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EXHIBIT 10.24
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as
of November 17, 1997, by and between XXXXXXXX COFFEE, INC., a Delaware
corporation (the "Company") and XXXXXXX X. XXXX ("the Employee").
R E C I T A L S:
The Company and the Employee desire to enter into this Agreement to
establish the terms and conditions of the Employee's employment by the Company
during the term hereof.
A G R E E M E N T:
NOW, THEREFORE, in consideration of the foregoing recital, and subject
to the conditions and covenants set forth herein, the parties agree as follows:
1. Employment and Term.
(a) The Company hereby employs the Employee as its President and
Chief Executive Officer and the Employee hereby accepts such employment upon the
terms and subject to the conditions set forth in this Agreement. Unless earlier
terminated as provided in this Agreement, the term of the Employee's employment
under this Agreement shall commence on the date hereof and shall continue for a
period of two (2) years from the date hereof (the "Term").
(b) The Employee shall perform such duties and functions consistent
with his role as Chief Executive Officer as may from time to time be assigned to
him by the Board of Directors of the Company (the "Board"). The Employee agrees
that during the course of the Company's business hours throughout the Term, he
will devote the whole of his time, attention and efforts to the performance of
his duties and obligations hereunder. The Employee shall not, during the Term,
without the written approval of the Board first had and obtained in each
instance, directly or indirectly (i) accept employment or receive any
compensation for the performance of services from any business enterprise other
than the Company or (ii) enter into or be concerned or interested in any trade
or business or public or private work (whether for profit or otherwise and
whether as partner, principal, shareholder or otherwise), which may, in the
absolute discretion of the Board, hinder or otherwise interfere with the
performance by the Employee of his duties and obligations hereunder, except as a
holder of not more than five percent (5%) of any class of stock or other
securities in any company which is listed and/or traded on any securities
market.
2. Compensation.
2.1 Salary. For all services to be rendered by the Employee under
this Agreement, the Company agrees to pay the Employee a salary (the "Base
Salary") equal to Two Hundred Thousand Dollars ($200,000) per year, payable in
bi-weekly installments, less all amounts required by law to be withheld or
deducted. During the Term of this Agreement, the
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Compensation Committee of the Board (the "Compensation Committee") shall review
the Employee's Base Salary on or about each anniversary date of the date of this
Agreement. The Compensation Committee, in its sole and absolute discretion from
time to time, may increase (but not decrease without the Employee's written
consent) the Employee's Base Salary.
2.2 Performance Bonus. If the Employee remains in the employ of the
Company under this Agreement for twelve months from the date of this Agreement,
the Compensation Committee, in its sole and absolute discretion, also may pay
the Employee discretionary performance bonuses (the "Performance Bonuses"), that
initially shall not exceed twenty-five percent (25%) of the Employee's Base
Salary. Payment of the Performance Bonuses shall be based on the Employee
achieving reasonable performance objectives designated by the Compensation
Committee and communicated to the Employee. The Performance Bonuses shall be
made in such amounts and at such times as the Compensation Committee may
determine in its discretion.
2.3 Stock Options. Contemporaneously with the execution of this
Agreement, the Company and Employee shall enter into a Stock Option Plan and
Agreement, in substantially the form attached hereto as Exhibit A (the "Option
Agreement"), pursuant to which the Company will grant Employee, upon the terms
and subject to approval of the Company's stockholders and other conditions set
forth therein, options to purchase 600,000 shares of the Company's Common Stock.
3. Employee Benefits. During the Term of the Employee's employment
hereunder:
(a) The Employee shall be entitled to three weeks annual vacation
leave.
(b) The Company shall pay or reimburse the Employee for all
reasonable and necessary travel and other business expenses incurred or paid by
the Employee in connection with the performance of his services under this
Agreement consistent with the Company's policies for other senior executives of
the Company, except that for automobile expenses, the Company shall pay the
Employee a monthly car allowance of Six Hundred Dollars ($600.00) less all
amounts required by law to be withheld or deducted.
(c) Notwithstanding any other provision of this Agreement, the
Company shall not provide or pay for the cost of premiums for health, dental,
medical, life or disability insurance coverage for the Employee or the
Employee's dependents. The Employee acknowledges that he has been offered such
insurance coverage and declined it in favor of alternative compensation.
(d) Subject to Section 3(c) above, the Employee is entitled to and
has been offered benefits which are equivalent to or better than the benefits
that the Company presently makes available to its other senior executives.
4. Termination of Employment.
(a) Notwithstanding any other provision of this Agreement, the
Employee's employment under this Agreement may be terminated as follows:
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(i) Upon the death of the Employee, this Agreement and the
Employee's employment hereunder shall terminate immediately and without
notice by the Company; or
(ii) In the event of the inability of the Employee to perform his
duties or responsibilities hereunder, as a result of mental or physical
ailment or incapacity, for a period of ninety (90) consecutive calendar
days or an aggregate of one hundred twenty (120) calendar days during
any calendar year (whether or not consecutive) (a "Disability") during
which period of Disability the Employee shall be entitled to his
compensation pursuant to this Agreement, this Agreement and the
Employee's employment hereunder shall terminate upon delivery of written
notice to the Employee; or
(iii) By the Company for Cause (as defined below) in accordance
with the provisions of Section 4(b) hereof
(b) The parties agree that for purposes of this Agreement, the term
"Cause" shall mean the following:
(i) The Employee's willful and repeated failure to substantially
perform his job duties under this Agreement;
(ii) Failure by the Employee to comply with all material
applicable laws in performing his job duties or in directing the conduct
of the Company's business, or
(iii) Commission by the Employee of any felony or intentionally
fraudulent act against the Company, or its employees, agents or
customers.
(c) With respect to events described in subparagraph 4(b)(i) and (ii)
above, The Company shall give written notice to the Employee of any such event
and the Employee shall have thirty (30) days beginning on the date of delivery
of such written notice to cure same, or if such event cannot be cured within
said thirty (30) day period, the Employee shall commence his efforts to cure the
event within the thirty (30) day period and diligently work to cure such event
within a reasonable time period. If the Employee within said thirty (30) day
period or within a reasonable time period, as applicable, does not cure the
event for which notice has been provided under subparagraphs 4(b)(i) or (ii)
above, then the Employee's employment under this Agreement may be terminated by
the Company by delivery to the Employee of written notice of termination and
such termination will be effective as of the date of delivery of such written
notice. With respect to events described in subparagraph 4(b)(iii) above, the
Employee's employment under this Agreement may be terminated by the Company by
delivery to the Employee of written notice of termination and such termination
will be effective as of the date of delivery of such written notice. Upon the
effectiveness of termination pursuant to subparagraph 4(a), the Employee shall
not be entitled to receive any further compensation or benefits pursuant to this
Agreement except (i) for payment within ten days after his termination date of
all accrued but unpaid Base Salary or (ii) as set forth in the Option Agreement.
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(d) In addition to its rights to terminate the Employee's employment
under this Agreement pursuant to subparagraph 4(a), the Company may also
terminate the Employee's employment under this Agreement for any other reason,
provided that, in such event, the Employee shall be entitled to receive an
amount equal to fifty percent of the Employee's Base Salary on the termination
date and the Employee shall not be entitled to receive any other compensation or
benefits hereunder except as set forth in the Option Agreement. The Employee
acknowledges and agrees that the provisions of this paragraph 4 state his entire
and exclusive rights, entitlements, and remedies against the Company, its
successors, assigns, affiliates, officers, directors, employees and
representatives for termination without any cause shown by the Company.
(e) The Employee may terminate his employment for good cause or
without any cause. In the event the Employee terminates his employment for "good
cause" (as defined below), he shall be entitled to receive the severance
benefits described in subparagraph 4(d) above. If he terminates his employment
for any other reason, he shall not be entitled to receive any compensation
except for payment within ten days after his termination date of all accrued but
unpaid Base Salary. For purposes of this Agreement, "good cause" for termination
of employment by the Employee shall mean failure to maintain the Employee in the
position of President or Chief Executive Officer of the Company or a material
breach of the provisions of this Agreement by the Company. The Employee
acknowledges and agrees that the provisions of this subparagraph 4(e) state his
entire and exclusive rights and remedies under this Agreement against the
Company, its successors, assigns, affiliates, officers, directors, employees and
representatives if he terminates this Agreement.
5. Assignment of Rights and Duties.
(a) Neither the Employee nor the Company may assign their rights or
duties under this Agreement without prior written consent of both parties, which
consent may be withheld for any reason. Any attempted assignment, transfer,
conveyance, or other disposition of any interest of either party in this
Agreement shall be void. Notwithstanding the foregoing, the Company may make
such assignment to any affiliated company, but its assignment of this Agreement
to an affiliate does not relieve it of its obligations under this Agreement if
that affiliate fails to perform the Company's obligations under this Agreement.
(b) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance satisfactory to Employee, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
Failure of the Company to obtain such agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement and shall entitle
Employee to compensation from the Company in the same amount and on the same
terms as he would be entitled to hereunder if he terminated his employment for
"good cause," except that for purposes of implementing the foregoing, the date
on which any such succession becomes effective shall be deemed the termination
date.
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6. Confidential Information and Nonsolicitation.
(a) The Employee acknowledges and agrees that the Company has
developed and uses certain proprietary and confidential information, data,
processes, business methods, computer software, data bases, customer lists and
know-how ("Confidential Information"). The Employee agrees that the Confidential
Information is a trade secret of the Company which shall remain the sole
property of the Company notwithstanding that the Employee, as an employee of the
Company, may participate in the development of the Confidential Information.
During the term of this Agreement and at all times thereafter the Employee shall
not disclose any Confidential Information to any person or entity for any reason
or purpose whatsoever, nor shall the Employee make use of any Confidential
Information for the Employee's own benefit or for the benefit of any other
person or entity. Upon termination of this Agreement for any reason, the
Employee will promptly surrender to the Company all Confidential Information in
the Employee's possession or under the Employee's control, whether prepared by
the Employee or by others.
(b) The Employee agrees that for a period of three (3) years
following the termination of the Employee's employment hereunder, the Employee
will not directly or indirectly solicit or attempt to solicit any of the
employees of or consultants to the Company to leave the Company or to become
employees of or consultants to any other person or entity.
7. Miscellaneous.
7.1 Modification and Waiver of Breach. No waiver or modification of
this Agreement or any term hereof shall be binding unless it is in writing
signed by the parties hereto. No failure to insist upon compliance with any
term, provision or condition to this Agreement, whether by conduct or otherwise,
in any one or more instances, shall be deemed to be or construed as a waiver of
any such term, provision or condition or as a waiver of any other term,
provision or condition of this Agreement.
7.2 Notices. All notices, requests, demands and other communications
under this Agreement must be in writing and shall be deemed given upon personal
delivery, facsimile transmission (with confirmation of receipt), delivery by a
reputable overnight courier service or five (5) days following deposit in the
United States mail (if sent by certified or registered mail, postage prepaid,
return receipt requested), in each case duly addressed to the party to whom such
notice or communication is to be given as follows:
To the Company: Xxxxxxxx Coffee, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Chairman of the Board
Telecopy Number: (000) 000-0000
To the Employee: Xxxxxxx X. Xxxx
0000 Xxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
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Any party may change its address for the purpose of this subparagraph
7.2 by giving the other party written notice of the new address in the manner
set forth above.
7.3. Enforceability. If any of the covenants contained in this
Agreement, for any reason and to any extent, are construed to be invalid or
unenforceable, the remainder of this Agreement, and the application of the
remaining covenants to other persons or circumstances shall not be affected
hereby, but rather shall be enforced to the greatest extent permitted by law.
7.4. Entire Agreement. This Agreement contains the entire agreement
between the Company and the Employee with respect to the subject matters hereof
and supersedes all prior or contemporaneous agreements, arrangements or
understandings, written or oral, with respect to the subject matters hereof.
7.5. Legal Fees; Arbitration. The parties hereto expressly agree that
in the event of any dispute, controversy or claim by any party regarding this
Agreement, the prevailing party shall be entitled to reimbursement by the other
party to the proceeding of reasonable attorney's fees, expenses and costs
incurred by the prevailing party. Any controversy, dispute or claim arising out
of, in connection with, or in relation to the interpretation, performance or
breach of this Agreement or otherwise arising out of the execution hereof,
including any claim based on contract, tort or statute, shall be resolved, at
the request of any party, by submission to binding arbitration at the Orange
County, California offices of Judicial Arbitration & Mediation Services, Inc.
("JAMS"), and any judgment or award rendered by JAMS shall be final, binding and
unappealable, and judgment may be entered by any state or federal court having
jurisdiction thereof. Any party can initiate arbitration by sending written
notice of intention to arbitrate (the "Demand") by registered or certified mail
to all parties and to JAMS. The Demand shall contain a description of the
dispute, the amount involved, and the remedy sought. The arbitrator shall be a
retired or former judge agreed to between the parties from the JAMS' panel. If
the parties are unable to agree, JAMS shall provide a list of three available
judges and each party may strike one. The remaining judge shall serve as the
arbitrator. Each party hereto intends that the provisions to arbitrate set forth
herein be valid, enforceable and irrevocable. In his award, the arbitrator shall
allocate, in his discretion, among the parties to the arbitration all costs of
the arbitration, including the fees of the arbitrator and reasonable attorneys'
fees, costs and expert witness expenses of the parties. The parties hereto agree
to comply with any award made in any such arbitration proceedings that has
become final and agree to the entry of a judgment in any jurisdiction upon any
award rendered in such proceeding becoming final.
7.6 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California.
7.7. Counterparts. This Agreement may be executed simultaneously in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
"THE COMPANY" XXXXXXXX COFFEE, INC., a California
corporation
By:_________________________________
Xxxxxxxx Xxxxxxx,
Chairman of the Board and
Interim Chief Executive Officer
"THE EMPLOYEE" _________________________________
XXXXXXX X. XXXX
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