EXHIBIT 10.36
EMPLOYMENT AGREEMENT
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This Employment Agreement (as the same may be supplemented, modified,
amended or restated from time to time in the manner provided herein, this
"Agreement") dated as of _______________, 1998, between Xxxxx Xxxxx, an
individual residing at 00 Xxxxxxx, Xxxxxx, Xxxxxxxxxx 00000 (the "Employee"),
and Rockford Industries, Inc., a California corporation (the "Company") with
principal offices at 0000 Xxxx Xxxxx Xxxxxx, Xxxxx 000, Xxxxx Xxx, XX 00000.
WHEREAS, the Company desires to employ the Employee, and the Employee
desires to be employed by the Company, all upon the terms and provisions and
subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto hereby agree as follows:
Section 1. Employment and Term. The Company hereby employs the
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Employee as President and Chief Executive Officer of the Company and the
Employee hereby accepts such employment, upon the terms and provisions and
subject to the conditions set forth below for a term commencing on January 1,
1998 (the "Commencement Date") and terminating on the third anniversary of the
Commencement Date, unless sooner terminated as herein provided (the "Employment
Term"). This Agreement shall be automatically renewed for successive three (3)
year terms after the expiration of the Employment Term and each subsequent
renewal term, unless one party or the other gives notice, in writing, at least
sixty (60) days prior to the expiration of the Employment Term or renewal term
of their desire to terminate the Agreement or modify its terms.
Section 2. Employee's Duties. (a) The Employee shall perform all
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duties and services incident to and not inconsistent with Employee's positions
with the Company, including, but not limited to, those duties as are assigned to
such offices in the Company's by-laws and such other duties as may from time to
time be assigned to him by the Board of Directors of the Company, or otherwise,
subject in all cases to the authority and supervision of the Board of Directors
of the Company and such limitations as from time to time may be imposed by it.
(b) Employee agrees to abide by all policies of the Company
promulgated from time to time by the Company.
(c) Except for such business travels as may be incident to his
duties hereunder, the Employee shall perform his duties at the Company's offices
at the address set forth in the preamble to this Agreement or at such other
location within 15 miles of such address.
(d) The Employee shall devote all of his time (during regular
business hours), effort and attention to the business and affairs of the Company
and to the furtherance of the interests of the business of the Company. The
Employee shall diligently and faithfully perform his duties and services
hereunder to the best of his ability and with the highest of professional
standards and integrity. The Employee will not, directly or indirectly, engage
in any other business or enterprise requiring his personal time or attention,
other than: (i) at the direction and for the benefit of the Company; (ii) to the
extent approved in writing by the Company; or (iii) personal investments in
securities.
Section 3. Compensation for Employee's Services. (a) For the full,
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prompt and faithful performance of all of the duties and services to be
performed by the Employee pursuant to Sections 1 and 2 hereof, the Company
agrees to pay, and the Employee agrees to accept, during the first year of the
Employment Term an annual base salary (the "Salary") equal to $236,250, less all
necessary and required federal, state and local payroll deductions, payable in
accordance with the usual payroll practices of the Company. For each successive
year during the Employment Term (and any renewal term), Employee's Salary shall
be increased by the greater of (1) five percent (5%) or (ii) the percentage
increase in the Consumer Price Index for the previous calendar year.
(b) In addition to the Salary, each year during the Employment
Term (and any renewal term) Employee shall be eligible to receive a bonus
pursuant to the terms and conditions of each Annual Bonus Plan established by
the Company's Board of Directors. The target for each annual bonus shall be
twenty-five percent (25%) of Employee's Salary. The specific criteria and levels
in each Annual Bonus Plan shall be established in the discretion of the Board of
Directors but will include consideration for Company performance, including
earnings per share and originations, and Employee's individual performance. The
Board of Director's shall communicate the terms of the Annual Bonus Plan to
Employee on or before January 31st each year during the Employment Term (and any
renewal term).
(c) For each calendar year during the Employment Term (and any
renewal term), Employee shall be entitled to paid vacation according to the
following schedule:
YEARS OF SERVICE WITH COMPANY VACATION
Less than 10 years 4 weeks
More than 10 years 5 weeks
The Employee shall take such vacation at such time or times as shall be mutually
agreed upon with the Company. The maximum amount of vacation time that Employee
may have on the Company's books at any time shall be one year's vacation
allotment.
(d) During the Employment Term (and any renewal term), the
Employee shall be entitled, at no cost to Employee, to such insurance and health
and medical benefits as are from time to time in effect and are generally made
available to other similar employees of the Company pursuant to the policies of
the Company; provided, however, that the
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Employee shall be required to comply with the conditions attendant to coverage
and shall comply with and be entitled to benefits only in accordance with the
terms and conditions of such coverage. The Company may withhold from any
benefits payable to the Employee all federal, state, local or other taxes and
amounts as shall be permitted or required pursuant to law, rule or regulation.
(e) During the Employment Term (and any renewal term), the
Employee shall be eligible to participate in the pension, compensation and bonus
plans or programs that from time to time are made available to other employees
of the Company, subject to any applicable waiting periods, all in accordance
with the terms and provisions of such plans or programs.
(f) During the Employment Term (and any renewal term), the
Company shall pay expenses up to $1,500.00 per month incurred by Employee in
connection with the lease or ownership of an automobile to be used primarily for
Company business and for all related expenses.
(g) During the Employment Term (and any renewal term), the
Company shall reimburse Employee up to $12,000.00 per year for the annual dues
for membership in one (1) country club or other perquisites of equivalent
monetary value, at the discretion of the Employee.
(h) During the Employment Term (and any renewal term), the
Company shall maintain a policy of life insurance for Employee in a face amount
not less than two times Employee's then existing base salary. Employee shall
designate, at his discretion, the beneficiary of such life insurance.
Section 4. Expenses. The Employee shall be entitled to reimbursement
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for his ordinary and necessary business expenses actually incurred during the
Employment Term in the performance of his duties under Sections 1 and 2 of this
Agreement, if and to the extent supported by such reasonable documentation as
may be requested by the Company.
Section 5. Termination of Employment Term.
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(a) In the event of the death of the Employee during the term of
his employment (or any renewal term), the Employee's employment shall terminate
and this Agreement shall terminate on the date of such death; provided, however,
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that the Employee, his estate or legal representative, as the case may be, shall
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be entitled to receive, and the Company shall pay, any unpaid Salary and other
benefits and reimbursable expenses accrued and owing to the Employee with
respect to his employment prior to the termination. The sum of such amounts
shall hereinafter be referred to as the "Accrued Obligations" which shall be
paid to Employee's estate or beneficiary within thirty (30) days of the date of
termination.
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(b) If the Company determines in good faith that the Disability
of Employee has occurred (pursuant to the definition of Disability set forth
below), it may give to Employee written notice of its intention to terminate
Employee's employment. In such event, Employee's employment with the Company
shall terminate effective on the 30th day after receipt of such notice by
Employee, provided that, within the 30 days after such receipt, Employee shall
not have returned to full-time performance of his duties. For the purposes of
this Agreement, "Disability" shall mean a physical or mental impairment which
substantially limits a major life activity of Employee and which renders
Employee unable to perform the essential functions of his position, even with
reasonable accommodation which does not impose an undue hardship on the Company
and which has lasted at least 120 consecutive days. In the event of termination
of this Agreement on account of Employee's disability, within thirty (30) days
of termination of this Agreement, the Company shall pay to Employee (i) all
Accrued Obligations and (ii) a lump sum amount equal to one year of Employee's
salary and his most recent bonus. In addition, the Company shall reimburse
Employee for any payments made by him to the Company (or its insurance carrier)
for the purpose of continuation of his medical and dental insurance under the
provisions of the Consolidated Omnibus Reconciliation Act (COBRA).
(c) The Company shall have the right to terminate the Employee's
employment and to terminate this Agreement, in the event: (i) the Employee fails
to substantially perform or repeatedly neglects his duties assigned in
accordance with this Agreement in any continuing manner after notice from the
Company of such failure or neglect; (ii) the Employee willfully fails or refuses
to substantially follow or comply with the directions of the Board of Directors
or of a superior officer or the policies or work rules of the Company; (iii) the
Employee through his intentional action or inaction has subjected the Company to
any criminal or civil liability under any applicable law; (iv) the Employee is
indicted or convicted for any misdemeanor involving moral turpitude or any
felony; (v) the Employee has used any narcotic or other illegal or controlled
substance or abused or otherwise excessively used any alcoholic product or any
prescription stimulant or depressant and such abuse or excessive use has
interfered with Employee's performance of his duties hereunder; (vi) the
Employee has misappropriated any asset or property of the Company, including
(without limitation) any theft or embezzlement or any diversion of any corporate
opportunity; (vii) the Employee has breached any of his covenants and agreements
contained in this Agreement, including (without limitation) those contained in
Section 7 hereof; or (viii) the Employee concealed or misrepresented any
material fact in seeking employment hereunder. The Employee acknowledges and
agrees that any of the foregoing reasons constitute adequate and sufficient
cause for termination, and if the Company elects such termination, the Employee
shall be entitled to receive only the Accrued Obligations (which, however, shall
be subject to offset by the Company with respect to all amounts then owing to
the Company by the Employee, including amounts respecting misappropriated assets
and properties).
(d) Employee shall have the right to terminate his employment
and this Agreement by giving written notice of such termination within sixty
(60) days of the occurrence of any of the following events: (i) The Company
materially changes Employee's title, duties, scope of responsibility, or
reporting relationship; or (ii) Employee is required to perform his principal
duties at a location more than 25 miles from the Company's address set forth in
the preamble to this Agreement. The purchase of the Company by another entity
which
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subsequently operates the Company as a wholly owned subsidiary shall not
constitute a material change under clause (i) above so long as Employee's duties
and scope of responsibilities within the Company are not materially changed. In
the event of termination of this Agreement pursuant to this subsection, within
thirty (30) days of termination of this Agreement, the Company shall pay to
Employee (i) all Accrued Obligations and (ii) a lump sum amount equal to
Employee's salary and target bonus for the remainder of the Employment Term (or
renewal term) but not less than one years' salary and target bonus.
(e) Any termination under this Section or termination of
Employee's duties under Sections 1 and 2 of this Agreement, whether by the
Employee or by the Company, shall be communicated by a notice of termination to
the other party hereto, which shall set forth the facts and circumstances
respecting such termination; provided, however, that no notice of termination
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need be given in the event of the death of the Employee.
(f) The Employee acknowledges and agrees that any termination
under this Section is not intended, and shall not be deemed or construed, in any
way to affect any of the Employee's covenants and obligations contained in
Sections 7, 8, and 9 hereof, which shall continue in full force and effect.
(g) In the event the Company exercises its right not to renew
this Agreement pursuant to Section 1 or terminates the Employee's employment
hereunder, other than pursuant to Sections 5(a), 5(b), 5(c) or 6(a), the Company
shall pay to the Employee within thirty (30) days of termination (i) all Accrued
Obligations and (ii) a lump sum amount equal to Employee's salary and target
bonus for the remainder of the Employment Term (or renewal term) but not less
than one years' salary and target bonus.
Section 6. Change in Control-Termination of Employment and
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Compensation in Event of Termination. (a) After a Change in Control of the
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Company (as such term is hereinafter defined) has occurred, if the Company (or
any successor thereto) terminates the Employee's employment with the Company
within one year after the Change in Control, the Employee (i) shall be entitled
to his salary, bonuses, awards, perquisites and benefits, including, without
limitation, benefits and awards under the Company's stock option plans and the
Company's pension and retirement plans and programs, accrued through the date
the Employee's employment with the Company is terminated (the "Termination
Date") and, in addition, thereto, (ii) shall be entitled to be paid in a lump-
sum, on the Termination Date, an amount of cash (to be computed, at the expense
of the Company, by the partner of Deloitte & Touche, LLP, independent certified
public accountants to the Company or such other independent certified
accountants regularly employed by the Company (the "Accountants") in charge of
the Company's account immediately prior to the Change in Control, whose
computation shall be conclusive and binding upon the Employee and the Company)
equal to 2.99 times Employee's "base amount" as defined in Section 280G(b)(3) of
the Internal Revenue Code of 1986, as amended (the "Code"). Such lump-sum
payment is hereinafter referred to as the "Termination Compensation."
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(b) For purposes hereof, a Change in Control shall be deemed to
have occurred if there has occurred a change in control as the term "control" is
defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as
amended (the "Act"), as follows: (i) when any "person" (as such term is defined
in Sections 3(a)(9) and 13(d)(3) of the Act, except for an employee stock
ownership trust (or any of the trustees thereof), becomes a beneficial owner,
after the date hereof, directly or indirectly, of securities of the Company
representing twenty (20%) percent or more of the Company's then outstanding
common stock, no par value per share; (ii) if the stockholders of the Company
approve a plan of complete liquidation of the Company; or (iii) if the
stockholders of the Company approve an agreement for the sale or disposition of
all or substantially all of the Company's assets. Notwithstanding the foregoing,
no Change in Control shall be deemed to have occurred as a result of any event
specified in clauses (i)-(iii) of this paragraph 4(b) if a majority of the Board
of Directors approve such transaction prior to its occurrence.
(c) Notwithstanding anything in this Agreement to the contrary,
Employee shall have the right at his discretion to defer the Company's payment
of all or part of the Termination Compensation to a subsequent year or years,
provided that the Company shall not be required to pay the total Termination
Compensation in more than five (5) payments. Employee shall provide written
notice to the Company of any such deferral election in accordance with Section
11 of this Agreement.
(d) It is intended that the "present value" of the payments and
benefits to Employee, whether under this agreement or otherwise, which are
includable in the computation of "parachute payments" shall not, in the
aggregate, exceed 2.99 times the "base amount" (the terms "present value,"
"parachute payments" and "base amount" being determined in accordance with
Section 280G of the Code). Accordingly, if Employee receives payments or
benefits from the Company prior to payment of the Termination Compensation
which, when added to the Termination Compensation, would, in the opinion of the
Accountants, subject any of the payments or benefits to Employee to the excise
tax imposed by Section 4999 of the Code, the Termination Compensation shall be
reduced by the smallest amount necessary, in the opinion of the Accountants, to
avoid such tax. In addition, the Company shall have no obligation to make any
payment or provide any benefit to Employee subsequent to payment of the
Termination Compensation which, in the opinion of the Accountants, would subject
any of the payments or benefits to Employee to the excise tax imposed by Section
4999 of the Code. No reduction in Termination Compensation or release of the
Company from any payment or benefit obligation in reliance upon any aforesaid
opinion of the Accountants shall be permitted unless the Company shall have
provided to Employee a copy of any such opinion, specifically entitling Employee
to rely thereon, no later than the date otherwise required for payment of the
Termination Compensation or any such later payment or benefit.
Section 7. Restrictions Respecting Confidential Information. (a) The
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Employee has entered into the covenants and agreements contained in this Section
7 (i) in recognition of the competitive and confidential nature of the assets,
properties, information and business of the Company, and (ii) in consideration
of the compensation described in this Agreement.
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(b) The Employee hereby covenants and agrees that, during the
Employment Term and thereafter, the Employee will not, and will not cause,
suffer or permit any family member living within his household or other
affiliate of the Employee to, directly or indirectly, under any circumstance:
(i) disclose in any way any Confidential Information (as hereinafter defined) to
any other person; (ii) act or fail to act so as to reveal any Confidential
Information or otherwise impair the confidential or proprietary nature of any
Confidential Information; (iii) use any customer list, or other Confidential
Information other than at the direction and for the benefit of the Company; or
(iv) offer or agree to, or cause or assist in the inception or continuation of,
any such disclosure, impairment or use. For the purposes of the foregoing,
"Confidential Information" shall mean any and all information pertaining to the
assets, business, creditors, vendors, manufacturers, customers, data, employees,
financial condition or affairs, formulae, methods, operations, procedures,
reports, suppliers, systems and technologies of the Company, including (without
limitation) the contracts, patents, trade secrets and customer lists developed
or otherwise acquired by the Company during the Employment Term; provided,
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however, that Confidential Information shall exclude any information that is or
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becomes publicly available other than through disclosure (A) by the Employee or
any of his family members or (B) by the Company, or any of its directors,
officers, employees, consultants, agents or other representatives or affiliates.
All Confidential Information is and will remain the sole and exclusive property
of the Company. Following the Employment Term, the Employee shall exercise
reasonable efforts to return all documents and other tangible items containing
Confidential Information to the Company, without retaining any copies, notes or
excerpts thereof, or to destroy such documents and items, as the Company may
request.
(c) Notwithstanding anything to the contrary in this Agreement,
the terms and provisions of this Section and Sections 8 through 18 of this
Agreement, together with any definitions used in such terms and provisions,
shall survive the termination or expiration of the Employee's employment under
Sections 1 and 2 hereof, irrespective of (i) the reason therefor, and (ii)
whether such termination was permitted hereunder or under applicable law and the
Company will have the right to communicate with any future or prospective
employer concerning Employee's continuing obligations under this Agreement.
Section 8. Enforcement, Etc. The Company, in its sole discretion,
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may proceed to exercise or enforce any right, power, privilege, remedy or
interest that the Company may have under this Agreement or applicable law: at
law, in equity, in rem or in any other forum available under applicable law;
without notice except as otherwise expressly provided herein; without pursuing,
exhausting or otherwise exercising or enforcement any other right, power,
privilege, remedy or interest that the Company may have against or in respect of
the Employee or any other person or thing; and without regard to any act or
omission of the Company or any other person. The Company may institute one or
more proceedings (which may be separate proceedings) with respect to this
Agreement in such order and at such times as the Company may elect in its sole
and absolute discretion.
Section 9. Equitable Relief. The Employee acknowledges and agrees
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that it will be impossible to measure in money the damage to the Company in the
event of a breach of any of the terms and provisions of Section 7 of this
Agreement, and that, in the event of any such breach, the Company will not have
an adequate remedy at law, although the foregoing shall not
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constitute a waiver of any of the Company's rights, powers, privileges and
remedies against or in respect of a breaching party or any other person or thing
under this Agreement, or applicable law. It is therefore agreed that the
Company, in addition to all other such rights, powers, privileges and remedies
that it may have, shall be entitled to injunctive relief, specific performance
or such other equitable relief as the Company may request to exercise or
otherwise enforce any of those terms and provisions and to enjoin or otherwise
restrain any act prohibited thereby, and the Employee will not raise and hereby
waives any objection or defense that there is an adequate remedy available at
law.
Section 10. Representations and Warranties of Employee.
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(a) (i) In order to induce the Company to enter into this
Agreement, the Employee represents and warrants to the Company that: (i) the
execution and delivery of this Agreement by the Employee and the performance of
his obligations hereunder will not violate or be in conflict with any fiduciary
or other duty, instrument, agreement, document, arrangement or other
understanding to which the Employee is a party or by which he is or may be bound
or subject; and (ii) the Employee is not a party to any instrument, agreement,
document, arrangement or other understanding with any person (other than the
Company) requiring or restricting the use or disclosure of any confidential
information or the provision of any employment, consulting or other services.
(b) The Employee hereby agrees to indemnify and hold
harmless the Company from and against any and all losses, costs, damages and
expenses (including without limitation, its reasonably attorneys' fees) incurred
or suffered by the Company resulting from any breach by the Employee of any of
his representations or warranties set forth in Section 10(a) hereof.
Section 11. Notice. Except as otherwise expressly provided, any
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notice, request, demand or other communication permitted or required to be given
hereunder shall be in writing, shall be sent by one of the following means to
the addressee at the address set forth in the preamble to this Agreement (or at
such other address as shall be designated hereunder by notice to the other party
hereto, effective upon actual receipt) and shall be deemed conclusively to have
been given: (i) on the first business day following the day timely deposited
with Federal Express (or other equivalent national overnight courier) or United
States Express Mail, with the cost of delivery prepaid or for the account of the
sender; (ii) on the fifth business day following the day sent by certified or
registered United States mail, postage prepaid and return receipt requested; or
(iii) when otherwise actually received by the addressee on a business day (or on
the next business day if received after the close of normal business hours or on
any non-business day). If a certificate, signed notice or other signed item is
expressly required by another provision of this Agreement, a manually signed
original must be delivered by the party giving it; any other notice, request,
demand or other communication also may be sent by telecopy, with the cost of
transmission prepaid or for the account of the sender, and shall (except as
otherwise specified in this Agreement) be deemed conclusively to have been given
on the first business day following the day duly sent.
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Section 12. Section and Other Headings. The section and other
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headings contained in this Agreement are for reference purposes only and shall
not affect the meaning or interpretation of this Agreement.
Section 13. Governing Law. This Agreement has been executed and
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delivered, and shall be governed by and construed in accordance with the
applicable laws pertaining, in the State of California.
Section 14. Severability. In the event that any term or provision of
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this Agreement shall be finally determined to be superseded, invalid, illegal or
otherwise unenforceable pursuant to applicable law by a governmental authority
having jurisdiction and venue, that determination shall not impair or otherwise
affect the validity, legality or enforceability, to the maximum extent
permissible by law, (a) by or before that authority of the remaining terms and
provisions of this Agreement, which shall be enforced as if the unenforceable
term or provision were deleted, or (b) by or before any other authority of any
of the terms and provisions of this Agreement. If any provision of Section 7
hereof is held to be unenforceable because of the scope or duration of any such
provision, the parties agree that any court making such determination shall have
the power to reduce the scope or duration of such provision, and said provision
shall be enforceable in such reduced form.
Section 15. Counterparts. This Agreement may be executed in two
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counterpart copies of the entire document or of signature pages to the document,
each of which may be executed by one of the parties hereto, but all of which,
when taken together, shall constitute a single agreement binding upon both of
the parties hereto.
Section 16. Successors and Assigns; Assignment. Whenever in this
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Agreement reference is made to any party, such reference shall be deemed to
include the successors, assigns, heirs and legal representatives of such party,
and, without limiting the generality of the foregoing, all representations,
warranties, covenants and other agreements made by or on behalf of the Employee
in this Agreement shall inure to the benefit of the successors and assigns of
the Company; provided, however, that nothing herein shall be deemed to authorize
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or permit the Employee to assign any of his rights or obligations under this
Agreement to any other person (whether or not a family member or other affiliate
of the Employee), and the Employee covenants and agrees that he shall not make
any such assignment.
Section 17. Modification, Amendment, Etc. Each and every
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modification and amendment of this Agreement shall be in writing and signed by
all of the parties hereto, and each and every waiver of, or consent to any
departure from, any representation, warranty, covenant or other term or
provision of this Agreement shall be in writing and signed by each affected
party hereto.
Section 18. Entire Agreement. This Agreement contains the entire
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agreement of the parties and supersedes all other representations, warranties,
agreements and understandings, oral or otherwise, among the parties with respect
to the matters contained herein.
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In Witness Whereof, the parties hereto have executed and delivered
this Agreement as of the date first above written.
Employee
Name: Xxxxx Xxxxx
Rockford Industries, Inc.
Name: ___________________
Title: __________________
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