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EXHIBIT 10.15
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made effective as of January
26, 1999, by and between Pacific Research and Engineering Corporation ("PR&E")
and Xxxxx X. Xxxxx ("Xxxxx").
NOW, THEREFORE, the parties agree as follows:
1. Employment. PR&E hereby engages Xxxxx, and Xxxxx hereby accepts such
engagement, upon the terms and conditions set forth herein.
2. Duties.
2.1 Position. Xxxxx is engaged in the position of Chief
Financial Officer, reporting to the President & Chief Operating Officer ("COO")
of PR&E and shall have responsibility for PR&E's financial and accounting
concerns and shall support the SEC guidelines appropriate for a public company.
Xxxxx shall perform faithfully and diligently such duties, as well as such other
duties as the President & COO shall reasonably assign from time to time. PR&E
reserves the right to modify Xxxxx'x position and duties at any time in its sole
and absolute discretion.
2.2 Best Efforts/Full-time. Xxxxx will expend his best efforts
on behalf of PR&E, and will abide by all policies and decisions made by PR&E, as
well as all applicable federal, state and local laws, regulations or ordinances.
Xxxxx will act in the best interest of PR&E at all times. Xxxxx shall devote
Xxxxx'x full business time and efforts to the performance of his assigned
duties, unless Xxxxx notifies PR&E in advance of his intent to engage in other
paid work and receives PR&E's express written consent to do so. Xxxxx must not
engage in any work, paid or unpaid, that creates an actual or potential conflict
of interest with PR&E and, if PR&E believes a conflict exists, PR&E may ask
Xxxxx to choose whether to discontinue the other work or resign employment with
PR&E.
3. Compensation.
3.1 Base Salary. As compensation for the proper and satisfactory
performance of all duties to be performed by Xxxxx hereunder, PR&E shall pay to
Xxxxx an initial Base Salary of $130,000 per year, payable in accordance with
the normal payroll practices of PR&E, less required deductions for state and
federal withholding tax, social security and all other employment taxes and
payroll deductions. In the event Xxxxx'x employment under this Agreement is
terminated by either party, for any reason whatsoever, before the last day of
any employment year, Xxxxx will be entitled to receive for such year the Base
Salary prorated to the date of termination.
3.2 Incentive Compensation. Xxxxx will be eligible to earn
incentive compensation on an annual basis in accordance with the terms and
conditions established by PR&E in its sole and exclusive discretion. The
Incentive Compensation Plan established for calendar year 1999 is set forth on
Exhibit A.
3.3 Stock Options. Xxxxx will receive 30,000 stock options in
accordance with the terms and conditions of the PR&E Stock Option Plan.
3.4 Performance Review. The COO will periodically review Xxxxx'x
performance on no less than an annual basis. Adjustments to salary or other
compensation, if any, will be made by the COO, as approved by the compensation
committee, in their sole and absolute discretion.
4. Fringe Benefits.
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4.1 Customary Fringe Benefits. Xxxxx will be eligible for all
customary and usual fringe benefits generally available to employees of PR&E,
with the exception that Xxxxx will accrue three weeks of paid vacation per year
for each of the first five years of full-time employment and four weeks per year
thereafter. PR&E reserves the right to change or terminate the fringe benefits
on a prospective basis, at any time, effective upon notice to Xxxxx.
4.2 Car Allowance. PR&E will pay Xxxxx PR&E's standard executive
car allowance of $250 per month for each full month that Xxxxx is employed.
5. Business Expenses. Xxxxx will be reimbursed for all reasonable,
out-of-pocket business expenses incurred in the performance of his duties on
behalf of PR&E. To obtain reimbursement, expenses must be submitted promptly
with appropriate supporting documentation and must be approved by the Chief
Financial Officer of PR&E.
6. At-Will Employment Relationship. Xxxxx'x employment with PR&E is not
for any specified period and may be terminated at any time, with or without
cause or advance notice, by either Xxxxx or PR&E. In addition, PR&E reserves the
right to modify Xxxxx'x position and duties at any time in its sole and absolute
discretion and to impose disciplinary action short of termination whenever PR&E
deems it appropriate to do so. No representative of PR&E, other than the COO,
CEO or the majority vote of the board of directors, has the authority to alter
the at-will employment relationship. Any change to the at-will employment
relationship must be by specific, written agreement. Nothing in this Agreement
is intended to or should be construed to contradict, modify or alter this
at-will policy.
7. Competitive Employment. During the term of Xxxxx'x employment with
PR&E, Xxxxx agrees that he will not directly or indirectly compete with PR&E in
any way, and will not act as an officer, director, employee, consultant,
shareholder, volunteer, lender, or agent of any business enterprise of the same
nature as, or which is in direct competition with, the business in which PR&E is
now engaged or in which PR&E becomes engaged during the term of Xxxxx'x
employment with PR&E, as may be determined by PR&E in its sole discretion.
Further, Xxxxx agrees not to refer any client or potential client to competitors
of PR&E without PR&E's written consent during the term of Xxxxx'x employment
with PR&E.
8. Confidentiality and Proprietary Rights. As a condition of employment,
Xxxxx agrees to read, sign and abide by PR&E's Employee Innovations and
Proprietary Rights Assignment Agreement, which is provided with this Agreement
and incorporated herein by reference.
9. Nonsolicitation. During the term of this Agreement and for a period
of one year thereafter, irrespective of the reason for termination of
employment, Xxxxx agrees not to, directly or indirectly, separately or in
association with others:
9.1 Interfere with, impair, disrupt or damage PR&E's
relationship with any of its clients or prospective clients by soliciting or
encouraging or causing others to solicit or encourage, any of them for the
purpose of diverting or taking away the business such clients have with PR&E; or
9.2 Interfere with, impair, disrupt or damage PR&E's business by
soliciting, encouraging or causing others to solicit or encourage any of PR&E's
employees to discontinue their employment with PR&E.
10. General Provisions.
10.1 Successors and Assigns. The rights and obligations of PR&E
under this Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of PR&E. Xxxxx shall not be entitled to assign any of
Xxxxx'x rights or obligations under this Agreement.
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10.2 Waiver. Either party's failure to enforce any provision of
this Agreement shall not in any way be construed as a waiver of any such
provision, or prevent that party thereafter from enforcing each and every other
provision of this Agreement.
10.3 Severability. In the event any provision of this Agreement
is found to be unenforceable by an arbitrator or court of competent
jurisdiction, such provision shall be deemed modified to the extent necessary to
allow enforceability of the provision as so limited, it being intended that PR&E
shall received the benefit contemplated herein to the fullest extent permitted
by law. If a deemed modification is not satisfactory in the judgment of such
arbitrator or court, the unenforceable provision shall be deemed deleted, and
the validity and enforceability of the remaining provisions shall not be
affected thereby.
10.4 Interpretation; Construction. The headings set forth in
this Agreement are for convenience only and shall not be used in interpreting
this Agreement. This Agreement has been drafted by legal counsel representing
PR&E, but Xxxxx has participated in the negotiation of its terms. Furthermore,
Xxxxx acknowledges that he has had an opportunity to review and revise the
Agreement and have it reviewed by legal counsel, if desired, and, therefore, the
normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of this Agreement.
10.5 Governing Law. This Agreement will be governed by and
construed in accordance with the laws of the United States and the State of
California.
10.6 Notices. Any notice required or permitted by this Agreement
shall be in writing and shall be delivered as follows with notice deemed given
as indicated: (a) by personal delivery when delivered personally, (b) by
overnight courier upon written verification of receipt, (c) by telecopy or
facsimile transmission upon acknowledgment of receipt of electronic
transmission, or (d) by certified or registered mail, return receipt requested,
upon verification of receipt. Notice shall be sent to the addresses set forth
below, or such other address as either party may specify in writing.
10.7 Survival. Sections 8 ("Confidentiality and Proprietary
Rights"), 9 ("Nonsolicitation"), 10 ("General Provisions") and 11 ("Entire
Agreement") of this Agreement shall survive Xxxxx'x employment by PR&E.
11. Entire Agreement. This Agreement, including Exhibit A appended
hereto and the PR&E Employee Innovations and Proprietary Rights Assignment
Agreement incorporated by reference, constitutes the entire agreement between
the parties relating to this subject matter and supersedes all prior or
simultaneous representations, discussions, negotiations, and agreements, whether
written or oral. This Agreement may be amended or modified only with the written
consent of Xxxxx and the COO, CEO or majority vote of the board of directors of
PR&E. No oral waiver, amendment or modification will be effective under any
circumstances whatsoever.
THE PARTIES TO THIS AGREEMENT HAVE READ THE FOREGOING AGREEMENT AND FULLY
UNDERSTAND EACH AND EVERY PROVISION CONTAINED HEREIN. WHEREFORE, THE PARTIES
HAVE EXECUTED THIS AGREEMENT ON THE DATES SHOWN BELOW.
XXXXX X. XXXXX
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Dated:
0000 Xxxxx Xxxxx Xxxxx
Xxxxxxxx, XX 00000-0000
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PACIFIC RESEARCH & ENGINEERING
CORPORATION
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Dated: By:
Xxxxxx X. Xxxx
President & Chief Operating Officer
0000 Xxx Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
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EXHIBIT A
INCENTIVE COMPENSATION PLAN
CALENDAR YEAR 1999
In addition to the Base Salary, Xxxxx will be eligible to earn incentive
compensation in the form of a Performance Bonus and a Stock Option Award
calculated and paid in accordance with the terms and conditions set forth below.
A. Performance Bonus.
1. Bonus Potential. Xxxxx will be eligible to earn a maximum annual
performance bonus equal to 50 percent of the Base Salary in effect on the first
day of the applicable calendar year.
2. Prerequisites to Earning Bonus. In order to earn a performance bonus
for any calendar year, Xxxxx must be employed by PR&E on the last day of the
applicable calendar year.
3. Bonus Calculation. Bonus will be based on the achievement of annual
budget goals in each of four (4) categories: gross margin, inventory, revenue
and cash flow; the budget goals for the year will be set by PR&E in its sole and
absolute discretion. If PR&E achieves its annual budget goals for each and every
category, Xxxxx will be paid a 30-percent bonus. If PR&E exceeds its annual
budget goals by 10 percent or more in each and every category, Xxxxx will earn a
40-percent bonus. In the event that one or more categories falls short of the
30-percent, 40-percent or 50-percent bonus target, Xxxxx may be paid a prorated
bonus based on the actual achievement in each category. See chart below:
Budget Bonus Budget Bonus Budget Bonus Budget Bonus
Profit 90% 2.5% 100% 10% 110% 12% 125% 15%
Cash 90% 2.5% 100% 5% 110% 8% 125% 10%
Inventory 90% 2.5% 100% 10% 110% 12% 125% 15%
Revenue 90% 2.5% 100% 5% 110% 8% 125% 10%
---- -- -- ---
10% 30% 40% 50%
4. Payment of Bonus. The annual performance bonus, if any, will be paid
within 30 days after the completion of the annual audit.
5. Termination of Employment. In the event of termination of employment
prior to the end of any calendar year, Xxxxx will not earn an annual performance
bonus; however, if Xxxxx'x employment is terminated by PR&E without cause within
the last six months of the calendar year, PR&E will pay Xxxxx a prorated bonus
based on PR&E's achievement of budget goals to the date of termination provided
Xxxxx complies with all surviving provisions of the Employment Agreement and
executes a full general release of all claims, known or unknown, arising out of
or related to Xxxxx'x employment or termination of employment with PR&E. In the
event of Xxxxx'x voluntary resignation, termination with cause, or termination
without cause within the first six months of any calendar year, Xxxxx will not
be entitled to receive the prorated bonus or any part thereof.
B. Stock Option Award.
If PR&E meets or exceeds 110% of its annual budget goals in all four (4)
categories of gross margin, inventory, revenue and cash flow, as established by
PR&E in its sole and absolute discretion, Xxxxx will receive 5,000 stock options
in accordance with the terms and conditions of PR&E's Stock Option Plan,
provided Xxxxx is employed by PR&E on December 31, 1999 and meets all other
eligibility requirements of that Plan. The stock option award will not be
prorated. Furthermore, in the event of termination of employment, for any reason
whatsoever, prior to the end of the calendar year, Xxxxx will not earn and will
not be awarded the 5,000 stock options or any part thereof.
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