns.
(m) Legal Fees. The Company shall pay the reasonable legal expenses
incurred by the Employee in connection with the negotiation, execution and
delivery of this Employment Agreement, the Confidentiality Agreement and
the Term Sheet.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
BRITESMILE, INC.
By: /s/ Xxxx Xxxx
Name: Xxxx Xxxx
Title: CEO
/s/ Xxxxx Xxxxxxx
---------------------------------------
Xxxxx Xxxxxxx
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Exhibit A
First Year Objectives
1. Develop a strategic plan reasonably acceptable to the Executive
Committee for improving the efficiency of the Company's media spending
with a focus on (a) improving the productivity of domestic Associated
Centers; (b) improving the productivity of domestic Centers and (c)
signing more productive Associated Centers.
2. The Company achieving average "same store" Associated Center net
revenues per office per week ("NRPOPW") during the fiscal quarter
ending June 30, 2003 of $ * .
3. The Company achieving average "same store" Center NRPOPW during the
fiscal quarter ending June 30, 2003 of $ * .
* Amount to be set by the employer's Chief Executive Officer after
giving reasonable consideration to recommendations made by the
Employee within 60 days of the Start Date.
