EMPLOYMENT AGREEMENT
This
EMPLOYMENT
AGREEMENT is entered into by and between The Small Business Company, a Delaware
corporation (the “Company”), and Xxxxxx Xxxxxxxxx, the undersigned individual
(“Executive”).
RECITAL
The
Company and
Executive desire to enter into an Employment Agreement setting forth the terms
and conditions of Executive’s employment with the Company.
AGREEMENT
NOW,
THEREFORE, in
consideration of the mutual covenants and agreements hereinafter set forth,
the
Company and Executive agree as follows:
1. Employment.
(a) Term.
The Company
hereby employs the Executive to serve as President and CEO and to serve in
such
additional or different position or positions as the Company and its Board
of
Directors may determine at their sole discretion. The term of employment shall
be for a period of one year commencing on January 1, 2003 and renewable at
The
Company’s discretion on each anniversary.
(b) Duties
and
Responsibilities.
Executive will be
reporting to the Company’s Board of Directors. Within the limitations
established by the Bylaws of the Company, the Executive shall have each and
all
of the duties and responsibilities of that position and such other or different
duties on behalf of the Company, as may be assigned from time to time by the
Company’s Board of Directors.
(c) Location.
The initial
principal location at which Executive shall perform services for the Company
shall be 0000 Xxxxxxxx Xxxxx, Xxxxx X, Xxx Xxxxx, Xx, 00000.
2. Compensation.
(a) Base
Salary.
Executive shall
be paid a base salary (“Base Salary”) not to exceed $120,000 per year. Base
Salary may be reduced at the Compensation Committee’s discretion based on the
Company’s cash flow or other Company directives without the Company owing
Executive any additional monies or back pay. The Board Compensation Committee
will determine if such Base Salary should be increased in recognition of
services to the Company.
(b) Payment.
Payment of all
compensation to Executive hereunder shall be made in accordance with the
relevant Company policies in effect from time to time, including normal payroll
practices, and shall be subject to all applicable employment and withholding
taxes.
(c) Bonus.
Executive shall
also be entitled to a bonus determined at the sole discretion of The Board
of
Directors.
3. Other
Employment
Benefits.
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(a) Business
Expenses.
Upon submission
of itemized expense statements in the manner specified by the Company, Executive
shall be entitled to reimbursement for the following expenses: office equipment
and supplies, office rental (not to exceed $1,000 per month) and reasonable
travel and other reasonable business expenses duly incurred by Executive in
the
performance of his duties under this Agreement. Payment of Business Expenses
may
be reduced at the Compensation Committee’s discretion based on the Company’s
cash flow or other Company directives without the Company owing Executive any
additional monies or back expenses.
(b) Benefit
Plans.
Executive shall
be entitled to an allowance for medical and dental insurance (not to exceed
$500
per month) until such time as the Company adopts an employee medical and dental
plan at which time the Executive will have the option to participate in the
Company’s medical and dental plans, life and disability insurance plans and
retirement plans pursuant to their terms and conditions. Executive shall be
entitled to participate in any other benefit plan offered by the Company to
its
employees during the term of this Agreement (other than stock option or stock
incentive plans, which are governed by Section 3(d) below). Nothing in this
Agreement shall preclude the Company or any affiliate of the Company from
terminating or amending any employee benefit plan or program from time to time.
Payment of this medical and dental allowance may be reduced at the Compensation
Committee’s discretion based on the Company’s cash flow or other Company
directives without the Company owing Executive any additional monies or back
expenses.
(c) Vacation.
Executive shall
be entitled to three (3) weeks of vacation each year of full employment,
exclusive of legal holidays, as long as the scheduling of Executive’s vacation
does not interfere with the Company’s normal business operations.
(d)
Stock
Options.
Executive shall
be entitled to options to acquire shares of the Common Stock of the Company
pursuant to the terms of a Stock Option Plan to be adopted by the Company at
the
sole discretion of the Company’s Board of Directors.
(e) No
Other
Benefits.
Executive
understands and acknowledges that the compensation specified in Sections 2
and 3 of this Agreement shall be in lieu of any and all other compensation,
benefits and plans.
4. Executive’s
Business Activities.
Executive shall
devote his entire business time, attention and energy exclusively to the
business and affairs of the Company, as its business and affairs now exist
and
as they hereafter may be changed. Executive may serve as a member of the Board
of Directors of other organizations that do not compete with the Company, and
may participate in other professional, civic, governmental organizations and
activities that do not materially affect his ability to carry out his duties
hereunder.
5. Termination
of
Employment.
(a) For
Cause.
Notwithstanding
anything herein to the contrary, the Company may terminate Executive’s
employment hereunder for cause for any one of the following reasons:
(1) conviction
of a felony, any act involving moral turpitude, or a misdemeanor where
imprisonment is imposed, (2) commission
of any act of theft, fraud, dishonesty, or falsification of any employment
or
Company records, (3) improper
disclosure of the Company’s confidential or proprietary information,
(4) any
action
by the Executive which has a detrimental effect on the Company’s reputation or
business, (5) Executive’s
failure or inability to perform any reasonable assigned duties after written
notice from the Company of, and a reasonable opportunity to cure, such failure
or inability, (6) any
breach
of this Agreement, which breach is not cured within ten (10) days following
written notice of such breach, (7) a
course of
conduct amounting to gross incompetence, (8) chronic
and
unexcused absenteeism, (9) unlawful
appropriation of a corporate opportunity, or (10) misconduct
in connection with the performance of any of Executive’s duties, including,
without limitation, misappropriation of funds or property of the Company,
securing or attempting to secure personally any profit in connection with any
transaction entered into on behalf of the Company, misrepresentation to the
Company, or any violation of law or regulations on Company premises or to which
the Company is subject. Upon termination of Executive’s employment with the
Company for cause, the Company shall be under no further obligation to
Executive, except to pay all accrued but unpaid base salary and accrued vacation
to the date of termination thereof.
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(b) Without
Cause.
The Company may
terminate Executive’s employment hereunder at any time without cause, provided,
however, that Executive shall be entitled to severance pay in the amount of
twelve (12) weeks of Base Salary in addition to accrued but unpaid Base Salary
and accrued vacation, less deductions required by law, but if, and only if,
Executive executes a valid and comprehensive release of any and all claims
that
the Executive may have against the Company in a form provided by the Company
and
Executive executes such form within seven (7) days of tender.
(c) Resignation.
Upon termination
of employment, Executive shall be deemed to have resigned from the Board of
Directors of the Company if he is a director.
(d) Cooperation.
After notice of
termination, Executive shall cooperate with the Company, as reasonably requested
by the Company, to effect a transition of Executive’s responsibilities and to
ensure that the Company is aware of all matters being handled by
Executive.
6. Disability
of
Executive.
The Company may
terminate this Agreement without liability if Executive shall be permanently
prevented from properly performing his essential duties hereunder with
reasonable accommodation by reason of illness or other physical or mental
incapacity for a period of more than 120 consecutive days. Upon such
termination, Executive shall be entitled to all accrued but unpaid Base Salary
and vacation.
7. Death
of
Executive.
In the event of
the death of Executive during the Employment Period, the Company’s obligations
hereunder shall automatically cease and terminate; provided, however, that
within 15 days the Company shall pay to Executive’s heirs or personal
representatives Executive’s Base Salary and accrued vacation accrued to the date
of death.
8. Confidential
Information and Invention Assignments.
Executive has
executed a Confidential Information and Invention Assignment Agreement (the
“Confidential Information and Invention Assignment Agreement”). The obligations
under the Confidential Information and Invention Assignment Agreement shall
survive termination of this Agreement for any reason.
9. Exclusive
Employment.
During employment
with the Company, Executive will not do anything to compete with the Company’s
present or contemplated business, nor will he or she plan or organize any
competitive business activity. Executive will not enter into any agreement
which
conflicts with his duties or obligations to the Company. Executive will not
during his employment or within one (1) year after it ends, without the
Company’s express written consent, directly or indirectly, solicit or encourage
any employee, agent, independent contractor, supplier, customer, consultant
or
any other person or company to terminate or alter a relationship with the
Company.
10. Assignment
and
Transfer.
Executive’s
rights and obligations under this Agreement shall not be transferable by
assignment or otherwise, and any purported assignment, transfer or delegation
thereof shall be void. This Agreement shall inure to the benefit of, and be
binding upon and enforceable by, any purchaser of substantially all of Company’s
assets, any corporate successor to Company or any assignee thereof.
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11. No
Inconsistent
Obligations.
Executive is
aware of no obligations, legal or otherwise, inconsistent with the terms of
this
Agreement or with his undertaking employment with the Company. Executive will
not disclose to the Company, or use, or induce the Company to use, any
proprietary information or trade secrets of others. Executive represents and
warrants that he or she has returned all property and confidential information
belonging to all prior employers.
12. Miscellaneous.
(a) Attorneys’
Fees.
Should either
party hereto, or any heir, personal representative, successor or assign of
either party hereto, resort to legal proceedings in connection with this
Agreement or Executive’s employment with the Company, the party or parties
prevailing in such legal proceedings shall be entitled, in addition to such
other relief as may be granted, to recover its or their reasonable attorneys’
fees and costs in such legal proceedings from the non-prevailing party or
parties; provided, however, that nothing herein is intended to affect the
provisions of Section 12(l).
(b) Governing
Law.
This Agreement
shall be governed by and construed in accordance with the laws of the State
of
California without regard to conflict of law principles.
(c) Entire
Agreement.
[Except with
respect to the Stock Option Plan and Stock Option Agreement referenced in
Section 3(d),] this Agreement, [together with the attached exhibits and the
Confidential Information and Invention Assignment Agreement,] contains the
entire agreement and understanding between the parties hereto and supersedes
any
prior or contemporaneous written or oral agreements, representations and
warranties between them respecting the subject matter hereof.
(d) Amendment.
This Agreement
may be amended only by a writing signed by Executive and by a duly authorized
representative of the Company.
(e) Severability.
If any term,
provision, covenant or condition of this Agreement, or the application thereof
to any person, place or circumstance, shall be held to be invalid, unenforceable
or void, the remainder of this Agreement and such term, provision, covenant
or
condition as applied to other persons, places and circumstances shall remain
in
full force and effect.
(f) Construction.
The headings and
captions of this Agreement are provided for convenience only and are intended
to
have no effect in construing or interpreting this Agreement. The language in
all
parts of this Agreement shall be in all cases construed according to its fair
meaning and not strictly for or against the Company or Executive.
(g) Rights
Cumulative.
The rights and
remedies provided by this Agreement are cumulative, and the exercise of any
right or remedy by either party hereto (or by its successor), whether pursuant
to this Agreement, to any other agreement, or to law, shall not preclude or
waive its right to exercise any or all other rights and remedies.
(h) Nonwaiver.
No failure or
neglect of either party hereto in any instance to exercise any right, power
or
privilege hereunder or under law shall constitute a waiver of any other right,
power or privilege or of the same right, power or privilege in any other
instance. All waivers by either party hereto must be contained in a written
instrument signed by the party to be charged and, in the case of the Company,
by
an officer of the Company (other than Executive) or other person duly authorized
by the Company.
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(i) Remedy
for
Breach; Attorneys’ Fees.
The parties
hereto agree that, in the event of breach or threatened breach of any covenants
of Executive, the damage or imminent damage to the value and the goodwill of
the
Company’s business shall be inestimable, and that therefore any remedy at law or
in damages shall be inadequate. Accordingly, the parties hereto agree that
the
Company shall be entitled to injunctive relief against Executive in the event
of
any breach or threatened breach of any of such provisions by Executive, in
addition to any other relief (including damages) available to the Company under
this Agreement or under law. The prevailing party in any action instituted
pursuant to this Agreement shall be entitled to recover from the other party
its
reasonable attorneys’ fees and other expenses incurred in such
action.
(j) Notices.
Any notice,
request, consent or approval required or permitted to be given under this
Agreement or pursuant to law shall be sufficient if in writing, and if and
when
sent by certified or registered mail, with postage prepaid, to Executive’s
residence (as noted in the Company’s records), or to the Company’s principal
office, as the case may be.
(k) Assistance
in
Litigation.
Executive shall,
during and after termination of employment, upon reasonable notice, furnish
such
information and proper assistance to the Company as may reasonably be required
by the Company in connection with any litigation in which it or any of its
subsidiaries or affiliates is, or may become a party; provided, however, that
such assistance following termination shall be furnished at mutually agreeable
times and for mutually agreeable compensation.
[(l) Arbitration.
Any controversy,
claim or dispute arising out of or relating to this Agreement or the employment
relationship, either during the existence of the employment relationship or
afterwards, between the parties hereto, their assignees, their affiliates,
their
attorneys, or agents, shall be settled by arbitration in [City], [State]. Such
arbitration shall be conducted in accordance with the then prevailing commercial
arbitration rules of the American Arbitration Association (but the arbitration
shall be in front of an arbitrator appointed by JAMS/Endispute (“JAMS”)), with
the following exceptions if in conflict: (a) one arbitrator shall be chosen
by JAMS; (b) each party to the arbitration will pay its pro rata share of
the expenses and fees of the arbitrator(s), together with other expenses of
the
arbitration incurred or approved by the arbitrator(s); and (c) arbitration
may proceed in the absence of any party if written notice (pursuant to the
JAMS’
rules and regulations) of the proceedings has been given to such party. The
parties agree to abide by all decisions and awards rendered in such proceedings.
Such decisions and awards rendered by the arbitrator shall be final and
conclusive and may be entered in any court having jurisdiction thereof as a
basis of judgment and of the issuance of execution for its collection. All
such
controversies, claims or disputes shall be settled in this manner in lieu of
any
action at law or equity; provided however, that nothing in this subsection
shall
be construed as precluding the Company from bringing an action for injunctive
relief or other equitable relief or relief under the Confidential Information
and Invention Assignment Agreement. The arbitrator shall not have the right
to
award punitive damages, consequential damages, lost profits or speculative
damages to either party. The parties shall keep confidential the existence
of
the claim, controversy or disputes from third parties (other than the
arbitrator), and the determination thereof, unless otherwise required by law
or
necessary for the business of the Company. The arbitrator(s) shall be required
to follow applicable law. IF FOR ANY REASON THIS ARBITRATION CLAUSE BECOMES
NOT
APPLICABLE, THEN EACH PARTY, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW,
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY AS TO ANY ISSUE RELATING
HERETO IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR RELATING
TO
THIS AGREEMENT OR ANY OTHER MATTER INVOLVING THE PARTIES HERETO.]
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Alternate
(l):
[(l) Disputes.
Any controversy,
claim or dispute arising out of or relating to this Agreement or the employment
relationship, either during the existence of the employment relationship or
afterwards, between the parties hereto, their assignees, their affiliates,
their
attorneys, or agents, shall be litigated solely in state or federal court in
[City], [State]. Each party (1) submits to the jurisdiction of such court,
(2) waives the defense of an inconvenient forum, (3) agrees that valid
consent to service may be made by mailing or delivery of such service to the
California Secretary of State (the “Agent”) or to the party at the party’s last
known address, if personal service delivery can not be easily effected, and
(4) authorizes and directs the Agent to accept such service in the event
that personal service delivery can not easily be effected. EACH PARTY, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES ALL RIGHT
TO TRIAL BY JURY AS TO ANY ISSUE RELATING HERETO IN ANY ACTION, PROCEEDING,
OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER MATTER
INVOLVING THE PARTIES HERETO.]
IN
WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the
date set forth below.
| [The Small Business Company] | EXECUTIVE: | ||
| /s/ Xxxxx X. Xxxxxx | /s/ Xxxxxx Xxxxxxxxx | ||
|
Xxxxx X. Xxxxxx |
Xxxxxx Xxxxxxxxx, CEO |
||
Title: COO Date:
December 26, 2002
|
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