EXHIBIT 10.3
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into at Rancho Santa
Margarita, California, effective as of July l, 1996, between the L. L.
Xxxxxxxxxxxxx Co., Inc., a California corporation ("Employer") and Xxxxx
Xxxxxxx ("Employee"), with reference to the following:
a. Employee is presently an employee of Employer and has valuable
experience and unique skills in the business currently conducted by
Employer.
b. Employer desires to retain the exclusive services of Employee and
Employee desires to be employed by Employer for the term of this
Agreement.
In consideration of the foregoing and the commitments made herein, Employer
and Employee agree as follows:
1. Employment. During the term of this Agreement, Employee shall be employed
by Employer and shall render such services to, and perform such duties on behalf
of, Employer and shall exercise such authority as the Board of Directors of
Employer shall from time to time provide. The nature and scope of Employee's
responsibilities and duties shall generally be consistent with in character with
those performed by Employee immediately prior to the date hereof for Employer,
or those performed by persons holding the position of Executive Vice President
of similarly sized companies in similar industries in the United States of
America. Employee agrees to apply her best skill, efforts and knowledge and to
devote such time, energies and attention to the business of Employer as shall be
necessary to perform her responsibilities and duties hereunder.
2. Salary. Employee shall begin this employment under this Agreement
at a base salary of $100,000 per year (the "Base Salary") Such amount shalt be
paid periodically in accordance with the normal payroll procedures of Employer
in effect from time to time during the term of this Agreement. The Base Salary
provided above shall be adjusted incrementally on January 1 in the years 1997,
1998, 1999, 2000 and 2001 to reflect any increase in the cost of living. The
positive adjustment shall be in the same proportion as the proportional
differences between the Consumer Price Index for Urban Wage Earners and Clerical
Workers, all items (Los Angeles - Long Beach - Anaheim statistical area)
published by the United States Department of Labor, Bureau of Labor Statistics
(the "CPI") in effect on January 1, 1997, and on each of the adjustment dates,
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respectively, when compared to the base index in effect on January 1, 1996 for
the initial adjustment, and for each subsequent adjustment, the index in effect
on January 1 of such year shall be compared to the index in effect on January 1
of the previous year. Under no circumstances will there be a negative
adjustment to the Employee's Base Salary as a result of cost of living changes.
Should said Bureau discontinue the publication of the CPI, publish the same less
frequently, or alter the same in some other manner, then Employer may adopt a
substitute procedure which reasonably reflects and monitors consumer prices.
3. Management Bonus. In addition to the Base Salary, Employee shall be
entitled to participate in the current Management Bonus Plan in effect from time
as determined by the Board of Directors of Employer and the Compensation
Committee as appointed by the Board. The Bonus payable to Employee, if any,
shall be paid out of a Management Bonus Fund equal to 10% of the profits before
taxes of Employer based upon the audited financial statements of Employer. The
Compensation Committee shall make recommendations to the Board of Directors for
the payment to Employee of such sums out of the Management Bonus Fund as the
Board shall, in its sole discretion, determine or approve, and such sums will be
payable to Employee, in cash, for each fiscal year during the term of this
Agreement, including fiscal years 1997, 1998, 1999, 2000 and 2001; as well as
any fiscal years falling within any extension of this Agreement. In order to
determine the amount of the Management Bonus Fund, a calculation will be made
from the audited fiscal year and financial statements within 45 days of the
availability of such audited statements. If, upon such calculation, it is
determined that sufficient funds exist for the payment of bonus amounts under
the Management Bonus Plan, the Board of Directors shall determine such amounts
as shall be paid to all participants under the Management Bonus Plan, and such
amounts shall be paid within 60 days of the availability the audited fiscal year
and financial statements.
4. Stock Options. In addition to the Salary and Management Fee provided for
hereunder, Employee shall be entitled to receive Stock Options for the purchase
of shares of the Common Stock of Employer during the term of this Agreement as
determined by the Board of Directors of Employer and the Compensation Committee
as appointed by the Board. The Stock Options will be provided pursuant to the
terms of a separate qualified stock option plan adopted by Employer.
5. Benefits. Employee shall be entitled to participate in all medical,
dental, state disability insurance, and related welfare benefit plans as well as
any qualified profit
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sharing and other qualified employee benefit plans generally applicable to
employees of Employer, subject in each case to all applicable provisions of the
plans.
6. Additional Benefits and Perquisites. Employee shall be entitled to 15 days
of paid vacation per year in addition to all normal public holidays available to
all of Employer's employees.
7. Term. The term of this Agreement and the employment of Employee hereunder
shall begin as of July l, 1996 and shall continue until (i) June 30, 2001, (ii)
the end of the Extension Option period if exercised by Employer (as defined
below) or (iii) the earlier termination of Employee at the election of either
Employer for Cause (as defined below) or Employee for other than Good Reason (as
defined below).
Employer shall have a one-time right to extend this agreement for a period of
five additional years from July l, 2001 upon written notice to employee not
later than six months prior to the expiration of the term of this Agreement (the
"Extension Option"). During the term of the Extension Option, the terms and
conditions of this Agreement shall remain in full force and effect.
In the event of termination of Employee's employment by Employer for Cause
(as defined below) or by Employee for any reason other than Good Reason (as
defined below) Employee shall have no further rights to payments or benefits
under this Agreement. For the purpose of this Agreement, Cause for termination
shall exist whenever (i) Employee has been convicted of a felony, (ii) Employee
has engaged in gross misconduct or a dereliction of her duties, (iii) Employee
is otherwise in breach of any of the material provisions of this Agreement, or
(iv) Employee is unable to discharge her duties as a result of death or physical
or mental disability. Good Reason for termination by Employee shall exist
whenever (i) a voluntary or involuntary petition under the Bankruptcy Code has
been filed by or against Employer or Employer is otherwise insolvent, or (ii)
Employer is in breach of any of the material provisions of this Agreement.
8. Trade Secrets and Confidential Information. The following provisions
further set forth Employee's obligations to safeguard Trade Secrets and
Confidential Information of Employer obtained in the course and scope of her
employment with Employer, whether or not during the term of this Agreement.
8.1. The term "Trade Secret" is defined as the whole or any portion or
phrase of any scientific or technical or business information particular to
Employer, including, but not limited to, any design,
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process, procedure, business procedure or system, formula, improvement, or
invention that (1) derives independent economic value, actual or potential,
from not being generally known to the public or to other persons who can
obtain economic value from its disclosure or use, and (2) is the subject of
Employer's reasonable efforts to maintain its secrecy. In addition to
information belonging to Employer, information furnished to Employer by other
parties can be a Trade Secret. Employee acknowledges and accepts the
obligation to apply the definition of Trade Secrets in this Agreement to
information coming to Employee's attention, and to safeguard such information
from further disclosure except to perform her duties hereunder.
8.2. The term "Confidential Information" is defined as all items, materials
and information (whether or not reduced to writing and whether or not
patentable or copyrightable) which belong to Employer and which reflect,
consist of or refer to:
(a) The names of those customers and vendors of Employer which are not
generally known in the industry;
(b) Information compiled, collected or developed by Employer reflecting
identities and characteristics of any customers of Employer or customer
representatives including product or service preferences or requirements, cost
or price information for goods or services offered or sold, credit terms and
credit performance, actual or likely order cycles, the nature of supplies
delivered or services performed, and research or development plans or
activities;
(c) Information compiled, collected, or developed by Employer reflecting
identities and characteristics of any vendors or suppliers of Employer or
vendor or supplier representatives, including cost or price information for
goods or services offered or purchased, credit terms and credit performance,
product quality and reliability, delivery terms, and prior, current or future
research or development plans or activities;
(d) The prices, discounts, selling techniques and distribution methods used
by Employer;
(e) Personal and private information about any of Employer's employees,
employees of any customer or
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supplier, or any artist or spokesperson; or,
(f) Business plans, strategies, goals or objectives of Employer;
(g) Any other confidential or proprietary information obtained directly
or indirectly while performing Employee's duties on behalf of Employer.
8.3. The term "Confidential Information" includes information which may
also be a Trade Secret, but does not include anything described above
which is now generally known by parties other than Employer, its
affiliates and employees, or become generally known, through no act or
failure to act of Employee.
8.4. Employee agrees to hold all such Confidential Information in
confidence and to not disclose Confidential Information to any person not
employed by Employer.
8.5. Employee will, immediately upon the termination of this Agreement,
surrender to Employer any and all business records and materials which may
have been received from Employer during the term of this Agreement, or
which pertain to Employer's business, and all copies thereof, however made
or obtained.
8.6. Employee acknowledges that the foregoing provisions of this
Paragraph 8 are necessary to protect Employer's Trade Secrets and
Confidential Information.
9. Ownership of Programs and Documents. All work product produced by
Employee in performing Services for Employer, including without limitation,
designs, programs, product lines, program descriptions of any type, reports and
business records shall be and shall remain the property of Employer. Employee
agrees to execute such documents, including assignment of copyrights, as may be
provided from time to time by counsel for Employer in order to perfect
Employer's rights in such work product.
10. Place of Employment. During the term of this Agreement , Employer
shall maintain its principal executive offices in the County of Orange, and the
Employee's place of employment shall remain in the County of Orange, subject to
reasonable business travel. The parties hereto may amend the provisions of this
section by mutual agreement.
11. Withholding Taxes. A11 payments by Employer to Employee hereunder
shall be subject to reduction in the amount of
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any withholding taxes.
12. Conflicts of Interest. During the term of this Agreement, Employee
will not, directly or indirectly, either for herself or for any other person,
partnership, corporation or company participate in any enterprise operating
where Employer conducts its business or sells its products or services which
involves the business in which Employer is engaged at any time during Employee's
employment including, but not limited to, the marketing, sale, distribution,
processing or manufacturing of products within the same industries as Employer's
products. Employee acknowledges that this covenant is reasonable with respect to
its duration, geographical area and scope.
In performing her obligations for Employer, Employee shall act in the best
interest of, and with complete loyalty to, Employer and shall not exercise her
duties or responsibilities in her own self-interest, at the expense of the best
interest of Employer.
13. General Provisions
13.1. Complete Agreement. This Agreement embodies the complete
agreement and understanding among the parties and supersedes and preempts
any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter
hereof in any way.
13.2. Governing Law. This Agreement shall be governed by, construed and
enforced in accordance with the internal laws of the State of California.
13.3. Waiver of Breach. Any waiver by either party of a breach of the
terms and conditions of this Agreement shall not be considered as a waiver
of any subsequent breach of the same or any other term and condition
hereof.
13.4. Amendment and Waivers. Any provision of this Agreement may be
amended or waived only with the prior written consent of the Employer and
Employee.
13.5. Assignment. This Agreement is intended to bind and inure to the
benefit of and be enforceable by the parties hereto, and their respective
successors and assigns, except that any purported assignment by Employee
of any of her rights or obligations hereunder shall be void.
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13.6. Severability. In event that any provision or any part of any
provision of this Agreement is held to be illegal, invalid or
unenforceable, such illegality, invalidity or unenforceability shall not
affect the validity or enforceability of any other provision or part
hereof.
SIGNATURES APPEAR ON THE FOLLOWING PAGE
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above mentioned.
_________________________________
Xxxxx Xxxxxxx
The L. L. Xxxxxxxxxxxxx Co., Inc.
By:______________________________
Title: __________________________
Attest: _________________________
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