1
EXHIBIT 10.5
EMPLOYMENT AGREEMENT
THIS AGREEMENT (this "Agreement") is made as of November 21, 1997, by
and between XXXXXX XXXXX & ASSOCIATES, INC., a California corporation (the
"Corporation"), and XXXXXX X. XXXXX (the "Executive"), with reference to the
following facts:
R E C I T A L S:
A. The Corporation desires to employ Executive as its President and
Chief Executive Officer.
B. Executive desires to perform the duties connected with such position
on the terms and conditions hereinafter set forth.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing facts, the mutual
promises set forth below, and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Term.
The term of this Agreement ("Employment Term") shall commence on
November 21, 1997, and shall continue for two (2) years, subject to earlier
termination only as set forth in Section 5.
2. Duties.
2.1 Office. Executive is hereby appointed to serve as President and
Chief Executive Officer of the Corporation. In the above capacity, Executive
shall report directly to the Board of Directors of the Corporation. Executive
shall exercise such responsibilities and authority relating to Corporation's
business and operations as are customarily performed by an executive holding the
offices of President and Chief Executive Officer, and such additional or
different duties and services as the Board of Directors may reasonably require
from time to time.
2.2 Performance of Services. During the Employment Term, Executive shall use
his best efforts and abilities to promote Corporation's interests. Executive
agrees that he will diligently endeavor to perform the services contemplated by
this Agreement in accordance with policies established by the Board of Directors
from time to time.
2
3. Compensation.
3.1 Salary. As compensation for the services to be performed hereunder,
Corporation shall pay or cause to be paid to Executive a salary ("Salary") of
Nine Hundred Thousand Dollars ($900,000) per annum. The Salary shall be earned
and shall be payable to Executive at such intervals and otherwise in such manner
as is consistent with the normal payroll practices of Corporation for
remuneration of its executives.
3.2 Bonus Compensation. As additional compensation for the performance by
Executive of services hereunder and as a further incentive to Executive to
devote his best efforts to the business and affairs of Corporation, Executive
may be eligible to receive, at the sole and exclusive discretion of the
Corporation's Compensation Committee (the "Compensation Committee"), a bonus in
such amount as the Compensation Committee shall determine to be appropriate, not
to exceed $900,000.
3.3 Withholding. Corporation shall be entitled to withhold amounts from any
compensation or other form of remuneration or benefit payable by Corporation to
Executive that Corporation reasonably believes is required to be withheld under
any federal, state or local tax law to which Corporation is subject.
4. Benefits.
4.1 Vacation and Holidays. During the Employment Term, Executive shall be
entitled to holidays and vacation time in accordance with policies established
by the Corporation from time to time. No vacation time may be carried forward
and accumulated with the vacation time afforded Executive in any subsequent
year.
4.2 Expenses. Corporation shall, during the Employment Term, reimburse
Executive for all reasonable business expenses incurred and paid by Executive in
the course of the performance of his duties pursuant to this Agreement,
consistent with the Corporation's expense reimbursement policies and procedures
as in effect from time to time.
4.3 Other Benefits. Executive shall be entitled to participate in any
policies, programs and benefits which the Corporation may, in its discretion,
adopt for its Executive employees generally relating to sick leave, disability
insurance, life insurance, medical insurance, and bonus and incentive plans.
5. Termination.
The Employment Term shall terminate upon any of the following
occurrences:
-2-
3
5.1 Termination for Cause. Corporation may terminate this Agreement at any
time for "good and valid cause," thereby canceling, effective immediately, all
rights and obligations of the parties hereunder. In the event that Executive's
employment by the Corporation is terminated for good and valid cause,
Corporation shall have no obligation to pay any severance pay to Executive, or
to otherwise pay Executive's salary, bonus or any other benefits due hereunder
(except for salary, bonus and other benefits accrued on the books of Employer
through the date of termination).
For purposes of this Agreement, "good and valid cause" shall mean: (i)
conviction by a court of competent jurisdiction of a felony or other crime
involving moral turpitude; (ii) Executive's refusal or failure to substantially
perform the primary duties of his employment hereunder after written
notification thereof by the Corporation, which notice shall specify the alleged
instances of failure or refusal to perform and shall provide Executive with
thirty (30) days in which to cure; (iii) the determination by the Board of
Directors that Executive has become unable as a result of alcohol or drug abuse
to carry out the responsibilities of his employment; (v) Executive's breach of a
material term of this Agreement after written notification thereof by the
Corporation, which notice shall specify the alleged material breach and shall
provide Executive with ten (10) days in which to cure; or (v) the death or
permanent disability of Executive, with the term "permanent disability" defined
as a physical or mental disability continuing for a period of not less than
ninety (90) consecutive days, which prevents Executive from substantially
discharging his duties and responsibilities as set forth herein.
5.2 Termination Without Cause. Corporation shall have the right, exercisable
upon two (2) weeks' written notice, to terminate Executive's employment under
this Agreement without good and valid cause at any time during the Employment
Term. If Executive's employment is terminated by Corporation without cause,
Executive shall be entitled to receive as severance pay, following termination,
an amount equal to two (2) times the annual salary paid to Executive by
Corporation as provided in Section 3.1. Such severance pay shall be paid at
Corporation's election either in a lump sum or in 12 equal monthly installments.
5.3 Termination By Reason of Executive's Voluntary Resignation. Executive
shall be entitled to voluntarily resign from employment with Corporation upon
four (4) weeks' advance written notice to Corporation. Upon such voluntary
resignation, the Employment Term shall terminate without further action by
either party hereto and all rights and obligations of the parties pursuant to
this Agreement shall cease. Corporation shall have no obligation to pay any
severance pay to Executive in the event that Executive voluntarily resigns, or
to otherwise pay Executive's salary, bonus or any other benefits due hereunder
(except for salary, bonus and other benefits accrued on the books of Employer
through the date of termination).
-3-
4
6. Confidentiality.
Executive acknowledges that, by reason of his employment with Corporation,
he may learn trade secrets and obtain other confidential information concerning
the business and policies of Corporation. Executive agrees that, during and
after the end of the Employment Term, he will not voluntarily divulge or
otherwise disclose, directly or indirectly, any such trade secrets or other
confidential information concerning the business or policies of Corporation that
he may learn as a result of his employment during the Employment Term or may
have learned prior to the Employment Term, except to the extent such information
is lawfully obtainable from public sources or such use or disclosure is (i)
necessary to the performance of this Agreement and in furtherance of
Corporation's best interests, (ii) required by applicable laws, or (iii)
authorized by Corporation.
7. Miscellaneous.
7.1 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of Corporation and its respective successors and assigns and
shall be binding upon and inure to the benefit of Executive and his executors
and administrators. This Agreement, and Executive's rights and obligations
hereunder, may not be assigned by Executive.
7.2 Waiver of Breach. The waiver by Corporation or Executive of a breach of
any provision of this Agreement by the other party shall not be construed as a
waiver of any subsequent breach of the same provision or of any other provision
of this Agreement.
7.3 Notices. All notices, requests, demands and other communications
submitted hereunder shall be in writing and shall be deemed to have been duly
given if delivered or mailed, first class postage prepaid registered mail,
addressed as follows:
If to Executive: Xxxxxx X. Xxxxx
--------------------------------------
--------------------------------------
If to Corporation: Xxxxxx Xxxxx & Associates, Inc.
0000 XxxXxxxxx Xxxxx, 0xx Xxxxx
Xxxxxxx Xxxxx, XX 00000
7.4 Arbitration. If any dispute between the parties arises out of this
Agreement, such dispute shall be finally resolved by arbitration conducted in
Orange County, California, in accordance with the then existing Commercial
Arbitration Rules of the American Arbitration Association, and judgment upon the
award rendered by the arbitrators may be entered in any court having
jurisdiction thereof. The parties agree that there shall be no pre-arbitration
discovery and the arbitrator shall not award punitive damages to either of the
parties.
-4-
5
7.5 Severability. If any provision of this Agreement shall be found invalid
by any court of competent jurisdiction, such findings shall not affect the
validity of the other provisions hereof and the invalid provisions shall be
deemed to have been severed herefrom.
7.6 Entire Agreement. This instrument contains the entire agreement of the
parties. It may not be changed orally but only by an agreement in writing signed
by the parties.
7.7 Applicable Law. This Agreement is entered into and executed in the State
of California and shall be governed by the laws of such State.
7.8 Counterparts. This Agreement may be executed simultaneously in any
number of counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
7.9 Headings. The paragraph and subparagraph headings herein are for
convenience only and shall not affect the construction hereof.
7.10 Further Assurances. Each of the parties hereto shall, from time to
time, and without charge to the other parties, take such additional actions and
execute, deliver and file such additional instruments as may be reasonably
required to give effect to the transactions contemplated hereby.
7.11 Attorneys' Fees. In the event any party hereto commences arbitration or
legal action in connection with this Agreement, the prevailing party shall be
entitled to its attorneys' fees, costs and expenses incurred in such action.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
COMPANY: XXXXXX XXXXX & ASSOCIATES, INC.
a California corporation
By: /s/ XXXXXXX X. XXXXXXXX
------------------------------
Xxxxxxx X. Xxxxxxxx,
Executive Vice President
and Chief Operating Officer
EXECUTIVE: /s/ XXXXXX X. XXXXX
----------------------------------
Xxxxxx X. Xxxxx
-5-
