EXHIBIT 10(b)
XXXXXXXX, INC. AND XXXXXX X. XXXXXXX
PERSONAL SERVICES AGREEMENT AND
ACKNOWLEDGMENT OF TERMINATION OF EXECUTIVE EMPLOYMENT
THIS AGREEMENT effective December 31, 1998, is made and entered into by and
between XXXXXXXX, INC. (the "Company") and XXXXXX X. XXXXXXX ("Xxxxxxx").
WHEREAS, the Company and Xxxxxxx wish to terminate Xxxxxxx'x employment by
the Company effective December 31, 1998, pursuant to the terms and conditions of
the Executive Employment Agreement between the Company and Xxxxxxx dated January
1, 1995, a copy of which is attached hereto as Exhibit A (the 1995 Agreement);
and
WHEREAS, the Company and Xxxxxxx wish, instead, to enter into a personal
services agreement effective December 31, 1998;
NOW, THEREFORE, the parties hereto acknowledge and agree as follows:
1. Termination and Resignation. Xxxxxxx and the Company hereby mutually
---------------------------
agree that Xxxxxxx'x employment as Chairman of the Board is terminated pursuant
to the terms and conditions of the 1995 Agreement effective December 31, 1998.
Xxxxxxx hereby resigns as an officer and a director of the Company effective
December 31, 1998.
2. Retention. Xxxxxxx is hereby retained as a consultant effective
---------
December 31, 1998, pursuant to the terms and conditions set forth below, which
terms and conditions supersede the employment terms and conditions of the 1995
Agreement.
3. Term. The Agreement for Xxxxxxx'x personal services as a consultant
----
shall become effective on December 31, 1998, and continue for a term of five
years, provided, however, that either party may terminate the terms and
conditions related to Xxxxxxx'x personal services as a consultant at any time
upon thirty days' written notice.
4. Services. Upon reasonable request of the Company's Chief Executive
--------
Officer as requested by the Board of Directors and availability of Xxxxxxx,
Xxxxxxx shall work with the Company's Chief Executive Officer and staff as a
special consultant to the Board to visualize and identify Company direction and
evolve brand image, attend Board of Directors meetings, provided, however, that
Xxxxxxx shall not be required to provide such services for more than 30 days in
any 12-month period during the term of this Agreement. To the extent required in
order for Xxxxxxx to provide the requested services, the Company will provide
the hardware and technical links from Xxxxxxx'x home office to the Company.
5. Compensation. The Company shall pay Xxxxxxx $1,000 for each day he
------------
agrees to and does provide services to the Company, as more fully described
below. If Xxxxxxx is elected or appointed a director or officer of the Company
during the term of this Agreement, Xxxxxxx shall serve in such capacity or
capacities without further compensation; but nothing herein shall be construed
as requiring the Company or anyone else, to cause the election or appointment of
Xxxxxxx as such director or officer.
6. Health and Hospital Insurance. The Company shall continue to provide
-----------------------------
Xxxxxxx with health insurance through December 31, 1999, pursuant to the terms
of the 1995 Agreement.
7. Life Insurance. The Company shall maintain life insurance in the
--------------
amount of $2,000,000, through December 31, 1999, pursuant to the terms of the
1995 Agreement. Upon expiration of this Agreement, and at Xxxxxxx'x election,
the ownership of such life insurance shall be transferable to Xxxxxxx upon his
payment to the Company of one-half of the then cash value, if any, of such
insurance. Additionally, upon payment by Xxxxxxx to the Company of one-half of
the December 31, 1999, cash value of a split-dollar life insurance policy in the
name of Xxxxxxx for $1,000,000, the Company will relinquish all interest in the
said policy.
8. Stock Options. All options held by Xxxxxxx shall become immediately
-------------
exercisable for a period of five years pursuant to the terms of the 1995
Agreement. The following is a list of the options:
GRANT DATE OPTION PRICE NO. OF SHARES
---------- ------------ -------------
10/02/93 $ 8.50 133,236
10/02/93 $ 8.50 11,764
01/22/96 $ 6.50 15,384
01/22/96 $ 6.50 5,241
11/11/97 $10.1875 1,132
11/11/97 $10.1875 18,868
11/11/97 $10.1875 9,815
11/11/97 $10.1875 10,185
11/11/97 $10.1875 9,815
11/11/97 $10.1875 10,185
-------
Total Options 225,625
9. Expenses. Xxxxxxx is authorized to incur reasonable expenses for
--------
promoting and conducting the business of the Company, including expenses for
entertainment, travel and similar items, provided such expenses are preapproved
by the Company's Chief Executive Officer. The Company will reimburse Xxxxxxx for
all such expenses upon the presentation by Xxxxxxx, from time to time, of an
itemized account of such expenditures.
10. Golf Club Membership. Xxxxxxx owns a membership in Rancho Santa Fe
--------------------
Farms Golf Club (the "Club") which was purchased for him by the company in
(approximately) 1991. Xxxxxxx offers, and the Company accepts, use of his
membership at the Club for entertaining the Company's customers, employees and
associates for a period of five years from January 1, 1999, provided prior
approval has been obtained from Xxxxxxx or the management of the Club. The
Company agrees to reimburse Xxxxxxx for fees and expenses incurred by Company
customers, employees and associates. The Company will continue to pay the
monthly membership fee until December 31, 1999.
2
11. Proprietary Interests of Company. Recognizing and acknowledging that
--------------------------------
nothing in this Agreement prevents Xxxxxxx from providing services to other
companies which are not in direct competition with the Company, Xxxxxxx
acknowledges and agrees that all of the terms and conditions of Section 12 of
the 1995 Agreement are applicable, and Xxxxxxx hereby affirms that he will
comply with such terms and conditions.
12. Goodwill and Reputation of the Company and Xxxxxxx. Xxxxxxx shall at
--------------------------------------------------
all times conduct himself in such manner as to preserve and protect the
reputation and goodwill of the Company. The Company shall at all times conduct
its affairs in such manner as to preserve and protect the goodwill and
reputation of Xxxxxxx.
13. Noncompete. The Company and Xxxxxxx acknowledge and agree that,
----------
effective with the termination of Xxxxxxx'x employment, all of the terms and
conditions of Section 13 of the 1995 Agreement are applicable, and the Company
and Xxxxxxx hereby affirm their compliance with such terms and conditions;
provided, however, (1) upon request by Xxxxxxx, the Company shall prepay, up to
a maximum of $312,500, in the second year of the noncompete period the then
present value of the payment due the second year; and (2) upon request by
Xxxxxxx at any time from and after the second year of the noncompete period, the
Company may consent to prepay, up to a maximum of $312,500 in any year of the
noncompete period, the then present value of any future payment due during the
third through tenth years at a discounted rate of eight percent (8%), such
consent not be unreasonably withheld. Such prepayments shall not relieve
Xxxxxxx of his obligations under the noncompete provisions of the 1995
Agreement. Notwithstanding the foregoing, at any time after the third
anniversary of the date of this Agreement, Xxxxxxx may deliver written notice to
the Company (the "Election Notice") that Xxxxxxx no longer desires to receive
payments under the terms of Section 13 of the 1995 Agreement. In such event
Xxxxxxx shall elect to (1) reimburse the Company for any advance annual
installments attributable to the terminated noncompete period or (2) extend the
noncompete period through the date for which Xxxxxxx received compensation,
based upon the compensation agreed upon under Section 13 of the 1995 Agreement.
14. Notices. Any notice required or permitted to be given under this
-------
Agreement shall be sufficient if in writing and delivered in person or sent by
registered or certified mail to Xxxxxxx'x residence in the case of Xxxxxxx or to
its principal office in the case of the Company.
15. Waiver. The waiver of any provision of this Agreement shall not
------
operate or be construed as a waiver of any other provision of this Agreement.
No waiver shall be valid unless in writing and executed by the party to be
charged therewith.
16. Severability/Modification. In the event that any clause or provision
-------------------------
of this Agreement shall be determined to be invalid, illegal or unenforceable,
such clause or provision may be severed or modified to the extent necessary, as,
as severed and/or modified, this Agreement shall remain in full force and
effect.
17. Assignment. The rights and obligations of the Company under this
----------
Agreement shall inure to the benefit of and shall be binding upon the successors
and assigns of the Company. Xxxxxxx acknowledges that the services to be
rendered under this Agreement are
3
unique and personal. Accordingly, Xxxxxxx may not assign his rights and
obligations under this Agreement.
18. Entire Agreement. This instrument contained the entire agreement
----------------
concerning the employment arrangement between the parties and shall, as of the
effective date hereof, supersede all other such agreements between the parties.
It may not be amended except by an agreement in writing signed by both parties.
19. Governing Law and Jurisdiction. This Agreement shall be interpreted,
------------------------------
construed, and enforced under the laws of the State of California The courts and
authorities of the State of California shall have sole jurisdiction and venue
over all controversies which may arise with respect to this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement the date and
year indicated below, effective the date indicated above.
THE COMPANY:
XXXXXXXX, INC.
Date: By: /s/ XXXXXXX X. XXXXXX, XX.
--------------- ----------------------------
Xxxxxxx X. Xxxxxx, Xx.
President & Chief Executive Officer
XXXXXXX:
Date: /s/ XXXXXX X. XXXXXXX
--------------- -----------------------
Xxxxxx X. Xxxxxxx
4
