EXECUTIVE EMPLOYMENT AGREEMENT
THIS
EXECUTIVE EMPLOYMENT AGREEMENT (the “Agreement”) was
initially made and entered into effective as of August 6, 2007 (the “Effective Date”), by
and between Xxxx
Microproducts Inc., a California corporation (the “Company”), and Xxxxxxx X.
Xxxxx (the “Executive”), and is
hereby amended and restates as of the last date signed below.
RECITALS:
WHEREAS, Executive desires to
obtain employment with the Company and the Company desires to employee Executive
subject to the terms and conditions contained in this Agreement.
NOW, THEREFORE, in
consideration of the foregoing and the mutual covenants contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties agree as follows:
AGREEMENTS:
1. Employment
Duties. The Company shall employ Executive in the capacity of
Executive Vice President and Chief Financial Officer for the Company, with such
powers and duties in that capacity as may be established from time to time by
the Company in its discretion. Executive shall be the Principal
Accounting Officer. Executive will devote his best efforts, attention
and energies to the Company’s business. During Executive’s
employment, he will not engage in any other business activities, regardless of
whether such activity is pursued for profits, gains, or other pecuniary
advantage. However, nothing in this Agreement shall prevent Executive
from being engaged in business activities outside the Company so long as such
activities require no active participation by Executive that in any way
interferes with Executive’s duties and responsibilities to the Company, competes
with the business of the Company, or creates an actual or apparent conflict of
interest with Executive’s employment by the Company. Executive
understands and agrees that he will inform the Company of any current outside
business activities in which he is engaged as of the execution of this
Agreement, and in the future will inform the Company of any additional outside
business activities in which he seeks to engage in advance of such
engagement.
2. Term of
Employment. Unless his employment is earlier terminated in
accordance with Sections 12, 13, 14, or 15 of this Agreement or as provided in
this Section, Executive shall be employed on the Effective Date and shall
continue employment through August 6, 2010 (the “Initial
Term”). This Agreement, and Executive’s employment under this
Agreement, shall automatically be extended for consecutive twelve
(12) month periods (each such period referenced as a “Subsequent Term”)
unless at any time during the six months prior to the expiration of the Initial
Term or any Subsequent Term, either the Company or Executive provides the other
with written notice of its or his election not to extend the Agreement and
Executive’s employment under this Agreement (“Notice of
Non-renewal”). In the event either Executive or the Company
provides a Notice of Nonrenewal under this Section, the Company shall pay
Executive his base salary and pro-rated auto allowance through his last date of
employment (payable on the next payroll date) as well as a pro-rated bonus, if
any, earned under the terms of the Management Incentive Plan (with the latter
paid out at the same time as active employees, but no later than March 15
following the calendar year in which the Company’s fiscal year to which the
bonus relates ends). Executive shall not be entitled to any other
payments or benefits of any kind except as provided in applicable benefit plan
documents, stock option and/or restricted stock agreements, or as provided in
Section 14 of this Agreement.
3. Compensation. All
compensation paid to Executive under this Agreement is subject to applicable
withholding and deductions.
(a) Base
Salary. As compensation for services rendered hereunder,
Executive shall receive an annual base salary of three hundred fifty thousand
dollars ($350,000), less applicable withholding and deductions, at a rate
payable in equal installments according to Company’s normal payroll
practices. Such salary shall be subject to review and change (upward
but not downward) by the Company, in its sole discretion.
(b) Incentive Bonus
Compensation. On an annual basis, the Company’s Board of
Directors, in its sole discretion, upon the recommendation of the Company’s
Chief Executive Officer, shall establish Executive’s annual target incentive and
performance metrics. The Executive will receive an incentive bonus
based on Executive’s achievement of the performance metrics in accordance with
the Company’s Management Incentive Plan that the Company in its discretion may
establish. Executive’s initial bonus shall be two hundred thousand
dollars ($200,000) per year and will be prorated from Executive’s hire date and
be guaranteed through 2007. Any such bonuses shall be paid out no
later than March 15 following the calendar year in which the Company’s fiscal
year to which the bonus relates ends.
(c) Business
Expenses. In accordance with the Company’s policy governing
travel and other expenses, the Company will reimburse Executive for approved and
reasonable business expenses incurred by Executive in connection with the
performance of his duties, provided that Executive properly submits to the
Company receipts verifying such expenses.
(d) Employee
Benefits. Executive will be eligible to participate in such
group health, life or disability plans and other benefit plans that Company may
maintain from time-to-time for all employees, provided that Executive meets the
respective eligibility requirements and subject to the terms and conditions of
such plans as they exist from time to time.
(e) Automobile
Allowance. Executive shall be entitled to an automobile
allowance of $300 per month paid at the same time as Executive’s regular salary
for each month, plus reimbursement of business mileage at the rate of $0.15 per
mile.
(f) Financial Planning/Tax
Preparation Allowance. Executive shall be entitled to an
allowance of up to $1,500 per calendar year as reimbursement for personal
financial planning and tax preparation. To receive the reimbursement,
Executive will be required to submit supporting receipts that support the
reimbursement.
4. Noncompetition. As
a condition to and in consideration of the terms of this Agreement, Executive
agrees that, during Executive’s employment, and, if and only if severance
benefits are being paid out under Section 14 hereof, also for a period of twelve
(12) months following the termination of Executive’s employment, Executive will
not, on Executive’s behalf or on behalf of any other person or entity, directly
or indirectly, as an employee, proprietor, agent, partner, officer, director or
otherwise, participate or engage in, manage, work for, broker for, operate,
control, render advice or assistance to or be connected in any way with any
other person or entity engaged in a business which is in direct competition with
the Company’s principal business (as defined and discussed in Company’s
documents filed with the Securities Exchange Commission from time to time) or
any other business in which the Company or any Subsidiary was engaged at any
point during Executive’s employment or other relationship with the
Company. It is expressly understood by the parties hereto that the
only remedy for a breach of the noncompetition provisions of this Agreement
following Executive’s employment shall be ceasing to provide further severance
benefits pursuant to Section 14 hereof.
5. Non-solicitation. As
a condition to and in consideration of the terms of this Agreement, Executive
agrees that, during Executive’s employment, and for a period of twelve (12)
months following the termination of Executive’s employment, Executive will not,
on Executive’s behalf or on behalf of any other person or entity:
(a) Directly
or indirectly solicit, on Executive’s own behalf, or on behalf of another, any
potential or existing customers, clients, accounts, vendors, licensors or
licensees of the Company or any Subsidiary; or
(b) Directly
or indirectly attempt to hire, or influence or solicit, or attempt to influence
or solicit, any employee of the Company, or of any Subsidiary, to leave or
terminate his or her employment, or to work for any other person or
entity. For purposes of this Section, “employee” shall mean any
current employee, and any former employee who was employed with the Company or
any Subsidiary at any time during the last twelve (12) months of
Executive’s employment.
6. Confidential
Information. During Executive’s employment with the Company,
and at all times after Executive’s resignation or the termination of Executive’s
employment for any reason, whether voluntary or involuntary, Executive shall not
directly or indirectly use or disclose any trade secret, proprietary or
confidential information of the Company or any Subsidiary for the benefit of any
person or entity other than the Company or any Subsidiary without prior written
approval of the Company’s Chief Executive Officer. For purposes of
this Agreement, in addition to all materials and information protected by
applicable statute or law, the parties acknowledge that confidential information
shall include any information relating to the Company or any Subsidiary, whether
in print, on computer disc or tape or otherwise, which is public information and
not generally known by individuals outside the Company or any Subsidiary,
including but not limited to information relating to research, development,
technology, and/or processes; marketing, purchasing, sales, and/or servicing
information, techniques, plans, proposals or reports; all financial information,
reports and statements; information relating to sales and other financial
strategies, plans and/or goals; information relating to proprietary rights and
data, ideas, know-how, inventions, and/or trade secrets; information regarding
current or potential clients or customers, client or customer lists and other
client or customer information; information regarding active and inactive
accounts of the Company or any Subsidiary; information relating to vendors,
licensors or licensees of the Company or any Subsidiary; information provided by
a client or vendor; personnel or employee information; and information relating
to the Company’s or any Subsidiary’s methods of operation.
7. Work Product and
Inventions. Executive agrees that the Company shall be
entitled to all of the benefits, profits, results and work product arising from
or incident to all work, services, advice and activities of Executive, including
without limitation all rights in inventions (as set forth below), trademark or
trade name creations, and copyrightable materials. Executive shall
not, during the term of Executive’s employment with the Company, be interested,
directly or indirectly, in any manner, including, but not limited to, as
partner, officer, advisor, or in any other capacity in any other business
similar to, or in competition with, the Company’s or any Subsidiary’s
business.
Executive
will communicate promptly and fully to the Company all inventions, discoveries,
improvements or designs conceived or reduced to practice by Executive during the
period of Executive’s employment with the Company (alone or jointly with
others), and, except as provided in this Section, Executive will and hereby does
assign to the Company and/or its nominees all of Executive’s right, title and
interest in such inventions, discoveries, improvements or designs and all of
Executive’s right, title and interest in any patents, patent applications or
copyrights based thereon without obligation on the part of the Company or any
Subsidiary to make any further compensation, royalty or payment to
Executive. Executive further agrees to assist the Company and/or its
nominee (without charge but at no expense to Executive) at any time and in every
proper way to obtain and maintain for its and/or their own benefit, patents for
all such inventions, discoveries and improvements and copyrights for all such
designs.
This
Section does not obligate Executive to assign to the Company any invention,
discovery, improvement or design for which no equipment, supplies, facility or
trade secret, confidential or proprietary information of the Company or any
Subsidiary was used and which was developed entirely on Executive’s own time,
and (a) which does not relate (i) directly to the business of the
Company or any Subsidiary, or (ii) to the Company’s or any Subsidiary’s
actual or demonstrably anticipated research or development, or (b) which
does not result from any work performed by Executive for the Company or any
Subsidiary.
8. Exempt
Inventions. Identified below by descriptive title are all of
the inventions, if any, in which Executive possessed any right, title or
interest prior to Executive’s employment with the Company or execution of this
Agreement which are not subject to the terms hereof:
None
9. Copyrights. Executive
acknowledges that any documents, drawings, computer software or other work of
authorship prepared by Executive within the scope of Executive’s employment is a
“work made for hire” under U.S. copyright laws and that, accordingly, the
Company exclusively owns all copyright rights in such works of
authorship. For purposes of this Section, “scope of employment” means
that the work of authorship (a) relates to any subject matter pertaining to
Executive’s employment, (b) relates to or is directly or indirectly
connected with the existing or reasonably foreseeable business, products,
projects or confidential information of the Company or any Subsidiary, or
(c) involves the use of any time, material or facility of the Company or
any Subsidiary.
10. Return of
Property. Executive shall, immediately upon Executive’s
resignation or the termination of Executive’s employment for any reason, whether
voluntary or involuntary, deliver to the Company all documents, materials and
other items, whether on computer disc or tape or otherwise, including all copies
thereof, belonging to the Company or any Subsidiary, or in any way related to
the business of the Company or any Subsidiary, or the services Executive
performed for the Company or any Subsidiary, including but not limited to, any
documents, materials or items containing trade secret, proprietary, or
confidential information, documents in any way relating to any inventions or
copyrights, client or customer information, information relating to the
Company’s or any Subsidiary’s processes or procedures and any other documents,
materials or items of any sort relating to the Company or any
Subsidiary. Executive shall not retain any copies or summaries of any
kind of documents and materials covered by this Section.
11. Injunctive
Relief. The parties recognize that irreparable damage will
result to the Company if Executive violates or threatens to violate the terms of
Sections 4 (but only during Executive’s employment), 5, 6, 7, 8, 9, or 10,
and that the damages would be difficult to prove and quantify, and it is
therefore agreed that, in the event of a breach of Section 4, 5, 6, 7, 8,
9, or 10, the Company shall be entitled to injunctive relief, in addition to all
other legal and equitable remedies available to it.
12. Death or Inability to
Perform Job Duties.
(a) Executive’s
employment shall terminate automatically in the event of Executive’s
death. In such event, Executive’s estate shall receive Executive’s
base salary and pro-rated auto allowance through Executive’s last date of
employment as well as a pro-rated bonus, if any, earned under the terms of the
Management Incentive Plan. Executive’s estate shall not be entitled
to any other payments or benefits of any kind except as provided in applicable
benefit plan documents, stock option and/or restricted stock
agreements.
(b) If,
due to mental or physical disability, Executive is unable to perform the
essential functions of Executive’s job, with or without reasonable
accommodation, for a total of ninety (90) days within any twelve
(12) month period, then the Company may terminate
Executive. Executive shall, in such event, receive his base salary
and pro-rated auto allowance through his last date of employment (payable on the
next payroll date) as well as a pro-rated bonus, if any, earned under the terms
of the Management Incentive Plan (with the latter paid out at the same time as
active employees, but no later than March 15 following the calendar year in
which the Company’s fiscal year to which the bonus relates
ends). Executive shall not be entitled to any other payments or
benefits of any kind except as provided in applicable benefit plan documents,
stock option and/or restricted stock agreements. Nothing in this
Section shall limit the Company’s right to terminate Executive’s employment
under any other section of this Agreement.
13. Termination of Executive’s
Employment by the Company for Cause. The Company may terminate
Executive’s employment “for cause” at any time. As used herein, “for
cause” shall mean (i) any act of personal dishonesty taken by the Executive
in connection with his responsibilities as an employee and intended to result in
substantial personal enrichment of the Executive, (ii) the conviction of a
felony, (iii) a willful act by the Executive which constitutes gross
misconduct and which is injurious to the Company, and (iv) following
delivery to the Executive of a written demand for performance from the Company
which describes the basis for the Company’s belief that the Executive has not
substantially performed his duties, continued violations by the Executive of the
Executive’s obligations to the Company which are demonstrably willful and
deliberate on the Executive’s part.
In the
event the Company terminates Executive’s employment for cause, Executive shall
receive his base salary and pro-rated auto allowance through his last date of
employment (payable on the next payroll date) as well as a pro-rated bonus, if
any, earned under the terms of the Management Incentive Plan (with the latter
paid out at the same time as active employees, but no later than March 15
following the calendar year in which the Company’s fiscal year to which the
bonus relates ends). Executive shall not be entitled to any other
payments or benefits of any kind except as provided in applicable benefit plan
documents, stock option and/or restricted stock agreements.
14. Termination of Executive’s
Employment by the Company without Cause. In the event the
Company exercises its right to terminate Executive’s employment without cause
under this Section, the Company will pay Executive his base salary and pro-rated
auto allowance through his last date of employment as well as a pro-rated bonus,
if any, earned under the terms of the Management Incentive Plan. In
addition, the Company shall pay Executive a severance payment of an amount equal
to twelve (12) months of his then current base salary, less applicable
withholding and deductions. This payment will be paid as part of the
Company’s normal payroll processing during the twelve (12) month
period. However, in order to receive the severance payment under this
Section, Executive must first execute a waiver and release of claims agreement
in the form prescribed by the Company (the “Release”). In
order to receive any severance payments or benefits set forth in this Section,
the Release must become effective within fifty-two (52) days following
Executive’s employment termination date or such earlier date as required by the
Release (such deadline, the “Release
Deadline”). No severance payments or benefits pursuant to this
Agreement will be paid or provided until the Release becomes
effective. Any severance payments or benefits to which Executive is
entitled during such fifty-two (52) day period shall be paid by the Company to
Executive in cash and in full arrears on the fifty-third (53rd) day following
Executive’s employment termination date or such later date as is required to
avoid the imposition of additional taxes under Internal Revenue Code Section
409A. Executive shall not be entitled to any other payments or
benefits of any kind except as provided in applicable benefit plan documents,
stock option and/or restricted stock agreements. This Section shall
also apply if Executive voluntarily terminates his employment after the Company
downgrades Executive position title, materially downgrades Executive’s
responsibility, or reduces Executive’s salary or annual target
incentive. In the event that Executive’s employment termination would
trigger severance benefits under both this Agreement and Executive’s Management
Retention Agreement with the Company, Executive shall only receive severance
benefits under the Management Retention Agreement and not under this
Agreement.
15. Termination of Employment by
Executive. Executive may terminate his own employment with the
Company with or without cause upon thirty (30) days prior written notice to
the Company. Executive shall be required to perform Executive’s job
duties and will be paid his base salary through his last date of
employment. At the option of the Company, the Company may require
Executive to terminate employment at any time during the thirty (30) day
notice period. In such event, Company will pay Executive his base
salary for the remainder of the thirty (30) day notice
period. Executive shall, in addition, receive his pro-rated auto
allowance through his last date of employment as well as a pro-rated bonus, if
any, earned under the terms of the Management Incentive
Plan. Executive shall not be entitled to any other payments or
benefits of any kind except as provided in applicable benefit plan documents,
stock option and/or restricted stock agreements, or pursuant to the penultimate
sentence of Section 14 hereof.
16. Code Section
409A.
(a) To
the extent that any taxable reimbursements of expenses are provided under
Section 3, they shall be made in accordance with Internal Revenue Code Section
409A, including the following provisions:
(i) The
amount of any such expense reimbursement provided during one of Executive’s tax
years shall not affect any expenses eligible for reimbursement in any other
taxable year;
(ii) The
reimbursement of the eligible expense shall be made no later than the last day
of Executive’s tax year that immediately follows the year in which the expense
was incurred; and
(iii) Executive’s
right to any reimbursement shall not be subject to liquidation or exchange for
another benefit or payment.
(b) Notwithstanding
anything to the contrary in this Agreement, no severance payments or benefits
payable to Executive, if any, pursuant to this Agreement that, when considered
together with any other severance payments or separation benefits, is considered
deferred compensation under Section 409A (together, the “Deferred Payments”)
will be payable until Executive has a “separation from service” within the
meaning of Section 409A. Similarly, no severance payable to
Executive, if any, pursuant to this Agreement that otherwise would be exempt
from Section 409A pursuant to Treasury Regulation Section 1.409A-1(b)(9)
will be payable until Executive has a “separation from service” within the
meaning of Section 409A.
(c) Further,
if Executive is a “specified employee” within the meaning of Section 409A
at the time of separation from service (other than due to death), any Deferred
Payments that otherwise are payable within the first six (6) months following
Executive’s separation from service will become payable on the first payroll
date that occurs on or after the date six (6) months and one (1) day following
the date of Executive’s separation from service. All subsequent
Deferred Payments, if any, will be payable in accordance with the payment
schedule applicable to each payment or benefit. Notwithstanding
anything herein to the contrary, in the event of Executive’s death following
Executive’s separation from service but prior to the six (6) month anniversary
of Executive’s separation from service (or any later delay date), then any
payments delayed in accordance with this paragraph will be payable in a lump sum
as soon as administratively practicable after the date of Executive’s death and
all other Deferred Payments will be payable in accordance with the payment
schedule applicable to each payment or benefit. Each payment and
benefit payable under the Agreement is intended to constitute a separate payment
for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations.
(d) Any
severance payment that satisfies the requirements of the “short-term deferral”
rule set forth in Section 1.409A-1(b)(4) of the Treasury Regulations will not
constitute Deferred Payments for purposes of the Agreement. Any
severance payment that qualifies as a payment made as a result of an involuntary
separation from service pursuant to Section 1.409A-1(b)(9)(iii) of the Treasury
Regulations that does not exceed the Section 409A Limit will not constitute
Deferred Payments for purposes of the Agreement. For purposes of this
paragraph, “Section 409A Limit” will mean the lesser of two (2) times: (i)
Executive’s annualized compensation based upon the annual rate of pay paid
to Executive during the Company’s taxable year preceding the Company’s
taxable year of Executive’s separation from service as determined under
Treasury Regulation Section 1.409A-1(b)(9)(iii)(A)(1) and any Internal Revenue
Service guidance issued with respect thereto; or (ii) the maximum amount that
may be taken into account under a qualified plan pursuant to Section 401(a)(17)
of the Code for the year in which Executive’s employment is
terminated.
(e) The
foregoing provisions are intended to comply with the requirements of
Section 409A so that none of the severance payments and benefits to be
provided under the Agreement will be subject to the additional tax imposed under
Section 409A, and any ambiguities herein will be interpreted to so
comply. Executive and the Company agree to work together in good
faith to consider amendments to the Agreement and to take such reasonable
actions which are necessary, appropriate or desirable to avoid imposition of any
additional tax or income recognition prior to actual payment to Executive under
Section 409A.
17. Severability and
Interpretation. In the event that any provision of this
Agreement is held invalid by a court of competent jurisdiction, the remaining
provisions shall nonetheless be enforceable according to their
terms. Any provision held overbroad or unreasonable as written shall
be deemed amended to narrow its application to the extent necessary to make the
provision enforceable under applicable law, and shall be enforced as
amended. This Agreement shall be construed without regard to any
presumption or other rule requiring construction hereof against the party
causing this Agreement to be drafted.
18. Survival. Notwithstanding
any provision of this Agreement to the contrary, the provisions of
Sections 4, 5, 6, 7, 8, 9, 10, and 11 shall survive the termination of this
Agreement and shall survive Executive’s resignation or the termination of his
employment, whether voluntary or involuntary, and with or without
cause.
19. Notices. All
notices or other communications required or permitted hereunder shall be in
writing and shall be personally delivered or provided by facsimile (with
confirmation of transmission) to the party receiving such notice or shall be
delivered by Federal Express or similar overnight courier, addressed to the
party to whom such notice is intended to be given as follows:
(a) Company:
Xxxx
Microproducts Inc.
0000
Xxxxxxxx Xxxxxx
Xxx Xxxx,
Xxxxxxxxxx 00000-0000
Attn: VP
of Human Resources
Facsimile:
(000) 000-0000
(b) Executive:
at the
last address known to the Company
All
notices shall be deemed given on the day when actually delivered as provided
above, if delivered personally or by facsimile, or on the next business day
after the date dispatched, if delivered by Federal Express or other overnight
courier.
Either
party may, by written notice hereunder, designate a change of
address. Any notice, if mailed properly addressed, postage prepaid,
by registered or certified mail, shall be deemed dispatched on the registered
date or the date stamped on the certified mail receipt, and shall be deemed
received on the fifth business day thereafter, or when it is actually received,
whichever is sooner.
20. Amendments. This
Agreement expresses the entire understanding of the parties and supersedes all
prior agreements concerning the same subject matter. It may not be
changed orally. Any change or modification must be made in writing
and signed by the parties.
21. Governing
Law. The validity, enforceability, construction, and
interpretation of this Agreement shall be governed by the laws of the State of
California, without reference to its conflict of laws provisions.
22. Waiver by the
Company. Any waiver by the Company or Executive of any of
its/his rights under this Agreement shall be made in a writing signed by the
party seeking to effect the waiver of its/his rights and specifically designated
as a waiver of a right or rights under this Agreement. Neither the
Company’s nor Executive’s failure to enforce a breach of this Agreement shall
act as a waiver or otherwise prevent the Company or Executive from enforcing the
Agreement as to such breach or any other breach.
23. Successors and
Assigns. This Agreement shall be binding upon and inure to the
benefit of the Company and its successors and assigns.
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blank]
IN WITNESS WHEREOF, the
parties have executed this Agreement on the day and year set forth
below.
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XXXX
MICROPRODUCTS INC.
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By:
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/s/ Xxxxxxx X. Xxxxxxx
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Its:
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Senior Vice President, Human Resources | ||
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Date:
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August 25, 2009 | ||
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/s/
Xxxxxxx X. Xxxxx
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Executive
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Date:
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August 25, 2009 | ||
