Exhibit 10.25
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of November 27,
2001, between Xxxxxxxx Commercial Corporation, a Delaware corporation (the
"Company"), and Xxxxxxx X. Xxxx ("Executive") with reference to the following
facts:
A. WHEREAS, Executive is currently serving as a Director on the Company's
Board of Directors (the "Board");
B. WHEREAS, the Company regards Executive as valuable to it, and has
determined that it would be to the advantage and interest of the Company
and its stockholders to provide an inducement to provide executive services
to the Company and an incentive for increased efforts during such service;
C. Based on these facts, Executive and the Company wish to enter into an
employment contract providing for the employment of Executive on the terms
and conditions set forth herein.
NOW THEREFORE, based on the mutual covenants contained herein, the parties agree
as follows:
1. Employment and Duties. The Company hereby agrees to employ Executive and
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Executive hereby accepts employment with the Company under the terms and
conditions set forth in this Agreement. Executive shall be employed as
Chief Executive Officer, with the duties and responsibilities commensurate
with his position and as may be assigned by the Board of Directors.
Executive shall devote substantially all of his full working time,
attention and energies to performing his duties for the Company on an
exclusive basis (except for a limited amount of time devoted to personal
financial matters and community activities), and shall perform his duties
faithfully and to the best of his abilities.
2. Term of Employment. Subject to earlier termination as provided in Section
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5, Executive's employment under this Agreement shall commence on the date
first stated above and continue until the first anniversary of such date
(the "Employment Term"). In the event that Executive continues to be
employed by the Company following the Employment Term, that employment
shall be governed by this agreement and shall continue for successive
one-year terms until terminated by either party.
3. Compensation. As compensation for the performance by Executive of all of
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his obligations under this Agreement, the Company shall pay to Executive
(less applicable federal, state and other withholdings):
3.1. Base Salary. A base salary during the Employment Term, at a rate of
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Two Hundred and Fifty Thousand Dollars ($250,000) per annum for the
Employment Term, payable in accordance with the Company's normal
practices for its senior executive officers. The Base Salary may be
increased at the sole discretion of the Compensation Committee of the
Board.
3.2. Cash Bonus. The stock option package detailed in 4.5 below is the
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primary incentive compensation component; however, a cash bonus
payment may be made at the sole discretion of the Board.
3.3. Relocation. The company shall reimburse Executive for relocation as
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follows:
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3.3.1. Relocation. Reasonable expense reimbursement for the insurance,
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packing, transportation, storage, and delivery of personal
effects, limited household goods and one (1) personal
automobile.
3.3.2. Temporary Living Allowance. An annual temporary living
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allowance up to twenty-five thousand dollars ($25,000). The
mechanics for payment/reimbursement will be agreed between
executive and the Company's CFO.
3.3.3. Cash in Lieu of Services. Relocation and/or Temporary Living
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Allowance has no provision for cash in lieu of
payment/reimbursement for actual expenses incurred.
4. Benefits.
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4.1. Expenses. The Company shall repay or reimburse Executive for ordinary
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and necessary business expenses to the extent compatible with the
Company's general policies for its senior executive officers.
Executive shall keep accurate and complete records of all such
expenses.
4.2. Insurance Benefits. During the Employment Term, the Company shall
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provide Executive with those insurance benefits generally available to
its senior executive officers. In particular, but without limiting the
foregoing: (i) the Company shall be obligated, for the Employment
Term, to pay the term portion (as opposed to the whole life portion)
of the premiums for a $500,000 face amount term life insurance policy,
under which Executive shall designate a beneficiary.
4.3. Medical Insurance. In addition to the provisions of Section 4.2 of
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this Agreement, for the Employment Term, the Company shall provide
Executive with Company-paid medical insurance to the same extent such
insurance is made generally available to its senior executive
officers.
4.4. Vacation and Sick Leave. During the Employment Term, Executive shall
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be entitled to a paid annual vacation in accordance with the policies
established from time to time by the Company for its senior executive
officers; provided, however, that Executive shall be entitled to no
less than three (3) weeks paid vacation during the Employment Term.
Without the Company's written consent, vacation must be taken during
the Employment Term and Executive's vacation will be scheduled at
times convenient to the Company's business. Executive shall be
entitled to paid sick-days and personal days in accordance with the
policies established from time to time by the Company for its senior
executive officers.
4.5. Incentive Stock Plan. Executive shall be issued a Common Stock Option
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Share grant in accordance with the Company's Incentive Stock Plan of
One Hundred Thousand (100,000) option shares at a strike price
determined at the end of trading on the day this agreement is approved
by the Compensation Committee. Vesting may be accelerated at the sole
discretion of the Board.
4.6. Automobile. During the Employment Term, the Company shall provide a
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fully paid leased automobile chosen by Executive with a sale price of
approximately $48,000.
5. Termination of Employment.
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5.1. Termination. The Company may terminate Executive's employment with the
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Company at any time with or without "Cause" by written notice to
Executive. Cause exists if any one or more of the following should
occur, as determined in good faith by the Board: Executive's (a)
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failure to perform his duties under, or breach of, this Agreement, (b)
failure to comply with a reasonable direction of the Board, (c) breach
of his fiduciary duty to the Company or (d) conviction by a court of
competent jurisdiction of a felony or other serious crime. In the
event of Executive's physical or mental disability (so that Executive
is not reasonably able to render full services as contemplated hereby)
for any consecutive period exceeding eight (8) months, or for shorter
periods aggregating more than eight (8) months during any twelve (12)
month period, the Company shall nevertheless continue to pay full
salary up to and including the last date of the eighth consecutive
month of disability, or the day on which the shorter periods of
disability shall have equaled to a total of eight (8) months during
such twelve (12) month period, but the Company may, at any time within
six (6) weeks thereafter, at its election terminate this Agreement by
delivery of written notice thereof to Executive; provided, however,
that any amount received by Executive under the term disability
insurance policy described in Section 4.2 of this Agreement shall
reduce the Company's obligation under this Section 5.1 dollar for
dollar. In the event that Executive dies during the Employment Term,
this Agreement shall terminate automatically.
5.2. Payment Upon Termination.
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5.2.1.Generally. Upon any termination, the Company shall pay to
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Executive (or, if applicable, to Executive's estate) all amounts
accrued and unpaid as of the date of termination in respect of
(i), Executive's salary for periods through such date, (ii)
vacation pay, (iii) any reimbursement for expenses owing to
Executive pursuant to Section 4.1, (iv) relocation pursuant to
Section 4.2. In the event of a termination with Cause, Executive
shall only be entitled to the payments specified in this Section
5.2.1.
5.2.2.Termination Without Cause. If the Company terminates Executive
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other than for Cause, then in addition to amounts that Executive
is entitled to receive under Section 5.2.1, Executive shall be
entitled to receive as a severance benefit (i) equal to the
unpaid balance of the Employment Term Base Salary at the time of
termination, payment of which shall be accelerated and paid in
one lump sum as soon as practically possible, with an appropriate
discount to reflect such acceleration, and (ii) accelerated
vesting of common share option grants to Executive.
5.3. Exclusivity of Remedies. Executive agrees that the rights and
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entitlements set forth in this Section 5 are his exclusive rights and
entitlements from the Company and any affiliated entity upon the
termination of Executive's employment with the Company, and upon
termination the Company shall be released from other obligations
hereunder.
6. Covenants.
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6.1. Non-Interference Covenant. As a means reasonably designed to protect
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the Company's Confidential Information (as hereinafter defined)
(Executive hereby agreeing and acknowledging that the proscribed
activities would necessarily involve the use of such Confidential
Information), during the Employment Term and for a period of two years
thereafter, Executive shall not, directly, indirectly or as an agent
on behalf of or in conjunction with any person, firm, partnership,
corporation or other entity, (a) hire, solicit or encourage the
resignation of person who is then, or within the, prior six months has
been, an employee of the Company or its affiliated entities
(including, but not limited to, any independent sales representatives)
to leave the employment of the Company or its affiliated entities, or
(b) solicit or service any person or entity with whom the Company has
a business
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relationship or who is or was during the Employment Term, a customer
or client of the Company.
6.2. Employment Exclusive. Executive shall not, during the Employment Term,
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own any interest (other than up to 1% of the voting securities of a
publicly traded corporation) in, render financial assistance to, or
offer personal services (for payment or otherwise), to any entity or
individual that competes with the Company in Company Business (as
defined below) or that is a material supplier of the Company. In
addition, Executive shall not engage in any activity that would
interfere with the performance of Executive's services to the Company.
"Company Business" means the Company's business as it is currently
conducted, and any other business activity in which the Company is
engaged at any time during Executive's employment with the Company.
6.3. Confidential information. Executive occupies a position of trust and
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confidence with respect to the Company's affairs and business.
Executive has and will have access to Confidential Information, which
he acknowledges is proprietary to the Company and highly sensitive in
nature.
6.3.1.Definition of Confidential Information. "Confidential
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Information" means information disclosed to Executive or known to
Executive as a consequence of or through his employment by the
Company, whether or not related to his duties, and includes trade
secrets or any other like information relating to the business
and/or field of interest of the Company or any business and/or
field of interest seriously considered by the Company during
Executive's employment by the Company, including, but not limited
to, information relating to Inventions (as defined below),
disclosures, processes, systems, methods, formulas, patents,
patent applications, machinery, materials, research activities
and plans, cost of production, contract forms, prices, volume of
sales, marketing methods and plans, promotional methods, and
lists of names or classes of customers. Information shall for
purposes of this Agreement be considered to be confidential if
not known by the trade generally, even though such information
may have been disclosed to one or more third parties pursuant to
consulting agreements, joint research agreements, or other
agreements entered into by the Company.
6.3.2. No Disclosure. During and after Executive's employment with the
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Company, Executive shall not (a) use, disclose or otherwise
permit any person or entity access to any of the Confidential
Information other than as required in the good faith performance
of Executive's duties with the Company, or (b) sell, license or
otherwise exploit any products or services which embody in whole
or in part any Confidential Information. During and after
Executive's engagement with the Company, Executive shall take all
reasonable precautions to prevent disclosure by Executive of the
Confidential Information to unauthorized persons or entities.
6.3.3. Return All Materials. Upon termination of Executive's
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employment with the Company, Executive shall deliver to the
Company all tangible materials in any way embodying the
Confidential Information, including any documentation, records,
listings, notes, data, sketches, drawings, memoranda, models,
videos, accounts, reference materials, samples, machine-readable
media and equipment, and wire frame models. Executive shall not
retain any copies of any of the above materials.
6.4. Assignment of Inventions.
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6.4.1. Definition of Inventions. "Inventions" mean discoveries,
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developments, concepts, ideas, methods, designs, improvements,
inventions, formulas, processes, techniques, programs, know-how
and data, whether or not patentable or registerable under
copyright or similar statutes except, in accordance with
California Labor Code Section 2870, any such that (a) is not
related to the business of the Company, or the Company's actual
or demonstrable research or development, (b) does not involve the
use of any equipment, supplies, facility or trade secret
information of the Company, (c) was developed entirely on
Executive's own time, and (d) does not result from any work
performed by Executive for the Company.
6.4.2. Assignment. Executive agrees to and hereby does assign to the
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Company all his right, title and interest in any And all
Inventions he may make during his employment with the Company.
6.4.3. Duty to Disclose and Assist. Executive agrees to promptly
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disclose in writing all Inventions to the Company, and to provide
all assistance reasonably requested by the Company in the
preservation of the Company's interests in the Inventions
including obtaining patents in any country throughout the world.
Such services will be without additional compensation if
Executive is then employed by the Company and for reasonable
compensation and subjected to his reasonable availability if he
is not. If cannot, after reasonable effort, secure Executive's
signature on any document or documents needed to apply for or
prosecute any patent, copyright, or other right or protection
relating to an Invention, whether because of his physical or
mental incapacity or for any other reason whatsoever, Executive
hereby irrevocably designates and appoints the Company and its
duly authorized officers and agents as his agent and
attorney-in-fact, to act for and in his behalf and in his name
and xxxxx for the purpose of executing and filing any such
application or applications and taking all other lawfully
permitted actions to further the prosecution and issuance of
patents, copyrights, or similar protections thereon, with the
same legal force and effect as if executed by him.
6.4.4.Ownership of Copyrights. Executive agrees that any work prepared
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for the Company which is eligible for United States copyright
protection or protection under the Universal Copyright
Convention, the Berne Copyright Convention and/or the Buenos
Aires Copyright Convention shall be a work made for hire and
ownership of all copyrights (including all renewals and
extensions) therein shall vest in the Company. If any such work
is deemed not to be a work made for hire for any reason,
Executive hereby grants, transfers and assigns all right, title
and interest in such work and all copyrights in such work and all
renewals and extensions thereof to the Company, and agrees to
provide all assistance reasonably requested by the Company in the
establishment, preservation and enforcement of the Company's
copyright in such work, such assistance to be provided at the
Company's expense but without any additional compensation to
Executive. Executive hereby agrees to and does hereby waive the
enforcement of all moral rights with respect to the work
developed or produced hereunder, including without limitation any
and all rights of identification of authorship and any and all
rights of approval, restriction or limitation on use or
subsequent modifications.
6.5. Litigation. Executive agrees to render assistance, advice and counsel
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to the Company at its request regarding any matter, dispute or
controversy with which the Company may become involved and of which
Executive has or may have reason to have knowledge, information or
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expertise. Such services will be without additional compensation if
Executive is then employed by the Company and for reasonable
compensation and subjected to his reasonable availability if he is
not.
7. Arbitration as the Exclusive Remedy.
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7.1. Arbitration. Arbitration as the Exclusive Remedy Except for actions
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seeking injunctive relief (which may be brought before any court
having jurisdiction under this Agreement), any controversy or claim
(whether against the Company or any parent, subsidiary or affiliate
thereof, or any officer, director, employee or agent of any of the
foregoing) arising out of or relating to this Agreement, including,
but not limited to, any claim relating to its validity,
interpretation, enforceability or breach, and/or any other claim or
controversy arising out of the employment relationship or the
commencement or termination of that relationship, including, but not
limited to, claims which are brought against any of the Company's
directors, officers, employees and agents and claims for breach of
covenant, for breach of an implied covenant, for intentional
infliction of emotional distress, or under any applicable statute
(including, without limitation, claims for age or sex discrimination)
which are not settled by agreement between the parties, shall be
submitted to arbitration in Temecula, California (or such other place
as the parties may mutually agree) before an arbitrator to be mutually
agreed upon by the parties. In consideration of each party's agreement
to submit to arbitration all disputes with regard to this Agreement
and/or with regard to any alleged contract or tort or other claim
arising out of the employment relationship or the commencement or
termination of that employment relationship, and in consideration of
the anticipated expedition and the minimizing of expense of this
arbitration remedy, each agrees that the arbitration provisions of
this Agreement shall provide it with its exclusive remedy against the
other party (including its officers, directors, employees and agents)
and each party expressly waives any right it might have to seek
redress in any other forum except as provided herein.
7.2. Procedures. The party filing a claim must present it in writing to the
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other party in Temecula, California within six months of the date the
party filing the claim knew or should have known of it or the date of
the termination, whichever is earlier. Any claim not brought within
the required time period will be waived forever. In the proceedings
(i) all testimony of witnesses shall be taken under oath and (ii) upon
conclusion of any proceedings hereunder, the arbitrator shall render
findings of fact and conclusions of law in a written opinion setting
forth the basis and reasons for any decision reached and deliver such
documents to each party to this Agreement along with a signed copy of
the award in accordance with Section 1283.6 of the California Code of
Civil Procedure. The arbitrator shall have power to allocate between
the parties in their award costs incurred in preparation for and as a
result of any such arbitration, including, without limitation, filing
fees, attorneys' fees, the compensation to be paid to the arbitrator
in any such arbitration and costs of transcripts.
8. Miscellaneous.
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8.1. Agreement Authorized. Executive hereby represents and warrants that he
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is free to enter into this Agreement and to render his services
pursuant to this Agreement, that he has resigned all offices with any
other entities, and that he is not subject to any obligation or
restriction that would prevent him from discharging his duties under
this Agreement, and agrees to indemnify and hold harmless the Company
from and with respect to any liability, damages or costs, including
attorneys, fees, arising out of any breach by Executive of this
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representation and warranty. The Company hereby represents and
warrants that any required authorization of this Agreement by its
Board of Directors has been obtained.
8.2. Notices. Any notice required or desired to be given to the Company or
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to Executive shall be given in writing, and shall be addressed (i) to
the Company at its principal place of business, and (ii) to Executive
at his most recent home address in the records of the Company, or to
such other address as that party may hereafter designate in writing,
and shall be sufficiently given by actual delivery thereof to the
Company or Executive, as the case may be, or by facsimile or overnight
or registered mail, postage prepaid, return receipt requested,
addressed to the other party as aforesaid, and the date of delivery,
mailing or telegraphing shall be the date of the giving of such
notice.
8.3. Payment of Taxes. To the extent that any taxes become payable by
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Executive by virtue of any payments made or benefits conferred by the
Company, the Company shall not be liable to pay or obligated to
reimburse Executive for any such taxes or to make any adjustment under
this Agreement. Any payments otherwise due under this Agreement to
Executive, including, but not limited to, the Base Salary and any
bonus, shall be reduced by any required withholding for Federal, State
and/or local taxes and other appropriate payroll deductions. The
Company shall be entitled to offset any payment obligations to
Executive under this Agreement against any amounts that it alleges in
good faith that Executive owes to the Company.
8.4. Insurance. The Company may, from time to time, apply for and take out,
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in its own name and at its own expense, life, health, accident,
disability or other insurance on Executive in any sum or sums that it
may deem necessary to protect its interests, and Executive shall aid
and cooperate in all reasonable respects with the Company in procuring
any and all such insurance, including, without limitation, submitting
to the usual and customary medical examinations, and by filling out,
executing and delivering such applications and other instruments in
writing as may be reasonably required by an insurance company or
companies to which an application or applications for such insurance
may be made by or for the Company.
8.5. Assignment. This Agreement is a personal contract, and the rights,
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interests and obligations of Executive under this Agreement may not be
sold, transferred, assigned, pledged or hypothecated, except that this
Agreement may be assigned by the Company to any corporation or other
business entity which succeeds to all or substantially all of the
business of the Company through merger, consolidation, corporate
reorganization or by acquisition of all or substantially all of the
assets of the Company and which assumes the Company's obligations
under this Agreement. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon any successor to the
business of the Company.
8.6. Entire Agreement. This Agreement sets forth the entire understanding
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of the parties with respect to the employment relationship, including
the commencement and termination of the employment relationship, and
supersedes any and all prior agreements or understandings between the
parties relating to such subject matter. No person has any authority
to make any representation or promise on behalf of any of the parties
which is inconsistent with the representations set forth in the
Agreement and the Agreement has not been executed in reliance on any
promise or representation not set forth in the Agreement.
8.7. Modification, Waiver and Amendment. None of the terms or provisions of
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this Agreement shall be modified or waived, and this Agreement may not
be amended or terminated, except
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by a written instrument signed by the party against which any
modification, waiver, amendment or termination is to be enforced. No
waiver of any one provision shall be considered a waiver of any other
provision, and the fact that an obligation is waived for a period of
time or in one instance shall not be considered to be a continuing
waiver.
8.8. Cooperation. Each party hereto agrees to execute any and all further
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documents and writings and perform such other reasonable actions,
which may be or become necessary or expedient to effectuate and carry
out the provisions hereof.
8.9. Governing Law. This Agreement has been negotiated and entered into in
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the State of California, concerns a business with its principal
offices in California and all questions with respect to this Agreement
and the rights and liabilities of the parties shall be governed by the
laws of that state, regardless of the choice of law provisions of
California or any other jurisdiction.
8.10. Equity. The parties hereto agree that the services to be rendered
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under the terms of this Agreement, and the rights and privileges
granted to the Company by Executive under its terms, are of a special,
unique, unusual, extraordinary and intellectual character involving
skill of the highest order which gives them a peculiar value in the
event of the breach by Executive of any of the provisions of this
Agreement, the Company, in addition and as a supplement to such other
rights and remedies as may exist in its favor, may apply to any court
of law or equity having jurisdiction to enforce this Agreement, and/or
may apply for injunctive relief against any act which would violate
any of the provisions of this Agreement.
8.11. Injunctive Relief Profits. Executive understands that monetary
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damages will not be sufficient to avoid or compensate for a breach of
any of the covenants contained in Section 6 hereof and that injunctive
relief would be appropriate to prevent any such actual or threatened
breach. Such right to obtain injunctive relief may be exercised, at
the option of the Company, concurrently with, prior to, after, or in
lieu of, the exercise of any other rights or remedies which the
Company may have as a result of any such breach or threatened breach.
Executive shall account for and pay over to the Company all
compensation, profits and other benefits, after taxes, inuring to
Executive's benefit which are derived or received by Executive or any
other person or business entity controlled by Executive resulting from
any action or transaction constituting a breach of any covenant
contained in Section 6.
8.12. Rules of Construction.
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8.12.1. Headings. The Section headings in this Agreement are inserted
only as a matter of convenience, and in no way define, limit, or
extend or interpret the scope of this Agreement or of any
particular Section.
8.12.2. Tense and Case. Throughout this Agreement, as the context may
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require, references to any word used in one tense or case shall
include all other appropriate tenses or cases.
8.12.3. Severability. Nothing contained in this Agreement shall be
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construed so as to require the commission of any act contrary to
law and whenever there is any conflict between any provision of
this Agreement and any statute, law, ordinance, order or
regulation, contrary to which the parties have no right to
contract, the latter shall prevail, but in such event any
provision of this Agreement so affected shall be
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curtailed and limited only to the extent necessary to bring it
within legal requirements.
8.13. Counterparts. This Agreement may be executed in two counterparts,
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each of which will be deemed an original, but all of which together
will constitute one and the same instrument.
EXECUTIVE ACKNOWLEDGES HAVING CAREFULLY READ, UNDERSTOOD AND CONSULTED WITH AND
BEEN ADVISED BY HIS OWN COUNSEL REGARDING ALL OF THE PROVISIONS IN THIS
AGREEMENT AND HAVING NEGOTIATED SUCH PROVISIONS. EXECUTIVE KNOWS THAT HE CANNOT
RELY ON ANY STATEMENT OUTSIDE OF (i) THIS AGREEMENT OR (ii) A FORMAL WRITTEN
AMENDMENT OF THIS AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first written above.
/s/ Xxxxxxx X. Xxxx /s/ Xxxxxxx X. Xxxxxxxx Xx.
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Xxxxxxx X. Xxxx Xxxxxxxx Commercial Corporation
11/27/01 11/27/01
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Date Date
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