1
EXHIBIT 10.5
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into as of March 10,
1997, by and between Xxxxxx Incorporated, a Nevada corporation (the "Company"),
and Xxxxx X. Xxxxxx ("Executive").
1. Term. The Company hereby agrees to employ Executive, and
Executive hereby agrees to serve the Company, on the terms and conditions of
this Agreement for a three-year period commencing on the date hereof (such
period, subject to earlier termination or extension as provided herein, being
referred to as the "Period of Employment"). Commencing on the date three years
after the date hereof, and on each annual anniversary of such date (each such
date being referred to as a "Renewal Date"), the Period of Employment shall be
automatically extended so as to terminate one year from such Renewal Date,
unless at least 60 days prior to the Renewal Date the Company shall give
written notice to Executive or Executive shall give written notice to the
Company that the Period of Employment shall not be so extended.
2. Duties and Services. During the Period of Employment,
Executive agrees to serve the Company as President and in such other offices
and directorships of the Company and of its subsidiaries and related companies
(collectively, "Affiliates") to which he may be elected or appointed, and to
perform such other reasonable and appropriate duties as may be requested of him
by the board of directors of the Company (the "Board of Directors"), in
accordance with the terms herein set forth. In performance of his duties,
Executive shall be subject to the direction of the Board of Directors.
Excluding periods of vacation and sick leave to which Executive is entitled,
Executive shall devote his full time, energy and skill during regular business
hours to the business and affairs of the Company and its Affiliates and to the
promotion of their interests. The principal place of performance by Executive
of his duties hereunder shall be in Las Vegas, Nevada, or at such other
location as may be mutually agreed upon by the Company and the Executive, but
Executive may be reasonably required to travel outside that area.
3. Compensation.
(a) Salary and Bonuses. As compensation for his services
hereunder, the Company shall pay Executive, during the Period of Employment,
annual base salary in the amount of $360,000, payable in 24 equal installments
on the first and sixteenth of each month, or at such other times as may
mutually be agreed upon by the Company and Executive. On each anniversary of
the date of the Agreement, the annual base salary payable hereunder shall be
increased to an amount equal to 103% of the annual base salary of the
immediately preceding year or such greater amount as shall be determined by the
Board of Directors in its discretion. Executive shall be entitled to such
bonuses and other benefits as the Board of Directors may periodically award in
its discretion. Nothing contained herein shall preclude Executive from
participating in the present or future employee benefit plans of the Company or
of any Affiliate, including without limitation any employee stock ownership
plan, pension plan, profit-sharing plan, savings plan, deferred compensation
plan, stock option plan and health-and-accident plan or arrangement, if he
meets the eligibility requirements therefor.
2
(b) Fringe Benefits. Executive shall receive employment fringe
benefits not less favorable than those made available to the Company's most
senior executives. In addition, the Company shall, (i) upon the request of
Executive, provide Executive with an executive automobile for his use and
possession, the expenses of which shall be borne by the Company, (ii) obtain,
and pay all premiums payable with respect to, a $2.5 million life insurance
policy for the benefit of the heirs of the Executive, and (iii) obtain, and pay
all premiums payable with respect to, a long-term disability policy reasonably
acceptable to Executive.
(c) Expenses. All travel and other expenses incident to the
rendering of services by Executive hereunder shall be paid by the Company. If
any such expenses are paid in the first instance by Executive, the Company
shall reimburse him therefor on presentation of the appropriate documentation
required by the Internal Revenue Code of 1986, as amended, and Treasury
Regulations or otherwise required under the Company policy in connection with
such expenses.
(d) Vacation. Executive shall be entitled to paid vacation, to
be taken at time or times mutually satisfactory to Executive and the Company,
in accordance with the Company's vacation policy in effect from time to time
for most senior executives except as provided in the following sentences. The
Company acknowledges that Executive currently has 30 weeks of accrued vacation.
Executive may take such accrued vacation from time to time provided that it
shall be taken at all times mutually satisfactory to Executive and Company.
Moreover, in the event of the early termination of this Agreement by the
Company pursuant to Section 4(a) hereof, Executive shall be paid in cash for
any accrued vacation time.
4. Early Termination.
(a) Notwithstanding the provisions of Section 1 hereof,
Executive may be discharged by the Company for Cause (as defined in Section
4(c) hereof), in which event the Period of Employment hereunder shall cease and
terminate and the Company shall have no further obligation or duties under this
Agreement, except for obligations accrued under Section 3 at the date of
termination. In addition, the Period of Employment hereunder shall cease and
terminate upon the earliest to occur of the following events: (i) the death of
Executive; or (ii) at the election of the Board of Directors (subject to the
Americans With Disabilities Act), the inability of Executive by reason of
physical or mental disability to continue the proper performance of his duties
hereunder for a period of 180 consecutive days. Upon termination of the Period
of Employment pursuant to the preceding sentence, the Company shall continue to
pay to Executive or his estate, as the case may be, the entire compensation
otherwise payable to him under Section 3(a) hereof for the greater of one year
or the remaining Period of Employment (without giving effect to any future
available renewals of the term hereof).
(b) In the event that (i) Executive is discharged by the Company
other than for Cause or other than pursuant to Section 4(a) hereof by reason of
physical or mental disability, or (ii) Executive terminates employment with the
Company for good reason (as defined in Section 4(d) hereof), Executive shall
have no further obligations or duties under this Agreement; provided, however,
that Executive shall continue to be bound by the provisions of Section 5
2
3
hereof if the Company performs its obligations under this Section 4(b). In the
event of termination of the Period of Employment pursuant to the preceding
sentence, the Company shall, in addition to paying the obligations accrued
under Section 3 at the date of termination, pay Executive, within 30 days of
such termination, a cash severance payment, with no duty by Executive to
mitigate such payment, in an amount equal to, the entire compensation otherwise
payable to him under Section 3(a) hereof for the greater of two years or the
remaining Period of Employment (without giving effect to any future available
renewals of the term hereof).
(c) For purposes of this Agreement, cause ("Cause") shall be
deemed to exist only (i) upon Executive's consistent, unexcused refusal to
substantially perform, or willful misconduct in the substantial performance of,
his duties and obligations hereunder; provided such duties and obligations are
consistent with the duties and obligations imposed on Executive by this
Agreement and are clearly communicated to Executive or (ii) Executive's
conviction of a felony.
(d) For purposes of this Agreement, the term "for good reason"
shall mean (i) the assignment to Executive of any duties or responsibilities
which in the reasonable judgment of Executive are inconsistent in any respect
with Executive's position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as contemplated by Section
2, or any other action by the Company which in the reasonable judgment of
Executive results in a substantial diminishment in such position, authority,
duties or responsibilities; (ii) the Company's requiring relocation of
Executive, without his prior written consent, to a place of employment other
than Las Vegas, Nevada, except for travel reasonably required in the
performance of Executive's responsibilities; or (iii) the Company's failure to
substantially comply with the provisions of Section 3 of this Agreement or
other material breach by the Company of this Agreement.
5. Confidentiality and Non-Competition.
(a) The Company and Executive acknowledge that the services to
be performed by Executive under this Agreement are unique and extraordinary
and, as a result of such employment, Executive will be in possession of
confidential information, proprietary information and trade secrets
(collectively, "Confidential Material") relating to the business practices of
the Company and its Affiliates. Executive agrees that he will not, directly or
indirectly, (i) disclose to any other person or entity either during or after
his employment by the Company or (ii) use, except during his employment by the
Company in the business and for the benefit of the Company or any of its
Affiliates, any Confidential Material acquired by Executive during his
employment by the Company, without the prior written consent of the Company.
Upon termination of his employment with the Company for any reason, Executive
agrees to return to the Company all tangible manifestations of Confidential
Materials and all copies thereof. All programs, ideas, strategies, approaches,
practices or inventions created, developed, obtained or conceived of by
Executive prior to or during the term thereof, and all business opportunities
presented to Executive during the term hereof by reason of his engagement by
the Company, shall be owned by and belong exclusively to the Company, provided
that they are related in any manner to its business or that of any of its
Affiliates. Executive shall (i) promptly disclose all such programs, ideas,
strategies, approaches, practices, inventions or business opportunities to the
3
4
Company and (ii) execute and deliver to the Company, without additional
compensation, such instruments as the Company may require from time to time to
evidence its ownership of any such items.
(b) Executive agrees that during the Period of Employment, and
for one year following the end of such Period of Employment if the termination
of employment results from (i) Executive's discharge by the Company for Cause;
(ii) Executive's written notice to the Company of his decision not to extend
the Period of Employment on any Renewal Date as provided in Section 1 hereof;
or (iii) Executive's decision to terminate this Agreement other than "for good
reason" within the meaning of Section 4(d) hereof, he will not become a
stockholder, director, officer, employee or agent of or consultant to any
corporation (other than an Affiliate), or member of or consultant to any
partnership or other entity, or engage in any business as a sole proprietor or
act as a consultant to any such entity, or otherwise engage, directly or
indirectly, in any enterprise, in each case which competes with any business or
activity engaged in, or known by Executive to be contemplated to be engaged in,
by the Company or any of its Affiliates within ninety miles of any location in
which the Company or any Affiliate does business or in which Executive has
knowledge that the Company or any of its Affiliates contemplates doing
business; provided, however, that competition shall not include the ownership
(solely as an investor and without any other participation in or contact with
the management of the business) of less than two percent of the outstanding
shares of stock of any corporation engaged in any such business, which shares
are regularly traded on a national securities exchange or in an
over-the-counter market. Executive agrees that during the noncompete period
referred to in this Section 5, neither Executive nor any person or enterprise
controlled by Executive will solicit for employment any person employed the
Company or any of its Affiliates at, or at any time within three months prior
to, the time of the solicitation.
(c) Executive agrees that the remedy at law for any breach by
him of this Section 5 will be inadequate and that the Company shall be entitled
to injunctive relief.
6. Miscellaneous.
(a) Notices. Any notice or other communication required or
permitted to be given hereunder shall be made in writing and shall be delivered
in person, by facsimile transmission or mailed by prepaid registered or
certified mail, return receipt requested, addressed to the parties as follows:
If to the Company
Xxxxxx Incorporated
0000 Xxxx Xxxxxx Xxxxxx
Xxxxx Xxxxx
Xxx Xxxxx, Xxxxxx 00000
Attention: General Counsel
Facsimile No.: (000) 000-0000
4
5
If to Executive:
Xx. Xxxxx X. Xxxxxx
c/x Xxxxxx Incorporated
0000 Xxxx Xxxxxx Xxxxxx
Xxxxx Xxxxx
Xxx Xxxxx, Xxxxxx 00000
Facsimile No.: (000) 000-0000
or to such other address as the party shall have furnished in writing in
accordance with this Section. Such notices or communications shall be
effective upon delivery if delivered in person or by facsimile and either upon
actual receipt or three days after mailing, whichever is earlier, if delivered
by mail.
(b) Parties In Interest. This Agreement shall be binding upon
and inure to the benefit of Executive, and it shall be binding upon and inure
to the benefit of the Company and any corporation succeeding to all or
substantially all of the business and assets of the Company' by xxxxxx,
consolidation, purchase of assets or otherwise.
(c) Entire Agreement. This Agreement supersedes any and all
other agreements, either oral or in writing, between the parties hereto with
respect to the employment of Executive by the Company and contains all of the
covenants and agreements between the parties with respect to such employment in
any manner whatsoever. Any modification of this Agreement will be effective
only if it is in writing signed by the party to be charged.
(d) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Nevada, without giving
effect to the choice of law or conflicts of laws rules and laws of such
jurisdiction.
(e) Severability. In the event that any term or condition
contained in this Agreement shall for any reason be held by a court of
competent jurisdiction to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other term
or condition of this Agreement, but this Agreement shall be construed as if
such invalid or illegal or unenforceable term or condition had never been
contained herein. If a court of competent jurisdiction determines by final
judgment that the scope, time period or geographical limitations set forth in
Section 5 are too broad to be capable of enforcement, it may
5
6
modify such covenants and enforce such provisions as to scope, time and
geographical area as it deems equitable.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date first written above.
XXXXXX INCORPORATED
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Xxxxx X. Xxxxxx, President
/s/ Xxxxx X. Xxxxxx
-----------------------------------
XXXXX X. XXXXXX
6
