EXHIBIT 10.34
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") executed on July 25, 2000 and effective
as of the 16th day of March, 2000, by and between XXX XXXXXX an individual
("Employee"), and XXXXXXXXX.XXX, INC., a Nevada corporation (the "Company"),
with reference to the following facts:
Employee is an individual possessing unique management and executive talents of
value to the Company.
The Company desires to employ XX. XXXXXX as its President and Employee desires
to accept such employment, all on the terms and conditions set forth in this
Agreements.
AGREEMENT
In consideration of the foregoing recitals and of the covenants and agreements
herein, the parties agree as follows:
1. The Company hereby engages Employee to perform the duties and render the
services set forth in Sections 2 for a period commencing on March 16, 2000
(the "Start Date") and ending on the third anniversary of such date, (the
"Employment Period") and Employee hereby accepts said employment and agrees
to perform such services during the Employment Period. Unless this Agreement
is terminated pursuant to Section 4 or unless either party gives the other
written notice to the contrary at least six (6) months prior to an
expiration date, this Agreement, together with any changes which have
occurred during the employment period then expiring, shall automatically
renew at the end of an Employment Period for an additional one (1) year
employment period.
2. DUTIES
2.1. PRESIDENT: Performing executive work of major importance to the
Company, with the primary focus being the profitable management and
profitable growth of the Company as a whole. During the Employment
Period, Employee shall devote his full business time and attention to
performing his duties as President of the Company. He shall 1) switch
the focus of the Company from distribution and low margin reselling
of products to Professional Technical Services; 2) implement a X0X,
X0X and B2B2C e-commerce solutions and position the Company as an
industry leader in this regard; 3) reduce operating costs; 4) ensure
and maximize overall profitability; 5) implement our growth strategy
through strategic acquisitions, identifying redundancies,
implementing economies of scale and leverage mutual strengths; 6)
strengthen Vendor relations; 7) help in building customer's loyalty
and retention; 8) help in maintaining employees' retention,
confidence and talent recruiting; 9) increase the investment
community's confidence in our organization and maximizing the value
of our company to our investors and the community; 10) assist the CEO
in formulating and administering Company policies;
11) review and analyze the activities and operations of the Company
to define and to track their progress toward achieving their goals
and objectives; 12) carry out supervisory responsibilities in
accordance with Company policies, and applicable laws; 13) interview,
hire and train executive managers and staff in coordination with the
CEO; 14) plan, assign and direct the work of executive managers and
staff, appraise their performance, and reward and discipline them,
and address their complaints in his functional areas; 15) submit all
required documentation in a timely and accurate manner. The above
description of duties is non-exhaustive. Employee shall work out of
the Company's headquarters location and shall report to Company's
Chief Executive Officer. Employee recognizes that the Board of
Directors of the Company may be required under its fiduciary duty to
the Company and to its stockholders to eliminate such position or to
appoint a different person as such officer of this Company. The
parties agree however, that any such elimination or replacement of
Employee by the Company, other than pursuant to Section 4.2.1 or
4.3.2. hereof, shall constitute a termination of Employee's
employment hereunder by the Company without cause.
2.2. CHANGE OF CONTROL. If the Company or a significant portion thereof is
sold or merged or undergoes a change of control transaction (as
defined in the Company's Stock Option Agreement, a copy of which is
attached hereto as Exhibit A), this Agreement shall survive
consummation of such transaction and shall continue in effect for the
remainder of the Employment Period, but Employee shall serve as an
officer of the entity which succeeds to the business or a substantial
portion of the business of the Company, and is such case shall bear a
suitable title and perform the duties and functions of such office of
such publicly traded or privately held successor, consistent with
those customarily performed by an officer of such a unit, division or
entity comparable to the then business of the Company, unit, division
or entity. Employee may be required to accept greater or lesser
responsibility by any successor, and agrees to fully cooperate and
assist in any resulting transition for up to the remainder of the
Employment Period; and any adjustments required of Employee to
complete the transition to any successor, unit, division or entity,
shall not violate this Agreement so long as "good reason" does not
arise under Sections 4.6.2(ii), (iii) or (v). This Agreement shall
apply to the automatic modification in duties resulting from such
transaction as set forth above, however, notwithstanding the
foregoing, Employee any exercise any "good reason" rights he may have
under Section 4.6.2(iv).
2.3. CONFLICT OF INTEREST. Employee agrees that during the term of
employment Employee will not, directly or indirectly, compete with
the Company in any way, or usurp an Company opportunity in any way,
nor will employee act as an officer, director, employee, consultant,
shareholder, lender or agent of any entity which is engaged in any
business in which the Company is now engaged or in which the Company
becomes engaged during the term of employment. The Company is now
engaged in the business of reselling computer hardware, software and
peripherals, primarily to corporate and governmental accounts both
through traditional means and via the internet, and in the business
of selling computer systems consulting, help and maintenance
services, also primarily to corporate, education and governmental
accounts. The Company is not now engaged in the business of
manufacturing computers or their primary components. The Company may
become engaged in the business of final assembly of computers and may
become engaged in the business of catalog or mail-order sales of
computer hardware, software and peripherals. Employee also agrees
that during the term of employment, Employee will not, directly or
indirectly, whether on his own behalf or on behalf of another, offer
employment or a consulting assignment to any Company employee, nor
will Employee, nor Employee's employer, directly or indirectly,
whether on his own behalf or on behalf of another, actually employ or
grant a consulting assignment to any Company employee. Employee also
agrees that during the term of employment Employee will not, directly
or indirectly, whether on his own behalf or on behalf of another,
contact or solicit any of Company's clients to do business with any
entity other than Company.
2.4. During the term of employment with the Company, Employee may have
access to and become acquainted with information of a confidential,
proprietary or secret nature that is or may be either applicable or
related to present or future business of the Company, its research
and development, or the business of its customers. For example, trade
secret information includes, but is not limited to devices, secret
inventions, processes and compilations of information, records,
specifications and information concerning customers or vendors.
Employees shall not disclose any of the above-mentioned trade
secrets, directly or indirectly or use them in any way, either during
the term of this agreement of at any time thereafter, except as
required in the course of employment with the Company.
2.5. Employee agrees that all customers of the Company, for which the
Employee has or will provide services during the Employee's
employment by the Company, and all prospective customers from whom
the Employee has solicited business while in the employ of the
Company, shall be solely the customers of the Company.
2.6. Employee agrees that, for a period of twelve (12) months immediately
following the termination of employment with the Company, Employee
shall neither directly nor indirectly solicit business as to products
or services competitive with those of the Company, from any of the
Company's customers with whom the Employee had contact within twelve
(12) months prior to the Employee's termination.
2.7. Employee further agrees that for a period of twelve (12) months after
termination of employment, Employee will not directly or indirectly
induce or solicit any of Company's employees to leave their
employment with the Company. This non-solicitation clause shall only
apply to those employees employed by the Corporation at the time of
such potential solicition.
3. COMPENSATION. As compensation for his services to be performed hereunder,
the Company shall provide Employee with the following compensation and
benefits:
3.1 BASE SALARY. Employee's base salary shall be $275,000.00 per year,
subject to an annual increase (if any) in the sole discretion of the
Board, payable in accordance with the Company's payroll practices as
in effect from time to time, and subject to such withholding as is
required by law.
3.2 BONUSES.
3.2.1 Employee shall receive a cash bonus of 10% of the net earnings
of the organization as such net earnings are defined by the
company's auditors at the end of each calendar year, including
the year 2000. This provision will be renegotiated once the
company's net earning exceed $5 Million. However, in the event
of such renegotiation occur, the amount of such bonus shall
not be less than $500,000.
3.2.1.1 If any bonus is declared or paid, it shall be subject
to such withholding as is required by law.
3.3. BENEFITS.
3.3.1. VACATION. Employee shall be entitled to vacation time as been
accrued each pay period since his date of first hire, less any
vacation taken in such amounts and under such conditions as
normally afforded to the Company's executives. In the event
Employee does not use such vacation, he shall receive, upon
termination of the Employment Period, vacation pay for all
unused vacation calculated as having accrued at the applicable
base salary for each relevant period of his employment.
However, Employee shall endeavor to take vacation time in the
year in which it is allocated to him.
3.3.2. BUSINESS EXPENSES. The Company shall reimburse Employee for
reasonable business expenses incurred by Employee in the
course of performing services for the company and in
compliance with procedures established from time to time by
the Company. This reimbursement shall occur on a monthly
basis, and is subject to Employee providing original
documentation in support of all business expenses
reimbursement sought.
3.3.3. LIFE INSURANCE. The Company shall assume the premium cost for
policies for $2 million worth of term life insurance that
Employee had in effect during his employment with Merisel,
Inc.
3.3.3.1. The cost of such insurance premium payments shall be
subject to taxation as required by law.
3.3.4. STOCK OPTIONS.
3.3.4.1. Company shall grant Employee 592,592 incentive stock
options for the Company's common stock on his Start
Date that shall vest over a four-year period. The
exercise price of such options shall be $1.6875 per
option, the fair market value of the company's stock
(as determined by the closing bid price) on July 18,
2000, the date this contract was approved by the
Company's board of directors.
3.3.4.2. Company shall grant to Employee 50,000 incentive
stock options for the common stock of xXxxxxx.xxx,
Inc. as soon as possible after his start date for
consulting work to be preformed. Such options shall
vest over a four-year period. The exercise price of
such options shall be $2.50 per option, the fair
market value of uMember's stock on the date that
negotiations for employment were first entered into
with Employee.
3.3.4.3. In addition, Company shall grant to Employee in the
normal course of business incentive stock options on
the same terms as granted to its senior executives
(excluding the Company's Chief Executive Officer).
3.3.4.4. The issuance of options is subject to approval by the
Company's (or in the case of xXxxxxx.xxx,
xXxxxxx.xxx's) Board of Director's Compensation
Committee.
3.3.5. OTHER BENEFITS. Company shall provide Employee with employment
benefits as 401(k) participation, automobile allowance,
medical insurance and disability insurance, on the terms and
to the extent generally provided by the Company to its senior
executive employees. The amount of automobile allowance
provided by the Company to Employees shall be $500.00 per
month.
3.4 OTHER PERSONS. The parties understand that other officers and
employees may be afforded payments and benefits and employment
agreements which differ from those of Employee in this agreement; but
Employee's compensation and benefits shall be governed solely by the
terms of this Agreement, which shall supersede all prior
understandings or agreements between the parties concerning terms and
benefits of employment of Employee with the Company. Other officers
or employees shall not become entitled to any benefits under this
Agreement.
4. TERMINATION.
4.1. TERMINATION BY REASON OF PERMANENT DISABILITY. The Employment Period
shall terminate upon the permanent disability (as defined in Section
4.6.3 below) of Employee.
4.2. TERMINATION BY COMPANY
4.2.1. The Company may terminate the Employment Period for "cause" by
seven (7) days advance written notice to Employee. However,
no such advance written notice shall be given if the Company
determines that the Company or a person would suffer
irreparable harm should the Employee be given notice.
4.2.1.1. For such termination for "cause", the employee shall
have a ninety (90) day period from the date of the
written notice to cure such "cause". However, this
cure period shall not apply to termination's wherein
the Company's Board of Directors determines that the
Company would suffer irreparable harm should the
Employee be given the right to cure.
4.2.2. The Company may terminate the Employment Period for any other
reason, with cause other than those described in Section 4.6.1
or without cause, by thirty (30) days advance written notice.
4.3 TERMINATION BY EMPLOYEE
4.3.1. Employee may terminate the Employment Period for "good reason"
(as defined in section 4.6.2 below) at any time by written
notice to the company.
4.3.2. Employee may terminate the Employment Period for any other
reason by thirty (30) days advance written notice to the
Company.
4.4 SEVERANCE PAY
4.4.1 In the event the Employment Period is terminated by the
Company for any reason other than pursuant to Section 4.2.1 or
Section 4.3.2 hereof or if the Employment Period is terminated
because of a permanent disability of Employee pursuant to
Section 4.1, upon the effectiveness of any such termination,
the Company shall be obligated to pay to the employee (or his
executors, administrators or assigns, as the case may be) all
unpaid salary, benefits and bonuses (if any) accrued through
the date of effectiveness of such termination and, in
addition, a lump sum cash severance payment equal to eighteen
(18) month's total base salary at the rates set forth herein,
and such other benefits as may be required by law.
4.4.2 In addition, all stock options and general stock appreciation
rights granted by the Company to Employee which otherwise
would have vested within eighteen (18) months following the
Date of Termination for death or disability shall accelerate
and become fully vested and exercisable on the Date of
Termination for death or disability, and shall remain
exercisable for a period ending on the normal expiration date
specified in the option agreements.
4.4.3. In the event the Employment period is terminated by the
Company pursuant to Section 4.2.1 hereof, or the Employment
Period is
terminated by Employee pursuant to Section 4.3.2 hereof, the
Company shall have no obligation to pay any severance pay to
Employee. The Company shall, however, be obligated to pay to
Employee (or executors, administrators or assigns, as the case
may be) all unpaid salary, benefits and bonuses (if any)
accrued through the date of termination and shall provide such
other benefits as may be required by law.
4.5 TERMINATION BENEFITS. In the event of termination of the employment
Period pursuant to Section 4.2 or 4.3.1, the Company shall provide
Employee, Employee's spouse or domestic partner and children, if any,
with such normal medical insurance, on the terms and to the extent
generally provided by the Company to its executive employees on the
level comparable to Employee, for a period of eighteen (18) months
from the date of the termination of the Employment Period.
4.6 CERTAIN DEFINITIONS. For purposes of this Agreement:
4.6.1. The term "cause" shall mean those acts identified in Section
2924 of the California Labor Code, as that section exists on
October 1, 1997, to wit, any willful breach of duty by the
Employee in the course of his employment, or in case of his
habitual neglect of his duty or continued incapacity to
perform it.
4.6.2. The term "good reason" shall mean the occurrence of one or
more of the following events without Employee's express
written consent (I) removal of Employee from the position and
responsibilities as set forth under Section 2 above; (ii) a
material reduction by the company in the kind or level of
employee benefits to which Employee is entitled immediately
prior to such reduction with the result that Employee's
overall benefit package is significantly reduced; (iii) the
relocation of Employee to a facility or a location outside of
California; (iv) a change in the control of the Company, (v) a
material reduction in the Employees responsibilities to the
Company; or (vi) any material breach by the Company of any
material provision of this Agreement which continues uncured
for thirty (30) days following written notice thereof.
4.6.3. The term "permanent disability" shall mean Employee's
incapacity due to physical or mental illness, which results in
Employee being absent from the performance of his duties with
the Company on a full-time basis for a period of six (6)
consecutive months. The existence or cessation of a physical
or mental illness which renders Employees absent from the
performance of his duties on a full-time basis shall, if
disputed by the Company or Employee, be conclusively
determined by written opinions rendered by two qualified
physicians, one selected by Employee and one selected by the
Company. During the period of absence, but not beyond the
expiration of the Employment Period, Employee shall be deemed
to be on disability leave of absence, with his compensation
paid in full. During the period of such disability leave of
absence, the Board of Directors may designate an interim
officer with the same title and responsibilities of Employee
on such terms, as it deems proper.
4.7. EMPLOYEE BENEFIT PLANS
Any employee benefit plans in which employee may participate pursuant
to the terms of this Agreement shall be governed solely by the terms
of the underlying plan documents and by applicable law, and nothing
in this Agreement shall impair the Company's right to amend, modify,
replace, and terminate any and all such plans in its sole discretion
as provided by law. This Agreement is for the sole benefit of
Employee and the Company, and is not intended to create an employee
benefit plan or to modify the terms of any of the Company's existing
plans.
5. MISCELLANEOUS
5.1 ARBITRATION/GOVERNING LAW. To the fullest extent permitted bylaw, any
dispute, or claim or controversy of any kind (including but not
limited to tort, contract, and statue) arising under, in connection
with, or relating to this Agreement or Employee's employment, shall
be resolved exclusively by binding arbitration in Los Angeles County,
California in accordance with the commercial rules of the American
Arbitration Association then in effect. The Company and Employees
agree to waive any objection to personal jurisdiction or venue in any
forum located in Los Angeles County California. No claim, lawsuit or
action of any kind may be filed by either party to this Agreement
except to compel arbitration or to enforce an arbitration award;
arbitration is the exclusive dispute resolution mechanism between the
parties hereto. Judgment may be entered on the arbitrator's award in
any court having Jurisdiction. The validity; interpretation, effect
and enforcement of this Agreement shall be governed by the laws of
the State of California.
5.2 ASSIGNMENT. This agreement shall inure to the benefit of and shall be
binding upon the successors and assigns shall specifically assume
this Agreement. Since this agreement is based upon the unique
abilities of, and the Company's personal confidence in Employee,
Employee shall have no right to assign this Agreement or any of his
rights hereunder without the prior written consent of the Company.
5.3 SEVERABILITY. If any provision of this Agreement shall be found
invalid, such findings shall not effect the validity of the other
provisions hereof and the invalid provisions shall be deemed to have
been severed herefrom.
5.4 WAIVER OF BREACH. The waiver by any party of the breach of any
provision of this Agreement by the other party or the failure of any
party to exercise any right granted to it hereunder shall not
operator be construed as the waiver of any subsequent breach by such
other party nor the waiver of the right to exercise any such right.
5.5 ENTIRE AGREEMENT. This instrument, together with the plans referred
to in Section 5, contains the entire agreement of the parties. It may
not be changed orally but only by an agreement in writing signed by
the parties.
5.6 NOTICES. Any notice required or permitted to be given hereunder shall
be in writing and may be personally served or sent by United States
mail, and shall be deemed to have been given when personally served
or two days after having been deposited in the United States mail,
registered or certified mail, return receipt requested, with
first-class postage prepaid and properly addressed as follows. For
the purpose hereof, the addresses of the parties hereto (until notice
of a change thereof is given as provided in this Section 5.6) shall
be as follows:
If to Employee:
Xxx Xxxxxx
00 Xxxx Xxxx
Xxxxxx Xxxxx Xxxxxx, XX 00000
If to the Company:
Xxxxxxxxx.xxx, Inc.
0000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xx Xxxxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
5.7. HEADINGS. The paragraph and subparagraph headings herein are for the
convenience only and shall not affect the construction hereof.
5.8. FURTHER ASSURANCES. Each of the parties hereto shall, from time to
time, and without charge to the other parties, take such additional
actions and execute, deliver and file such additional instruments as
may be reasonably required to give effect to the transactions
contemplated hereby.
5.9. ATTORNEYS' FEES. In the event any party hereto commences arbitration
or legal action in connection with this Agreement, the prevailing
party shall be entitled to its attorneys' fees, costs and expenses
reasonably incurred in such action, and the amount thereof shall be
included in any judgment or award granted under Section 5.1.
5.10. COUNTERPARTS. This Agreement may be executed simultaneously in any
number of counterparts, each of which shall be deemed an original but
all, which together shall constitute one and the same instrument.
5.11. SEPARATE COUNSEL. The Company has been represented by counsel in the
negotiation and execution of this Agreement and has relied on such
counsel with respect to any matter relating hereto. The Employee has
been invited to have his own counsel review and negotiate this
Agreement and Employee has either obtained has either obtained his
own counsel or has elected not to obtain counsel.
5.12. INDEMNIFICATION. The Company shall provide to the Employee insurance
coverage under its Director and Officer's Insurance and General
Liability, and Employment Practices policies to the same extent as it
provides to all other similar employees of the Employee's title and
position.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands as of the
day and year first above written.
"EMPLOYEE" "COMPANY"
XXXXXXXXX.XXX, INC.
a Nevada corporation
/s/ Xxx Xxxxxx By: /s/ Xxx Xxxxxxxx
---------------- ------------------------------------
Xxx Xxxxxxxx
General Counsel
