EMPLOYMENT AGREEMENT
This Employment Agreement dated effective as of July 1,
2000, is by and between OAKRIDGE HOLDINGS, INC, a Minnesota
corporation located at 0000 000xx Xxxxxx, Xxxxx Xxxxxx, Xxxxxxxxx
(the "Company") and Xxxxxx X. Xxxxxx, an individual residing at
0000 000xx Xxxxxx Xxxx, Xxxxx Xxxxxx, Xxxxxxxxx (the "Employee").
A. The Employee is familiar with the Company's business and
products.
B. The parties wish to provide for the employment of the
Employee by the Company.
C. The Employee wishes to receive compensation from the Company
for the Employee's services, and the Company desires reasonable
protection of its confidential business and technical information
that has been acquired and is being developed by the Company at
substantial expense.
D. The Company has established the Oakridge Holdings, Inc. 1998
Stock Incentive Awards Plan (the "Plan") pursuant to which
eligible employees of Company and its subsidiaries, including the
Company, may, in the discretion of the Board of Directors of
Holdings, receive grants of incentive and non-statutory stock
options. The Company and Holdings wish to provide Employee with
an opportunity to earn options under the Plan in the event
certain goals of the Company and Employee are achieved.
E. The Company wishes to obtain reasonable protection against
unfair competition from the Employee following termination of
employment and to further protect against unfair use of its
confidential business and technical information and the Employee
is willing to grant the Company the benefits of a
covenant-not-to-compete for these purposes.
For good and valuable consideration, the receipt of which is
hereby acknowledged, the Company and the Employee each intending
to be legally bound, agree as follows:
1. Employment.
(a) Employment. Subject to all of the terms and
conditions of this Agreement, the Company agrees to employ the
Employee as its President & Chief Executive Officer of the
Company and President & Chief Executive Officer of the company's
wholly owned subsidiaries and the Employee accepts such
employment.
(b) Duties. The Employee will devote a minimum of
forty (40) hours per week to, and, during such time, make the
best use of Employee's energy, knowledge and training in
advancing the Company's interests. The Employee will diligently
and conscientiously perform the duties of the Employee's position
within the general guidelines to be determined by the Company's
Board of Directors (the "Board"). While the Employee is employed
by the Company, the Employee will keep the Company informed of
any other business activities or outside employment, and will
promptly stop any activity or employment that might conflict with
the Company's interests or adversely affect the performance of
the Employee's duties for the Company.
2. Compensation.
(a) Base Salary. The Company agrees to pay Employee
an annual base salary of $180,000 per year beginning July 1,
2000, less legally required deductions and withholdings, payable
in periodic installments in accordance with the standard payroll
practices of the Company in effect from time-to-time. On July 1,
2001, the annual base salary will be adjusted upwards by 5%. On
July 1, 2002 and 2003, the annual base salary will be adjusted
upwards by an incremental 5% over the base salary in the prior
year. In the event of change of control of the Company which
leads to the termination or separation of the Employee (1)
because the position is eliminated, (2) because continuing to
work in the position would require the employee to transfer to a
work site outside a 50 mile radius of his work location at the
time of change in control and Employee is unwilling to relocate,
or because his responsibilities change so substantially that the
Employee has effectively been removed from the position held by
him prior to the change in control, the Employee will
automatically get an additional twelve (12) months of prior base
salary and the remainder of his contract.
(b) Incentive Bonus. The Employee will be entitled to
receive an incentive bonus award of up to seventy percent (70%)
of his base salary depending upon the achievement of objectives
defined and agreed to by the Board of Directors prior to the last
Board meeting of each calendar year. The determination of any
additional incentive bonus programs shall be in the sole
discretion of the Board of Directors. In the event of a change
of control of the Company, a minimum bonus of $150,000 will be
paid for each year of compensation remaining under the terms of
this Agreement for which a bonus has not yet been paid.
(c) Reimbursement of Business Expenses. The Company
agrees to reimburse the Employee for all reasonable out-of-pocket
business expenses incurred by the Employee on behalf of the
Company, provided that the Employee properly accounts to the
Company for all such expenses in accordance with the rules and
regulations of the Internal Revenue Service under the Internal
Revenue Code of 1986, as amended (the "Code") and in accordance
with the standard policies of the Company relating to
reimbursement of business expenses.
(d) Benefits and Vacation. The Employee shall also be
entitled to participate in all employee benefit plans or programs
of the Company, including any disability and life insurance group
plans, to the extent that his position, title, tenure, salary,
age, health and other qualifications make him eligible to
participate. The Company will provide $ 5,000 expense
reimbursement yearly for life insurance. The Employee shall be
entitled to take twenty-five (25) days of vacation per year with
pay, at such times as shall be mutually convenient to the Company
and the Employee. Vacation time may be accumulated throughout
the term of this and any prior agreements. The Employee will also
be required to have a physical examination yearly and report the
findings back to the board of directors.
3. Term and Termination.
(a) Term. Subject to earlier termination in
accordance with Section 3(b) below, this Agreement will become
effective on the date set forth above and will have an initial
term of four (4) years.
(b) Termination. Subject to the respective continuing
obligations of the Company and the Employee under Sections 4, 5
and 6:
(1) The Company may terminate this Agreement
immediately on written notice to the Employee for cause,
including (without limitation) (i) dishonesty, fraud, material
and deliberate injury or attempted injury, in each case related
to the Company or its business, (ii) any unlawful or criminal
activity of a serious nature, (iii) any willful breach of duty or
habitual neglect of duty, (iv) any intended to result in personal
enrichment of the Employee at the expense of the Company, or (v)
any breach of Sections 4, 5 and 6 of this Agreement
(2) This Agreement will terminate upon Employee's
death or upon written notice from the Company in the event of
Employee's "permanent disability" (the term "permanent
disability" means the occurrence of an event which constitutes
permanent and total disability within the meaning of Section
22(e)(3) of the Code);
(3) This Agreement will not terminate upon a change in
control. For purposes of this Agreement, a "Change in Control"
means (i) the sale, lease, exchange or other transfer of all or
substantially all of the assets of Holdings to a corporation,
person or other entity that is not controlled by Holdings; (ii)
the approval by the shareholders of Holdings any plan or proposal
for the liquidation or dissolution of Holdings; (iii) a merger or
consolidation to which Holdings is a party if the shareholders of
Holdings immediately prior to the effective date of such merger
or consolidation have "beneficial ownership" (as defined in Rule
13d-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), immediately following the effective date of
such merger or consolidation, of securities of the surviving
corporation representing (A) 50% or more, but not more than 80%,
of the combined voting power of the surviving corporation's then
outstanding securities ordinarily having the right to vote at
elections of directors, unless such merger or consolidation has
been approved in advance by the Board, or (B) less than 50% of
the combined voting power of the surviving corporation's then
outstanding securities ordinarily having the right to vote at
elections of directors (regardless of any approval by the Board
of Directors of Holdings); (iv) any person becomes, after the
date hereof, the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of (A) 20% or
more, but not 50% or more, of the combined voting power of the
outstanding securities of Holdings ordinarily having the right to
vote at elections of directors, unless the transaction resulting
in such ownership has been approved in advance by the Board of
Directors of Holdings, or (B) more than 50% of the combined
voting power of the outstanding securities of Holdings ordinarily
having the right to vote at elections of directors (regardless of
any approval by the Board); or (v) a change in control of
Holdings of a nature that would be required to be reported
pursuant to Section 13 or 15 (d) of the Exchange Act, whether or
not Holdings is then subject to such reporting requirements. If
terminated by a change in control there shall be no adverse
change in Salary, bonus, opportunity, benefits or location of
business, if there is, severence shall be equal to three times.
The date this Agreement is terminated is hereinafter
referred to as the "Termination Date."
(c) Compensation Upon Termination. If the Company
terminates this Agreement pursuant to paragraph (3) of Section
3(b), the Company will be obligated to pay the Employee three
times his Salary as may be due and owing through the terms of the
contract, and all other non-contingent compensation shall be
earned through the terms of the contract. Such Salary and other
amounts owed will be paid in one lump sum within ten business
days of the Termination Date.
4. Confidentiality.
(a) Prohibition on Use of Confidential Information.
The Employee agrees not to directly or indirectly disclose or use
at any time, either during or subsequent to his employment by the
Company and any of its subsidiaries or affiliates (which
obligation will survive indefinitely), any technology, trade
secrets, know-how, or other information, knowledge, or data
possessed or used by the Company or Holdings or to which the
Employee gains access in connection with his employment and which
the Company or Holdings deems confidential or proprietary or
which the Employee has reason to believe is confidential or
proprietary, except as such disclosure or use may be required in
connection with his work for the Company or unless the Employee
first secures the written consent of the Company and Holdings.
Upon termination of his employment, the Employee will promptly
return to the Company all originals and all copies of all
property and assets of the Company or Holdings created or
obtained by the Employee as a result of or in the course of or in
connection with his employment with the Company which are in the
Employee's possession or control, whether confidential or not,
including, but not limited to, computer files, software programs,
computer equipment, correspondence, notes, memoranda, notebooks,
drawings, customer lists, or other documents delivered to the
Employee concerning any idea, product, apparatus, invention or
process manufactured, used, developed, investigated, or marketed
by the Company or Holdings during the period of his employment.
(b) Third-Party Information. The Employee understands
and acknowledges that the Company has a policy prohibiting the
receipt by the Company of any confidential information in breach
of the Employee's obligations to third parties and does not
desire to receive any confidential information under such
circumstances. Accordingly, the Employee will not disclose to
the Company or use in the performance of any duties for the
Company any confidential information in breach of an obligation
to any third party. The Employee represents that he has provided
the Company with a copy of any agreement by which the Employee is
bound that restrict the Employee's use of any third party's
confidential information.
5. Inventions.
(a) Definition. "Inventions", as used in this
Agreement, means any inventions, discoveries, improvements and
ideas, whether or not in writing or reduced to practice and
whether or not patentable or copyrightable, made, authored or
conceived by the Employee, whether by the Employee's individual
efforts or in connection with the efforts of others, and that
either (i) relate in any way to the Company's business, products
or processes, past, present, anticipated or under development, or
(ii) result in any way from the Employee's employment by the
Company, or (iii) use the Company's equipment, supplies,
facilities or trade secret information.
(b) Ownership of Inventions. The Employee agrees that
all Inventions made by the Employee during the period of the
Employee's employment with the Company and for eighteen (18)
months thereafter, whether made during the working hours of the
Company or on the Employee's own time, will be the sole and
exclusive property of the Company. The Employee will, with
respect to any Invention: (i) keep current, accurate, and
complete records, which will belong to the Company and be kept
and stored on the Company's premises; (ii) promptly and fully
disclose the existence and describe the nature of the Invention
to the Company in writing (and without request); (iii) assign
(and the Employee hereby assigns) to the Company all of the
Employee's right, title and interest in and to the Invention, any
applications the Employee makes for patents or copyrights in any
country, and any patents or copyrights granted to the Employee in
any country; and (iv) acknowledge and deliver promptly to the
Company any written instruments, and perform any other acts
necessary in the Company's opinion to preserve property rights in
the Invention against forfeiture, abandonment or loss and to
obtain and maintain letters patent and/or copyrights on the
Invention and to vest the entire right and title to the Invention
in the Company. The Employee agrees to perform promptly (without
charge to the Company but at the expense of the Company) all acts
as may be necessary in the Company's opinion to preserve all
patents and/or copyrights granted upon the Employee's Inventions
forfeiture, abandonment or loss.
The requirements of this Section 5(b) do not apply to
any Invention for which no equipment, supplies, facility or
trade secret information of the Company was used and which
was developed entirely on the Employee's own time, and (i)
which does not relate directly to the Company's business or
to the Company's actual or demonstrably anticipated research
or development, or (ii) which does not result from any work
the Employee performed for the Company. The Employee
represents that, except as disclosed below, as of the date
of this Agreement, the Employee has no rights under and will
make no claims against the Company with respect to, any
inventions, discoveries, improvements, ideas or works of
authorship which would be Inventions if made, conceived,
authored or acquired by the Employee during the term of this
Agreement.
(c) Works Made for Hire. To the extent that any
Invention qualifies as "work made for hire" as defined in 17
U.S.C. 101 (1976), as amended, such Invention will constitute
"work made for hire" and, as such, will be the exclusive property
of the Company.
(d) Presumption. In the event of any dispute,
arbitration or litigation concerning whether an invention,
improvement or discovery made or conceived by the Employee is the
property of the Company, such invention, improvement or discovery
will be presumed the property of the Company and the Employee
will bear the burden of establishing otherwise.
(e) Survivability. The obligations of this Section 5
will survive the expiration or termination of this Agreement.
6. Non-Competition Agreement.
(a) Other Agreements. The Employee represents and
warrants to the Company that he is not currently subject to a non-
competition, confidentiality or other such agreement with a
former employer which prohibits the Employee from working for the
Company.
(b) Definition. "Company Product" means any actual or
projected product, product line or service that has been
designed, developed, manufactured, marketed or sold by the
Company during the Employee's employment with the Company or
regarding which the Company has conducted or acquired research
and development during the Employee's employment with the
Company.
(c) Non-Compete. The Employee agrees that, during his
employment with the Company and for a period of two (2) years
after employment with the Company ends, the Employee will not
alone, or in any capacity with another firm, within any
geographical area in which the Company, at the termination of the
Employee's employment with the Company, was engaged in more than
an insignificant volume of business:
(1) directly or indirectly participate in or support
in any capacity (e.g., as an advisor, principal, agent, partner,
officer, director, shareholder, employee or otherwise) the
manufacture, invention, development, sale, solicitation of sale,
marketing, testing, research or other business aspect of any
actual or projected product, product line or service designed,
developed, manufactured, marketed or sold by anyone other than
the Company that performs similar functions or is used for the
same general purposes as a Company Product;
(2) call upon, solicit, contact or serve any of the
then-existing clients, customers, vendors or suppliers, of the
Company, any clients, customers, vendors or suppliers that have
had a relationship with the Company during the preceding twelve
(12) months, or any potential clients, customers, vendors or
suppliers that were solicited by the Company during the preceding
twelve (12) months;
(3) disrupt, damage, impair, or interfere with the
business of the Company whether by way of interfering with or
disrupting the Company's relationship with employees, customers,
agents, representatives or vendors; or
(4) employ or attempt to employ (by soliciting or
assisting anyone else in the solicitation of) any of the
Company's then employees on behalf of any other entity, whether
or not such entity competes with the Company.
(d) Exceptions to Non-Compete. The restrictions
contained in Section 6(c) of this Agreement will not prevent the
Employee from accepting employment with a large diversified
organization with separate and distinct divisions that do not
compete, directly or indirectly, with the Company, as long as
prior to accepting such employment the Company receives separate
written assurances from the prospective employer and from the
Employee, satisfactory to the Company, to the effect that the
Employee will not render any services, directly or indirectly, to
any division or business unit that competes, directly or
indirectly, with the Company. During the restrictive period set
forth in Section 6(c), the Employee will inform any new employer,
prior to accepting employment, of the existence of this Agreement
and provide such employer with a copy of this Agreement.
(e) Cessation of Business. Section 6(c) of this
Agreement will cease to be applicable to any activity of the
Employee from and after such time as the Company (i) has ceased
all business activities for a period of six (6) months or (ii)
has made a decision through its Board of Directors not to
continue, or has ceased for a period of six (6) months, the
business activities with which such activity of the Employee
would be competitive.
(f) No Additional Compensation. In the event that the
Employee's employment terminates for any reason, no additional
compensation will be paid for this non-competition obligation.
(g) Survival. The obligations of this Section 6 will
survive the expiration or termination of this Agreement.
7. Miscellaneous.
(a) No Adequate Remedy. The Employee understands that
if the Employee fails to fulfill Employee's obligations under
Sections 4, 5 and 6 of this Agreement, the damages to the Company
would be very difficult to determine. Therefore, in addition to
any rights or remedies available to the Company at law, in
equity, or by statute, the Employee hereby consents to the
specific enforcement of Sections 4, 5 and 6 of this Agreement by
the Company through an injunction or restraining order issued by
an appropriate court.
(b) Consent to Use of Name. The Employee consents to
the use of Employee's name in appropriate Company materials such
as, but not limited to, offering memoranda related to financing
activities of the Company.
(c) No Conflicts. The Employee represents and
warrants to the Company that neither the entering into of this
Agreement nor the performance of any obligations hereunder will
conflict with or constitute a breach under any obligation of the
Employee, as the case may be, under any agreement or contract to
which the Employee is a party or any other obligation by which
the Employee is bound. Without limiting the foregoing, the
Employee agrees that at no time will the Employee use any trade
secrets or other intellectual property of any third party while
performing services hereunder.
(d) Successors and Assigns. This Agreement is binding
on and inures to the benefit of the Company's successors and
assigns; provided however, that the Company may assign the
Agreement only in connection with a merger, consolidation,
assignment, sale or other disposition or substantially all of its
assets or business. This Agreement is also binding on the
Employee's heirs, successors, assigns and legal representatives.
(e) Modification. This Agreement may be modified or
amended only by a writing signed by the Company and the Employee.
(f) Governing Law. The laws of Minnesota will govern
the validity, construction, and performance of this Agreement.
Any legal proceeding related to this Agreement will be brought in
an appropriate Minnesota court, and the Company and the Employee
hereby consent to the exclusive jurisdiction of that court for
this purpose.
(g) Dispute Resolution. Except for any proceeding
brought pursuant to Section 7(a) herein, the parties agree that
any dispute arising out of or relating to this Agreement or the
formation, breach, termination or validity thereof (a "Dispute"),
will be resolved as follows. If the Dispute cannot be settled
through direct discussions, the parties will first try to settle
the Dispute in an amicable manner by mediation under the
Commercial Mediation Rules of the American Arbitration
Association, before resorting to arbitration. Any Dispute that
has not been resolved within sixty (60) days of the initiation of
the mediation procedure (the "Mediation Deadline") will be
settled by binding arbitration by a panel of three arbitrators in
accordance with the commercial arbitration rules of the American
Arbitration Association. The arbitration and mediation
proceedings will be located in Minneapolis, Minnesota. The
arbitrators are not empowered to award damages in excess of
compensatory damages and each party hereby irrevocably waives any
damage in excess of compensatory damages. Judgment upon any
arbitration award may be entered into any court having
jurisdiction thereof and the parties' consent to the jurisdiction
of the courts the state in which the arbitration occurred for
this purpose.
(h) Construction. Whenever possible, each provision of
this Agreement will be interpreted so that it is valid under the
applicable law. If any provision of this Agreement is to any
extent declared invalid by a court of competent jurisdiction
under the applicable law, that provision will remain effective to
the extent not declared invalid. The remainder of this Agreement
also will continue to be valid, and the entire Agreement will
continue to be valid in other jurisdictions.
(i) Waivers. No failure or delay by the Company or
the Employee in exercising any right or remedy under this
Agreement will waive any provision of the Agreement. Nor will
any single or partial exercise by either the Company or the
Employee of any right or remedy under this Agreement preclude
either of them from otherwise or further exercising these rights
or remedies, or any other rights or remedies granted by any law
or any related document.
(j) Entire Agreement. This Agreement supersedes all
previous and contemporaneous oral negotiations, commitments,
writings and understandings between the parties concerning the
matters in this Agreement, including without limitation any
policy or personnel manuals of the Company.
(k) Notices. All notices and other communications
required or permitted under this Agreement will be in writing and
sent by registered first-class mail, postage prepaid, and will be
effective five days after mailing to the addresses stated at the
beginning of this Agreement. These addresses may be changed at
any time by like notice.
IN WITNESS WHEREOF, the Company and the Employee have executed
this Agreement as of the date first above written.
OAKRIDGE HOLDINGS, INC EMPLOYEE
By: /s/ Xxxxxx X. Xxxxxx /s/Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx, President Xxxxxx X. Xxxxxx
By: /s/ Xxxxxx Xxxxxx
Xxxxxx Xxxxxx, Secretary
