EXHIBIT 10.5
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of January 1, 2003 by and between Xenonics,
Inc., a Delaware corporation (the "Company"), and Xxxx Xxxxxxxx (the
"Executive").
1. Term of Employment
Subject to the provisions of Section 10 below, the Company shall employ
the Executive, and the Executive shall serve the Company in the capacity of
Chief Executive Officer for a term commencing as of January 1, 2003 and ending
that date which is 24 months after either party provides the other party with
written notice of termination (the "Term of Employment").
2. Duties
During the Term of Employment, the Executive will serve as the Company's
Chief Executive Officer and will report directly to the Board of Directors.
Executive will serve the Company faithfully, diligently, and competently and to
the best of his ability.
3. Compensation
During the Term of Employment, the Company shall pay to the Executive as
compensation for the performance of his duties and obligations hereunder a
salary at the rate of $180,000 per annum during each year of the term of this
Agreement. Such salary shall be paid bi-weekly. After the first year, the
Executive's salary shall be increased on the anniversary date each year during
the Term of Employment in proportion to any upward changes in the Consumer Price
Index of the U.S. Bureau of Labor Statistics of Urban Wage Earners and Clerical
Workers, U.S. City Average (1967=100) during the calendar year immediately
preceding each such anniversary date (in the event that such index shall be
changed or discontinued, the index published by the United States Government
which is most nearly the same as such index shall be used to make the foregoing
calculations).
4. Expenses and Other Benefits.
All travel, entertainment and other reasonable business expenses incident
to the rendering of services by the Executive hereunder will be promptly paid or
reimbursed by the Company subject to submission by the Executive in accordance
with the Company's policies in effect from time to time.
The Executive shall be entitled during the Term of Employment to
participate in employee benefit and welfare plans and programs of the Company
including any employee incentive stock option plans, qualified or unqualified,
to the extent that any other executives or officers of the Company or its
subsidiaries are eligible to participate and subject to the provisions, rules,
regulations, and laws applicable thereto.
5. Death or Disability
This Agreement shall be terminated by the death of the Executive and also
may be terminated by the Board of Directors of the Company if the Executive
shall be rendered incapable by illness or any physical or mental disability
(individually, a "disability") from substantially complying with the terms,
conditions and provisions to be observed and performed on his part for a period
in excess of six months (whether or not consecutive) during any 12 months during
the Term of Employment. If this Agreement is to be terminated by reason of
illness, or any physical or mental disability of the Executive, the Company
shall give thirty days' written notice to that effect to the Executive in the
manner provided herein and the Executive shall be entitled to 75% of the
Executive's compensation that was to accrue during the balance of the Term of
Employment, including those benefits described in Section 4.
6. Disclosure of Information; Inventions and Discoveries
Except as provided in the California Labor Code, the Executive shall
promptly disclose to the Company all processes, trademarks, inventions,
improvements, discoveries and other information (collectively, "developments")
directly related to the business of the Company conceived, developed or acquired
by him alone or with others during the Term of Employment by the Company,
whether or not during regular working hours or through the use of material or
facilities of the Company. All such developments shall be the sole and exclusive
property of the Company, and upon request the Executive shall deliver to the
Company all drawings, sketches, models and other data and records relating to
such development. In the event any such development shall be deemed by the
Company to be patentable, the Executive shall, at the expense of the Company,
assist the Company in obtaining a patent or patents thereon and execute all
documents and do all other things necessary or proper to obtain letters patent
and invest the Company with full title thereto.
7. Non-Competition
The Company and the Executive agree that the services rendered by the
Executive hereunder are unique and irreplaceable. During his employment by the
Company, the Executive shall not become an executive officer of any business
that in the judgment of the Company is, or as a result of the Executive's
engagement or participation would become, directly competitive with any aspect
of the business of the Company.
8. Non-Disclosure
The Executive will not at any time after the date of this Employment
Agreement divulge, furnish or make accessible to anyone (otherwise than in the
regular course of business of the Company) any knowledge or information with
respect to confidential or secret processes, inventions, discoveries,
improvements, formulas, plans, material, devices, ideas or other know-how,
whether patentable or not, with respect to any confidential or secret
engineering, development or research work or with respect to any
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other confidential or secret aspect of the business of the Company (including,
without limitation, customer lists, supplier lists and pricing arrangements with
customers or suppliers), except to the extent such disclosure is (a) in the
performance of his duties under this Agreement, (b) required by applicable law,
(c) lawfully obtainable from other sources, (d) authorized in writing by the
Company, or (e) when required to do so by legal process, that requires him to
divulge, disclose or make accessible such information.
9. Remedies
The Company may pursue any appropriate legal, equitable or other remedy,
including injunctive relief, in respect of any failure by the Executive to
comply with the provisions of Sections 6, 7 or 8 hereof, it being acknowledged
by the Executive that the remedy at law for any such failure would be
inadequate. If the Company shall have failed to cure any material breach by the
Company of any material provision of this Agreement within 30 days after notice
by the Executive to the Company specifying such breach with particularity, the
Executive may, in addition to other remedies, give notice to the Company of
acceleration of the entire amount of compensation which was to accrue to the
Executive during the balance of the Term of Employment, and such amount shall be
immediately due and payable to the Executive.
10. Termination
The Executive's employment with the Company may be terminated by the Board
of Directors of the Company (i) upon ten (10) days' notice to the Executive in
the event of the Executive's personal dishonesty, willful misconduct or breach
of fiduciary duty or (ii) upon thirty (30) days' notice to the Executive if the
Executive shall be in material breach of any material provision of this
Employment Agreement other than as provided in clause (i) above and shall have
failed to cure such breach during such thirty day period. Any such notice to the
Executive shall specify with particularity the reason for termination or
proposed termination. In the event of termination under this Section 10 or under
Section 5 (except as provided therein), the Company's unaccrued obligations
under this Agreement shall cease and the Executive shall forfeit all right to
receive any unaccrued compensation or benefits hereunder but shall have the
right to reimbursement of expenses already incurred. Notwithstanding any
termination of the Agreement pursuant to this Section 10 or by reason of
disability under Section 5, the Executive, in consideration of his employment
hereunder to the date of such termination, shall remain bound by the provisions
of Sections 6, 7 and 8 (unless this Agreement is terminated on account of the
breach hereof by the Company) of this Agreement. Termination without cause or
any attempt by the Board of Directors of the Company to reassume any of the
responsibilities or duties from the Executive or to change the duties of the
Executive without cause shall be deemed a breach of this Agreement by the
Company without cause and shall immediately entitle the Executive, as liquidated
damages therefore, to the entire remaining balance due him as compensation
pursuant to this Agreement.
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Subject to the provisions set forth in the immediately following
paragraph, notwithstanding anything contained herein to the contrary, if the
Company terminates the Executive's employment other than for cause, the
Executive shall be entitled to receive remaining salary and other benefits due
the Executive pursuant to the Term of Employment.
11. Resignation
In the event that the Executive's services hereunder are terminated under
Section 5 or 10 of this Agreement (except by death), the Executive agrees that
he will deliver his written resignation to the Board of Directors, such
resignation to become effective immediately.
12. Data
Upon expiration of the Term of Employment or termination pursuant to
Section 5 or 10 hereof, the Executive or his personal representative shall
promptly deliver to the Company all books, memoranda, plans, records and written
data of every kind relating to the business and affairs of the Company which are
then in his possession on account of his employment hereunder, but excluding all
such materials in the Executive's possession which are personal and not property
of the Company or which he holds on account of his past or current status as a
director or shareholder of the Company.
13. Arbitration
Any dispute or controversy arising under this Agreement or relating to its
interpretation or the breach hereof, including the arbitrability of any such
dispute or controversy, shall be determined and settled by arbitration in San
Diego, California pursuant to the Rules then obtaining of the American
Arbitration Association. Any award rendered herein shall be final and binding on
each and all of the parties, and judgment may be entered thereon in any court of
competent jurisdiction.
14. Insurance
The Company shall have the right at its own cost and expense to apply for
and to secure in its own name, or otherwise, life, health or accident insurance
or any or all of them covering the Executive, and the Executive agrees to submit
to any usual and customary medical examination and otherwise to cooperate with
the Company in connection with the procurement of any such insurance, and any
claims thereunder.
15. Waiver of Breach
Any waiver of any breach of this Employment Agreement shall not be
construed to be a continuing waiver or consent to any subsequent breach on the
part either of the Executive or of the Company.
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16. Assignment
Neither party hereto may assign his or its rights or delegate his or its
duties under this Employment Agreement without the prior written consent of the
other party; provided, however, that this Agreement shall inure to the benefit
of and be binding upon the successors and assignees of the Company, all as
though such successors and assignees of the Company and their respective
successors and assignees were of the Company, upon (a) a sale of all or
substantially all of the Company's assets, or upon merger or consolidation of
the Company with or into any other corporation, and (b) upon delivery on the
effective day of such sale, merger or consolidation to the Executive of a
binding instrument of assumption by such successors and assigns of the rights
and liabilities of the Company under this Agreement, provided, however, that no
such assignment or transfer will relieve the Company from its payment
obligations hereunder in the event the transferee or assignee fails to timely
discharge them. No rights or obligations of the Executive under this Agreement
may be assigned or transferred other than his rights to compensation and
benefits, which may be transferred by will or operation of law or as otherwise
specifically provided or permitted hereunder or under the terms of any
applicable employee benefit plan.
17. Notices
Any notice required or desired to be given hereunder shall be in writing
and shall be deemed sufficiently given when delivered or 3 days after mailing in
United States certified or registered mail, postage prepaid, to the party for
whom intended at the following address:
The Company:
Xenonics, Inc.
0000 Xxxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxx, XX 00000
The Executive:
Xxxx Xxxxxxxx
0000 Xxxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxx, XX 00000
or to such other address as either party may from time to time designate by like
notice to the other.
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18. General
The terms and provisions of this Agreement shall constitute the entire
agreement by the Company and the Executive with respect to the subject matter
hereof, and shall supersede any and all prior agreements or understandings
between the Executive and the Company, whether written or oral. This Agreement
may be amended or modified only by a written instrument executed by the
Executive and the Company, and any such amendment or modification or any
termination of this Agreement shall become effective only after written approval
thereof has been received by the Executive. This Agreement shall be governed by
and construed in accordance with California law. In the event that any terms or
provisions of this Agreement shall be held to be invalid or unenforceable, such
invalidity or unenforceability shall not affect the validity or enforceability
of the remaining terms and provisions hereof. In the event of any judicial,
arbitral or other proceeding between the parties hereto with respect to the
subject matter hereof, the prevailing party shall be entitled, in addition to
all other relief, to reasonable attorneys' fees and expenses and court costs.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
Xenonics, Inc.
By: /S/ Xxxxxxx X. Xxxxxxx
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Secretary
AGREED TO AND ACCEPTED:
By: /S/ Xxxx Xxxxxxxx
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Xxxx Xxxxxxxx
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