Exhibit 10.32
EMPLOYMENT AGREEMENT
--------------------
This EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
this first day of June, 2000, by and between PROLONG INTERNATIONAL CORPORATION,
a Nevada corporation, PROLONG SUPER LUBRICANTS, INC., a Nevada corporation,
(collectively referred to as the "Company"), and XXXXXXXX XXXXXX, an individual
(the "Executive").
R E C I T A L
- - - - - - -
The Company desires to employ Executive in the capacity hereinafter
stated, and the Executive desires to enter into the employ of the Company in
that capacity for the period and pursuant to the terms and conditions set forth
herein.
A G R E E M E N T
- - - - - - - - -
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, the Company, and the Executive,
intending to be legally bound, hereby agree as follows:
1. Employment. The Company hereby employs the Executive as Chief
Financial Officer of the Company, reporting directly to the Chief Executive
Officer, and the Executive accepts such employment and agrees to devote
substantially all his business time and efforts and skills diligently and on
such basis as shall be assigned to him by the Company as provided herein in
performing his duties hereunder for the benefit of the Company.
2. Term. The initial term of the Executive's employment hereunder shall
be for a period of three (3) years, commencing on the date of this Agreement,
and shall continue until the third anniversary of this Agreement (the "Initial
Term"); provided, however, that Executive's employment is subject to earlier
termination as hereafter specified. This Agreement shall be renewed
automatically for successive one-year periods following the Initial Term unless
either party gives written notice to the other party of non-renewal at least 180
days in advance of any successive one-year anniversary of the Initial Term.
3. Position and Duties.
3.1 Service with the Company. During the term of this Agreement,
the Executive agrees to perform such duties and on such basis as shall be
assigned to him from time to time by the Company's Board of Directors and Chief
Executive Officer; such duties, however, to be commensurate with the Executive's
position as Chief Financial Officer of the Company.
3.2 No Conflicting Duties. During the term of this Agreement,
the Executive agrees to devote substantially all of his productive time, ability
and attention to the above duties and obligations. The Executive hereby confirms
that he is under no contractual commitments inconsistent with his obligations
set forth in this Agreement , and agrees that during the term of this Agreement
he will not render or perform services, or enter into any contract to do so, for
any other corporation, firm, entity or person which are inconsistent with the
provisions of this Agreement.
4. Compensation.
4.1 Base Salary. As compensation for all services to be
rendered by the Executive under this Agreement, the Company shall pay to the
Executive a base annual salary of One hundred thousand dollars ($100,000) ("Base
Salary"), which shall be paid on a regular basis in accordance with the
Company's normal payroll procedures and policies. The amount of the Base Salary
shall be reviewed annually by the Board of Directors (or the Compensation
Committee) on or before June 1 of each year, which shall determine, in its sole
discretion, the amount of the increase in Executive's Base Salary, such
determination to be made on the basis of an evaluation of Executive's
performance, the performance of the Company and such other factors as the Board
of Directors (or the Compensation Committee) shall deem appropriate.
4.2 Stock Options. Concurrently with the entering into this
Agreement by the Company and the Executive, the Executive shall be granted
incentive stock options to purchase forty-five thousand (45,000) shares of the
Common Stock of the Company at an exercise price equal to the Fair Market Value
(as such term is defined in the Company's 1997 Stock Incentive Plan (the
"Plan")) on the date hereof (collectively, the "Options"). The terms of the
Options shall be governed by the Plan and the stock option agreement issued in
connection therewith, and shall be substantially in accordance with the terms
contained in the form of option agreement attached hereto as Exhibit A (the
---------
"Option Agreement").
4.3 Incentive Compensation Plans. In addition to the foregoing,
Executive shall become eligible to participate in any management incentive
compensation plans approved by the Company's Board of Directors, such
participation to be on terms comparable to those afforded to other key executive
employees with the Company. All amounts to which Executive may be entitled
under any incentive compensation plan approved by the Board of Directors,
including without limitation, any stock option or purchase plan, and any bonus
plan, adopted by the Company (collectively the "Incentive Bonus") shall be
subject to the provisions of Section 5.4 below with respect to the effect of any
termination of employment on compensation of the Executive and to the
provisions, rules and regulations of any such plan. In addition, any such plan,
if adopted, may provide for deferral of the receipt of any Incentive Bonus that
is awarded and may require Executive to remain in the Company's employ for a
specified period or periods of time as a condition to receipt of any such
Incentive Bonus.
4.4 Benefit Plans. Notwithstanding any limitation imposed
solely by this agreement, Executive shall be entitled to participate in all
employee benefit plans or programs in accordance with the Benefits set forth in
the Company's Employee Policy Manual and this agreement, to the extent that his
position, title, tenure, salary, age, health and other qualifications make him
eligible to participate therein. The Executive's participation in any such plan
or program shall be subject to the provisions, rules and regulations thereof
that are generally applicable to all participants therein, provided, however,
-------- -------
that all stock options and/or restricted stock granted to Executive shall be
subject to acceleration as set forth in Section 5.5 below.
4.5 Leave. Notwithstanding any limitation imposed solely by
this agreement, Employee shall be entitled to Holiday, paid time off, and other
leave in accordance with the Leave Policies set forth in the Company's Employee
Policy Manual.
4.6 Expenses, Automobile Allowance. In accordance with the
Company's policies established from time to time, the Company will pay or
reimburse the Executive for all
2
reasonable and necessary out-of-pocket expenses incurred by him in the
performance of his duties under this Agreement, and shall provide Executive with
an automobile allowance of five hundred dollars ($500) per month, as adjusted
from time to time at the sole discretion of the Board of Directors.
5. Termination.
5.1 Termination by the Company for Cause. Any of the following
acts or omissions shall constitute grounds for the Company to terminate the
Executive's employment pursuant to this Agreement for "cause":
(a) The continued, unreasonable refusal or omission by the
Executive to perform any material duties required of him by this Agreement or as
reasonably requested by the Board of Directors of the Company if consistent with
the terms of this Agreement;
(b) Any material act or omission by the Executive involving
gross negligence or willful misconduct in the performance of the Executive's
duties to, or material deviation from any of the policies or directives of, the
Company;
(c) Conduct on the part of the Executive which constitutes
the breach of any statutory or common law duty of loyalty to the Company; or
(d) Any illegal act by the Executive which materially and
adversely affects the business of the Company or any felony committed by
Executive, as evidenced by conviction thereof, provided that the Company may
suspend the Executive with pay while any allegation of such illegal or felonious
act is investigated.
Termination by the Company for cause shall be accomplished by written
notice to the Executive and shall be preceded by a written notice providing a
reasonable opportunity for the Executive to correct his conduct. Any such
termination shall be without prejudice to any other remedy to which the Company
may be entitled either at law, in equity, or under this Agreement.
5.2 Termination for Death or Disability. In addition to
termination for cause pursuant to Section 5.1 above, the Executive's employment
pursuant to this Agreement shall be immediately terminated without notice by the
Company (i) upon the death of the Executive or (ii) upon the Executive becoming
totally disabled. For purposes of this Agreement, the term "totally disabled"
means an inability of Executive, due to a physical or mental illness, injury or
impairment, to perform a substantial portion of his duties for a period of one
hundred eighty (180) or more consecutive days, as determined by the Company's
Board of Directors following such one hundred eighty (180) day period.
5.3 Termination for Good Reason. Executive's employment pursuant
to this Agreement may be terminated by the Executive for "good reason" if the
Executive voluntarily terminates his employment as a result of any of the
following:
(a) Without the Executive's prior written consent, a
reduction in his then current Base Salary;
(b) The taking of any action by the Company that would
substantially diminish the aggregate value of the benefits provided the
Executive under the Executive's medical,
3
health, accident, disability insurance, life insurance, thrift and retirement
plans in which he was participating on the date of this Agreement, if any, other
than any such reduction which is (i) required by law, (ii) implemented in
connection with a general concessionary arrangement affecting all employees or
affecting the group of employees (senior management) of which the Executive is a
member or (iii) generally applicable to all beneficiaries of such plans;
(c) Without Executive's prior written consent, a relocation
of the Executive's place of employment outside of Orange County, California;
(d) Resignation as a result of unlawful discrimination, as
evidenced by a final court order;
(e) A reduction in duties and responsibilities which
results in the Executive no longer having duties customary for the Chief
Financial Officer of Prolong Super Lubricants, Inc; or
(f) The Company materially breaches any provision of this
Agreement and such breach continues uncorrected for a period of thirty (30) days
after written notice of the occurrence thereof from Executive to the Board of
Directors, provided that,the employment of a separate Chief Financial Officer
-------- ----
for Prolong International Corporation shall not constitute a breach of this
agreement.
5.4 Payments Upon Removal or Termination. If during the term of
this Agreement, the Company terminates the Executive's service, except as
provided in Sections 2, 5.1 or 5.2 hereof, or the Executive resigns for one of
the reasons stated in Section 5.3 above, Executive shall be entitled to the
following compensation: (i) the portion of his then current Base Salary which
has accrued through his date of termination, (ii) any vested Incentive Bonus to
which Executive is entitled as of the date of termination pursuant to any bonus
or incentive compensation plan in which he is then participating, provided the
payment thereof is not contingent or conditional on Executive's continued
employment with the Company or the satisfaction of any other condition which has
not been satisfied, (iii) any payments for unused vacation and reimbursement
expenses, which are due, accrued or payable at the date of Executive's
termination, and (iv) a severance payment in an amount (the "Severance Amount")
equal to the result obtained by multiplying his then current monthly Base Salary
by six (6) months (the "Severance Period"). For a period of six (6) months
immediately succeeding the date of termination, the Company shall further
provide Executive with health and disability insurance as otherwise provided in
this Agreement. All payments required to be made by the Company to the Executive
pursuant to this Section 5.4 shall be paid in equal installments on a regular
basis in accordance with the Company's normal payroll procedures and policies.
If the Company terminates the Executive's employment pursuant to Sections 2, 5.1
or 5.2, or if Executive voluntarily resigns (except as provided in Section 5.3),
then Executive shall be entitled to the compensation set forth in items (i),
(ii) and (iii) above. To the extent that any or all of the payments and benefits
provided for in this Agreement (including the benefits set forth in Section 5.5
below) constitute "parachute payments" within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"), and, but for this
sentence, would be subject to the excise tax imposed by Section 4999 of the
Code, the aggregate amount of such payments and benefits shall be reduced such
that the present value thereof (as determined under the Code and applicable
regulations) is equal to 2.99 times Executive's Base Amount (as such term is
defined in Section 280G of the Code). The determination of any reduction of any
payments or benefits under this Section 5.4 pursuant to the foregoing provision
shall be made by a nationally recognized public
4
accounting firm chosen by the Company in good faith, and such determination
shall be conclusive and binding on the Company and the Executive.
5.5 Acceleration of Vesting. If during the term of this
Agreement, the Company terminates the Executive's service, except as provided in
Sections 2, 5.1 or 5.2 hereof, or the Executive resigns for one of the reasons
stated in Section 5.3, all of Executive's stock options and/or restricted stock
shall be immediately vested so that all stock options shall be fully
exercisable, and all restricted stock shall be no longer be subject to
repurchase. Additionally, all vested stock options and/or restricted stock shall
be exercisable for a period of one (1) year following the date of termination of
the Executive's employment or consulting relationship with the Company. The
foregoing supersedes any contradictory provision of any plan or arrangement
under which such stock options are granted, and/or such restricted stock is
issued.
6. Confidential Information. Executive will hold in strict confidence
and not disclose to any person or entity without the express prior authorization
of the Company, any confidential information of the Company or its affiliates,
including, without limitations, financial, manufacturing or marketing data
(including, without limitation, financial statements of the Company), technique,
process, formula, developmental or experimental work, work in progress, business
methods, trade secrets (including, without limitation, any customer list or
lists of customer sources), marketing techniques or plans, or any other secret
or confidential information relating to the products, services, customers, sales
or business affairs of the Company or its Affiliates. Executive agrees that he
will not make use of any of the above at any time for a period of three (3)
years after termination of his employment. Upon termination of employment,
Executive shall deliver to the Company all documents, records, work papers and
all similar repositories containing any information concerning the Company or
any Affiliate, whether prepared by Executive, the Company or anyone else.
Executive may keep his daily notebook. The foregoing restrictions shall not
apply to (i) information which is or becomes, other than as a result of a breach
of this Agreement, generally available to the public or (ii) the disclosure of
information required pursuant to a subpoena or other legal process; provided
that the Executive shall notify the Company, in writing, of the receipt of any
such subpoena or other legal process requiring such disclosure immediately after
receipt thereof and the Company shall have a reasonable opportunity to quash
such subpoena or other legal process prior to any disclosure by the Executive.
7. Proprietary Rights. All work performed by Executive and all materials
and products developed or prepared for the Company by Executive pursuant to this
Agreement are the property of the Company, and all title and interest therein
shall vest in the Company and shall be deemed to be a work made for hire in the
course of the services rendered hereunder. Executive shall also execute any
employee proprietary rights or invention assignment agreement reasonably
requested by the Company.
8. Assignment. This Agreement shall not be assignable, in whole or in
part, by either party without the written consent of the other party, except
that the Company may, without the consent of the Executive, assign its rights
and obligations under this Agreement to an Affiliate or to any corporation, firm
or other business entity (i) with or into which the Company may merge or
consolidate, or (ii) to which the Company may sell or transfer all or
substantially all of its assets; provided, however, that such assuming party
-------- -------
agrees to be bound by all of the terms and conditions of this Agreement. After
any such assignment by the Company, the Company shall be discharged from all
further liability hereunder and such assignee shall thereafter be deemed to be
the Company for the purposes of all provisions of this Agreement including this
Section 8.
5
9. Successors. This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal and legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive should die while any amounts are still payable to him hereunder, all
such amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to the Executive's devisee, legatee, or other
designee or, if there be no such designee, to the Executive's estate.
10. Injunctive Relief. The Executive agrees that it would be difficult to
compensate the Company fully for damages for any violation of the provisions of
this Agreement, including, without limitation, the provisions of Sections 6 and
7. Accordingly, the Executive specifically agrees that the Company shall be
entitled to temporary and permanent injunctive relief to enforce the provisions
of this Agreement, to the extent that such relief is provided by law for such
violation. This provision with respect to injunctive relief shall not, however,
diminish the right of the Company to claim and recover damages in addition to
injunctive relief.
11. Arbitration. Except as provided in Section 10, all disputes between
the parties hereto shall be determined solely and exclusively by arbitration
under, and in accordance with the rules then in effect of, the American
Arbitration Association, or any successors thereto ("AAA"), in Orange County,
California, unless the parties otherwise agree in writing. The parties shall
jointly select an arbitrator. In the event the parties fail to agree upon an
arbitrator within ten (10) days, then the Company shall select an arbitrator and
Executive shall select an arbitrator and such arbitrators shall then select a
third arbitrator to serve as the sole arbitrator, provided that if either the
Company or Executive, in such event, fails to select an arbitrator within seven
(7) days, such arbitrator shall be selected by the AAA upon application of
either the Company or Executive. Judgment upon the award of the agreed upon
arbitrator or the so chosen third arbitrator, as the case may be, shall be
binding and shall be entered into by a court of competent jurisdiction.
12. Opportunity to Engage Legal Counsel. The Executive acknowledges that
it is aware that it is entitled to consult independent legal counsel and/or
other advisors in connection with the negotiation or execution of this
Agreement, and represents and warrants to the Company that it has had full and
adequate opportunity to do so, and has either done so or has freely and
knowingly relinquished such right, and has the capacity and experience to
understand this Agreement, and fully understands all of the terms of this
Agreement
13. Miscellaneous.
13.1 Governing Law. This Agreement is made under and shall be
governed by and construed in accordance with the laws of the State of
California.
13.2 Prior Agreements. This Agreement contains the entire
agreement of the parties relating to the subject matter hereof and supersedes
all prior agreements and understanding with respect to such subject matter, and
the parties hereto have made no agreements, representations or warranties
relating to the subject matter of this Agreement which are not set forth herein.
13.3 Notices. All notices, requests, demands and other
communications (collectively, "Notices") given or made pursuant to this
Agreement shall be in writing and sent by mail, courier, personal delivery or
facsimile, to the following addresses:
6
(a) If to the Company, to:
Prolong Super Lubricants, Inc
6 Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attn: President
(b) If to Executive, to:
Xxxxxxxx Xxxxxx
0000 Xxxxxxxx Xxxxx
Xxxxx Xxxxx, XX 00000
13.4 Withholding Taxes. The Company may withhold from any
salary and benefits payable under this Agreement all federal, state, city or
other taxes or amounts as shall be required to be withheld pursuant to any law
or governmental regulation or ruling.
13.5 Amendments. No amendment or modification of this
Agreement shall be deemed effective unless made in writing signed by the parties
hereto.
13.6 No Waiver. No term or condition of this Agreement shall
be deemed to have been waived nor shall there be any estoppel to enforce any
provisions of this Agreement, except by a statement in writing signed by the
party against whom enforcement of the waiver or estoppel is sought. Any written
waiver shall not be deemed a continuing waiver unless specifically stated, shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than that specifically waived.
13.7 Severability. To the extent any provision of this
Agreement shall be invalid or unenforceable, it shall be considered deleted
herefrom and the remainder of such provision and of this Agreement shall be
unaffected and shall continue in full force and effect.
13.8 Definition. As used in this Agreement, the term
"Affiliate" means any corporation, association or other business entity of which
more than 50% of the total voting power of shares of stock entitled to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by the Company.
13.9 Section Headings. The section headings used in this
Agreement are inserted for reference purposes only and shall not in any way
affect the meaning or interpretation of this Agreement.
13.10 Attorneys' Fees. If either party sues the other to
enforce any of the terms of this Agreement, the prevailing party shall, in
addition to all other damages, be entitled to recover its costs and reasonable
attorneys' fees.
13.11 Counterpart Execution. This Agreement may be executed by
facsimile and in counterparts, each of which shall be deemed an original and all
of which when taken together shall constitute but one and the same instrument.
7
IN WITNESS WHEREOF, the parties have executed this Employment Agreement as
of the day and year set forth above.
"Company"
PROLONG INTERNATIONAL CORPORATION,
a Nevada corporation
By: /s/ Xxxxx Xxxxxxxx
-------------------------------
Its: President
------------------------------
PROLONG SUPER LUBRICANTS, INC.,
a Nevada corporation
By: /s/ Xxxxx Xxxxxxxx
-------------------------------
Its: President
------------------------------
"Executive"
/s/ Xxxxxxxx Xxxxxx
----------------------------------
Xxxxxxxx Xxxxxx
8
Exhibit A
---------
Form of Stock Option Agreement
9
