Exhibit 10.14
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of
October 8, 2003 by and between Kinetics Holdings Corporation, a Delaware
corporation (the "Employer," "Kinetics" or "Company"), and Xxxx Xxxxxxx (the
"Employee").
WHEREAS, Employer, a current employee of Kinetics, desires to retain
the services of Employee, and Employee desires to continue to provide
his services in exchange for compensation, Employer hereby agrees that
it shall offer to continue to employ Employee, and Employee agrees that
he shall accept such continued employment, under the terms and
conditions hereinafter set forth, the parties hereby agree as follows.
1. Position and Title. Employee will be employed by Kinetics as its
General Counsel upon the date hereof (the "Effective Date") and
continuing thereafter until December 31, 2005 (the "Term"), or
until earlier termination pursuant to Section 6. Employee will
have overall responsibility for the management of the Company's
legal affairs and such other duties as the Company may reasonably
require, and shall report directly to its Chief Executive Officer
(the "CEO"). Employee will be expected to devote Employee's full
working time and attention to the business of Kinetics, and
Employee will not render services to any other business without
the prior approval of the CEO or, directly or indirectly, engage
or participate in any business that is competitive in any manner
with the business of Kinetics. Employee will also be expected to
comply with and be bound by the Company's operating policies,
procedures and practices that are from time to time in effect
during the term of Employee's employment.
2. Cash Compensation.
Base Salary. Employee's annual base salary is $250,000. Employee's
annual base salary shall be reviewed and increased from time to time
at the discretion of the CEO, in consultation with the Compensation
Committee
Bonus Compensation. Employee's cash bonus for 2003 shall be $200,000,
and shall be payable upon the execution hereof. Employee's performance
bonus in each of 2004 and 2005 shall be earned on the basis of
employee's performance against a defined set of metrics, to be
determined through agreement by the Employee and the CEO (in
consultation with the Compensation Committee), and shall be in
writing. For such periods, Employee would be eligible for a bonus
equal to 30%-120% of his then-current base salary. Eligibility for the
2004 and 2005 bonus shall be dependant upon continued employment
including being on the payroll on the last day of each year. All
unpaid amounts of Employee's annual bonus shall be paid not later than
the 91st day of the following year.
3. Vacation: Employee shall be eligible for three (3) weeks of vacation
annually, which shall accrue pursuant to the Company's normal vacation
accrual policy.
4. Other Benefits. Employee will be eligible for the normal health insurance,
401(k), any employee stock purchase plan and other benefits that are
offered to all Kinetics senior executives of similar rank and status.
5. Stock Options. Employee shall be eligible to participate in the Company's
employee equity compensation programs at a level consistent with that of
other Kinetics senior executives of similar rank and status and as provided
by the program or plan.
6. Employment and Termination. Employee's employment with Kinetics will be
at-will and may be terminated by Employee or by Kinetics at any time for
any reason. Employee may terminate his employment upon written notice to
the CEO for any reason, including "Good Reason," as provided below;
a. Employee may terminate his employment upon written notice to the
CEO at any time at Employee's discretion without Good Reason
("Voluntary Termination");
b. Employee may terminate his employment upon written notice to the
CEO at any time at Employee's discretion with Good Reason (an
"Constructive Termination");
c. Kinetics may terminate Employee's employment upon written notice
to Employee at any time following a determination by the CEO, the
Compensation Committee or the Board, upon a finding that there is
"Cause," as defined below, for such termination ("Termination for
Cause");
d. Kinetics may terminate Employee's employment upon written notice
to Employee at any time in the sole discretion of the CEO, the
Compensation Committee or the Board, without a determination that
there is Cause for such termination ("Termination without
Cause");
e. Employee's employment will automatically terminate upon
Employee's death or upon Employee's disability as determined by
the Company ("Termination for Death or Disability"); provided
that "disability" shall mean Employee's inability to perform
Employee's essential job responsibilities with or without
reasonable accommodation. Due to the critical importance of this
position to the Company, it is agreed that it would be an undue
hardship for the Employee to be on a medical leave of absence for
a period exceeding 180 consecutive days or 180 days in the
aggregate in any 12-month period.
7. Definitions. As used in this Agreement, the following terms have the
following meanings:
a. "Good Reason" means:
i. a material reduction in Employee's duties that is
inconsistent with Employee's position as General
Counsel of Kinetics or a change in Employee's reporting
relationship such that Employee no longer report
directly to the CEO;
ii. Employee's no longer being General Counsel of Kinetics
or, in the case of a Change in Control, of the
surviving entity or acquirer that results from any
Change in Control;
iii. any reduction in Employee's base annual salary or
target bonus (other than in connection with a general
decrease in the salary or target bonuses for all
officers of Kinetics) without Employee's consent;
iv. a material breach by Kinetics of any of its obligations
hereunder after providing Kinetics with written notice
and an opportunity to cure within 30 business days;
v. a requirement by Kinetics that Employee relocate
Employee's principal office to a facility more than 50
miles from Kinetics' current headquarters; or
vi. failure of any successor to assume this agreement
pursuant to Section 14(b) below.
b. "Cause" means:
x. xxxxx negligence or willful misconduct in the
performance of Employee's duties to Kinetics that has
resulted or is likely to result in substantial and
material damage to Kinetics. No act or failure to act
by Employee shall be considered "willful" if done or
omitted by Employee in good faith with reasonable
belief that Employee's action or omission was in the
best interests of Kinetics,
ii. material failure in the performance of Employee's
duties to Kinetics (other than gross negligence or
willful misconduct described above) after a written
demand for substantial performance is delivered to
Employee by the Company which specifically identifies
the manner in which the Company believes Employee have
not substantially performed Employee's duties and
Employee have been provided with a reasonable
opportunity, of not less than 30 days, to cure any
alleged material failure in performance;
iii. commission of any act of fraud with respect to
Kinetics; or
iv. conviction of a felony or a crime involving moral
turpitude either of which causes or reasonably could
cause material harm to the business and affairs of
Kinetics.
c. "Change in Control" means
i. The acquisition (other than from the Company) by any
person, entity or "group", within the meaning of
section 13(d) (3) or 14 (d) (2) of the Securities and
Exchange Act of 1934 (the "Exchange Act"), (excluding,
for this purpose, Kinetics or its subsidiaries, or any
employee benefit plan of Kinetics or its subsidiaries
which, or any current holder of more than 5% of the
Company's outstanding securities whom acquires
beneficial ownership of voting securities of Kinetics)
of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 50% or
more of either the then outstanding shares of common
stock or the combined voting power of the Kinetics'
then outstanding voting securities entitled to vote
generally in the election of directors; or
ii. the individuals who, as of the date hereof, constitute
the Board (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board,
provided that any person becoming a director subsequent
to the date hereof whose election, or nomination for
election by Kinetics' shareholders, was approved by a
vote of at least a majority of the directors then
comprising the Incumbent Board (other than an election
or nomination of an individual whose initial assumption
of the office is in connection with an actual or
threatened election contest relating to the election of
the directors of Kinetics, as such terms are used in
Rule 14a-l 1 of Regulation 14A promulgated under the
Exchange Act) shall be, for the purposes of this
Agreement, considered as though such person were a
member of the Incumbent Board; or
iii. Approval of the stockholders of Kinetics of a
reorganization, merger or consolidation, in each case,
with respect to which persons who were the stockholders
of Kinetics immediately prior to such reorganization,
merger or consolidation do not, immediately thereafter,
own more than 50% of the combined voting power entitled
to vote generally in the election of directors of the
reorganized, merged or consolidated company's then
outstanding voting securities, or a liquidation or
dissolution of Kinetics or of the sale of all or
substantially all of the assets of Kinetics.
8. Separation Benefits. Upon termination of Employee's employment with
Kinetics for any reason, Employee will receive payment for all unpaid
salary and vacation accrued to the date of Employee's termination of
employment; and Employee's benefits will be continued under Kinetics' then
existing benefit plans and policies for so long as provided under the terms
of such plans and policies and as required by applicable law. Under certain
circumstances, subject to Employee's execution of a termination and general
release agreement, Employee will also be entitled to receive severance
benefits as set forth below. Kinetics' termination and general release
agreement will contain provisions specifying that Employee will not solicit
employees for a period of one year after any final payment, that Employee
shall not compete to the extent legally enforceable while receiving
payments from the Employer, that the termination and general release
agreement shall be confidential, that neither Employee nor Kinetics shall
disparage the other party, and that Employee shall have no waivable claims
against Kinetics that survive that agreement, other than as set forth in
Section 13, below. Within sixty days of the signing of this Agreement the
parties shall agree upon a model termination and general release agreement
available to be used in conjunction with this Section.
9. Severance Benefits.
a. In the event of a Voluntary Termination or a Termination for
Cause, Employee will not be entitled to Severance Benefits. In
the event of Employee's Constructive Termination or Termination
without Cause during the Term of this Agreement after September
30, 2003, Employee will be entitled to:
i. A severance payment equal to eighteen months of
Employee's then-current annual base salary. All amounts
due under this Section 9 shall be payable as follows:
20% within seven days, 30% within 60 days, and the
remaining unpaid balance within 180 days from the date
of such termination, in accordance with Kinetics'
normal payroll practices with such payroll deductions
and withholdings as are required by law, provided, that
Employee provide Kinetics with reasonable transition
services during such period after the date of
termination; and
ii. Accelerated vesting and exercisability of that portion
of Employee's outstanding unvested options to purchase
Kinetics Common Stock that would have vested within two
years from the date of the Constructive Termination or
Termination without Cause, with ail vested options
exercisable for a period of two years from the date of
Employee's Constructive Termination or Termination
without Cause.
For the purpose of this agreement, termination by death or disability shall
not create eligibility for the severance benefits provided for a
Constructive Termination or a Termination Without Cause.
b. If Employee's severance and other benefits provided for in this
Section 9 constitute "parachute payments" within the meaning of
Section 280G of the Code and, but for this subsection, would be
subject to the excise tax imposed by Section 4999 of the Internal
Revenue Code, then Employee's severance and other benefits under
this Section 9 will be payable, at Employee's election, either in
full or in such lesser amount as would result, after taking into
account the applicable federal, state and local income taxes and
the excise tax imposed by Section 4999, in Employee's receipt on
an after-tax basis of the greatest amount of severance and other
benefits.
c. No payments due Employee hereunder shall be subject to mitigation
or offset.
10. Indemnification Agreement. Within 60 days of the Effective Date, Kinetics
will enter into a standard form of indemnification agreement for officers
and directors to indemnify Employee against certain liabilities Employee
may incur as an officer or director of Kinetics. It is intended that this
agreement will provide for the maximum indemnification reasonably available
for acts or failure to act when the conduct is within the scope of the
officer's or director's actual or apparent authority.
11. No Solicitation. During the term of Employee's employment with Kinetics and
for one year thereafter, Employee will not, on behalf of Employee or any
third party, solicit or attempt to induce any employee of Kinetics to
terminate his or her employment with Kinetics.
12. Arbitration. The parties agree that any dispute regarding the
interpretation or enforcement of this agreement shall be decided by
confidential, final and binding arbitration conducted by Judicial
Arbitration and Mediation Services ("JAMS") under the then existing JAMS
rules rather than by litigation in court, trial by jury, administrative
proceeding or in any other forum. The filing fees and arbitrator's fees and
costs in such arbitration will be borne by Kinetics. The parties will be
entitled to reasonable discovery of essential matters as determined by the
arbitrator. In the arbitration, the parties will be entitled to all
remedies that would have been available if the matter were litigated in a
court of law.
13. Survival. In the event that this Agreement expires or is terminated,
Kinetics' payment obligations to Employee as set forth herein shall survive
such expiration or termination. Following the expiration hereof, any
continuation of Employee's employment with the Company shall be unaffected
by the terms hereof, and shall be upon terms determined by the Company and
subject to the Company's regular employment policies applicable to other
senior executives of Kinetics.
14. Miscellaneous.
a. Attorneys Fees. If a legal action or other proceeding is brought
for enforcement of this agreement because of an alleged dispute,
breach, default, or misrepresentation in connection with any of
the provisions of this agreement, the prevailing party shall be
entitled to recover reasonable attorneys' fees and costs
incurred, both before and after judgment, in addition to any
other relief to which they may be entitled.
b. Successors. This agreement is binding on and may be enforced by
Kinetics and its successors and assigns and is binding on and may
be enforced by Employee and Employee's heirs and legal
representatives. Any successor to Kinetics or substantially all
of its business (whether by purchase, merger, consolidation or
otherwise) will in advance assume in writing and be bound by all
of Kinetics' obligations under this agreement.
c. Notices. Notices under this agreement must be in writing and will
be deemed to have been given when personally delivered or two
days after mailed by U.S. registered or certified mail, return
receipt requested and postage prepaid. Mailed notices to Employee
will be addressed to Employee at the home address that Employee
has most recently communicated to Kinetics in writing. Notices to
Kinetics will be addressed to its CEO with copy to the Chief
Financial Officer at Kinetics' corporate headquarters.
d. Waiver. No provision of this agreement will be modified or waived
except in writing signed by Employee and an officer of Kinetics
duly authorized by its Board of Directors.
No waiver by either party of any breach of this agreement by the
other party will be considered a waiver of any other breach of
this agreement.
e. Entire Agreement. This agreement, along with the Confidentiality,
Development and Nondisclosure Agreement between Employee and the
Company dated on or about November 31, 1998, represents the
entire agreement between us concerning the subject matter of
Employee's employment by Kinetics, unless otherwise referenced in
this Agreement.
f. The provisions of this Agreement shall be deemed severable and
the invalidity or unenforceability of any provision shall not
affect the validity and enforceability of the other provisions
hereof. If any provision of this Agreement is unenforceable for
any reason whatsoever, such provision shall be appropriately
limited and given effect to the extent that it may be
enforceable.
g. Governing Law. This agreement will be governed by the laws of the
State of California without reference to conflict of laws
provisions.
The parties hereto acknowledge and agree to the terms of this Agreement by their
signatures below, effective as of the date first written above.
KINETICS GROUP, INC. EMPLOYEE
/s/ Xxxxx X. Xxxxxxx /s/ Xxxx Xxxxxxx
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Xxxxx X. Xxxxxxx, CEO Xxxx Xxxxxxx
Acknowledged & Agreed this____________day of October 2003 by the Compensation
Committee of the Company's Board of Directors.
/s/ Xxxxxxx Xxxxxxx
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Xxxxxxx Xxxxxxx, Member
