EXECUTIVE EMPLOYMENT AGREEMENT
Exhibit 10.26
THIS AGREEMENT (the “Agreement”) is made and entered into effective as of August 6, 2007, (the
“Effective Date”) by and between Xxxx Microproducts Inc., a California corporation (the “Company”),
and Xxxxxxx X. Xxxxx, (the “Executive”).
RECITALS:
WHEREAS, Executive desires to obtain employment with the Company and the Company desires to
employee Executive subject to the terms and conditions contained in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants contained herein,
and for other good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
AGREEMENTS:
1. Employment Duties. The Company shall employ Executive in the capacity of Executive
Vice President and Chief Financial Officer for the Company, with such powers and duties in that
capacity as may be established from time to time by the Company in its discretion. Executive shall
be the Principal Accounting Officer. Executive will devote his best efforts, attention and energies
to the Company’s business. During Executive’s employment, he will not engage in any other business
activities, regardless of whether such activity is pursued for profits, gains, or other pecuniary
advantage. However, nothing in this Agreement shall prevent Executive from being engaged in
business activities outside the Company so long as such activities require no active participation
by Executive that in any way interferes with Executive’s duties and responsibilities to the
Company, competes with the business of the Company, or creates an actual or apparent conflict of
interest with Executive’s employment by the Company. Executive understands and agrees that he will
inform the Company of any current outside business activities in which he is engaged as of the
execution of this .Agreement, and in the future will inform the Company of any additional outside
business activities in which he seeks to engage in advance of such engagement.
2. Term of Employment. Unless his employment is earlier terminated in accordance with
Section 11, 12, 13, or 14 of this Agreement or as provided in this Section 2, Executive shall be
employed on the Effective Date and shall continue employment through Aug. 6, 2010 (the “Initial
Term”). This Agreement, and Executive’s employment under this Agreement, shall automatically be
extended for consecutive twelve (12) month periods (each such period referenced as a “Subsequent
Term”) unless at any time during the six months prior to the expiration of the Initial Term or any
Subsequent Term, either the Company or Executive provides the other with written notice of its or
his election not to extend the Agreement and Executive’s employment under this Agreement (“Notice
of Non-renewal”). In
the event either Executive or the Company provides a Notice of Nonrenewal under this Section
2, the Company shall pay Executive his base salary and pro-rated auto allowance through his last
date of employment as well as a pro-rated bonus, if any, earned under the terms of the Management
Incentive Plan. Executive shall not be entitled to any other payments or benefits of any kind
except as provided in applicable benefit plan documents, stock option and/or restricted stock
agreements, in Section 13 of this Agreement.
3. Compensation.
All compensation paid to Executive under this Agreement is subject to applicable withholding
and deductions.
(a) Base Salary. As compensation for services rendered hereunder, Executive shall
receive an annual base salary of three hundred fifty thousand dollars ($350,000), less applicable
withholding and deductions, at a rate payable in equal installments according to Company’s normal
payroll practices. Such salary shall be subject to review and change (upward but not downward) by
the Company, in its sole discretion.
(b) Incentive Bonus Compensation. On an annual basis, the Company’s Board of
Directors, in its sole discretion, upon the recommendation of the Company’s Chief Executive
Officer, shall establish Executive’s annual target incentive and performance metrics. The Executive
will receive an incentive bonus based on Executive’s achievement of the performance metrics in
accordance with the Company’s Management Incentive Plan that the Company in its discretion may
establish. Executive’s initial bonus shall be Two Hundred
Thousand Dollars ($200,000) per year and for 2007 the bonus amount will be prorated from
Executives hire date and guaranteed.
(c) Business Expenses. In accordance with the Company’s policy governing travel and
other expenses, the Company will reimburse Executive for approved and reasonable business expenses
incurred by Executive in connection with the performance of his duties, provided that Executive
properly submits to the Company receipts verifying such expenses.
(d) Employee Benefits. Executive will be eligible to participate in such group health,
life or disability plans and other benefit plans that Company may maintain from time to time for
all employees, provided that Executive meets the respective eligibility requirements and subject to
the terms and conditions of such plans as they exist from time to time.
(e) Automobile Allowance. Executive shall be entitled to an automobile allowance of
$300 per month, plus reimbursement of business mileage at the rate of $0.15 per mile.
(f) Financial Planning/Tax Preparation Allowance. Executive shall be entitled to an
allowance of up to $1,500 per calendar year as reimbursement for personal financial planning and
tax preparation. To receive the reimbursement, Executive will be required to submit supporting
receipts that support the reimbursement.
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(g) Stock Option Grant. Executive shall be granted an option to purchase 225,000
shares of Xxxx Microproducts, Inc. common stock. The stock options will vest 25% per year beginning
on the one-year anniversary of the grant date. The grant date shall be Executive’s first date of
employment as an employee with the Company (“Hire Date”), and the exercise price shall be the
closing price of the stock on the date of grant. The term of the option is 5 years.
4. Noncompetition. As a condition to and in consideration of the terms of this
Agreement, Executive agrees that, during Executive’s employment, and for a period of twelve months
(12) following Executive’s resignation or the termination of Executive’s employment, for any
reason, whether voluntary or involuntary, Executive will not, On Executive’s behalf or On behalf of
any other person or entity:
(a) Directly or indirectly, as an employee, proprietor, agent, partner, officer, director or
otherwise, participate or engage in, manage, work for, broker for, operate, control, render advice
or assistance to or be connected in any way with any other person or entity engaged in a business
which is in direct competition with the Company’s principal business (as defined and discussed in
Company’s documents filed with the Securities Exchange Commission from time to time) or any other
business in which the Company or any Subsidiary was engaged at any point during Executive’s
employment or other relationship with the Company; or
(b) Directly or indirectly solicit, on Executive’s own behalf, or On behalf of another, any
potential or existing customers, clients, accounts, vendors, licensors or licensees of the Company
or any Subsidiary; or
(c) Directly or indirectly, hire or attempt to hire, or influence or solicit, or attempt to
influence or solicit, any employee of the Company, or of any Subsidiary, to leave or terminate his
or her employment, or to work for any other person or entity. For purposes of this Section 4(c),
“employee” shall mean any current employee, and any former employee who was employed with the
Company or any Subsidiary at any time during the last twelve (12) months of Executive’s employment.
5. Confidential Information. During Executive’s employment with the Company, and at
all times after Executive’s resignation or the termination of Executive’s employment for any
reason, whether voluntary or involuntary, Executive shall not directly or indirectly use or
disclose any trade secret, proprietary or confidential information of the Company or any Subsidiary
for the benefit of any person or entity other than the Company or any Subsidiary without prior
written approval of the Company’s Chief Executive Officer. For purposes of this Agreement, in
addition to all materials and information protected by applicable statute or law, the parties
acknowledge that confidential information shall include any information relating to the Company or
any Subsidiary, whether in print, On computer disc or tape or otherwise, which is public
information and not generally known by individuals outside the Company or any Subsidiary, including
but not limited to information relating to research, development, technology, and/or processes;
marketing, purchasing, sales, and/or servicing information, techniques, plans, proposals or
reports; all financial information, reports and statements; information relating to sales and other
financial strategies, plans and/or goals; information relating to proprietary rights and data,
ideas, know-how, inventions, and/or trade secrets; information regarding current or potential
clients or
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customers, client or customer lists and other client or customer information; information
regarding active and inactive accounts of the Company or any Subsidiary; information relating to
vendors, licensors or licensees of the Company or any Subsidiary; information provided by a client
or vendor; personnel or employee information; and information relating to the Company’s or any
Subsidiary’s methods of operation.
6. Work Product and Inventions. Executive agrees that the Company shall be entitled to
all of the benefits, profits, results and work product arising from or incident to all work,
services, advice and activities of Executive, including without limitation all rights in inventions
(as set forth below), trademark or trade name creations, and copyrightable materials. Executive
shall not, during the term of Executive’s employment with the Company, be interested, directly or
indirectly, in any manner, including, but not limited to, as partner, officer, advisor, or in any
other capacity in any other business similar to, or in competition with, the Company’s or any
Subsidiary’s business.
Executive will communicate promptly and fully to the Company all inventions, discoveries,
improvements or designs conceived or reduced to practice by Executive during the period of
Executive’s employment with the Company (alone or jointly with others), and, except as provided in
this Section 6, Executive will and hereby does assign to the Company and/or its nominees all of
Executive’s right, title and interest in such inventions, discoveries, improvements or designs and
all of Executive’s right, title and interest in any patents, patent applications or copyrights
based thereon without obligation on the part of the Company or any Subsidiary to make any further
compensation, royalty or payment to Executive. Executive further agrees to assist the Company
and/or its nominee (without charge but at no expense to Executive) at any time and in every proper
way to obtain and maintain for its and/or their own benefit, patents for all such inventions,
discoveries and improvements and copyrights for all such designs.
This Section 6 does not obligate Executive to assign to the Company any invention, discovery,
improvement or design for which no equipment, supplies, facility or trade secret, confidential or
proprietary information of the Company or any Subsidiary was used and which was developed entirely
on Executive’s own time, and (a) which does not relate (i) directly to the business of the Company
or any Subsidiary, or (ii) to the Company’s or any Subsidiary’s actual or demonstrably anticipated
research or development, or (b) which does not result from any work performed by Executive for the
Company or any Subsidiary.
7. Exempt Inventions. Identified below by descriptive title are all of the inventions,
if any, in which Executive possessed any right, title or interest prior to Executive’s employment
with the Company or execution of this Agreement which are not subject to the terms hereof:
None
8. Copyrights. Executive acknowledges that any documents, drawings, computer software
or other work of authorship prepared by Executive within the scope of Executive’s employment is a
“work made for hire” under U.S. copyright laws and that, accordingly, the Company exclusively owns
all copyright rights in such works of authorship. For purposes of this Section 8, “scope of
employment” means that the work of authorship (a) relates to any subject matter pertaining to
Executive’s employment, (b) relates to or is directly
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or indirectly connected with the existing or reasonably foreseeable business, products,
projects or confidential information of the Company or any Subsidiary, or (c) involves the use of
any time, material or facility of the Company or any Subsidiary.
9. Return of Property. Executive shall, immediately upon Executive’s resignation or
the termination of Executive’s employment for any reason, whether voluntary or involuntary, deliver
to the Company all documents, materials and other items, whether on computer disc or tape or
otherwise, including all copies thereof, belonging to the Company or any Subsidiary, or in any way
related to the business of the Company or any Subsidiary, or the services Executive performed for
the Company or any Subsidiary, including but not limited to, any documents, materials or items
containing trade secret, proprietary, or confidential information, documents in any way relating to
any inventions or copyrights, client or customer information, information relating to the Company’s
or any Subsidiary’s processes or procedures and any other documents, materials or items of any sort
relating to the Company or any Subsidiary. Executive shall not retain any copies or summaries of
any kind of documents and materials covered by this section 9.
10. Injunctive Relief. The parties recognize that irreparable damage will result to
the Company if Executive violates or threatens to violate the terms of Section 4, 5, 6, 8 or 9, and
that the damages would be difficult to prove and quantify, and it is therefore agreed that, in the
event of a breach of Section 4, 5, 6, 8 or 9, the Company shall be entitled to injunctive relief,
in addition to all other legal and equitable remedies available to it.
11. Death or Inability to Perform Job Duties.
(a) Executive’s employment shall terminate automatically in the event of
Executive’s death. In such event, Executive’s estate shall receive Executive’s base salary and
pro-rated auto allowance through Executive’s last date of employment as well as a pro-rated bonus,
if any, earned under the terms of the Management Incentive Plan. Executive’s estate shall not be
entitled to any other payments or benefits of any kind except as provided in applicable benefit
plan documents, stock option and/or restricted stock agreements.
(b) If, due to mental or physical disability, Executive is unable to perform the essential
functions of Executive’s job, with or without reasonable accommodation, for a total of ninety (90)
days within any twelve (12) month period, then the Company may terminate Executive. Executive
shall, in such event, receive his base salary and pro-rated auto allowance through his last date of
employment as well as a pro-rated bonus, if any, earned under the terms of the Management Incentive
Plan. Executive shall not be entitled to any other payments or benefits of any kind except as
provided in applicable benefit plan documents, stock option and/or restricted stock agreements.
Nothing in this Section l1(b) shall limit the Company’s right to terminate Executive’s employment
under any other section of this Agreement.
12. Termination of Executive’s Employment by the Company for Cause. The Company may
terminate Executive’s employment “for cause” at any time. As used herein, “for cause” shall mean
(i) any act of personal dishonesty taken by the Executive in connection with his responsibilities
as an employee and intended to result in substantial personal enrichment of the Executive, (ii) the
conviction of a felony, (iii) a willful act by the
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Executive which constitutes gross misconduct and which is injurious to the Company, and (iv)
following delivery to the Executive of a written demand for performance from the Company which
describes the basis for the Company’s belief that the Executive has not substantially performed his
duties, continued violations by the Executive of the Executive’s obligations to the Company which
are demonstrably willful and deliberate on the Executive’s part.
In the event the Company terminates Executive’s employment for cause, Executive shall receive
his base salary and pro-rated auto allowance through his last date of employment as well as a
pro-rated bonus, if any, earned under the terms of the Management Incentive Plan. Executive shall
not be entitled to any other payments or benefits of any kind except as provided in applicable
benefit plan documents, stock option and/or restricted stock agreements.
13. Termination of Executive’s Employment by the Company Without Cause. In the event
the Company exercises its right to terminate Executive’s employment without cause under this
Section 13, the Company will pay Executive his base salary and pro-rated auto allowance through his
last date of employment as well as a pro-rated bonus, if any, earned under the terms of the
Management Incentive Plan. In addition, the Company shall pay Executive a severance payment of an
amount equal to twelve (12) months of his then current base salary, less applicable withholding and
deductions. This payment will be paid as part of the Company’s normal payroll processing during the
twelve (12) month period. However, in order to receive the severance payment under this Section 13,
Executive must first execute a waiver and release of claims agreement in the form prescribed by the
Company. Executive shall not be entitled to any other payments or benefits of any kind except as
provided in applicable benefit plan documents, stock option and/or restricted stock agreements.
This paragraph 13 shall also apply if the Company downgrades Executive position title, materially
downgrades Executive’s responsibility, or reduces Executives salary or annual target incentive.
14. Termination of Employment by Executive. Executive may terminate his own employment
with the Company with or without cause upon thirty (30) days prior written notice to the Company.
Executive shall be required to perform Executive’s job duties and will be paid his base salary
through his last date of employment. At the option of the Company, the Company may require
Executive to terminate employment at any time during the thirty (30) day notice period. In such
event, Company will pay Executive his base salary for the remainder of the thirty (30) day notice
period. Executive shall, in addition, receive his pro-rated auto allowance through his last date of
employment as well as a pro-rated bonus, if any, earned under the terms of the Management Incentive
Plan. Executive shall not be entitled to any other payments or benefits of any kind except as
provided in applicable benefit plan documents, stock option and/or restricted stock agreements.
15. Severability and Interpretation. In the event that any provision of this Agreement
is held invalid by a court of competent jurisdiction, the remaining provisions shall nonetheless be
enforceable according to their terms. Any provision held overbroad or unreasonable as written shall
be deemed amended to narrow its application to the extent necessary to make the provision
enforceable under applicable law, and shall be enforced as amended. This Agreement shall be
construed without regard to any presumption or other rule requiring construction hereof against the
party causing this Agreement to be drafted.
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16. Survival. Notwithstanding any provision of this Agreement to the contrary, the
provisions of Sections 4, 5, 6, 7, 8, 9, and 10 shall survive the termination of this Agreement and
shall survive Executive’s resignation or the termination of his employment, whether voluntary or
involuntary, and with or without cause.
17. Notices. All notices or other communications required or permitted hereunder shall
be in writing and shall be personally delivered or provided by facsimile (with confirmation of
transmission) to the party receiving such notice or shall be delivered by Federal Express or
similar overnight courier, addressed to the party to whom such notice is intended to be given as
follows:
| (a) | Company | |||
| Xxxxxxx X. Xxxxxxx Xxxx Microproducts Inc. 0000 Xxxxxxxx Xxxxxx Xxx Xxxx, XX 00000-0000 Facsimile (000) 000-0000 |
||||
| (b) Executive: | ||||
| Xxxxxxx X. Xxxxx | ||||
| [Redacted] |
All notices shall be deemed given on the day when actually delivered as provided above, if
delivered personally or by facsimile, or on the next business day after the date dispatched, if
delivered by Federal Express or other overnight courier.
Either party may, by written notice hereunder, designate a change of address. Any notice, if
mailed properly addressed, postage prepaid, by registered or certified mail, shall be deemed
dispatched on the registered date or the date stamped on the certified mail receipt, and shall be
deemed received on the fifth business day thereafter, or when it is actually received, whichever is
sooner.
18. Amendments. This Agreement expresses the entire understanding of the parties and
supersedes all prior agreements concerning the same subject matter. It may not be changed orally.
Any change or modification must be made in writing and signed by the parties.
19. Governing Law. The validity, enforceability, construction, and interpretation of
this Agreement shall be governed by the laws of the State of California, without reference to its
conflict of laws provisions.
20. Waiver by the Company. Any waiver by the Company or Executive of any of its/his
rights under this Agreement shall be made in a writing signed by the party seeking to effect the
waiver of its/his rights and specifically designated as a waiver of a right or rights under this
Agreement. Neither the Company’s nor Executive’s failure to enforce a breach of
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this Agreement shall act as a waiver or otherwise prevent The Company or Executive from
enforcing the Agreement as to such breach or any other breach.
21. Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the Company and its successors and assigns.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first
above written.
| XXXX MICROPRODUCTS INC. |
||||
| By: | / Xxxxxxx X. Xxxxxxx | |||
| Its: Senior Vice President, Human Resources | ||||
| /s/ Xxxxxxx X. Xxxxx | ||||
| Executive | ||||
| 8/6/07 | ||||
| Date | ||||
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