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EXHIBIT 10.14
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into at Lake Forest,
California, effective as of April 1,1998, between the L. L. Xxxxxxxxxxxxx Co.,
Inc., a California corporation ("Employer") and Xxxxxx X. Xxxx, Xx.
("Employee"), with reference to the following:
a. Employee has valuable experience and unique skills in the
business currently conducted by Employer.
b. Employer desires to retain the exclusive services of Employee
and Employee desires to be employed by Employer for the term of this
Agreement.
In consideration of the foregoing and the commitments made herein,
Employer and Employee agree as follows:
1. Employment. During the term of this Agreement, Employee shall be
employed by Employer and shall render such services to, and perform such duties
on behalf of , Employer and shall exercise such authority as the Board of
Directors of Employer shall from time to time provide. The nature and scope of
Employee's responsibilities and duties shall generally be consistent with in
character with those performed by persons holding the position of Chief
Operating Officer of similarly sized companies in similar industries in the
United States of America. Employee agrees to apply his best skill, efforts and
knowledge and to devote such time, energies and attention to the business of
Employer as shall be necessary to perform his responsibilities and duties
hereunder.
2. Salary. Employee shall begin this employment under this Agreement at
a base salary of $160,000 per year (the "Base Salary") Such amount shall be paid
periodically in accordance with the normal payroll procedures of Employer in
effect from time to time during the term of this Agreement. The Base Salary
provided above shall be adjusted incrementally on January 1 in the years 1999,
2000, 2001 and 2002 to reflect any increase in the cost of living. The positive
adjustment shall be in the same proportion as the proportional differences
between the Consumer Price Index for Urban Wage Earners and Clerical Workers,
all items (Los Angeles - Long Beach - Anaheim statistical area) published by the
United States Department of Labor, Bureau of Labor Statistics (the "CPI") in
effect on January 1, 1999, and on each of the adjustment dates, respectively,
when compared to the base index in effect on January 1, 1998 for the initial
adjustment, and for each subsequent adjustment, the index in effect on January 1
of such year shall be compared to the index in effect on January 1 of the
previous year. Under no circumstances will there be a negative adjustment to the
Employee's Base Salary as a result of cost of living changes. Should said Bureau
discontinue the publication of the CPI, publish the same less frequently, or
alter the same in some other manner, then Employer may adopt a substitute
procedure which reasonably reflects and monitors consumer prices.
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3. Management Xxxxx.Xx addition to the Base Salary, Employee shall be
entitled to participate in the current Management Bonus Plan in effect from time
as determined by the Board of Directors of Employer and the Compensation
Committee as appointed by the Board. The Bonus payable to Employee, if any,
shall be paid out of a Management Bonus Fund equal to 10% of the profits before
taxes of Employer based upon the audited financial statements of Employer. The
Compensation Committee shall make recommendations to the Board of Directors for
the payment to Employee of such sums out of the Management Bonus Fund as the
Board shall, in its sole discretion, determine or approve, and such sums will be
payable to Employee, in cash, for each fiscal year during the term of this
Agreement, including fiscal years 1998, 1999, 2000, 2001 and 2002; as well as
any fiscal years falling within any extension of this Agreement. In order to
determine the amount of the Management Bonus Fund, a calculation will be made
from the audited fiscal year end financial statements within 45 days of the
availability of such audited statements. If, upon such calculation, it is
determined that sufficient funds exist for the payment of bonus amounts under
the Management Bonus Plan, the Board of Directors shall determine such amounts
as shall be paid to all participants under the Management Bonus Plan, and such
amounts shall be paid within 60 days of the availability the audited fiscal year
end financial statements.
4. Stock Options. In addition to the Salary and Management Fee provided
for hereunder, Employee shall be entitled to receive 250,000 Stock Options for
the purchase of shares of the Common Stock of Employer, vesting 50,000 per year
during the term of this Agreement, ad such additional options or other
compensation as determined by the Board of Directors of Employer and the
Compensation Committee as appointed by the Board. The Stock Options will be
provided pursuant to the terms of a separate qualified stock option plan adopted
by Employer.
5. Benefits. Employee shall be entitled to participate in all medical,
dental, state disability insurance, and related welfare benefit plans as well as
any qualified profit sharing and other qualified employee benefit plans
generally applicable to employees of Employer, subject in each case to all
applicable provisions of the plans.
6. Additional Benefits and Perquisites. Employee shall be entitled to 15
days of paid vacation per year in addition to all normal public holidays
available to all of Employer's employees. Additionally, Employee shall be paid
an automobile allowance in the amount of $600 per month during the Term of this
Agreement.
7. Term. The term of this Agreement and the employment of Employee
hereunder shall begin as of April 1, 1998 and shall continue until (i) Xxxxx 00,
0000, (xx) the end of the Extension Option period if exercised by Employer (as
defined below) or (iii) the earlier termination of Employee at the election of
either Employer for Cause (as defined below) or Employee for other than Good
Reason (as defined below).
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Employer shall have a one-time right to extend this agreement for a
period of five additional years from April 1, 2003 upon written notice to
employee not later than six months prior to the expiration of the term of this
Agreement (the "Extension Option"). During the term of the Extension Option, the
terms and conditions of this Agreement shall remain in full force and effect.
In the event of termination of Employee's employment by Employer for
Cause (as defined below) or by Employee for any reason other than Good Reason
(as defined below) Employee shall have no further rights to payments or benefits
under this Agreement. For the purpose of this Agreement, Cause for termination
shall exist whenever (i) Employee has been convicted of a felony, (ii) Employee
has engaged in gross misconduct or a dereliction of his duties, (iii) Employee
is otherwise in breach of any of the material provisions of this Agreement, or
(iv) Employee is unable to discharge his duties as a result of death or physical
or mental disability. Good Reason for termination by Employee shall exist
whenever (i) a voluntary or involuntary petition under the Bankruptcy Code has
been filed by or against Employer or Employer is otherwise insolvent, or (ii)
Employer is in breach of any of the material provisions of this Agreement.
8. Trade Secrets and Confidential Information. The following provisions
further set forth Employee's obligations to safeguard Trade Secrets and
Confidential Information of Employer obtained in the course and scope of his
employment with Employer, whether or not during the term of this Agreement.
8.1. The term "Trade Secret" is defined as the whole or any
portion or phrase of any scientific or technical or business information
particular to Employer, including, but not limited to, any design,
process, procedure, business procedure or system, formula, improvement,
or invention that (1) derives independent economic value, actual or
potential, from not being generally known to the public or to other
persons who can obtain economic value from its disclosure or use, and
(2) is the subject of Employer's reasonable efforts to maintain its
secrecy. In addition to information belonging to Employer, information
furnished to Employer by other parties can be a Trade Secret. Employee
acknowledges and accepts the obligation to apply the definition of Trade
Secrets in this Agreement to information coming to Employee's attention,
and to safeguard such information from further disclosure except to
perform his duties hereunder.
8.2. The term "Confidential Information" is defined as all
items, materials and information (whether or not reduced to writing and
whether or not patentable or copyrightable) which belong to Employer and
which reflect, consist of or refer to:
(a) The names of those customers and vendors of Employer which
are not generally known in the industry;
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(b) Information compiled, collected or developed by Employer
reflecting identities and characteristics of any customers of Employer
or customer representatives including product or service preferences or
requirements, cost or price information for goods or services offered or
sold, credit terms and credit performance, actual or likely order
cycles, the nature of supplies delivered or services performed, and
research or development plans or activities;
(c) Information compiled, collected, or developed by Employer
reflecting identities and characteristics of any vendors or suppliers of
Employer or vendor or supplier representatives, including cost or price
information for goods or services offered or purchased, credit terms and
credit performance, product quality and reliability, delivery terms, and
prior, current or future research or development plans or activities;
(d) The prices, discounts, selling techniques and distribution
methods used by Employer;
(e) Personal and private information about any of Employer's
employees, employees of any customer or supplier, or any artist or
spokesperson;
(f) Business plans, strategies, goals or objectives of Employer;
or
(g) Any other confidential or proprietary information obtained
directly or indirectly while performing Employee's duties on behalf of
Employer.
8.3. The term "Confidential Information" includes information
which may also be a Trade Secret, but does not include anything
described above which is now generally known by parties other than
Employer, its affiliates and employees, or become generally known,
through no act or failure to act of Employee.
8.4 Employee agrees to hold all such Confidential Information in
confidence and to not disclose Confidential Information to any person
not employed by Employer.
8.5. Employee will, immediately upon the termination of this
Agreement, surrender to Employer any and all business records and
materials which may have received from Employer during the term of this
Agreement, or which pertain to Employer's business, and all copies
thereof, however made or obtained.
8.6. Employee acknowledges that the foregoing provisions of this
Paragraph 8 are necessary to protect Employer's Trade Secrets and
Confidential Information.
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9. Ownership of Programs and Documents. All work product produced by
Employee in performing Services for Employer, including without limitation,
designs, programs, product lines, program descriptions of any type, reports and
business records shall be and shall remain the property of Employer. Employee
agrees to execute such documents, including assignment of copyrights, as may be
provided from time to time by counsel for Employer in order to perfect
Employer's rights in such work product.
10. Place of Employment. During the term of this Agreement, Employer
shall maintain its principal executive offices in the County of Orange, and the
Employee's place of employment shall remain in the County of Orange, subject to
reasonable business travel. The parties hereto may amend the provisions of this
section by mutual agreement.
11. Withholding Taxes. All payments by Employer to Employee hereunder
shall be subject to reduction in the amount of any withholding taxes.
12. Conflicts of Interest. During the term of this Agreement, Employee
will not, directly or indirectly, either for himself or for any other person,
partnership, corporation or company participate in any enterprise operating
where Employer conducts its business or sells its products or services which
involves the business in which Employer is engaged at any time during Employee's
employment including, but not limited to, the marketing, sale, distribution,
processing or manufacturing of products within the same industries as Employer's
products. Employee acknowledges that this covenant is reasonable with respect to
its duration, geographical area and scope.
In performing his obligations for Employer, Employee shall act in the
best interest of, and with complete loyalty to, Employer and shall not exercise
his duties or responsibilities in his own self-interest, at the expense of the
best interest of Employer.
13. Arbitration and Remedies. Employee understands that he may not agree
with the discretionary judgment of Employer's management regarding matters
between him and Employer, including without limitation matters relating to his
employment or its termination. Subject to the other provisions of this Paragraph
on Arbitration and Remedies, Employee agrees to attempt to resolve informally
with Employer any dispute that may arise regarding such matters, including his
employment or the termination of his employment, in accordance with reasonable
Company procedures for informal dispute resolution that may then be applicable
to him.
Any controversy or claim arising out of or relating to this Agreement,
or its breach, termination or validity, including without limitation any claim
arising from Employee's employment or the termination of such employment, shall
be exclusively and finally settled by arbitration before a single arbitrator in
accordance with the Employment Dispute Resolution
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Rules of the American Arbitration Association, and judgment upon the award
rendered by the Arbitrator may be entered in any court having jurisdiction
thereof. Claims subject to exclusive final and binding arbitration under this
Agreement include, without limitation, claims that otherwise could be tried in
court to a jury in the absence of this Agreement. Such claims include, without
limitation, statutory claims for employment discrimination based on race, color,
national origin, sex, religion, disability, and other statutory claims for
employment discrimination; claims for wrongful termination including employment
termination in violation of public policy; and claims for personal injury
including, without limitation, defamation, fraud, and infliction of emotional
distress. Employee acknowledges that by entering into this Agreement he is
giving up any right he might otherwise have to a jury trial. The arbitration
shall be held in the principal city of the federal judicial district in which
Employee resides as of the time of the alleged acts or omissions giving rise to
arbitration under this Agreement; provided, that arbitration of claims rising
wholly or partially out of Employee's employment termination shall be conducted
in the principal city of the federal judicial district in which Employee resides
at the time of such employment termination. Employer shall pay the fees and
costs of the Arbitrator, however each party shall pay for its or his attorneys'
fees and costs including, without limitation, costs of any experts. However, if
any party prevails on a statutory claim which entitles the prevailing party to a
reasonable attorneys' fee (with or without expert fees) as part of the costs,
the Arbitrator may award reasonable fees (with or without expert fees) to the
prevailing party in accordance with such statute. Any controversy over whether a
dispute is an arbitrable dispute or as to the interpretation or enforceability
of this paragraph with respect to such arbitration shall be determined by the
Arbitrator. The parties agree that this Agreement is to be construed broadly in
favor of final and binding arbitration except, and only to the extent, that such
remedy is prohibited by applicable federal or state laws.
Employee acknowledges that he has ongoing contractual obligations
contained in this Agreement together with noncontractual fiduciary obligations
to Employer which will survive the termination of his employment. Employee
agrees that any breach of any of these obligations could not reasonably or
adequately be compensated in damages in arbitration or in an action at law and
that if Employee breaches any of these obligations Employer shall be entitled to
injunctive relief in any court of competent jurisdiction. The parties understand
that injunctive relief may include, but shall not be limited to, restraining
continuing breaches of such obligations. Any such injunctive proceedings shall
be without prejudice to Employer's rights under this Agreement to obtain relief
in arbitration with respect to such matters.
14. General Provisions.
14.1. Complete Agreement. This Agreement embodies the complete
agreement and understanding among the parties and supersedes and
preempts any prior understandings, agreements or representations by or
among the parties, written or oral, which may have related to the
subject matter hereof in any way.
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14.2. Governing Law. This Agreement shall be governed by,
construed and enforced in accordance with the internal laws of the State
of California.
14.3. Waiver of Breach.Any waiver by either party of a breach of
the terms and conditions of this Agreement shall not be considered as a
waiver of any subsequent breach of the same or any other term and
condition hereof.
14.4. Amendment and Waivers. Any provision of this Agreement may
be amended or waived only with the prior written consent of the Employer
and Employee.
14.5. Assignment. This Agreement is intended to bind and inure
to the benefit of and be enforceable by the parties hereto, and their
respective successors and assigns, except that any purported assignment
by Employee of any of his rights or obligations hereunder shall be void.
14.6. Severability. In event that any provision or any part of
any provision of this Agreement is held to be illegal, invalid or
unenforceable, such illegality, invalidity or unenforceability shall not
affect the validity or enforceability of any other provision or part
hereof.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above mentioned.
/s/ Xxxxxx X. Xxxx, Xx.
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Xxxxxx X. Xxxx, Xx.
THE L. L. XXXXXXXXXXXXX CO., INC.
By: /s/ Xxxxx X. Xxxxxxxxxxxxx
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Title: Chairman and CEO
