EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made as of June 3, 1999
(the "Effective Date") by and between Island Pacific Systems Corporation, a
California corporation (the "Company"), and Xxxx X. Xxxxx ("Executive"), with
reference to the following facts:
A. Executive is experienced in managing the business conducted by the
Company.
B. Island Pacific has been acquired by SVI Holdings, Inc., a Nevada
corporation ("SVI"), pursuant to the Stock Purchase Agreement dated as of June
1, 1999 among SVI, the Company, Xxxx Xxxxxxxxx, an individual, The Xxxxxxxxx
Family Trust, Xxxx Xxxxxxx, an individual, Xxxxxx X. Xxxxxxx, an individual,
Xxxxxxx Xxxxxxx, an individual, and Executive (the "Stock Purchase Agreement").
C. Under the Stock Purchase Agreement Executive sold to SVI, the
holding company of the Company, all of Executive's shares in the Company.
D. The Company desires to employ Executive to perform the duties and
responsibilities described herein on the terms and conditions hereinafter set
forth.
1. EMPLOYMENT. The Company hereby employs Executive and Executive
hereby accepts such employment upon the terms and conditions hereinafter set
forth.
2. DUTIES. Subject to the terms and provisions of this Agreement,
Executive hereby is employed by the Company as the Chief Executive Officer of
the Company. Executive's duties shall consist of such duties as customarily are
associated with service as the Chief Executive Officer of a corporate business,
and shall have full responsibility and authority, along with the President, for
managing the day-to-day operations of the Company and implementing such policies
as the Board of Directors of the Company may from time to time promulgate.
Executive shall report directly to the Chairman of the Board of Directors of the
Company or his designee.
3. SCOPE OF SERVICES. Executive shall devote substantially all of his
business time, attention, energies, skills, learning and efforts to the
Company's business.
4. TERM OF EMPLOYMENT AND VOLUNTARY TERMINATION. Subject to prior
termination of this Agreement as hereinafter provided, the term of this
Agreement shall commence on the Effective Date and shall continue for three
years thereafter, unless earlier terminated as provided in this Agreement.
5. COMPENSATION.
5.1. Executive's annual compensation ("Base Compensation")
under this Agreement prorated for any partial year, shall be $300,000 per year,
commencing June 1, 1999. The Base Compensation shall be payable semi-monthly in
arrears from the Effective Date in accordance with the ordinary payroll
procedures of the Company. Any increases in Base Compensation shall be in the
sole and absolute discretion of the Company.
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6. OTHER RIGHTS AND BENEFITS. Executive shall also be entitled to
receive all other rights and benefits, including health insurance, vacations,
sick pay and retirement plan participation, as are made available to other
senior executives of the Company and its affiliates.
7. TERMINATION. The employment of Executive may be terminated as
follows:
7.1. TERMINATION BY MUTUAL AGREEMENT. The Company and
Executive may mutually agree in writing to terminate Executive's employment.
7.2. TERMINATION FOR DEATH. Executive's employment shall
terminate immediately upon Executive's death.
7.3. TERMINATION UPON DISABILITY. Executive's employment shall
terminate if Executive should become totally and permanently disabled. For
purposes of this Agreement, Executive shall be considered "totally and
permanently disabled" if Executive is treated as permanently "disabled" under
any permanent disability insurance policy maintained by the Company and is
entitled to full benefits payable under such policy upon a total and permanent
disability. In the event any such policy is either not in force or the benefits
are not available under such policy, then "total and permanent disability" shall
mean the inability of Executive, as a result of substance abuse, any mental,
nervous or psychiatric disorder, or physical condition, injury or illness to
perform substantially all of his duties on a full-time basis currently for a
period of six (6) consecutive months, as determined by a licensed physician
selected by the Board of Directors of the Company.
7.4. TERMINATION BY THE COMPANY OR EXECUTIVE. Executive or the
Company may terminate this Agreement at will, for any reason, or for no reason
at all, upon six (6) months prior written notice.
7.5. TERMINATION BY EMPLOYEE FOR "CAUSE". The Company may
terminate this Agreement for "Cause" upon three days written notice so long as
the Company has given Executive written notice describing the Cause and
Executive has not cured such Cause within a reasonable time, but no less than
fourteen (14) days. For purposes of this Agreement, "Cause" shall mean the
existence or occurrence of any of the following:
7.5.1. Executive's conviction of a felony involving
the Company or moral turpitude.
7.5.2. Executive's commission of theft, embezzlement
or fraud.
7.5.3. Executive's willful violation of a reasonable
the Company policy previously made known to him or a reasonable directive of the
Board of Directors of the Company.
7.5.4. Executive's breach of his obligations set
forth in Sections 9, 10, 11 and 12 below.
7.5.5. Any neglect or breach of duty by Executive
under this Agreement, or any failure by Executive to perform under this
Agreement which remains a breach for fourteen days after receipt of written
notice describing such breach.
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7.5.6. If Executive breaches any material term of the
Stock Purchase Agreement and remains in breach for 14 days after receipt of
written notice describing such breach.
8. REPRESENTATIONS AND WARRANTIES. Executive hereby represents and
warrants that as of the date of execution of this Agreement: (i) this Agreement
will not cause or require Executive to breach any obligation to, or agreement or
confidence with, any other person; (ii) Executive is not representing, or
otherwise affiliated in any capacity with, any other lines of products,
manufacturers, vendors or customers of the Company; and (iii) Executive has not
been induced to enter into this Agreement by any promise or representation other
than as expressly set forth in this Agreement.
9. CONFIDENTIALITY. Executive hereby acknowledges that the Company has
made (or may make) available to Executive certain customer lists, product design
information, performance standards and other confidential and/or proprietary
information of the Company or licensed to the Company, including without
limitation trade secrets, copyrighted materials and/or financial information of
the Company (or any of its Affiliates, as defined in Section 11.5 below),
including without limitation, financial statements, reports and data
(collectively, the "Confidential Material"). Except as essential to Executive's
obligations under this Agreement, neither Executive nor any agent, employee,
officer, or independent contractor of or retained by Executive shall make any
disclosure of this Agreement, the terms of this Agreement, or any of the
Confidential Material. Except as essential to Executive's obligations under this
Agreement, neither employee nor any agent, employee, officer, or independent
contractor of or retained by Executive shall make any duplication or other copy
of any of the Confidential Material. Immediately upon request from the Company,
Executive shall return to the Company all Confidential Material. Executive shall
notify each person to whom any disclosure is made that such disclosure is made
in confidence, that the Confidential Material shall be kept in confidence by
such person, and that such person shall be bound by the provisions of this
Section. Nothing contained in this section 9 shall be construed as preventing
Executive from providing Confidential Material in compliance with a valid court
order issued by court of competent jurisdiction, providing Executive takes
reasonable steps to prevent dissemination of such Confidential Material.
10. PROPRIETARY INFORMATION. For purposes of this Agreement,
"Proprietary Information" shall mean any information, observation, data, written
material, record, document, computer program, software, firmware, invention,
discovery, improvement, development, tool, machine, apparatus, appliance,
design, promotional idea, customer list, practice, process, formula, method,
technique, trade secret, product and/or research related to the actual or
anticipated research, marketing strategies, pricing information, business
records, development, products, organization, business or finances of the
Company. Proprietary Information shall not include information in the public
domain as of execution of this Agreement except through any act or omission of
Employee. All right, title and interest of every kind and nature whatsoever in
and to the Proprietary Information made, discussed, developed, secured, obtained
or learned by Executive during the term of this Agreement, or the 60-day period
immediately following termination of this Agreement, shall be the sole and
exclusive property of the Company for any purposes or uses whatsoever, and shall
be disclosed promptly by Executive to the Company. The covenants set forth in
the preceding sentence shall apply regardless of whether any Proprietary
Information is made, discovered, developed, secured, obtained or learned (a)
solely or jointly with others, (b) during the usual hours of work or otherwise,
(c) at the request and upon the suggestion of the Company or otherwise, or (d)
with the Company's materials, tools, instruments or on the Company's premises or
otherwise. All Proprietary Information developed, created, invented, devised,
conceived or discovered by Executive that are subject to copyright protection
are explicitly considered by Executive and the Company to be works made for hire
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to the extent permitted by law. Executive hereby assigns to the Company all of
Executive's right, title and interest in and to the Proprietary Information.
Executive hereby forever fully releases and discharges the Company, any
Affiliates of the Company and their respective officers, directors and
employees, from and against any and all claims, demands, damages, liabilities,
costs and expenses of Executive arising out of, or relating to, any Proprietary
Information. Executive shall execute any documents and take any action the
Company may deem necessary or appropriate to effectuate the provisions of this
Agreement, including without limitation assisting the Company in obtaining
and/or maintaining patents, copyrights or similar rights to any Proprietary
Information assigned to the Company, if the Company, in its sole discretion,
requests such assistance. Executive shall comply with any reasonable rules
established from time to time by the Company for the protection of the
confidentiality of any Proprietary Information. Executive irrevocably appoints
the Chairman of the Company's Holding Company to act as Executive's agent and
attorney-in-fact to perform all acts necessary to obtain and/or maintain
patents, copyrights and similar rights to any Proprietary Information assigned
by Executive to the Company under this Agreement if (a) Executive refuses to
perform those acts, or (b) is unavailable, within the meaning of any applicable
laws. Executive acknowledges that the grant of the foregoing power of attorney
is coupled with an interest and shall survive the death or disability of
Executive. Executive shall promptly disclose to the Company, in confidence (a)
all Proprietary Information that Executive creates during the term of this
Agreement, and (b) all patent applications filed by Executive within one year
after termination of this Agreement. Any application for a patent, copyright
registration or similar right filed by Executive within one year after
termination of this Agreement shall be presumed to relate to Proprietary
Information created by Executive during the term of this Agreement, unless
Executive can prove otherwise. Nothing contained in this Agreement shall be
construed to preclude the Company from exercising all of its rights and
privileges as sole and exclusive owner of all of the Proprietary Information
owned by or assigned to the Company under this Agreement. The Company, in
exercising such rights and privileges with respect to any particular item of
Proprietary Information, may decide not to file any patent application or any
copyright registration on such Proprietary Information, may decide to maintain
such Proprietary Information as secret and confidential, or may decide to
abandon such Proprietary Information or dedicate it to the public. Executive
shall have no authority to exercise any rights or privileges with respect to the
Proprietary Information owned by or assigned to the Company under this
Agreement. This Agreement does not apply to any Proprietary Information that
qualifies fully under the provisions of California Labor Code Section 2870 or
any similar or successor statute.
11. COVENANT NOT TO COMPETE AND NONCOMPETITION. Executive acknowledges
that this Agreement is being entered in connection with the acquisition by the
Company of all of Executive's shares in the Company. To the extent permitted by
applicable law, during the period of time set forth in Section 11.5 below:
11.1. Executive shall not, directly or indirectly, engage or
invest in, own, manage, operate, finance, control, or participate in the
ownership, management, operation, or control of, be employed by, associated
with, or in any manner connected with, or render services or advice to, any
business whose products or activities compete in whole or in part with the
products or business of the Company anywhere in the United States, which
business consists of the business that the Company conducts as of the date of
this Agreement ("the Company's Business"). This paragraph 11.1 shall not apply
if: (a) the Company terminates this Agreement without Cause or (b) the Company
transfers Executive out of Orange County, California and Executive terminates
this Agreement as a result of such transfer.
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11.2. Executive shall not undertake any employment or activity
competitive with the Company's Business, including without limitation the
inducement or solicitation of the Company's customers, if the duties or work of,
in connection with or related to such competitive employment or activity would
or might cause Executive to reveal or use any Confidential Material or
Proprietary Information. The restriction set forth in this Section 11 shall not
be limited to a particular geographical area.
11.3. Executive shall not, directly or indirectly, either for
himself or any other person, (i) induce or attempt to induce any employee of the
Company or any Affiliate (as defined below) to leave the employ of such the
Company, (ii) in any way interfere with the relationship between the Company or
any Affiliate and any employee of such the Company, (iii) employ, or otherwise
engage as an employee, independent contractor, or otherwise, any employee of the
Company or any Affiliate, or (iv) induce or attempt to induce any customer,
supplier, licensee, or business relation of the Company or any Affiliate to
cease doing business with such company, or in any way interfere with the
relationship between any customer, supplier, licensee, or business relation of
such the Company.
11.4. Executive shall not, directly or indirectly, either for
himself or any other person, solicit the business of any person known to
Executive to be a customer of the Company or any Affiliate, whether or not
Executive had business or personal contact with such person, unless Executive's
solicitation of such person is done in connection with a business that is not
competitive with that of the Company or any Affiliate.
11.5. The duration of the covenants set forth in this Section
11 shall be the entire term of Executive's employment with the Company plus a
period of three years after the termination of such employment. Executive agrees
that this covenant is reasonable with respect to its duration, geographical
area, and scope. Notwithstanding such restriction, Executive may purchase or
otherwise acquire up to (but not more than) one percent (1%) of any class of
securities of any enterprise (but without otherwise participating in the
activities of such enterprise) if such securities are listed on any national or
regional securities exchange or have been registered under Section 12(g) of the
Securities Exchange Act of 1934.
In the event of a breach by Executive of any covenant set
forth in this Section 11, the term of such covenant will be extended by the
period of the duration of such breach, provided, however, that such extension
shall be limited to three years. In addition to the Company's right to damages
and any other rights it may have, to obtain injunctive or other equitable relief
to restrain any breach or threatened breach or otherwise to specifically enforce
the provisions of this Section, Executive agrees that money damages alone would
be inadequate to compensate the Company and would be an inadequate remedy for
such breach. If a court of competent jurisdiction holds that the obligations of
Executive pursuant to this Section 11 are unenforceable due to the duration,
geographical areas or scope of this covenant, then such duration, geographical
area or scope of this covenant shall be reduced to the least degree necessary to
render this covenant enforceable. For purposes of this Agreement, "Affiliate"
shall mean any partner, employee, director, shareholder, officer of the Company
or any person or entity controlled by, controlling, or under common control
with, directly or indirectly, the Company, and its successor in title and
interest.
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12. BUSINESS OPPORTUNITIES. During the term of this Agreement, if
Executive (or any agent, employee, officer or independent contractor of or
retained by Executive) becomes aware of, or develops, creates, invests, devises,
conceives or discovered, any project, investment, venture, business or other
opportunity (any of the preceding, an "Opportunity") that is similar to,
competitive with, related to or in the same field as the Company or any
Affiliate, or any project, investment, venture, or business of the Company or
any Affiliate, then Executive shall so notify the Company immediately in writing
of such Opportunity and shall use Executive's good-faith efforts to cause the
Company to have the opportunity to invest in, participate in or otherwise become
affiliated with such Opportunity.
13. SECTION HEADINGS. The section headings or captions in this
Agreement are for convenience of reference only and do not form a part hereof,
and do not in any way modify, interpret or construe the intent of the parties or
affect any of the provisions of this Agreement.
14. SURVIVAL. The obligations and rights imposed upon the parties
hereto by the provisions of this Agreement which relate to acts or events
subsequent to the termination of this Agreement shall survive the termination of
this Agreement and shall remain fully effective thereafter.
15. VENUE AND JURISDICTION. For purposes of venue and jurisdiction,
this Agreement shall be deemed made and to be performed in the City of San
Diego, California.
16. ARBITRATION.
16.1. Any claim, dispute or other controversy (a
"Controversy") relating to this Agreement shall be settled and resolved by
binding arbitration in San Diego County, California, before the American
Arbitration Association ("AAA"). The arbitration shall be conducted in
accordance with AAA's rules and procedures, except as expressly modified by this
Section. The Parties to this Agreement (the "Parties") shall be entitled to full
discovery regarding the Controversy as permitted by the California Code of Civil
Procedure. The arbitrator's decision on the Controversy shall be a final and
binding determination of the Controversy and shall be fully enforceable as an
arbitration award in any court having jurisdiction and venue over the Parties.
The arbitrator shall also award the prevailing Party any attorneys' fees and
expenses the prevailing Party incurs in connection with the arbitration, and the
other Party shall pay the arbitrator's fees and expenses. The arbitrator shall
determine who is the prevailing Party. Each Party submits to the exclusive
jurisdiction of the courts located in San Diego County, California, for purposes
of Section 16.2 below compelling arbitration or giving legal confirmation of any
arbitration award. Each Party also agrees to accept service of process for all
arbitration proceedings in accordance with AAA's rules.
16.2. The obligation to arbitrate shall not be binding upon
either party with respect to requests for temporary restraining orders,
preliminary injunctions or other procedures in a court of competent jurisdiction
to obtain interim relief when deemed necessary by such court to preserve the
status quo or prevent irreparable injury pending resolution by arbitration of
the actual dispute between the parties.
16.3. The provisions of this Section shall be construed as
independent of any other covenant or provision of this Agreement; provided that
if a court of competent jurisdiction determines that any such provisions are
unlawful in any way, such court shall modify or interpret such provisions to the
minimum extent necessary to have them comply with the law.
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16.4. This arbitration provision shall be deemed to be
self-executing and shall remain in full force and effect after expiration or
termination of this Agreement. In the event either party fails to appear at any
properly noticed arbitration proceeding, an award may be entered against such
party by default or otherwise notwithstanding said failure to appear.
17. SEVERABILITY. Should any one or more of the provisions of this
Agreement be determined to be illegal or unenforceable in any relevant
jurisdiction, then such illegal or unenforceable provision shall be modified by
the proper court, if possible, but only to the extent necessary to make such
provision enforceable, and such modified provision and all other provisions of
this Agreement shall be given effect separately from the provision or portion
thereof determined to be illegal or unenforceable and shall not be affected
thereby; provided, that any such modification shall apply only with respect to
the operation of this Agreement in the particular jurisdiction in which such
determination of illegality or unenforceability is made.
18. WAIVER. The failure of either party to enforce any provision of
this Agreement shall not be construed as a waiver of any such provision, nor
prevent such party thereafter from enforcing such provision or any other
provision of this Agreement. The rights granted both parties herein are
cumulative and the election of one shall not constitute a waiver of such party's
right to assert all other legal remedies available under the circumstances.
19. PARTIES IN INTEREST. Nothing in this Agreement, whether express or
implied, is intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the parties to this Agreement and the
successors, assigns and affiliates of the Company, nor is anything in this
Agreement intended to relieve or discharge the obligation or liability of any
third person to any party to this Agreement, nor shall any provision give any
third person any right of action over or against any party to this Agreement.
20. ASSIGNMENT. The rights and obligations under this Agreement shall
be binding upon, and inure to the benefit of, the heirs, executors, successors
and assigns of Executive and the Company. Except as specifically provided in
this Section 20, neither the Company nor Executive may assign this Agreement or
delegate their respective responsibilities under this Agreement without the
consent of the other party hereto. Upon the sale, exchange or other transfer of
substantially all of the assets of the Company, the Company shall assign this
Agreement to the transferee of such assets. No assignment of this Agreement by
the Company shall relieve the Company of, and the Company shall remain obligated
to perform, its duties and obligations under this Agreement, including, without
limitation, payment of the annual salary set forth in Section 5, above.
21. ATTORNEYS' FEES. In the event of any suit, action or arbitration to
enforce any of the terms or provisions of this Agreement, the prevailing party
shall be entitled to its reasonable attorneys' fees and costs. The foregoing
entitlement shall also include attorneys' fees and costs of the prevailing party
on any appeal of a judgment and for any action to enforce a judgment.
22. MODIFICATION. This Agreement may be modified only by a contract in
writing executed by the party(ies) to this Agreement against whom enforcement of
such modification is sought.
23. PRIOR UNDERSTANDINGS. This Agreement contains the entire agreement
between the parties to this Agreement with respect to the subject matter of this
Agreement, is intended as a final expression of such parties' agreement with
respect to such terms as are included in this Agreement, is intended as a
complete and exclusive statement of the terms of such agreement, and supersedes
all negotiations, stipulations, understandings, agreements, representations and
warranties, if any, with respect to such subject matter, which precede or
accompany the execution of this Agreement.
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24. INTERPRETATION. Whenever the context so requires in this Agreement,
all words used in the singular shall be construed to have been used in the
plural (and vice versa), each gender shall be construed to include any other
genders, and the word "person" shall be construed to include a natural person, a
corporation, a firm, a partnership, a joint venture, a trust, an estate or any
other entity.
25. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
26. APPLICABLE LAW. This Agreement and the rights and obligations of
the parties hereunder shall be construed under, and governed by, the laws of the
State of California without giving effect to conflict of laws provisions.
27. DRAFTING AMBIGUITIES. Each party to this Agreement has reviewed and
revised this Agreement. Each party to this Agreement has had the opportunity to
have such party's legal counsel review and revise this Agreement. The rule of
construction that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or of any
amendments or exhibits to this Agreement.
28. CONSTRUCTION. Where used in this Agreement, the terms "include" or
"including" mean include or including, as applicable, without limitation.
THE COMPANY:
ISLAND PACIFIC SYSTEMS CORPORATION,
a California corporation
By: /s/ Xxxxx Xxxxxxxxx
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XXXXX XXXXXXXXX
EXECUTIVE:
/S/ Xxxx X. Xxxxx
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XXXX X. XXXXX
