EXHIBIT 2.5
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
February 18, 1998, between and among AD ART DISPLAYS, INC., a Florida
corporation (the "Company"), LA-MAN CORPORATION, a Nevada corporation ("La-
Man"), and XXXXX X. XXXX ("Employee").
RECITALS:
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The Employee presently serves as the President of the Company, a wholly-
owned subsidiary of La-Man;
The Company desires that the Employee continue to serve in an employment
capacity as the President of the Company, and the Employee desires to continue
to serve in such employment capacity, pursuant to a new employment agreement;
NOW, THEREFORE, the Company and the Employee, in consideration of the mutual
covenants herein contained and intending to be legally bound hereby, agree as
follows:
1. DEFINITIONS. In addition to other terms defined herein, for purposes of
this Agreement, the following terms shall have the meanings specified in this
Section unless the context clearly requires otherwise:
1.01 "AFFILIATE" and "ASSOCIATE" shall have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
1.02 "BASE SALARY" shall mean the total annual cash salary, excluding
bonuses and incentive compensation, earned by the Employee in all capacities
with the Company.
1.03 "CAUSE" shall mean: (a) the repeated failure of the Employee to observe
or perform any of the material terms or provisions of this Agreement, which
failure continues after written notice to the Employee and remains uncured for a
period of 10 days following such written notice, except that there shall be no
cure period with respect to any violation of Section 7 or Section 8 hereof; (b)
misappropriation of funds, or willful dishonesty towards, fraud upon, or willful
misconduct of a material nature to the injury of, the Company or its Affiliates;
(c) commission of a felony or other crime involving moral turpitude; or (d)
habitual insobriety or abuse of controlled substances.
1.04 "NOTICE OF TERMINATION" means a written notice which (a) indicates the
specific termination provision in this Agreement relied upon, (b) briefly
summarizes the facts and circumstances deemed to provide a basis for termination
of the Employee's employment under the provision so indicated and (c) specifies
the Termination Date. The Termination Date so specified shall be (i) a date not
less than 60 days from the delivery of such Notice of Termination to the
Employee (in the case of termination by the Company other than for Cause), (ii)
a date not more than 30 days after the delivery of such Notice of Termination to
the Company (in the case of termination by the Employee) or (iii) the date of
receipt of such Notice of Termination by the Employee (in the case of
termination by the Company for Cause).
1.05 "PERSON" shall mean any individual, firm, corporation, partnership or
other entity.
1.06 "TERMINATION DATE" shall mean the date required to be specified in the
Notice of Termination, or the last day of the Employment Term (as hereinafter
defined) if the employment of the Employee by the Company does not continue
thereafter.
1.07 "TERMINATION OF EMPLOYMENT" shall mean the termination of the
Employee's actual employment relationship with the Company whether pursuant to
Section 10 hereof or upon expiration of the Employment Term.
2. EMPLOYMENT TERM.
2.01 EMPLOYMENT TERM. The employment term under this Agreement shall
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commence as of the date hereof (the "Effective Date"), and shall continue until
February 18, 1999. Thereafter, such employment term shall be renewed for
successive one-year terms unless and until either the Company or the Employee
elects not to renew by delivery of written notice to the other not later than 90
days prior to the expiration of the initial one-year term or any annual renewal
term (the "Employment Term"). Notwithstanding any provisions to the contrary
contained herein, nothing in this Agreement shall be deemed to create any
obligation on the part of either party to renew this Agreement at any time.
2.02 TERMINATION. The Employment Term may be terminated only in accordance
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with Section 10 hereof.
3. DUTIES AND RESPONSIBILITIES; ELECTIONS.
3.01 DUTIES AND RESPONSIBILITIES. Unless modified by mutual written
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consent, the Employee shall perform such services and discharge such duties and
responsibilities of a senior executive nature as may be prescribed from time to
time by the Board of Directors of the Company ("Board") or such other persons as
may be designated by the Board; provided,
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however, that the services performed by, and the duties and responsibilities of,
the Employee shall be consistent with those usually associated with the position
of President. The Employee shall serve in the capacities, titles and positions
with respect to the Company, and perform all duties and accept all
responsibilities incidental to any such capacities, titles and positions, as the
Board may reasonably direct in conformity with the foregoing sentence.
3.02 ELECTIONS. During the Employment Term, the Company shall use its best
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efforts to cause the Employee to be nominated and elected and to continue to
serve as President of the Company and to be elected to the Board of Directors of
La-Man.
4. EXTENT OF SERVICE. The Employee shall devote his best efforts to the
business of the Company and shall devote his full time, attention and energy to
the performance of his services and the discharge of his duties and
responsibilities hereunder. During the existence of the employment relationship
hereunder, the Employee shall not work, on either a part-time, full-time or
independent contracting basis, for any other business or enterprise without the
Company's prior written consent.
5. COMPENSATION.
5.01 ANNUAL SALARY. For all the services to be performed by the Employee
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hereunder, the Company shall pay the Employee a Base Salary at the annual rate
of $175,000, less withholding required by law. Such Base Salary shall be
payable in installments at such times as the Company customarily pays its other
senior executives (but in any event not less frequently than monthly).
5.02 INCENTIVE COMPENSATION. In addition to his annual Base Salary, the
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Employee shall be designated a "Participant" under, and shall participate in,
the La-Man Corporation Senior Management Incentive Plan, commencing with the
fiscal year ending June 30, 2000. For the fiscal year ending June 30, 1999, the
Employee shall be entitled to incentive compensation in an amount equal to 5% of
the Company's annual net income in excess of $2,400,000 for such fiscal year, as
determined in accordance with generally accepted accounting principles
consistently applied; provided, however, that such 1999 incentive compensation
shall not exceed 50% of Employee's Base Salary. In the event the Employee is
employed hereunder for any partial fiscal year, any incentive compensation
payable under this Section 5.02 shall be prorated accordingly.
6. BUSINESS EXPENSES; OTHER BENEFITS.
6.01 COMPANY AUTO. At Employee's option, the Company will supply the
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Employee with a leased Lincoln Town Car or equivalent vehicle, or a $600 per
month auto expense allowance.
6.02 BUSINESS EXPENSES. The Company will reimburse the Employee for Company
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auto operating expenses and for all other ordinary, necessary and reasonable
out-of-pocket
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business expenses incurred by Employee in connection with his performance of
services hereunder in accordance with the Company's expense approval procedures
in effect from time to time.
6.03 OTHER BENEFITS. The Company will provide the Employee with such
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individual and dependant group medical insurance coverage, if any, and other
employment benefits as are or may in the future be provided by La-Man to its
officer employees in accordance with La-Man's policies.
7. CONFIDENTIAL INFORMATION. The Employee acknowledges that, by reason of his
employment by and service to the Company, he will have access to confidential
information of the Company and its Affiliates, including, without limitation,
information and knowledge pertaining to products, developments, improvements,
methods of operation, sales and profit figures, customer and client lists and
relationships between the Company and its Affiliates and their agents,
customers, clients, suppliers and others who have business dealings with them
(collectively, "Confidential Information"). The Employee acknowledges that such
Confidential Information is a valuable and unique asset of the Company and its
Affiliates and, in consideration of the benefits specified in this Agreement,
covenants that, both during and after the termination of the employment
relationship between the parties hereto, he will not use any Confidential
Information or disclose any Confidential Information to any Person (except as
his duties as an employee of the Company or any Affiliate may require) without
the prior written authorization of the Board. The obligation of confidentiality
imposed by this Section shall not apply to information which becomes generally
known in the industry through no act of the Employee in breach of this Agreement
or to information which the Employee is legally compelled to disclose pursuant
to subpoena, civil investigative demand or similar process (in such event, the
Employee promptly shall provide the Company with written notice thereof in order
to allow the Company to seek a protective order or other appropriate remedy).
8. NON-COMPETITION. The Employee acknowledges that he will acquire specialized
knowledge and experience in the business of the Company and its Affiliates and
that if his knowledge, experience, reputation or contacts are used by or on
behalf of the Employee to compete with the Company or its Affiliates or to
solicit employees or agents away from the Company or its Affiliates, serious
harm to the Company and its Affiliates may result. In consideration of the
benefits specified in this Agreement, the Employee agrees that during the
Employee's employment by the Company and for a period of one (1) year
thereafter, subject to the performance by the Company of its obligations under
Section 10 hereof upon a Termination of Employment (whether prior to, or as the
result of, expiration of the Employment Term), the Employee shall not, unless
acting pursuant hereto or with the prior written consent of the Board, directly
or indirectly, render any services of a business, commercial, or professional
nature to any Person, whether for compensation or otherwise, within the United
States or elsewhere in competition with the Company or its Affiliates or which
is in conflict with the Company's or its Affiliates' interests, or solicit for
employment or in any other fashion hire any of the employees or agents of the
Company or its Affiliates or, with respect to the two (2) year period referred
to above, any person who was an employee or agent of the Company or its
Affiliates
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at any time within six months prior to the termination of employment hereunder;
provided, however, that this provision shall terminate in the event the
employment of the Employee is terminated by the Company in violation of Section
10 hereof. For the purpose of this Section 8, the phrases "in competition with"
and "in conflict with" shall not be deemed to apply to any Person whose
activities do not involve similar lines of business now or hereafter undertaken
by the Company or any Affiliate. In the event that the provisions of this
Section should ever be adjudicated to exceed the time, geographic, service or
product limitations permitted by applicable law in any jurisdiction, then such
provisions shall be deemed reformed in such jurisdiction to the maximum time,
geographic, service or product limitations permitted by applicable law.
9. EQUITABLE RELIEF. The Employee acknowledges that the restrictions contained
in Sections 7 and 8 hereof are, in view of the nature of the business of the
Company and its Affiliates, reasonable and necessary to protect the legitimate
interests of the Company, and that any violation of any provisions of those
Sections will result in irreparable injury to the Company. The Employee also
acknowledges that the Company shall be entitled to temporary and permanent
injunctive relief, without the necessity of proving actual damages, and to an
equitable accounting of all earnings, profits and other benefits arising from
any such violation, which rights shall be cumulative and in addition to any
other rights or remedies to which the Company may be entitled. In the event of
any such violation, the Company shall be entitled to commence an action for
temporary and permanent injunctive relief and other equitable relief in any
court of competent jurisdiction and Employee further irrevocably submits to the
jurisdiction of any California court or Federal court sitting in the Eastern
District of California over any suit, action or proceeding arising out of or
relating to this Section 9. The Employee hereby waives, to the fullest extent
permitted by law, any objection that he may now or hereafter have to such
jurisdiction or to the venue of any such suit, action or proceeding brought in
such a court and any claim that such suit, action or proceeding has been brought
in any inconvenient forum. Effective service of process may be made upon the
Employee by mail under the notice provisions contained in Section 13 hereof.
10. TERMINATION.
10.01 TERMINATION WITHOUT CAUSE. The Company shall have the right to
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terminate the employment of the Employee prior to expiration of the Employment
Term only as follows:
(a) As the result of partial or total disability as provided in
Section 10.02 hereof;
(b) Upon death of the Employee as provided in Section 10.03 hereof;
(c) For Cause as provided in Section 10.04 hereof;
(d) Upon breach by the Employee of his obligations under Section 7 or
Section 8 hereof; or
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(e) For any other, or for no, reason, provided that on or as soon as
practicable following the Termination Date, the Company pays to the Employee as
severance, less withholding required by law, in a single lump sum or, at the
Company's option, in equal installments corresponding to what would have been
the Employee's regular pay dates and amounts, an amount equal to the greater of
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(i) 66-2/3% of the Employee's Base Salary or (ii) the Base Salary that would
have otherwise have been payable to the Employee for the remainder of the
Employment Term; provided, however, that in the event the Company does not renew
or otherwise extend the employment of the Employee following expiration of the
initial one-year Employment Term, the Company shall pay to the Employee, on or
as soon as practicable (but in any event not later than 45 days) following the
date of expiration of the Employment Term, as severance the lump sum amount of
$116,672.50, less withholding required by law. Any severance payment pursuant
to this subpart (e) shall be in addition to, and not in lieu of, any unpaid
salary, incentive compensation and other benefits earned or accrued prior to the
Termination Date.
The Employee acknowledges and agrees that the Company shall have no obligation
to pay any severance or other compensation to the Employee upon termination by
the Company for Cause or in the event the Employee elects to terminate such
employment other than as the result of the failure of the Company to perform its
obligations under this Section 10.
10.02 PARTIAL OR TOTAL DISABILITY. In the event that the Employee is unable
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to perform his duties and responsibilities hereunder to the full extent required
hereunder by reason of illness, injury or incapacity for six consecutive months
(herein defined as a "Disability") (during which time, if during the Employment
Term, he shall be entitled to receive payments of the difference between the
Employee's Base Salary and incentive compensation during such time, or portion
thereof, and the payments to which the Employee is entitled pursuant to any
applicable disability insurance policy (less withholding required by law), each
such payment calculated and payable at the times corresponding to what would
have been the Employee's regular pay dates during such time), the Employment
Term may be terminated by the Company and the Company shall have no further
liability or obligation hereunder to the Employee except for unpaid salary,
incentive compensation and benefits accrued through the date of termination.
The Employee agrees, in the event of any dispute under this Section 10.02, to
submit to a physical examination by a licensed physician selected by the
Company, the cost of such examination to be paid by the Company.
10.03 DEATH. In the event that the Employee dies, the Employment Term shall
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terminate and thereafter the Company shall have no liability or obligation to
the Employee, his executors, administrators, heirs, assigns or any other person
claiming under or through him except for unpaid salary, incentive compensation
and benefits accrued to the date of his death. Such payments shall be made to
the Employee's surviving spouse, or if none, to the Employee's surviving
children, and the surviving issue of deceased children, in equal shares per
stirpes, or if none, to the Employee's estate.
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10.04 CAUSE. Nothing in this Employment Agreement shall be construed to
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prevent the termination of the Employment Term by the Company at any time for
Cause. The termination of the Employee's employment hereunder for Cause shall
not be effective until delivery to the Employee of a written decision of the
Board (after notice in writing to the Employee (as provided in Section 1.03) of
the basis for such termination and an opportunity for the Employee, together
with his counsel, to be heard before the Board), finding that in the good faith
opinion of the Board the Employee committed conduct constituting Cause and
specifying the particulars thereof in conformity with the requirements for a
Notice of Termination.
10.05 EFFECT OF TERMINATION. In the event of a Termination of Employment,
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upon the satisfaction and performance by the Company of its obligations under
Section 10 hereof, the Company and its Affiliates and their respective
shareholders, directors, officers, and employees, shall be deemed fully released
by the Employee, and that if employee agrees that such satisfaction and
performance by the Company of its obligations under this Section 10 shall
constitute a full release and discharge from any and all claims, rights,
demands, actions, obligations, and causes of action of any and all kind, nature,
and character, known or unknown, which the Employee may now have or may have had
against the Company or any predecessor to the termination of employment,
including, but not limited to, any claims to any federal or state agencies, or
lawsuits in federal or state courts against the Company alleging discrimination
(including, but not limited to, claims arising under the Civil Rights Act of
1866, as amended, the Civil Rights Act of 1964, as amended, the California Fair
Employment and Housing Act, as amended, the Age Discrimination in Employment Act
of 1967, the Americans with Disabilities Act of 1990, and the Civil Rights Act
of 1991), workers' compensation claims, any claim related to employment
contracts, express or implied, or any other claims related to Employee's
employment or association with the Company or the circumstances surrounding
Employee's employment or association with the Company, or the termination
thereof.
10.06 RETURN OF COMPANY PROPERTY. Promptly following any Termination of
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Employment, the Employee shall turn over and surrender to the Company all
property of the Company then in his possession, including without limitation
Company automobiles, automobile keys and office keys, credit cards, debit cards,
telephone calling cards, and all business and financial records, statements,
memoranda, notebooks, correspondence and other documentation, and the Employee
shall not retain in his actual or constructive possession copies or
reproductions of any of said items of property or information without the prior
written approval of the Company, the Employee hereby acknowledging that all of
said items are and shall remain the sole and exclusive property of the Company
and that following any Termination of Employment the Employee shall not have any
ownership interest in or right to use, either for his personal benefit or the
benefit of others, any of such items of property or information.
11. SURVIVAL. Notwithstanding the termination of the employment relationship
between the parties hereto, the obligations of the Employee under Sections 7, 8,
9, 10.05 and 10.06 hereof shall survive and remain in full force and effect and
the Company shall be entitled to equitable relief against the Employee pursuant
to the provisions of Section 9 hereof. In addition to and not in limitation of
the provisions of the preceding sentence, notwithstanding any such
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termination of the employment relationship between the parties hereto,
obligations of the Company under this Agreement that are intended pursuant to
the terms hereof to survive any such termination shall survive and remain in
full force and effect and such obligations shall be enforceable by the Employee
in accordance with the provisions of this Agreement.
12. NOTICE. Any notice or other communication required or permitted hereunder
shall be in writing and shall be delivered personally, telegraphed, telexed,
sent by facsimile transmission (provided acknowledgment of receipt thereof is
delivered to the sender) or sent by certified, registered or express mail,
postage prepaid. Any such notice shall be deemed given when so delivered
personally, telegraphed, telexed or sent by facsimile transmission or, if
mailed, three days after the date of deposit in the United States mails as
follows:
If to Employee, to:
Xxxxx X. Xxxx
0000 Xxxxx Xx Xxx Xxxx
Xxxxxxxx, XX 00000
with a copy to:
Xxxxx X. Xxxxx
Attorney at Law
00 Xxxxxx Xxxxxxx Xxxxx
Xxxxxxx, XX 00000
If to the Company, to:
Ad Art Displays, Inc.
0000 Xxxxxxxxx xxxxx
Xxxxxxx, XX 00000
Attention: J. Xxxxxxx Xxxxxxxx
Chairman
with a copy to:
Xxxxxxxx X. Xxxxxx, Esq.
Broad and Xxxxxx
000 X. Xxxxxx Xxx., Xxxxx 0000
Xxxxxxx, XX 00000
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If to La-Man to:
La-Man Corporation
0000 Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Mr. J. Xxxxxxx Xxxxxxxx
President and Chief Executive Officer
with a copy to:
Xxxxxxxx X. Xxxxxx, Esq.
Broad and Xxxxxx
000 X. Xxxxxx Xxx., Xxxxx 0000
Xxxxxxx, XX 00000
or to such other names or addresses as the Company, La-Man or the Employee, as
the case may be, shall designate by notice to the other parties hereto in the
manner specified in this section.
13. REVIEW. The Employee represents and acknowledges that (a) he has been
advised by the Company to consult his own legal counsel with respect to this
Agreement and (b) he has had full opportunity, prior to execution of this
Agreement, to review thoroughly this Agreement with his counsel.
14. GOVERNING LAW. This Agreement shall be governed by, and construed and
interpreted under, the laws of the State of Florida without giving effect to any
conflict of laws provisions.
15. CONTENTS OF AGREEMENT; AMENDMENT AND ASSIGNMENT. This Agreement sets forth
the entire understanding between the parties hereto with respect to the subject
matter hereof and supersedes any and all other employment agreements or
arrangements between the parties hereto, including without limitation any prior
or existing employment or consulting agreements between the Company and the
Employee, and the Employee hereby releases and forever discharges the Company,
La-Man and all of their respective Affiliates, shareholders, directors,
officers, employees and agents from any and all claims for additional fixed or
incentive compensation or other benefits, or other claims or causes of action of
any nature whatsoever arising out of or in connection with or under any and all
such other agreements, express or implied it being the mutual intent of the
Company, La-Man and the Employee that any and all such agreements are superseded
in their entirety by this Agreement. This Agreement cannot be changed, modified
or terminated except upon written amendment duly executed by the parties hereto.
All of the terms and provisions of this Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective heirs,
representatives, successors and assigns of the parties hereto, except that the
duties and responsibilities of the Employee hereunder are of a personal nature
and shall not be assignable
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in whole or in part by the Employee. The Employee acknowledges that, from time
to time, the Company may establish, maintain and distribute employee manuals or
handbooks or personnel policy manuals, and officers or other representatives of
the Company may make written or oral statements relating to personnel policies
and procedures. Such manuals, handbooks and statements are intended only for
general guidance. No policies, procedures or statements of any nature by or on
behalf of the Company (whether written or oral, and whether or not contained in
any employee manual or handbook or personnel policy manual), and no acts or
practices of any nature, shall be construed to modify this Agreement.
16. SEVERABILITY. If any provision of this Agreement or application thereof to
anyone or under any circumstances is adjudicated to be invalid or unenforceable
in any jurisdiction, such invalidity or unenforceability shall not affect any
other provisions or applications of this Agreement which can be given effect
without the invalid or unenforceable provision or application and shall not
invalidate or render unenforceable such provision in any other jurisdiction.
17. ENFORCEMENT; NO MITIGATION; NON-EXCLUSIVITY.
17.01 Any party to this Agreement that is required to incur any expenses
associated with the enforcement of such party's rights under this Agreement,
whether by arbitration, litigation, other legal action or otherwise, shall be
entitled, upon successfully enforcing any such rights, to recover from the party
against whom such rights were successfully enforced all such costs and expenses
(including all reasonable attorneys' fees and expenses). For purposes of this
Section 17.01, "successfully enforcing" shall mean the attainment of a final and
binding determination pursuant to any arbitration, litigation, or other legal
action awarding damages, equitable relief or other relief for the enforcement of
the rights of any party hereunder.
17.02 This Agreement negates and supersedes in their entirety any and all
other employment agreements between Employee and the Company; notwithstanding
the foregoing, nothing in this Agreement shall prevent or limit the Employee's
continuing or future participation in or rights under any benefit, bonus,
incentive or other plan or program provided by the Company or any present or
future Subsidiary or Affiliate and for which the Employee may qualify.
18. REMEDIES CUMULATIVE; NO WAIVER. No remedy conferred by this Agreement is
intended to be exclusive of any other remedy, and each and every such remedy
shall be cumulative and shall be in addition to any other remedy given hereunder
or now or hereafter existing at law or in equity. No delay or omission in
exercising any right, remedy or power hereunder or existing at law or in equity
shall be construed as a waiver thereof, and any such right, remedy or power may
be exercised from time to time and as often as may be deemed expedient or
necessary.
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19. HEADINGS. All section headings contained in this Agreement are for
convenience of reference only, do not form a part of this Agreement and shall
not affect in any way the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the undersigned have executed or caused to be executed
this Agreement as of the date first above written.
AD ART DISPLAYS, INC.
By: /s/ J. Xxxxxxx Xxxxxxxx
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Name: J. Xxxxxxx Xxxxxxxx
Title: Chairman
LA-MAN CORPORATION
By: /s/ J. Xxxxxxx Xxxxxxxx
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J. Xxxxxxx Xxxxxxxx, President
/s/ Xxxxx X. Xxxx
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XXXXX X. XXXX
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