Exhibit
10.5
EMPLOYMENT
AGREEMENT
THIS
EMPLOYMENT AGREEMENT is made effective as of the 1stday
of August, 2007
(the “Effective Date”).
AMONG:
MAJOR
ELECTRIC, INC., a corporation formed pursuant to the laws of the State
of Washington and having an office for business located at 18538 142nd Avenue
NE,
Woodinville, Washington 98072 ("Employer") and wholly owned subsidiary of
WPCS INTERNATIONAL INCORPORATED, a corporation formed pursuant
to the laws of the State of Delaware (“Parent”);
AND
James
Jordan, an individual having an address at
[ ]
(“Employee”).
WHEREAS,
Employee has agreed to continue to serve as an employee of Employer,
and Employer has agreed to hire Employee as such, pursuant to the terms and
conditions of this Employment Agreement (the “Agreement”).
NOW
THEREFORE THIS AGREEMENT WITNESSETH THAT in consideration of the
premises and the mutual covenants, agreements, representations and warranties
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Employee and Employer hereby
agree
as follows:
ARTICLE
1
EMPLOYMENT
Employer
hereby affirms, renews and extends the employment of Employee as Vice President
and General Manager, and Employee hereby affirms, renews and accepts such
employment by Employer for the “Term” (as defined in Article 3 below), upon the
terms and conditions set forth herein.
ARTICLE
2
DUTIES
During
the Term, Employee shall serve Employer faithfully, diligently and to the best
of his ability, under the direction and supervision of the President of Employer
and shall use his best efforts to promote the interests and goodwill of Employer
and any affiliates, successors, assigns, subsidiaries, and/or future purchasers
of Employer. Employee shall render such services during the Term at Employer’s
principal place of business in Woodinville, Washington or at such other place
of
business within a 25 mile radius of Woodinville, Washington as may be determined
by the Board of Directors of Employer, as Employer may from time to time
reasonably require of him, and shall devote all of his business time to the
performance thereof.
ARTICLE
3
TERM
The
“Term” of this Agreement shall commence on the Effective Date and continue
thereafter for a term of two (2) years, as may be extended or earlier terminated
pursuant to the terms and conditions of this Agreement.
ARTICLE
4
COMPENSATION
Salary
4.1
Employer
shall pay to Employee an annual salary (the “Salary”) of One Hundred Thirty
Thousand Dollars ($130,000.00), payable in equal installments at the end of
such
regular payroll accounting periods as are established by Employer, or in such
other installments upon which the parties hereto shall mutually agree, and
in
accordance with Employer’s usual payroll procedures, but no less frequently than
monthly. If this Agreement is extended for additional periods,
the Salary increases will be determined by the Employer’s Board of
Directors. It is the intent of the Employer to appoint Employee to
the position of President, when the existing President retires. When
Employee is appointed President, the Employee’s base salary shall increase to
$140,000 per annum.
Benefits
4.2
During
the Term, Employee shall be entitled to participate in all medical and other
employee benefit plans, including vacation, sick leave, retirement accounts
and
other employee benefits provided by Employer to similarly situated employees
on
terms and conditions no less favorable than those offered to such employees.
Such participation shall be subject to the terms of the applicable plan
documents, Employer’s generally applicable policies, and the discretion of the
Board of Directors or any administrative or other committee provided for in,
or
contemplated by, such plan.
Expense
Reimbursement
4.3
Employer
shall reimburse Employee for reasonable and necessary expenses incurred by
him
on behalf of Employer in the performance of his duties hereunder during the
Term
in accordance with Employer's then customary policies, provided that such
expenses are adequately documented.
Bonus
4.4
In
year
one of this agreement, Employee shall be eligible to receive bonuses, based
on
the financial performance of the Employer, at the discretion of the Board of
Directors of the Employer or Parent. In year two of this agreement, the Employee
shall be entitled to receive an annual bonus equal to 2% (the "Bonus") of the
consolidated annual operating income, before the deduction of interest and
taxes
(“EBIT”). The amount of the Bonus shall be determined based upon the
operating income reported in the financial statements, as calculated based
on
U.S. generally accepted accounting principles and as audited by the Employer’s
accounting firm at year end. Any Bonus amount will be payable within thirty
(30)
days from completion of the audit. Employee shall have the right to review
and
independently verify the conclusions of any audit by delivering notice in
writing to Employer within 30 days after receipt of such audit indicating that
Employee wishes to exercise his right of review and verification. Within 10
business days after receipt of any such notice, Employer shall make available
to
Employee and his representatives, at reasonable times during normal business
hours, the books and records of Employer which are reasonably necessary to
conduct such review and verification. Employee shall cause such review to be
conducted and concluded as quickly as reasonably practicable and in such a
manner so as not to unreasonably interfere with the business and operations
of
Employer. Any representatives conducting such review shall, prior to being
given
access to such books and records, be required to enter into confidentiality
and
non-disclosure agreements with Employer on terms and conditions satisfactory
to
Employer, acting reasonably. If Employee disputes the results of the audit,
he
shall, within 20 days after receipt of determination from the Employer, he
shall
notify the Employer in writing that there exists a dispute and the Employee
and
Employer shall submit such dispute for resolution to an independent accounting
firm mutually appointed by the Employee and Employer (the “Independent
Accounting Firm”), which shall determine and report to the parties and such
report shall be final, binding and conclusive on the parties
hereto. If the Independent Accounting Firm determines that the EBIT
is more than five percent (5%) above the EBIT determined by the Employer, then
the Employer shall pay the legal fees and expenses (including the fees of the
Independent Accounting Firm) of the other party. If the Independent
Accounting Firm determines that the EBIT is equal to or less than five percent
(5%) above the EBIT determined by the Employer, then the Employee shall pay
the
legal fees and expenses (including the fees of the Independent Accounting Firm)
of the Employer. The parties shall cooperate with one another and
provide reasonable access of all pertinent books and records to the other
party.
ARTICLE
5
OTHER
EMPLOYMENT
During
the Term of this Agreement, Employee shall devote substantially all of his
business and professional time and effort, attention, knowledge, and skill
to
the management, supervision and direction of Employer’s business and affairs as
Employee’s highest professional priority. Except as provided below, Employer
shall be entitled to all benefits, profits or other issues arising from or
incidental to all work, services and advice performed or provided by Employee.
Provided that the activities listed below do not materially interfere with
the
duties and responsibilities under this Agreement, nothing in this Agreement
shall preclude Employee from devoting reasonable periods required
for:
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(a)
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Serving
as a member of any organization involving no conflict of interest
with
Employer;
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(b)
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Serving
as a consultant in his area of expertise to government, commercial
and
academic panels where it does not conflict with the interests of
Employer;
and
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(c)
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Managing
his personal investments or engaging in any other non-competing
business.
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ARTICLE
6
CONFIDENTIAL
INFORMATION/INVENTIONS
Confidential
Information
6.1
Employee
shall not, in any manner, for any reasons, either directly or indirectly,
divulge or communicate to any person, firm or corporation, any confidential
information concerning any matters not generally known or otherwise made public
by Employer which affects or relates to Employer’s business, finances, marketing
and/or operations, research, development, inventions, products, designs, plans,
procedures, or other data (collectively, “Confidential Information”) except in
the ordinary course of business or as required by applicable law. Without regard
to whether any item of Confidential Information is deemed or considered
confidential, material, or important, the parties hereto stipulate that as
between them, to the extent such item is not generally known, such item is
important, material, and confidential and affects the successful conduct of
Employer’s business and goodwill, and that any breach of the terms of this
Section 6.1 shall be a material and incurable breach of this Agreement.
Confidential Information shall not include (i) information in the public domain
at the time of the disclosure of such information by Employee, (ii) information
that is disclosed by Employee with the prior consent of Employer, or (iii)
information disclosed in connection with a legal or governmental proceeding
provided that Employee has delivered prior written notice thereof to Employer
and has reasonably cooperated (at Employer’s expense) with any efforts by
Employer to prevent such disclosure.
Documents
6.2
Employee
further agrees that all documents and materials furnished to Employee by
Employer and relating to the Employer’s business or prospective business are and
shall remain the exclusive property of Employer. Employee shall deliver all
such
documents and materials, not copied, to Employer upon demand therefor and in
any
event upon expiration or earlier termination of this Agreement. Any payment
of
sums due and owing to Employee by Employer upon such expiration or earlier
termination shall be conditioned upon returning all such documents and
materials, and Employee expressly authorizes Employer to withhold any payments
due and owing pending return of such documents and materials.
Inventions
6.3
All
ideas, inventions, and other developments or improvements conceived or reduced
to practice by Employee, alone or with others, during the Term of this
Agreement, whether or not during working hours, that are within the scope of
the
business of Employer or that relate to or result from any of Employer’s work or
projects or the services provided by Employee to Employer pursuant to this
Agreement, shall be the exclusive property of Employer. Employee agrees to
assist Employer, at Employer’s expense, to obtain patents and copyrights on any
such ideas, inventions, writings, and other developments, and agrees to execute
all documents necessary to obtain such patents and copyrights in the name of
Employer.
NOTICE
PURSUANT TO RCW 49.44.140(3):
This
Section 6.3 shall not apply to an invention for which no equipment, supplies,
facility, or trade secret information of the Employer was used and which was
developed entirely on the Employee’s own time, unless (a) the invention relates
(i) directly to the business of the Employer, or (ii) to the Employer’s actual
or demonstrably anticipated research or development, or (b) the invention
results from any work performed by the Employee for the Employer.
Disclosure
6.4
During
the Term, Employee will promptly disclose to the Board of Directors of Employer
full information concerning any interest, direct or indirect, of Employee (as
owner, shareholder, partner, lender or other investor, director, officer,
employee, consultant or otherwise) or any member of his immediate family in
any
business that is actually known to Employee to purchase or otherwise obtain
services or products from, or to sell or otherwise provide services or products
to, Employer or to any of its suppliers or customers.
ARTICLE
7
COVENANT
NOT TO COMPETE
Except
as
expressly permitted in Article 5 above, during the Term of this Agreement and
for a period of six (6) months after the later of the Effective Date or the
termination of the Employee’s employment by the Employer, Employee shall not
engage in any of the following competitive activities: (a) engaging directly
or
indirectly in any business or activity substantially similar to any business
or
activity engaged in (or scheduled to be engaged) by the Employer or the Parent
in any areas where the Employer or the Parent engage in business; (b) engaging
directly or indirectly in any business or activity competitive with any business
or activity engaged in (or scheduled to be engaged) by the Employer or the
Parent in any areas where the Employer or the Parent engage in business; (c)
soliciting or taking away any employee, agent, representative, contractor,
supplier, vendor, customer, franchisee, lender or investor of the Employer
or
the Parent, or attempting to so solicit or take away; (d) interfering with
any
contractual or other relationship between the Employer or the Parent and any
employee, agent, representative, contractor, supplier, vendor, customer,
franchisee, lender or investor; or (e) using, for the benefit of any person
or
entity other than the Employer, any Confidential Information of the Employer
or
the Parent. In addition, during the two-year period following such
expiration or earlier termination, neither Employee nor Employer or Parent
shall
make or, to the extent within its control, permit the making of any negative
statement of any kind concerning Employer or its affiliates, or their directors,
officers or agents or Employee, except in connection with any legal or
governmental proceedings or actions. Nothing in this Article 7 shall be deemed,
however, to prevent Employee from owning securities of any publicly-owned
corporation engaged in any such business, provided that the total amount of
securities of each class owned by Employee in such publicly-owned corporation
(other than Parent) does not exceed two percent (2%) of the outstanding
securities of such class.
ARTICLE
8
SURVIVAL
Employee
agrees that the provisions of Articles 6, 7 and 9, and Employer agrees that
the
last sentence of Article 7, shall survive expiration or earlier termination
of
this Agreement for any reasons, whether voluntary or involuntary, with or
without cause, and shall remain in full force and effect
thereafter. Notwithstanding the foregoing, if this Agreement is
terminated upon the voluntary or involuntary dissolution of Employer, the filing
of a petition in bankruptcy by Employer or upon an assignment for the benefit
of
creditors of the assets of Employer, Articles 6, 7 and 9 shall be of no further
force or effect.
ARTICLE
9
INJUNCTIVE
RELIEF
Employee
acknowledges and agrees that the covenants and obligations of Employee set
forth
in Articles 6 and 7 with respect to non-competition, non-solicitation,
confidentiality and Employer’s property relate to special, unique and
extraordinary matters and that a violation of any of the terms of such covenants
and obligations will cause Employer irreparable injury for which adequate
remedies are not available at law. Therefore, Employee agrees that Employer
shall be entitled to an injunction, restraining order or such other equitable
relief (without the requirement to post bond) as a court of competent
jurisdiction may deem necessary or appropriate to restrain Employee from
committing any violation of the covenants and obligations referred to in this
Article 9. These injunctive remedies are cumulative and in addition to any
other
rights and remedies Employer may have at law or in equity.
ARTICLE
10
TERMINATION
Termination
by Employee
10.1
Employee
may terminate this Agreement for Good Reason at any time upon 30 days’ written
notice to Employer, provided the Good Reason has not been cured within such
period of time.
Good
Reason
10.2
In
this
Agreement, “Good Reason” means, without Employee’s prior written consent, the
occurrence of any of the following events, unless Employer shall have fully
cured all grounds for such termination within thirty (30) days after Employee
gives notice thereof:
(i) any
reduction in his then-current Salary;
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(ii)
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any
material failure to timely grant, or timely honor, any equity or
long-term
incentive award;
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(iii)
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failure
to pay or provide required compensation and
benefits;
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(iv)
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any
material diminution in his title or duties or the assignment to him
of
duties not customarily associated with Employee’s position as Vice
President of Employer;
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(v)
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any
relocation of Employee’s office as assigned to him by Employer, to a
location more than 25 miles from Woodinville,
Washington;
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(vi)
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the
failure of Employer to obtain the assumption in writing of its obligation
to perform the Employment Agreement by any successor to all or
substantially all of the assets of Employer or upon a merger,
consolidation, sale or similar transaction of Employer;
or
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(vii)
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the
voluntary or involuntary dissolution of Employer, the filing of a
petition
in bankruptcy by Employer or upon an assignment for the benefit of
creditors of the assets of
Employer.
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The
written notice given hereunder by Employee to Employer shall specify in
reasonable detail the cause for termination, and such termination notice shall
not be effective until thirty (30) days after Employer’s receipt of such notice,
during which time Employer shall have the right to respond to Employee’s notice
and cure the breach or other event giving rise to the termination.
Termination
by Employer
10.3
Employer
may terminate its employment of Employee under this Agreement for cause at
any
time by written notice to Employee. For purposes of this Agreement, the term
“cause” for termination by Employer shall be (a) a conviction of or plea of
guilty or nolo contendere by Employee to a felony, or any crime
involving fraud or embezzlement; (b) the refusal by Employee to perform his
material duties and obligations hereunder; (c) Employee’s willful and
intentional misconduct in the performance of his material duties and
obligations; or (d) if Employee or any member of his family makes any personal
profit arising out of or in connection with a transaction to which Employer
is a
party or with which it is associated without making disclosure to and obtaining
the prior written consent of Employer. The written notice given hereunder by
Employer to Employee shall specify in reasonable detail the cause for
termination. In the case of a termination for the causes described in (a) and
(d) above, such termination shall be effective upon receipt of the written
notice. In the case of the causes described in (b) and (c) above, such
termination notice shall not be effective until thirty (30) days after
Employee’s receipt of such notice, during which time Employee shall have the
right to respond to Employer’s notice and cure the breach or other event giving
rise to the termination.
Severance
10.4
Upon
a
termination of this Agreement without Good Reason by Employee or with cause
by
Employer, Employer shall pay to Employee all accrued and unpaid compensation
and
expense reimbursement as of the date of such termination, subject to the
provision of Section 6.2. Upon a termination of this Agreement with Good Reason
by Employee or without cause by Employer, Employer shall pay to Employee all
accrued and unpaid compensation and expense reimbursement as of the date of
such
termination, including any pro-rated bonus, and the “Severance
Payment.” The Severance Payment shall be payable in a lump sum,
subject to Employer’s statutory and customary withholdings. If the
termination of Employee hereunder is by Employee with Good Reason, the Severance
Payment shall be paid by Employer within five (5) business days of the
expiration of any applicable cure period. If the termination of Employee
hereunder is by Employer without cause, the Severance Payment shall be paid
by
Employer within five (5) business days of termination. The “Severance
Payment” shall equal the amount of the Salary payable to Employee under Section
4.1 of this Agreement from the date of such termination until the end of the
Term of this Agreement (prorated for any partial month).
Termination
Upon Death
10.5
If
Employee dies during the Term of this Agreement, this Agreement shall terminate,
except that Employee’s legal representatives shall be entitled to receive any
earned but unpaid compensation or expense reimbursement, including any pro-rated
bonus, due hereunder through the date of death.
Termination
Upon Disability
10.6
If,
during the Term of this Agreement, Employee suffers and continues to suffer
from
a “Disability” (as defined below), then Employer may terminate this Agreement by
delivering to Employee thirty (30) calendar days’ prior written notice of
termination based on such Disability, setting forth with specificity the nature
of such Disability and the determination of Disability by Employer. For the
purposes of this Agreement, “Disability” means Employee’s inability, with
reasonable accommodation, to substantially perform Employee’s duties, services
and obligations under this Agreement due to physical or mental illness or other
disability for a continuous, uninterrupted period of sixty (60) calendar days
or
ninety (90) days during any twelve month period. Upon any such
termination for Disability, Employee shall be entitled to receive any earned
but
unpaid compensation or expense reimbursement, including any pro-rated bonus,
due
hereunder through the date of termination.
ARTICLE
11
PERSONNEL
POLICIES, CONDITIONS, AND BENEFITS
Except
as
otherwise provided herein, Employee’s employment shall be subject to the
personnel policies and benefit plans which apply generally to Employer’s
employees as the same may be interpreted, adopted, revised or deleted from
time
to time, during the Term of this Agreement, by Employer in its sole discretion.
During the Term hereof, Employee shall be entitled to vacation during each
year
of the Term at the rate of three (3) weeks and three (3) days per year. Employee
shall take such vacation at a time approved in advance by Employer, which
approval will not be unreasonably withheld but will take into account the
staffing requirements of Employer and the need for the timely performance of
Employee's responsibilities.
ARTICLE
12
BENEFICIARIES
OF AGREEMENT
This
Agreement shall inure to the benefit of Employer and any affiliates, successors,
assigns, parent corporations, subsidiaries, and/or purchasers of Employer as
they now or shall exist while this Agreement is in effect.
ARTICLE
13
GENERAL
PROVISIONS
No
Waiver
13.1
No
failure by either party to declare a default based on any breach by the other
party of any obligation under this Agreement, nor failure of such party to
act
quickly with regard thereto, shall be considered to be a waiver of any such
obligation, or of any future breach.
Modification
13.2
No
waiver
or modification of this Agreement or of any covenant, condition, or limitation
herein contained shall be valid unless in writing and duly executed by the
parties to be charged therewith.
Choice
of Law/Jurisdiction
13.3
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Washington, without regard to any conflict-of-laws principles. Employer
and Employee hereby consent to personal jurisdiction before all courts in the
State of Washington, and hereby acknowledge and agree that the State of
Washington is and shall be the most proper forum to bring a complaint before
a
court of law.
Entire
Agreement
13.4
This
Agreement embodies the whole agreement between the parties hereto regarding
the
subject matter hereof and there are no inducements, promises, terms, conditions,
or obligations made or entered into by Employer or Employee other than contained
herein.
Severability
13.5
All
agreements and covenants contained herein are severable, and in the event any
of
them, with the exception of those contained in Articles 1 and 4 hereof, shall
be
held to be invalid by any competent court, this Agreement shall be interpreted
as if such invalid agreements or covenants were not contained
herein.
Headings
13.6
The
headings contained herein are for the convenience of reference and are not
to be
used in interpreting this Agreement.
Independent
Legal Advice
13.7
Employer
has obtained legal advice concerning this Agreement and has requested that
Employee obtain independent legal advice with respect to same before executing
this Agreement. Employee, in executing this Agreement, represents and
warrants to Employer that he has been so advised to obtain independent legal
advice, and that prior to the execution of this Agreement he has so obtained
independent legal advice, or has, in his discretion, knowingly and willingly
elected not to do so.
No
Assignment
13.8
Employee
may not assign, pledge or encumber his interest in this Agreement nor assign
any
of his rights or duties under this Agreement without the prior written consent
of Employer.
Notices
13.9
All
notices and other communications under this Agreement shall be in writing and
shall be deemed given when delivered personally, mailed by certified mail,
return receipt requested, or via recognized overnight courier service with
all
charges prepaid or billed to the account of the sender to the parties (and
shall
also be transmitted by facsimile to the Persons receiving copies thereof) at
the
following addresses (or to such other address as a party may have specified
by
notice given to the other party pursuant to this provision):
Major
Electric, Inc.
18538
142nd Avenue
NE
Woodinville,
WA 98072
Attn: James
Jordan
Phone: (425)
483-2677
Facsimile: (425)
402-9708
James
Jordan
Phone: (Home)
[intentionally
blank]
IN
WITNESS WHEREOF the parties have executed this Employment Agreement
effective as of the day and year first above written.
Employer:
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MAJOR ELECTRIC,
INC. |
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By:
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/s/ FRANK
MAUGER |
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Frank
Mauger
President
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Employee:
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By:
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/s/ JAMES
JORDAN |
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James
Jordan
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