Exhibit 10.1
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated December 31, 1997, (the "Effective Date"), by
and between Flexpoint, Inc., a Utah corporation and Sensitron, Inc., a Utah
corporation (collectively "Company") and Xxxx Xxxx ("Executive"). The Company
desires to engage the services of the Executive as President of the Company on
the terms and subject to the conditions of this Agreement, and Executive
desires to accept such employment.
In consideration of the terms and mutual covenants contained in this
Agreement, the Company and Executive agree as follows:
1. Employment. The Company hereby engages the services of Executive
as President of the Company with powers and duties consistent with such
position, and Executive hereby accepts such engagement. During the terms of
this Agreement, Executive shall perform such additional duties and accept
election or appointment to such additional offices or positions of the Company
or its affiliates of an executive nature as may be specified by the Board of
Directors of the Company. Executive shall perform his obligations to the
Company and it subsidiaries pursuant to this Agreement under the direction of
the Board of Directors of the Company, and Executive shall devote
approximately all of his business time and efforts to such performance.
2. Term. This Agreement shall continue in full force and effect for
a term of three years beginning on the Effective Date, unless sooner
terminated pursuant to the provisions contained herein (the "Initial Term").
Unless terminated, this Agreement will be renewed automatically for one or
more successive one-year terms (the "Renewal Terms"), unless Executive or the
Company gives its written notice of non-renewal to the other party not less
than ninety (90) days prior to the expiration of the then-current term.
Executive's period of employment hereunder, including the Initial Term and all
Renewal Terms, shall constitute and be hereinafter referred to as the "Term"
of this Agreement.
3. Compensation. For services rendered pursuant to this Agreement,
Executive shall receive, commencing on the Effective Date, the following
compensation: (i) a base salary of One Hundred Twenty Thousand Dollars
($120,000.00) in fiscal year 1998, One Hundred Twenty Thousand Dollars
($120,000.00) in fiscal year 1999, and One Hundred Twenty Thousand Dollars
($120,000.00) in fiscal year 2000; and (ii) such bonuses and/or increases as
from time to time as referenced herein or as authorized by the Board of
Directors in their sole discretion. Executive's base salary shall be paid in
equal bi-monthly installments.
4. Incentive Bonus. In addition to the base salary, Executive shall
be eligible for an incentive bonus ("Incentive Bonus") each year in the amount
as identified herein. The Incentive Bonus shall be based upon the operating
results for that year of the Company and shall be issued, if earned, within
thirty days after such operating results have been determined by the companies
accountants. The criteria upon which the Incentive Bonus is awarded shall be
set by the Board of Directors.
5. Employment Benefits. Executive shall be entitled to three weeks
of paid vacation each calendar year, beginning January 1, 1998. Unused
vacation time shall not accrue or carry over to future years, so that three
weeks will be the maximum amount of paid vacation to which Executive shall be
entitled hereunder during any calendar year.
During the term of this Agreement, the Company will provide to Executive
the following benefits:
(a) Insurance. Medical, dental, and short- and long-term disability
insurance programs for the benefit of Executive and his immediate family;
(b) Automobile. Payment of reasonable automobile expenses related to
Executive's use of his personal automobile for purposes related to the
Company's business, including reimbursement at the maximum rate per mile
allowable by the Internal Revenue Service for all mileage incurred in
connection with Company business; and
(c) Other Benefits. Executive shall also receive, on the same plans
as other applicable employees, such other employment benefits as are approved
for key employees or employees generally by the Company's Board of Directors
from time to time, including (without limitation) participation in any stock
option plans, insurance plans, profit-sharing plans and retirement plans.
(d) Life Insurance. Life insurance of no less than $1,000,000 with
Company as 50% beneficiary and Executive's assignee as the remaining 50%.
(e) Bonus. If the performance goals are met for the selected fiscal
years referenced below, Executive shall be granted stock options that shall be
exercisable as follows:
Stock Options Stock Options
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If Employed Based Upon Performance
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Fiscal Year 1998 5,000 5,000
Fiscal Year 1999 5,000 5,000
Fiscal Year 2000 5,000 5,000
In accordance with and subject to the Sensitron Omnibus Stock Option
Plan, the stock option shall be for a share purchase price of $5.00 per share
and shall be vested on the first day of the fiscal year.
In accordance with and subject to the Sensitron Omnibus Stock Option
Plan, the stock option shall be for a share purchase price of $5.00 per share
and if specific performance goals are not as outlined in paragraph.
6. Reimbursement of Future Expenses. Executive shall be reimbursed
by the Company for all reasonable out-of-pocket expenses documented and
incurred by Executive in performance of his duties under this Agreement.
7. Annual Plan. Executive shall submit to the Board of Directors for
its approval, not later than 60 days before the beginning of each calendar
year, an annual business plan for the Company (the "Annual Plan"). The Annual
Plan shall be revised by Executive and submitted to the Board of Directors for
its review (and approval in the case of material changes from the approved
Annual Plan) from time to time during each year to reflect changes in the
Annual Plan because of operations or otherwise. Each Annual Plan shall
include the following information:
(a) an annual forecast of income and expenses for the operation of
the Company;
(b) a cash flow budget, estimate of profit, and source and use of
cash statements for the operation of the Company;
(c) a payroll and staffing plan and budget for the operation of the
Company; and
8. Termination. Executive's employment will terminate upon the first
to occur of the following:
(a) Termination by the Company for "cause," as reasonably determined
by the Company's Board of Directors in good faith. For the purposes of this
Section 8, "cause" shall mean:
(i) misfeasance or negligence in the performance of his duties
hereunder;
(ii) engagement by Executive in dishonest or illegal conduct that is
injurious to the Company; or
(iii) a breach of the Company's policy and procedure as reasonably
established from time to time by the Board of Directors of the Company that is
not cured within 30 days of notice being sent by the Company.
Executive shall be given 30 days notice of any anticipated termination of
his employment for cause, and a 30 days opportunity to rectify or correct the
alleged problem. Immediately upon termination of the Executive under this
Section 8 , the Company shall have no further obligations to Executive under
this Agreement other than the continuation of insurance policies to the extent
required by law.
(b) Termination by the Company (in its sole discretion) in the event
of Executive's disability. "Disability" will be deemed to exist if Executive
has substantially failed to perform his duties hereunder for 90 consecutive
days for reasons of mental or physical health and is no longer able to perform
his duties hereunder with or without reasonable accommodations by the Company,
or if a physician selected in good faith by the Company examines Executive
(and Executive agrees to permit such examinations at the Company's expense)
and advises the Company that Executive will not be able to perform his duties
hereunder with or without reasonable accommodations by the Company for the
following 90 consecutive days. In determining what are reasonable
accommodations, the Company shall comply with the Americans with Disabilities
Act. If the Company terminates Executive's employment for disability,
Executive shall receive compensation due under Section 3 of this Agreement and
the employee benefits due under Section 4 of this Agreement through the date
of termination and the company will have no further obligation under this
Agreement other than the continuation of insurance policies to the extent
required by law.
(c) Executive's death. In the event of the Executive's death,
Executive's estate or surviving spouse, as applicable, shall receive all
compensation due to Executive under this Agreement through the date of death
and the Company will have no further obligation under this Agreement other
than the continuation of insurance policies to the extent required by law and
continuation of other benefits under this Agreement for six months following
the date of death.
(d) Termination by the Company at its discretion. Upon such
termination, Executive shall receive all compensation due him under this
Agreement and the employee benefits due under this Agreement for a period of
twelve months after termination. The Company will have no further obligation
under this Agreement other than the continuation of insurance policies to the
extent required by law.
9. Notice of Termination. Any termination of Executive's employment
under this Agreement shall be communicated by a written Notice of Termination
to the other party hereto, which notice shall specify the particular
termination provision in this Agreement relied upon by the terminating party
and shall set forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination under such provision.
10. Executive's Devotion of Time. Executive hereby agrees to devote
his full time, abilities and energy to the faithful performance of the duties
assigned to him or her and to the promotion and forwarding of the business
affairs of the Company, and not to divert any business opportunities from the
Company to himself or to any other person or business entity.
11. Agreement Not to Compete. In the event that this Agreement
expires in accordance with its terms or is terminated for any reason,
Executive covenants and agrees that for a period of two years after his
employment under this Agreement expires or is so terminated, he will not
directly or indirectly (whether as employee, director, owner, 5% or greater
stockholder, consultant, partner (limited or general) or otherwise) engage in
or have any interest in any business that competes with the business of the
Company or its subsidiaries provided, however, that nothing herein will
prevent Executive from owning up to 5% of the outstanding stock of a
corporation, so long as Executive does not participate in the business of such
corporation other than as a passive investor.
The Company may, in its discretion, give Executive written approval(s) to
personally engage in any activity or render any services referred to in this
Section if Company secures written assurances (satisfactory to the Company and
its counsel) from the Executive and any prospective employer(s) of Executive
that the integrity of the Company's Confidential or Proprietary Information
will not in any way be jeopardized by such activities, provided that the
burden of so establishing the foregoing to the satisfaction of the Company and
its counsel shall be upon the executive and prospective employer(s).
12. Agreement Not to Solicit Employees, Customers, or Others.
Executive covenants and agrees that, for a period of two years after this
Agreement is terminated, he will not, directly or indirectly, (i) solicit,
induce or hire away, or assist any third party in soliciting, diverting or
hiring away, any employee of the Company or its subsidiaries, whether or not
the employee's employment is pursuant to a written agreement and whether or
not such employment is for a specified term or is at will, or (ii) induce or
attempt to induce any customer, supplier, dealer, lender, licensee,
consultant, or other business relation of the Company or its subsidiaries to
cease doing business with the Company or its subsidiaries.
13. Inventions and Improvements. Executive agrees that all
inventions, innovations, or improvements in the Company's or its subsidiaries'
products or methods of conducting its business (including new combinations,
applications, improvements, ideas, and discoveries, whether or not
copyrightable or patentable) conceived or made by him while he is employed by
the Company or its subsidiaries and all reports, data, writings or technical
information prepared by him while he is employed by the Company belong to the
Company or its subsidiaries. Executive will promptly disclose such
inventions, innovations or improvements to the Board of Directors of the
Company and perform all actions reasonably requested to establish or confirm
the ownership of the Company or its subsidiaries thereof.
14. Ownership, Non-Disclosure and Non-Use of Confidential or
Proprietary Information.
(a) Executive covenants and agrees that while he is employed by the
Company and after termination of employment he will not, directly or
indirectly:
(i) give any person not authorized by Company to receive it or use
it, except for the sole benefit of the Company or its subsidiaries, any of the
Company's or subsidiaries' proprietary data or information whether relating to
products, ideas, designs, processes, research, marketing, customers,
management, know-how, patents or otherwise; or
(ii) give to any person not authorized by the Company to receive it
any specifications, reports, or technical information or the like owned by the
Company or its subsidiaries; or
(iii) give to any person not authorized by the Company to receive it
any information that is not generally known outside the Company or that is
designated by the Company or its subsidiaries as limited, private, or
confidential.
(b) If Executive is employed in a sales capacity, Executive will not
render services, directly or indirectly, to any competitor of the Company or
its subsidiaries in connection with the development, marketing, sales,
merchandising, leasing, servicing, or promotion of any product sold by the
Company or its subsidiaries.
(c) Executive covenants and agrees that he will keep himself informed
of the Company's policies and procedures for safeguarding the Company property
including proprietary data and information and will strictly comply therewith
at all times. Executive will return to the Company or its subsidiaries
immediately upon termination of his employment all Company or its subsidiaries
property in his possession or control.
15. Limitations. The parties agree that in the event any court of
competent jurisdiction should determine that the term or restrictions set
forth herein is unreasonable in scope, then in such event the court shall fix
the term or restrictions so as to be reasonable, enforceable and consistent
with the intent of this Agreement.
16. Independent Agreements: Survival. Executive and Company agree
that the covenants made in Sections 8 through and including 13 herein shall be
construed as agreements independent of any other provision of this Agreement,
and shall survive the termination of this Agreement. Moreover, the existence
of any claim or cause of action of Executive against the Company, or the
Company against Executive, whether or not predicated upon the terms of this
Agreement, shall not constitute a defense to the enforcement of any of these
covenants against Executive by Company, or against Company by Executive,
respectively. Any reference to the Company in Sections 7 through and
including 12 shall include the Company and its subsidiaries where applicable.
17. Complete Agreement. This Agreement embodies the complete
agreement and understanding between the parties and supersedes any prior
understandings, agreements, or representations by or among the parties,
whether written or oral, concerning the subject matter hereof in any way.
18. Amendments: Waivers. This Agreement may not be amended except
by a writing signed by both the Company and Executive. Any waiver by a party
hereof of any right hereunder shall be effective only if evidenced by a signed
writing, and only to the extent set forth in such writing.
19. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and their
respective successors, heirs, and assigns, except that Executive may not
assign any of his obligations hereunder without the prior written consent of
the Company.
20. Remedies. Each of the parties to this Agreement will be entitled
to specifically enforce its rights under this Agreement, to recover damages by
reason of any breach of any provisions of this Agreement and to exercise all
other rights to which it may be entitled. The parties agree and acknowledge
that money damages may not be an adequate remedy for breach of the provision
of the Agreement and accordingly, each party hereby agrees and consents that
in the event of any material breach of this Agreement by it, the non-breaching
party may obtain appropriate injunctive relief or an order for specific
performance, in order to enforce or prevent any violations of the provisions
of this Agreement.
21. Governing Law. In the event of any dispute arising under this
Agreement, it is agreed between the parties that the laws of the State of Utah
will govern the interpretation, validity, and effect of this Agreement without
regard to the place of execution or performance hereof.
22. Dispute Resolution. In the event of a dispute between the
parties arising out of or related to this Agreement, the parties agree to use
the following procedure prior to either party pursuing other available
remedies:
(a) A meeting shall be hold promptly between the parties, attended
by representatives having decision-making authority regarding the dispute, to
attempt in good faith to negotiate a resolution of the dispute.
(b) If, within thirty (30) days after such meeting, the parties have
not succeeded in negotiating a resolution of the dispute, they will jointly
appoint a mutually acceptable neutral person not affiliated with either of the
parties (the "Neutral"), seeking assistance in such regard from the American
Arbitration Association, Center for Public Resources, or other mutually
agreed-upon organization if they have been unable to agree upon such
appointment within forty (40) days from the initial meeting. The fees of, and
authorized costs incurred by, the Neutral shall be shared equally by the
parties.
(c) In consultation with the Neutral, the parties will select or
devise an alternative dispute resolution procedure ("ADR") by which they will
attempt to resolve the dispute, and a time and place for the ADR to be held,
with the Neutral making the decision as to the procedure, and/or place and
time, if the parties have been unable to agree on any of such matters within
twenty (20) days after initial consultation with the Neutral. In any case,
the ADR shall be held no later than sixty (60) days after selection of the
Neutral.
(d) The parties agree to participate in good faith in the ADR to its
conclusion. If the parties are not successful in resolving the dispute
through the ADR, then either party may pursue other available remedies upon
seven (7) days written notice to the other party specifying its intended
course of action.
23. Notices. Any notice to be given hereunder shall be in writing
and shall be effective when personally delivered or sent to the other party by
registered or certified mail, return receipt requested, or overnight courier,
postage prepaid, or otherwise when received by the other party, at the address
set forth at the end of this Agreement.
24. Severability. Any provision of this Agreement that is deemed
invalid, illegal, or unenforceable in any jurisdiction shall, as to that
jurisdiction and subject to this section, be ineffective to the extent of such
invalidity, illegality or unenforceablity, without affecting in any way the
remaining provisions hereof in such jurisdiction or rendering that or any
other provisions of this Agreement invalid, illegal, or unenforceable in any
other jurisdiction. If the covenant should be deemed invalid, illegal, or
unenforceable because its scope is considered excessive, such covenant shall
be modified so that the scope of the covenant is reduced only to the minimum
extent necessary to render the modified covenant valid, legal and enforceable.
25. Attorney Fees. In the event any action or proceeding is brought
by any party, against any other party, to enforce the provisions of this
Agreement, the prevailing party shall be entitled to recover its costs and
reasonable attorney fees, whether such sums are expended with or without suit,
at trial or on appeal.
26. Taxes. Any payments provided for hereunder shall be paid net of
any applicable withholding required under federal, state or local law.
27. Construction. This Agreement shall not be construed against the
party preparing it, and shall be construed without regard to the identity of
the person who drafted it or the party who caused it to be drafted and shall
be construed as if all parties had jointly prepared this Agreement and it
shall be deemed their joint work product, and each and every provision of this
Agreement shall be construed as though all the parties hereto participated
equally in the drafting hereof; and any uncertainty or ambiguity shall not be
interpreted against any one party. As a result of the foregoing, any rule of
construction that a document is to be construed against the drafting party
shall not be applicable.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
FLEXPOINT, INC. EXECUTIVE
By /s/ Xxxxx X. xxXxxxx /s/ Xxxx Xxxx
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Name: Xxxxx X. XxXxxxx Xxxx Xxxx
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Title: Sec. Address:__________________________
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SENSITRON, INC.
By: /s/ Xxxxx X. xxXxxxx
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Name: Xxxxx X. xxXxxxx
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Title: Sec.
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