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EXHIBIT 10.14
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into at Lake
Forest, California, effective as of April 1,1998, between the L. L.
Xxxxxxxxxxxxx Co., Inc., a California corporation ("Employer") and Xxxxxx X.
Xxxx, Xx. ("Employee"), with reference to the following:
a. Employee has valuable experience and unique skills
in the business currently conducted by Employer.
b. Employer desires to retain the exclusive services of
Employee and Employee desires to be employed by Employer for
the term of this Agreement.
In consideration of the foregoing and the commitments made
herein, Employer and Employee agree as follows:
1. Employment. During the term of this Agreement, Employee shall
be employed by Employer and shall render such services to, and perform such
duties on behalf of , Employer and shall exercise such authority as the Board of
Directors of Employer shall from time to time provide. The nature and scope of
Employee's responsibilities and duties shall generally be consistent with in
character with those performed by persons holding the position of Chief
Operating Officer of similarly sized companies in similar industries in the
United States of America. Employee agrees to apply his best skill, efforts and
knowledge and to devote such time, energies and attention to the business of
Employer as shall be necessary to perform his responsibilities and duties
hereunder.
2. Salary. Employee shall begin this employment under this
Agreement at a base salary of $160,000 per year (the "Base Salary") Such amount
shall be paid periodically in accordance with the normal payroll procedures of
Employer in effect from time to time during the term of this Agreement. The Base
Salary provided above shall be adjusted incrementally on January 1 in the years
1999, 2000, 2001 and 2002 to reflect any increase in the cost of living. The
positive adjustment shall be in the same proportion as the proportional
differences between the Consumer Price Index for Urban Wage Earners and Clerical
Workers, all items (Los Angeles - Long Beach - Anaheim statistical area)
published by the United States Department of Labor, Bureau of Labor Statistics
(the "CPI") in effect on January 1, 1999, and on each of the adjustment dates,
respectively, when compared to the base index in effect on January 1, 1998 for
the initial adjustment, and for each subsequent adjustment, the index in effect
on January 1 of such year shall be compared to the index in effect on January 1
of the previous year. Under no circumstances will there be a negative adjustment
to the Employee's Base Salary as a result of cost of living changes. Should said
Bureau discontinue the publication of the CPI, publish the same less frequently,
or alter the same in some other manner, then Employer may adopt a substitute
procedure which reasonably reflects and monitors consumer prices.
3. Management Bonus. In addition to the Base Salary, Employee
shall be entitled to participate in the current Management Bonus Plan in effect
from time as determined by the Board of Directors of Employer and the
Compensation Committee as appointed by the Board. The Bonus payable to Employee,
if any, shall be paid out of a Management Bonus Fund equal to 10% of the profits
before taxes of Employer based upon the audited financial statements of
Employer. The Compensation Committee shall make recommendations to the Board of
Directors for the payment to Employee of such sums out of the Management Bonus
Fund as the Board shall, in its sole discretion, determine or approve, and such
sums will be payable to Employee, in cash, for each fiscal year during the term
of this Agreement, including fiscal years 1998, 1999, 2000, 2001 and 2002; as
well as any fiscal years falling within any extension of this Agreement.
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In order to determine the amount of the Management Bonus Fund, a calculation
will be made from the audited fiscal year end financial statements within 45
days of the availability of such audited statements. If, upon such calculation,
it is determined that sufficient funds exist for the payment of bonus amounts
under the Management Bonus Plan, the Board of Directors shall determine such
amounts as shall be paid to all participants under the Management Bonus Plan,
and such amounts shall be paid within 60 days of the availability the audited
fiscal year end financial statements.
4. Stock Options. In addition to the Salary and Management Fee
provided for hereunder, Employee shall be entitled to receive 250,000 Stock
Options for the purchase of shares of the Common Stock of Employer, vesting
50,000 per year during the term of this Agreement, ad such additional options or
other compensation as determined by the Board of Directors of Employer and the
Compensation Committee as appointed by the Board. The Stock Options will be
provided pursuant to the terms of a separate qualified stock option plan adopted
by Employer.
5. Benefits. Employee shall be entitled to participate in all
medical, dental, state disability insurance, and related welfare benefit plans
as well as any qualified profit sharing and other qualified employee benefit
plans generally applicable to employees of Employer, subject in each case to all
applicable provisions of the plans.
6. Additional Benefits and Perquisites. Employee shall be
entitled to 15 days of paid vacation per year in addition to all normal public
holidays available to all of Employer's employees. Additionally, Employee shall
be paid an automobile allowance in the amount of $600 per month during the Term
of this Agreement.
7. Term. The term of this Agreement and the employment of
Employee hereunder shall begin as of April 1, 1998 and shall continue until (i)
Xxxxx 00, 0000, (xx) the end of the Extension Option period if exercised by
Employer (as defined below) or (iii) the earlier termination of Employee at the
election of either Employer for Cause (as defined below) or Employee for other
than Good Reason (as defined below).
Employer shall have a one-time right to extend this agreement for
a period of five additional years from April 1, 2003 upon written notice to
employee not later than six months prior to the expiration of the term of this
Agreement (the "Extension Option"). During the term of the Extension Option, the
terms and conditions of this Agreement shall remain in full force and effect.
In the event of termination of Employee's employment by Employer
for Cause (as defined below) or by Employee for any reason other than Good
Reason (as defined below) Employee shall have no further rights to payments or
benefits under this Agreement. For the purpose of this Agreement, Cause for
termination shall exist whenever (i) Employee has been convicted of a felony,
(ii) Employee has engaged in gross misconduct or a dereliction of his duties,
(iii) Employee is otherwise in breach of any of the material provisions of this
Agreement, or (iv) Employee is unable to discharge his duties as a result of
death or physical or mental disability. Good Reason for termination by Employee
shall exist whenever (i) a voluntary or involuntary petition under the
Bankruptcy Code has been filed by or against Employer or Employer is otherwise
insolvent, or (ii) Employer is in breach of any of the material provisions of
this Agreement.
8. Trade Secrets and Confidential Information. The following
provisions further set forth Employee's obligations to safeguard Trade Secrets
and Confidential Information of Employer obtained in the course and scope of his
employment with Employer, whether or not during the term of this Agreement.
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8.1. The term "Trade Secret" is defined as the whole or any
portion or phrase of any scientific or technical or business
information particular to Employer, including, but not limited
to, any design, process, procedure, business procedure or
system, formula, improvement, or invention that (1) derives
independent economic value, actual or potential, from not being
generally known to the public or to other persons who can obtain
economic value from its disclosure or use, and (2) is the
subject of Employer's reasonable efforts to maintain its
secrecy. In addition to information belonging to Employer,
information furnished to Employer by other parties can be a
Trade Secret. Employee acknowledges and accepts the obligation
to apply the definition of Trade Secrets in this Agreement to
information coming to Employee's attention, and to safeguard
such information from further disclosure except to perform his
duties hereunder.
8.2. The term "Confidential Information" is defined as all
items, materials and information (whether or not reduced to
writing and whether or not patentable or copyrightable) which
belong to Employer and which reflect, consist of or refer to:
(a) The names of those customers and vendors of Employer
which are not generally known in the industry;
(b) Information compiled, collected or developed by Employer
reflecting identities and characteristics of any customers of
Employer or customer representatives including product or
service preferences or requirements, cost or price information
for goods or services offered or sold, credit terms and credit
performance, actual or likely order cycles, the nature of
supplies delivered or services performed, and research or
development plans or activities;
(c) Information compiled, collected, or developed by
Employer reflecting identities and characteristics of any
vendors or suppliers of Employer or vendor or supplier
representatives, including cost or price information for goods
or services offered or purchased, credit terms and credit
performance, product quality and reliability, delivery terms,
and prior, current or future research or development plans or
activities;
(d) The prices, discounts, selling techniques and
distribution methods used by Employer;
(e) Personal and private information about any of Employer's
employees, employees of any customer or supplier, or any artist
or spokesperson;
(f) Business plans, strategies, goals or objectives of
Employer; or
(g) Any other confidential or proprietary information
obtained directly or indirectly while performing Employee's
duties on behalf of Employer.
8.3. The term "Confidential Information" includes
information which may also be a Trade Secret, but does not
include anything described above which is now generally known by
parties other than Employer, its affiliates and employees, or
become generally known, through no act or failure to act of
Employee.
8.4 Employee agrees to hold all such Confidential
Information in confidence and to not disclose Confidential
Information to any person not employed by Employer.
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8.5. Employee will, immediately upon the termination of this
Agreement, surrender to Employer any and all business records
and materials which may have received from Employer during the
term of this Agreement, or which pertain to Employer's business,
and all copies thereof, however made or obtained.
8.6. Employee acknowledges that the foregoing provisions of
this Paragraph 8 are necessary to protect Employer's Trade
Secrets and Confidential Information.
9. Ownership of Programs and Documents. All work product produced
by Employee in performing Services for Employer, including without limitation,
designs, programs, product lines, program descriptions of any type, reports and
business records shall be and shall remain the property of Employer. Employee
agrees to execute such documents, including assignment of copyrights, as may be
provided from time to time by counsel for Employer in order to perfect
Employer's rights in such work product.
10. Place of Employment. During the term of this Agreement,
Employer shall maintain its principal executive offices in the County of Orange,
and the Employee's place of employment shall remain in the County of Orange,
subject to reasonable business travel. The parties hereto may amend the
provisions of this section by mutual agreement.
11. Withholding Taxes. All payments by Employer to Employee
hereunder shall be subject to reduction in the amount of any withholding taxes.
12. Conflicts of Interest. During the term of this Agreement,
Employee will not, directly or indirectly, either for himself or for any other
person, partnership, corporation or company participate in any enterprise
operating where Employer conducts its business or sells its products or services
which involves the business in which Employer is engaged at any time during
Employee's employment including, but not limited to, the marketing, sale,
distribution, processing or manufacturing of products within the same industries
as Employer's products. Employee acknowledges that this covenant is reasonable
with respect to its duration, geographical area and scope.
In performing his obligations for Employer, Employee shall act in
the best interest of, and with complete loyalty to, Employer and shall not
exercise his duties or responsibilities in his own self-interest, at the expense
of the best interest of Employer.
13. Arbitration and Remedies. Employee understands that he may
not agree with the discretionary judgment of Employer's management regarding
matters between him and Employer, including without limitation matters relating
to his employment or its termination. Subject to the other provisions of this
Paragraph on Arbitration and Remedies, Employee agrees to attempt to resolve
informally with Employer any dispute that may arise regarding such matters,
including his employment or the termination of his employment, in accordance
with reasonable Company procedures for informal dispute resolution that may then
be applicable to him.
Any controversy or claim arising out of or relating to this
Agreement, or its breach, termination or validity, including without limitation
any claim arising from Employee's employment or the termination of such
employment, shall be exclusively and finally settled by arbitration before a
single arbitrator in accordance with the Employment Dispute Resolution Rules of
the American Arbitration Association, and judgment upon the award rendered by
the Arbitrator may be entered in any court having jurisdiction thereof. Claims
subject to exclusive final and binding arbitration under this Agreement include,
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without limitation, claims that otherwise could be tried in court to a jury in
the absence of this Agreement. Such claims include, without limitation,
statutory claims for employment discrimination based on race, color, national
origin, sex, religion, disability, and other statutory claims for employment
discrimination; claims for wrongful termination including employment termination
in violation of public policy; and claims for personal injury including, without
limitation, defamation, fraud, and infliction of emotional distress. Employee
acknowledges that by entering into this Agreement he is giving up any right he
might otherwise have to a jury trial. The arbitration shall be held in the
principal city of the federal judicial district in which Employee resides as of
the time of the alleged acts or omissions giving rise to arbitration under this
Agreement; provided, that arbitration of claims rising wholly or partially out
of Employee's employment termination shall be conducted in the principal city of
the federal judicial district in which Employee resides at the time of such
employment termination. Employer shall pay the fees and costs of the Arbitrator,
however each party shall pay for its or his attorneys' fees and costs including,
without limitation, costs of any experts. However, if any party prevails on a
statutory claim which entitles the prevailing party to a reasonable attorneys'
fee (with or without expert fees) as part of the costs, the Arbitrator may award
reasonable fees (with or without expert fees) to the prevailing party in
accordance with such statute. Any controversy over whether a dispute is an
arbitrable dispute or as to the interpretation or enforceability of this
paragraph with respect to such arbitration shall be determined by the
Arbitrator. The parties agree that this Agreement is to be construed broadly in
favor of final and binding arbitration except, and only to the extent, that such
remedy is prohibited by applicable federal or state laws.
Employee acknowledges that he has ongoing contractual obligations
contained in this Agreement together with noncontractual fiduciary obligations
to Employer which will survive the termination of his employment. Employee
agrees that any breach of any of these obligations could not reasonably or
adequately be compensated in damages in arbitration or in an action at law and
that if Employee breaches any of these obligations Employer shall be entitled to
injunctive relief in any court of competent jurisdiction. The parties understand
that injunctive relief may include, but shall not be limited to, restraining
continuing breaches of such obligations. Any such injunctive proceedings shall
be without prejudice to Employer's rights under this Agreement to obtain relief
in arbitration with respect to such matters.
14. General Provisions.
14.1. Complete Agreement. This Agreement embodies the
complete agreement and understanding among the parties and
supersedes and preempts any prior understandings, agreements or
representations by or among the parties, written or oral, which
may have related to the subject matter hereof in any way.
14.2. Governing Law. This Agreement shall be governed by,
construed and enforced in accordance with the internal laws of
the State of California.
14.3. Waiver of Breach. Any waiver by either party of a
breach of the terms and conditions of this Agreement shall not
be considered as a waiver of any subsequent breach of the same
or any other term and condition hereof.
14.4. Amendment and Waivers. Any provision of this Agreement
may be amended or waived only with the prior written consent of
the Employer and Employee.
14.5. Assignment. This Agreement is intended to bind and
inure to the benefit of and be enforceable by the parties
hereto, and their respective successors and assigns, except that
any purported assignment by Employee of any of his rights or
obligations hereunder shall be void.
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14.6. Severability. In event that any provision or any part
of any provision of this Agreement is held to be illegal,
invalid or unenforceable, such illegality, invalidity or
unenforceability shall not affect the validity or enforceability
of any other provision or part hereof.
IN WITNESS WHEREOF, the parties have duly executed this Agreement
as of the date first above mentioned.
/s/ Xxxxxx X. Xxxx, Xx.
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Xxxxxx X. Xxxx, Xx.
THE L. L. XXXXXXXXXXXXX CO., INC.
By: /s/ Xxxxx X. Xxxxxxxxxxxxx
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Title: Chairman and CEO
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