EXHIBIT 10.13
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (this "AGREEMENT") is made and
entered into as of this 28 day of February, 2005 (the "EFFECTIVE DATE"), by and
between Patron Systems, Inc., a Delaware corporation (the "Company") and Xxxx X.
Xxxxxx ("EXECUTIVE").
1. ENGAGEMENT AND DUTIES.
1.1 Commencing upon the Effective Date, and upon the terms and
subject to the conditions set forth in this Agreement, the
Company hereby engages and employs Executive as an officer of
the Company, with the title and designation of Chief Marketing
Officer of the Company. Executive hereby accepts such
engagement and employment.
1.2 Executive's duties and responsibilities shall be those
normally and customarily vested in the office of Chief
Marketing Officer of a corporation, subject to the
supervision, direction and control of the Board of Directors
of the Company ("BOARD"). In addition, Executive's duties
shall include those duties and services for the Company and
its affiliates as the Board shall from time to time reasonably
direct. Executive shall report directly to the President of
the Company.
1.3 Executive agrees to devote his primary business time,
energies, skills, efforts and attention to his duties
hereunder, and will not, without the prior written consent of
the Board, which consent will not be unreasonably withheld,
render any material services to any other business concern.
Executive will use his best efforts and abilities faithfully
and diligently to promote the Company's business interests.
1.4 Except for routine travel incident to the business of the
Company, Executive shall perform his duties and obligations
under this Agreement principally from an office provided by
the Company in Aliso Viejo, California, or such other location
in Orange County, California, as the Board may from time to
time determine.
2. TERM OF EMPLOYMENT. Unless earlier terminated pursuant to the
provisions hereof, the initial term ("INITIAL TERM") of Executive's
employment under this Agreement shall be for a period of one (1) year
commencing on the Effective Date. Said term shall be automatically
renewed thereafter for successive one (1)-year terms (the Initial Term
and any renewal terms, the "TERM") unless the Board or any successor
entity provides Executive with written notice 90 days prior to the
expiration of the then current Term.
3. TERMINATION.
3.1 Executive's employment pursuant to this Agreement shall
terminate on the earliest to occur of the following:
(a) the expiration of the Term;
(b) the death of Executive;
(c) delivery to Executive of written notice of
termination by the Company if Executive shall suffer
a "permanent disability," which for purposes of this
Agreement shall mean a physical or mental disability
which, in the reasonable judgment of the Board, is
likely to render Executive unable to perform his
duties and obligations under this Agreement for 90
days in any 12-month period;
(d) delivery to Executive of written notice of
termination by the Company "for cause," by reason of:
(i) any act or omission knowingly undertaken or
omitted by Executive with the intent of causing
damage to the Company or its affiliates, its
properties, assets or business, or its stockholders,
officers, directors or employees; (ii) any act of
Executive involving a material personal profit to
Executive, including, without limitation, any fraud,
misappropriation or embezzlement, involving
properties, assets or funds of the Company or any of
its subsidiaries; (iii) Executive's consistent
failure to perform his normal duties or any
obligation under any provision of this Agreement, in
either case, as directed by the Board; (iv)
conviction of, or pleading nolo contendere to any
crime or offense involving monies or other property
of the Company;
(e) delivery to the Company of written notice of
termination by Executive "for good reason," by reason
of (i) a material change in Executive's function,
authority, duties, compensation or responsibilities,
without Executive's express written consent; (ii) a
substantial difference of opinion between Executive
and the Board develops, or other circumstances should
arise such that Executive, in good faith, no longer
believes that he can function effectively as Chief
Marketing Officer of the Company; (iii) any material
failure by the Company to comply with any of the
provisions of this Agreement; or (iv) any other
matter or circumstance requested by the Board if
either (a) made with the intent of hindering
Executive in the performance of his duties hereunder
or creating an incentive for Executive to exercise
his rights under this Section 3.1(e) hereof or (b)
the effect of such request could reasonably be
expected to hinder Executive in the performance of
his duties hereunder or create an incentive for
Executive to exercise his rights under this Section
3.1(e); or
(f) delivery to Executive of written notice of
termination by the Company "without cause."
3.2 With regard to Section 3.1(d), the Company shall first provide
Executive with 30-days written notice of such alleged
misconduct, including a specific description of such
misconduct sufficient to allow Executive an opportunity to
correct such noted problems. Executive shall have the
opportunity to appear before the Board, with his legal
counsel, to present any relevant information he believes the
Board should consider. Executive shall not be terminated under
Section 3.1(d) unless, after the notice period expires,
Executive continues to fail to satisfactorily perform his
duties.
3.3 With regard to Section 3.1(e), if Executive determines that
"good reason" as defined in Section 3.1(e) exists, Executive
shall so notify the Company in writing. The Company shall have
thirty (30) days to remedy the facts and circumstances that
provided "good reason" as defined in Section 3.1(e). If
adequate remedy has occurred, Executive shall continue in the
employ of the Company as if no notice had been given. If
adequate remedy has not occurred, Executive may, at his
option, terminate his employment for "good reason" as defined
in Section 3.1(e).
4. COMPENSATION; EXECUTIVE BENEFIT PLANS.
2
4.1 The Company shall pay to Executive a base salary at an annual
rate of $180,000 during each fiscal year of this Agreement
("BASE SALARY"), subject to adjustment on an annual basis by
the Board. The Base Salary shall be payable in installments
throughout the year in the same manner and at the same times
the Company pays base salaries to other executive officers of
the Company. Executive shall receive a commission of 1% on all
product sales of the Company. This percentage is subject to
review at the end of each fiscal year. The Executive will
receive a non-recoverable draw of $60,000 during the first six
months of this agreement. In the event that Executive's
employment is terminated pursuant to SECTION 3.1(E) OR (F),
above, Executive shall continue to receive Executive's Base
Salary and shall be entitled to continued participation in the
Company Executive Benefit Plans (as defined below) for a
period of six (6) months. Notwithstanding the foregoing, the
Company shall not be obligated to pay Executive any amounts
hereunder following the termination of Executive's employment
pursuant to SECTION 3.1(E) OR (F), above, from and after any
time that Executive accepts an employment or consulting
position with any person or entity that is determined by the
Board, in the exercise of its reasonable discretion, to be a
competitor of the Company.
4.2 In addition to the Base Salary to be paid to Executive
hereunder, the Company shall pay a performance bonus (the
"BONUS") determined in accordance with a management incentive
plan to be agreed upon between Executive and the Board on an
annual basis. The management incentive plan will provide for
the payment of a Bonus equal to twenty-five percent (25%) of
Executive's then-current Base Salary upon achieving the
"target" objectives set forth in the management incentive
plan, and payments of such lesser or greater amounts upon
achieving results less than or greater than the "target"
objectives as shall be contained in the management incentive
plan.
4.3 Executive shall be entitled each year to vacation for a
minimum of four (4) calendar weeks, plus such additional
period or periods as the Board may approve in the exercise of
its reasonable discretion, during which time his compensation
shall be paid in full.
4.4 Executive shall be entitled to reimbursement from the Company
for the reasonable costs and expenses which he incurs in connection with the
performance of his duties and obligations under this Agreement in a manner
consistent with the Company's practices and policies as adopted or approved from
time to time by the Board for executive officers.
4.5 The Company may deduct from any compensation payable to
Executive the minimum amounts sufficient to cover applicable federal, state
and/or local income tax withholding, old-age and survivors' and other social
security payments, state disability and other insurance premiums and payments.
5. OTHER BENEFITS. During the term of his employment hereunder, Executive
shall be eligible to participate in all operative employee benefit and welfare
plans of the Company then in effect from time to time and in respect of which
all executive officers of the Company and its affiliates generally are entitled
to participate ("COMPANY EXECUTIVE BENEFIT PLANS"), including, to the extent
then in effect, group life, medical, disability and other insurance plans, all
on the same basis applicable to employees of the Company whose level of
management and authority is comparable to that of Executive.
3
6. CONFIDENTIALITY OF PROPRIETARY INFORMATION AND MATERIAL.
6.1 INDUSTRIAL PROPERTY RIGHTS. For the purpose of this Agreement,
"INDUSTRIAL PROPERTY RIGHTS" shall mean all of the Company's patents,
trademarks, trade names, inventions, copyrights, know-how or trade secrets,
formulas and science, now in existence or hereafter developed or acquired by the
Company or for its use, relating to any and all products and services which are
developed, formulated and/or manufactured by the Company.
6.2 TRADE SECRETS. For the purpose of this Agreement, "TRADE
SECRETS" shall mean any formula, pattern, device, or compilation of information
that is used in the Company's business and gives the Company an opportunity to
obtain an advantage over its competitors who do not know and/or do not use it.
This term includes, but is not limited to, information relating to the marketing
of the Company's products and services, including price lists, pricing
information, customer lists, customer names, the particular needs of customers,
information relating to their desirability as customers, financial information,
intangible property and other such information which is not in the public
domain.
6.3 TECHNICAL DATA. For the purpose of this Agreement, "TECHNICAL
DATA" shall mean all information of the Company in written, graphic or tangible
form relating to any and all products which are developed, formulated and/or
manufactured by the Company, as such information exists as of the Effective Date
or is developed by the Company during the term hereof.
6.4 PROPRIETARY INFORMATION. For the purpose of this Agreement,
"PROPRIETARY INFORMATION" shall mean all of the Company's Industrial Property
Rights, Trade Secrets and Technical Data. Proprietary Information shall not
include any information which (i) was lawfully in the possession of Executive
prior to Executive's employment with the Company, (ii) may be obtained by a
reasonably diligent businessperson from readily available and public sources of
information, (iii) is lawfully disclosed to Executive after termination of
Executive's employment by a third party which does not have an obligation to the
Company to keep such information confidential, or (iv) is independently
developed by Executive after termination of Executive's employment without
utilizing any of the Company's Proprietary Information.
6.5 AGREEMENT NOT TO COPY OR USE. Executive agrees, at any time
during the term of his employment and for a period of ten years thereafter, not
to copy, use or disclose (except as required by law after first notifying the
Company and giving it an opportunity to object) any Proprietary Information
without the Company's prior written permission. The Company may withhold such
permission as a matter within its sole discretion during the term of this
Agreement and thereafter.
7. RETURN OF CORPORATE PROPERTY AND TRADE SECRETS. Upon any termination of
this Agreement, Executive shall turn over to the Company all property, writings
or documents then in his possession or custody belonging to or relating to the
affairs of the Company or comprising or relating to any Proprietary Information.
8. DISCOVERIES AND INVENTIONS.
8.1 DISCLOSURE. Executive will promptly disclose in writing to the
Company complete information concerning each and every invention, discovery,
improvement, device,
4
design, apparatus, practice, process, method, product or work of authorship,
whether patentable or not, made, developed, perfected, devised, conceived or
first reduced to practice by Executive, whether or not during regular working
hours (hereinafter referred to as "Developments"), either solely or in
collaboration with others, (a) prior to the term of this Agreement while working
for the Company, (b) during the term of this Agreement or (c) within six months
after the term of this Agreement, if relating either directly or indirectly to
the business, products, practices, techniques or confidential information of the
Company.
8.2 ASSIGNMENT. Executive, to the extent that he has the legal
right to do so, hereby acknowledges that any and all Developments are the
property of the Company and hereby assigns and agrees to assign to the Company
any and all of Executive's right, title and interest in and to any and all of
such Developments; PROVIDED, HOWEVER, that, in accordance with California Labor
Code Sections 2870 and 2872, the provisions of this SECTION 8.2 shall not apply
to any Development that the Executive developed entirely on his own time without
using the Company's equipment, supplies, facilities or trade secret information
except for those Developments that either:
(a) relate at the time of conception or reduction to
practice of the Development to the Company's business, or actual or demonstrably
anticipated research or development of the Company; or
(b) result from any work performed by Executive for the
Company.
8.3 ASSISTANCE OF EXECUTIVE. Upon request and without further
compensation therefor, but at no expense to Executive, and whether during the
term of this Agreement or thereafter, Executive will do all reasonable lawful
acts, including, but not limited to, the execution of papers and lawful oaths
and the giving of testimony, that, in the reasonable opinion of the Company, its
successors and assigns, may be necessary or desirable in obtaining, sustaining,
reissuing, extending and enforcing United States and foreign Letters Patent,
including, but not limited to, design patents, on any and all Developments and
for perfecting, affirming and recording the Company's complete ownership and
title thereto, subject to the proviso in SECTION 8.2 hereof, and Executive will
otherwise reasonably cooperate in all proceedings and matters relating thereto.
8.4 RECORDS. Executive will keep complete and accurate accounts,
notes, data and records of all Developments in the manner and form requested by
the Company. Such accounts, notes, data and records shall be the property of the
Company, subject to the proviso in SECTION 8.2 hereof, and, upon request by the
Company, Executive will promptly surrender the same to it or, if not previously
surrendered upon its request or otherwise, Executive will surrender the same,
and all copies thereof, to the Company upon the conclusion of his employment.
5
8.5 OBLIGATIONS, RESTRICTIONS AND LIMITATIONS. Executive
understands that the Company may enter into agreements or arrangements with
agencies of the United States Government and that the Company may be subject to
laws and regulations which impose obligations, restrictions and limitations on
it with respect to inventions and patents which may be acquired by it or which
may be conceived or developed by employees, consultants or other agents
rendering services to it. Executive agrees that he shall be bound by all such
obligations, restrictions and limitations applicable to any such invention
conceived or developed by him during the term of this Agreement and shall take
any and all further action which may be required to discharge such obligations
and to comply with such restrictions and limitations.
9. NON-SOLICITATION COVENANT.
9.1 NONSOLICITATION AND NONINTERFERENCE. During the term of this
Agreement and for a period of two years thereafter, Executive shall not (a)
induce or attempt to induce any employee of the Company to leave the employ of
the Company or in any way interfere adversely with the relationship between any
such employee and the Company, (b) induce or attempt to induce any employee of
the Company to work for, render services or provide advice to or supply
confidential business information or trade secrets of the Company to any third
person, firm or corporation or (c) induce or attempt to induce any customer,
supplier, licensee, licensor or other business relation of the Company to cease
doing business with the Company or in any way interfere with the relationship
between any such customer, supplier, licensee, licensor or other business
relation and the Company.
9.2 INDIRECT SOLICITATION. Executive agrees that, during the term
of this Agreement and the period covered by SECTION 9.1 hereof, he will not,
directly or indirectly, assist or encourage any other person in carrying out,
directly or indirectly, any activity that would be prohibited by the provisions
of SECTION 9.1 if such activity were carried out by Executive, either directly
or indirectly; and, in particular, Executive agrees that he will not, directly
or indirectly, induce any employee of the Company to carry out, directly or
indirectly, any such activity.
10. INJUNCTIVE RELIEF. Executive hereby recognizes, acknowledges and agrees
that in the event of any breach by Executive of any of his covenants,
agreements, duties or obligations contained in SECTIONS 6, 7, 8 AND 9 of this
Agreement, the Company would suffer great and irreparable harm, injury and
damage, the Company would encounter extreme difficulty in attempting to prove
the actual amount of damages suffered by the Company as a result of such breach,
and the Company would not be reasonably or adequately compensated in damages in
any action at law. Executive therefore covenants and agrees that, in addition to
any other remedy the Company may have at law, in equity, by statute or
otherwise, in the event of any breach by Executive of any of his covenants,
agreements, duties or obligations contained in SECTIONS 6, 7, 8 AND 9 of this
Agreement, the Company shall be entitled to seek and receive temporary,
preliminary and permanent injunctive and other equitable relief from any court
of competent jurisdiction to enforce any of the rights of the Company, or any of
the covenants, agreements, duties or obligations of Executive hereunder, and/or
otherwise to prevent the violation of any of the terms or provisions hereof, all
without the necessity of proving the amount of any actual damage to the Company
or any affiliate thereof resulting therefrom; provided, however, that nothing
contained in this SECTION 10 shall be deemed or construed in any manner
whatsoever as a waiver by the Company of any of the rights which the Company may
have against Executive at
6
law, in equity, by statute or otherwise arising out of, in connection with or
resulting from the breach by Executive of any of his covenants, agreements,
duties or obligations hereunder.
11. MISCELLANEOUS.
11.1 ARBITRATION. The parties agree that they will use their best
efforts to amicably resolve any dispute arising out of or relating to this
Agreement. Any controversy, claim or dispute that cannot be so resolved shall be
settled by final binding arbitration in accordance with the rules of the
American Arbitration Association and judgment upon the award rendered by the
arbitrator or arbitrators may be entered in any court having jurisdiction
thereof. Any such arbitration shall be conducted in Xxxx County, Illinois, or
such other place as may be mutually agreed upon by the parties. Within fifteen
(15) days after the commencement of the arbitration, each party shall select one
person to act arbitrator, and the two arbitrators so selected shall select a
third arbitrator within ten (10) days of their appointment. Each party shall
bear its own costs and expenses and an equal share of the arbitrators expenses
and administrative fees of arbitration.
11.2 NOTICES. All notices, requests and other communications
(collectively, "NOTICES") given pursuant to this Agreement shall be in writing,
and shall be delivered by personal service or by United States first class,
registered or certified mail (return receipt requested), postage prepaid,
addressed to the party at the address set forth below:
If to Company:
Patron Systems, Inc.
000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attn: Board of Directors
If to Executive, at the address maintained for Executive in the
Company's payroll records.
Any Notice shall be deemed duly given when received by the
addressee thereof, provided that any Notice sent by registered or certified mail
shall be deemed to have been duly given three days from date of deposit in the
United States mails, unless sooner received. Either party may from time to time
change its address for further Notices hereunder by giving notice to the other
party in the manner prescribed in this section.
11.3 ENTIRE AGREEMENT. This Agreement contains the sole and entire
agreement and understanding of the parties with respect to the entire subject
matter of this Agreement, and any and all prior agreements, discussions,
negotiations, commitments and understandings, whether oral or otherwise, related
to the subject matter of this Agreement are hereby merged herein. No
representations, oral or otherwise, express or implied, other than those
contained in this Agreement have been relied upon by any party to this
Agreement.
11.4 ATTORNEYS' FEES. If any action, suit or other proceeding is
instituted to remedy, prevent or obtain relief from a default in the performance
by any party of its obligations under this Agreement, the prevailing party shall
recover all of such party's costs and reasonable attorneys' fees incurred in
each and every such action, suit or other proceeding, including any
7
and all appeals or petitions therefrom.
11.5 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD
TO CONFLICTS OF LAW PRINCIPLES THEREOF.
11.6 CAPTIONS. The various captions of this Agreement are for
reference only and shall not be considered or referred to in resolving questions
of interpretation of this Agreement.
11.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
11.8 BUSINESS DAY. If the last day permissible for delivery of any
Notice under any provision of this Agreement, or for the performance of any
obligation under this Agreement, shall be other than a business day, such last
day for such Notice or performance shall be extended to the next following
business day (provided, however, under no circumstances shall this provision be
construed to extend the date of termination of this Agreement).
In witness whereof, the parties have executed this Agreement as of the
date first set forth above.
Company: Executive:
PATRON SYSTEMS, INC.
By: /S/ XXXXXX X. XXX /S/ XXXX X. XXXXXX
---------------------------------------- ------------------------------
Xxxxxx X. Xxx, XX, Chairman of the Board Xxxx X. Xxxxxx
8
