EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is dated effective as of May 6,
2002 (the "Date of this Agreement"), between Xxxxxxx.xxx, Inc., a Delaware
corporation ("Company"), and Xxxxx Xxxxxx ("Executive"). In consideration of the
mutual covenants and agreements set forth herein, the parties hereto agree as
follows:
ARTICLE I
EMPLOYMENT
1.1 Term. The Company hereby employs Executive, and Executive hereby
accepts such employment, for a term commencing as of the Date of this Agreement
and ending on the third anniversary of such date, unless sooner terminated in
accordance with the provisions of Article IV.
1.2 Duties. During the Term, Executive shall be employed by the Company as
its Executive Vice President of Operations, or in such other management position
as the Company shall reasonably determine, and as such, Executive shall
faithfully perform for the Company the duties and have the powers customary for
such position. The Executive shall devote substantially all of his business time
and effort to the performance of Executive's duties hereunder, and shall work
primarily at the Company's main business offices.
ARTICLE II
COMPENSATION
2.1 Salary. The Company shall pay Executive during the Term a salary at
the rate of Two Hundred Forty Thousand Dollars ($240,000) per annum (the "Annual
Salary"), in accordance with the customary payroll practices of the Company
applicable to senior executives, provided the payments are no less frequent than
semi-monthly. The Annual Salary shall be reviewed annually by the Board of
Directors of the Company (the "Board") or such committee of the Board as they
shall designate for such purpose from time to time. Any adjusted Annual Salary
shall thereupon be the "Annual Salary" for the purposes hereof. The Executive's
Annual Salary shall not be decreased below Two Hundred Forty Thousand Dollars
($240,000) without his prior written consent at any time during the Term.
2.2 Incentive Compensation. During the Term, Executive shall be eligible
to receive, in addition to his Annual Salary, an annual bonus (the "Bonus") of
up to Seventy-Five Thousand Dollars ($75,000) per annum for the first year and
up to forty percent (40%) of Executive's Annual Salary for years thereafter,
subject to applicable deductions and withholdings. The terms and conditions
required to be attained in order to receive such Bonus shall be set by the
Board, or such committee of the Board as they shall designate for such purpose
from time to time, with input from the Chief Executive Officer.
2.3 Stock Options. On the Date of this Agreement, Executive will be
granted stock options to purchase an aggregate of 83,333 shares of the Company's
Common Stock. On
June 12, 2002, following stockholder approval of an amendment to the Company's
1999 Stock Incentive Plan to increase the maximum number of shares authorized
for issuance to any participant during any calendar year, Executive will be
granted stock options to purchase an aggregate of 41,667 shares of the Company's
Common Stock. On the first anniversary of the Date of this Agreement, provided
that Executive is employed by the Company, Executive will be granted stock
options to purchase an aggregate of 75,000 shares of the Company's Common Stock.
All such stock options will be granted at fair market value on the date of grant
and will vest quarterly over a four year period. All stock options to purchase
shares of the Company's Common Stock granted to Executive prior to the Date of
this Agreement and all stock options granted to Executive during the Term of
this Agreement shall accelerate and become fully vested immediately upon a
Corporate Transaction or Change of Control, as those terms are defined in
Article IV, during the Term.
2.4 Benefits. Except as otherwise provided herein, during the Term
Executive shall participate in any group life, medical or disability insurance
plans, health programs, retirement plans, fringe benefit programs and similar
benefits that may be available to other employees of the Company generally, on
the same terms as such other employees, to the extent that Executive is eligible
under the terms of such plans or programs as they may be in effect from time to
time.
2.5 Expenses. The Company shall pay or reimburse Executive for all
ordinary and reasonable out-of-pocket expenses actually incurred (and, in the
case of reimbursement, paid) by Executive during the Term in the performance of
Executive's services under this Agreement, provided that Executive submits
reasonable proof of such expenses, with the properly completed forms as
prescribed from time to time by the Company.
2.6 Paid Time Off and Holidays. During the Term, Executive shall be
entitled to annual paid time off of seventeen (17) days at full pay, or such
greater paid time off benefits as may be provided for by the Company's paid time
off policies. Executive shall be entitled to such holidays as are established by
the Company for all employees.
2.7 Automobile Allowance. During the Term, the Company shall provide
Executive with an automobile allowance of $700 per month (the "Automobile
Allowance").
ARTICLE III
NONDISCLOSURE AND NON-SOLICITATION
3.1 Proprietary Information.
(a) The Executive recognizes that Executive's relationship with the
Company is one of high trust and confidence by reason of Executive's access to
and contact with the trade secrets and confidential and proprietary information
of the Company including, without limitation, information not previously
disclosed to the public regarding current and projected revenues, expenses,
costs, profit margins and any other financial and budgeting information;
marketing and distribution plans and practices; business plans, opportunities,
projects and any other business and corporate strategies; product information;
names, addresses, terms of
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contracts and other arrangements with customers, suppliers, agents and employees
of the Company; confidential and sensitive information regarding other
employees, including information with respect to their job descriptions,
performance strengths and weaknesses, and compensation; and other information
not generally known regarding the business, affairs and plans of the Company
(collectively, the "Proprietary Information"). The Executive acknowledges and
agrees that Proprietary Information is the exclusive property of the Company and
that Executive shall not at any time, either during Executive's employment with
the Company or thereafter disclose to others, or directly or indirectly use for
Executive's own benefit or the benefit of others, any of the Proprietary
Information. For purposes of this Article III, the "Company" shall mean the
Company and each of its subsidiaries.
(b) The Executive acknowledges that the unauthorized use or
disclosure of Proprietary Information would be detrimental to the Company and
would reasonably be anticipated to materially impair the Company's value.
(c) The Executive's undertakings and obligations under this Section
3.1 will not apply, however, to any Proprietary Information which: (i) is or
becomes generally known to the public through no action on Executive's part,
(ii) is generally disclosed to third parties by the Company without restriction
on such third parties, (iii) is approved for release by written authorization of
the Board, (iv) is known to Executive other than as a result of work performed
for the Company, or (v) is required to be disclosed by law or governmental or
court process or order.
(d) Upon termination of Executive's employment with the Company or
at any other time upon reasonable request, Executive will promptly deliver to
the Company all notes, memoranda, notebooks, drawings, records, reports, written
computer code, files and other documents (and all copies or reproductions of
such materials) in Executive's possession or under Executive's control, whether
prepared by Executive or others, which contain Proprietary Information. The
Executive acknowledges that this material is the sole property of the Company.
3.2 Absence of Restrictions upon Disclosure and Competition.
(a) The Executive hereby represents that, except as Executive has
disclosed in writing to the Company on Exhibit A attached hereto, Executive is
not bound by the terms of any agreement with any previous employer or other
party to refrain from using or disclosing any trade secret or confidential or
proprietary information in the course of Executive's employment with the Company
or to refrain from competing, directly or indirectly, with the business of such
previous employer or any other party.
(b) The Executive further represents that Executive's performance of all
the terms of this Agreement and as an employee of the Company does not and will
not breach any agreement to keep in confidence proprietary information,
knowledge or data acquired by Executive in confidence or in trust prior to his
employment with the Company, and Executive will not disclose to the Company or
induce the Company to use any confidential or proprietary information or
material belonging to any previous employer or others.
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3.3 Prohibition on Solicitation of Customers. During the Term and for a
period of eighteen (18) months thereafter, Executive agrees not to, directly or
indirectly, either for Executive or for any other person or entity, solicit any
person or entity to terminate such person's or entity's contractual and/or
business relationship with the Company, nor will Executive interfere with or
disrupt or attempt to interfere with or disrupt any such relationship. None of
the foregoing shall be deemed a waiver of any and all rights and remedies the
Company may have under applicable law.
3.4 Prohibition on Solicitation of Employees, Agents or Independent
Contractors. During the Term and for a period of eighteen (18) months
thereafter, Executive agrees not to solicit any of the employees, agents or
independent contractors of the Company to leave the employ of the Company for a
competitive company or business. However, Executive may solicit any employee,
agent or independent contractor who voluntarily terminates his or her employment
with the Company after a period of ninety (90) days have elapsed since the
termination date of such employee, agent or independent contractor. None of the
foregoing shall be deemed a waiver of any and all rights and remedies the
Company may have under applicable law.
3.5 Other Obligations. The Executive acknowledges that the Company from
time to time may have agreements with other persons, which impose obligations or
restrictions on the Company regarding inventions made during the course of work
under such agreements or regarding the confidential nature of such work. The
Executive agrees to be bound by all such obligations and restrictions which are
made known to Executive and to take all reasonable action necessary to discharge
the obligations of the Company under such agreements.
3.6 Rights and Remedies upon Breach. The Executive acknowledges and agrees
that any material breach by him of any of the provisions of Article III (the
"Restrictive Covenants") would result in irreparable injury and damage for which
money damages may not provide an adequate remedy. Therefore, if Executive
materially breaches any of the provisions of Article III, the Company shall have
the following rights and remedies, each of which rights and remedies shall be
independent of the other and severally enforceable, and all of which rights and
remedies shall be in addition to, and not in lieu of, any other rights and
remedies available to the Company under law or in equity (including, without
limitation, the recovery of damages): the right and remedy to have the
Restrictive Covenants specifically enforced (without posting bond and without
the need to prove damages) by any court having equity jurisdiction; including,
without limitation, the right to an entry against Executive of restraining
orders and injunctions (preliminary, mandatory, temporary and permanent) against
violations, threatened or actual, and whether or not then continuing, of such
covenants.
ARTICLE IV
TERMINATION
4.1 Definitions. For purposes of this Agreement, the following definitions
shall apply to the terms set forth below:
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(a) Cause. "Cause" shall mean:
(i) habitual neglect or insubordination (defined as a refusal to
execute or carry out directions from the Board which are consistent with
Executive's title and position) where Executive has been given written notice of
the acts or omissions constituting such neglect or insubordination and Executive
has failed to cure such conduct, where susceptible to cure, within thirty (30)
days following notice;
(ii) conviction of any felony or any crime involving moral
turpitude;
(iii) participation in any fraud against the Company;
(iv) willful breach of Executive's material duties to the
Company, including but not limited to theft from the Company and failure to
fully disclose personal pecuniary interest in a transaction involving the
Company;
(v) intentional damage to any property of the Company;
(vi) conduct by Executive which in the good faith, reasonable
determination of the Board demonstrates gross unfitness to serve including, but
not be limited to, gross neglect, non-prescription use of controlled substances,
any abuse of controlled substances whether or not by prescription, or habitual
drunkenness, intoxication, or other impaired state induced by consumption of any
drug, including alcohol; or
(vii) material breach by the Executive of the Restrictive
Covenants.
(b) Change in Control. "Change in Control" shall mean a change in
ownership or control of the Company effected through either of the following
transactions:
(i) the acquisition, directly or indirectly, by any person or
related group of persons (other than the Company or a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Company) of beneficial ownership (within the meaning of Rule 13d-3 of the 1934
Securities Exchange Act, as amended) of securities possessing more than fifty
percent (50%) of the total combined voting power of the Company's outstanding
securities pursuant to a tender or exchange offer made directly to the Company's
stockholders, or
(ii) a change in the composition of the Company's Board such
that a majority of the Board members ceases, by reason of one or more contested
elections for Board membership, to be comprised of individuals who either (A)
have been Board members continuously since the Date of this Agreement or (B)
have been elected or nominated for election as Board members described in clause
(A) who were still in office at the time the Board approved such election or
nomination.
(c) Corporate Transaction. "Corporate Transaction" shall mean either
of the following stockholder-approved transactions to which the Company is a
party:
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(i) a merger, consolidation or reorganization in which
securities possessing more than fifty percent (50%) of the total combined voting
power of the Company's outstanding securities are transferred to a person or
persons different from the persons holding those securities immediately prior to
such transaction, or
(ii) the sale, transfer or other disposition of all or,
substantially all of the Company's assets; or
(iii) complete liquidation or dissolution of the Company.
(d) Good Reason. "Good Reason" shall mean, unless otherwise
consented to in writing by Executive:
(i) assignment of the Executive to a position, responsibilities
or duties of a materially lesser status or degree of responsibility than his
position, responsibilities or duties as of the Date of this Agreement;
(ii) relocation of the Executive outside of the Los
Angeles/Orange County area;
(iii) a reduction by the Company of the Executive's Annual
Salary below the initial Annual Salary or, following a Corporate Transaction or
Change in Control, below Executive's Annual Salary at the time of the Corporate
Transaction or Change in Control;
(iv) a failure by the Company to continue in effect, without
substantial change, any benefit plan or arrangement in which the Executive was
participating or the taking of any action by the Company which would adversely
affect the Executive's participation in or materially reduce his benefits under
any benefit plan (unless such failure, action or changes apply equally to
substantially all other management employees of Company); or
(v) any material breach by the Company of any provision of this
Agreement without the Executive having committed any material breach of
Executive's obligations hereunder.
Notwithstanding the foregoing, (x) Good Reason shall not be deemed to exist
unless notice of termination on account thereof (specifying a termination date
no later than thirty (30) days from the date of such notice) is given no later
than sixty (60) days after the time at which the event or condition purportedly
giving rise to Good Reason first occurs or arises (or when Executive first
becomes aware of such circumstances); and (y) the Company shall have thirty (30)
days from the date notice of such a termination is given to cure such event or
condition if curable and, if the Company does so fully cure such event or
condition, such event or condition shall not constitute Good Reason hereunder.
4.2 Termination upon Death or Disability. If Executive dies during the
Term, the Term shall terminate as of the date of death, and the obligations of
the Company to or with respect to Executive shall terminate in their entirety
upon such date except as otherwise provided
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under this Section 4.2. If Executive becomes disabled for purposes of the
long-term disability plan of the Company for which Executive is eligible, or, in
the event that there is no such plan, if Executive by virtue of ill health or
other disability is unable to perform substantially and continuously the
material duties assigned to him for more than 180 consecutive or non-consecutive
days out of any consecutive 12-month period, then the Company shall have the
right, to the extent permitted by law, to terminate the employment of Executive
upon notice in writing to Executive. If Executive is given such notice of
termination for disability, the Term shall terminate as of the date of such
notice, and the obligations of the Company to Executive shall terminate in their
entirety upon such date except as otherwise provided under this Section 4.2.
Upon termination of employment due to death or disability, Executive (or
Executive's estate or beneficiaries in the case of the death of Executive) shall
be entitled to receive:
(a) any Annual Salary and other benefits earned and accrued under
this Agreement prior to the date of termination (and reimbursement under this
Agreement for expenses incurred prior to the date of termination);
(b) his Annual Salary payable in accordance with the Company's
customary payroll practices for twelve (12) months following such termination;
(c) acceleration and immediate vesting of all stock options to
purchase shares of the Company's Common Stock granted to Executive which would
have vested and become exercisable pursuant to the scheduled vesting for such
options had Executive continued as an employee of the Company for twelve (12)
months following such termination; and
(d) the right to exercise any and all vested stock options for a
period of twelve (12) months following such termination (after which they shall
expire and no longer be exercisable); provided, however, that in no event shall
the exercise period extend later than the expiration term of such option as set
forth in the applicable Notice of Grant.
Executive (or, in the case of Executive's death, Executive's estate and
beneficiaries) shall have no further rights to any other compensation or
benefits hereunder on or after the termination of employment, or any other
rights hereunder, except as otherwise provided in the plans and policies of the
Company.
4.3 Termination for Cause; Termination of Employment by Executive without
Good Reason. The Company may terminate Executive's employment hereunder for
Cause immediately, and Executive may terminate his employment for any or no
reason on at least thirty (30) days' and not more than sixty (60) days' written
notice given to the Company. If during the Term the Company terminates Executive
for Cause, or Executive terminates his employment and the termination by
Executive is not covered by Section 4.2 or 4.4, Executive shall receive any
Annual Salary and other benefits earned and accrued under this Agreement prior
to the termination of employment (and reimbursement under this Agreement for
expenses incurred prior to the termination of employment) and Executive shall
have no further rights to any other compensation or benefits hereunder on or
after the termination of employment, or any other rights hereunder, except as
otherwise provided in the plans and policies of the Company. In addition, in the
event Executive is terminated hereunder for Cause, all stock options to purchase
shares of the Company's Common Stock granted to Executive, vested or unvested,
shall
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immediately cease to be exercisable and shall terminate upon the effective date
of such termination.
4.4 Termination by the Company without Cause; or Executive for Good
Reason. The Company may terminate Executive's employment at any time for any
reason or no reason and Executive may terminate Executive's employment with the
Company for Good Reason. If during the Term the Company terminates Executive's
employment and the termination is not covered by Section 4.2 or 4.3, or
Executive terminates his employment for Good Reason, Executive shall receive:
(a) any Annual Salary and other benefits earned and accrued under
this Agreement prior to the termination of employment (and reimbursement under
this Agreement for expenses incurred prior to the termination of employment);
(b) his Annual Salary payable in accordance with the Company's
customary payroll practices for a period (the "Salary Continuation Period")
following such termination determined as follows:
(i) if such termination occurs within three (3) months following
the Date of this Agreement, the Salary Continuation Period shall be three (3)
months;
(ii) if such termination occurs more than three (3) months
following the Date of this Agreement, but within nine (9) months following the
Date of this Agreement, the Salary Continuation Period shall be six (6) months;
(iii) if such termination occurs more than nine (9) months
following the Date of this Agreement, but within twelve (12) months following
the Date of this Agreement, the Salary Continuation Period shall be nine (9)
months; and
(iv) if such termination occurs more than twelve (12) months
following the Date of this Agreement, the Salary Continuation Period shall be
twelve (12) months;
(c) acceleration and immediate vesting of all stock options to
purchase shares of the Company's Common Stock granted to Executive which would
have vested and become exercisable pursuant to the scheduled vesting for such
options had Executive continued as an employee of the Company during the
applicable Salary Continuation Period determined pursuant to Section 4.4(b)
above; and
(d) the right to exercise any and all vested stock options to
purchase shares of the Company's Common Stock then held by Executive during the
applicable Salary Continuation Period determined pursuant to Section 4.4(b)
above; provided, however, that in no event shall the exercise period extend
later than the expiration term of such option as set forth in the applicable
Notice of Grant.
In order to be eligible to receive the benefits specified under Sections
4.4(b)-(d), Executive must execute a general release of claims in a form
reasonably acceptable to the Company and Executive and signed by Executive.
Executive shall have no further rights to any
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other compensation or benefits hereunder on or after the termination of
employment, or any other rights hereunder, except as otherwise provided in the
plans and policies of the Company.
In the event Executive is terminated by the Company pursuant to this
Section 4.4, Executive shall not have a duty to seek substitute employment and
the Company shall not have the right to offset any compensation due Executive
against any compensation or income received by Executive after the date of such
termination.
4.5 Benefit Limit. In the event that any payment or benefit (including
salary continuation payments, accelerated option vesting or continued health
care coverage) received or to be received by Executive pursuant to this
Agreement (collectively the "Payments") would constitute a parachute payment
within the meaning of Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code"), then the following limitation shall apply:
The aggregate present value of those Payments shall be limited in amount
to the greater of the following dollar amounts (the "Benefit Limit"):
(a) 2.99 times Executive's Average Compensation, or
(b) the amount which yields Executive the greatest after-tax amount
of Payments under this Agreement after taking into account any excise tax
imposed under Code Section 4999 on those Payments.
The present value of the Payments will be measured as of the date of the
Change in Control or Corporate Transaction and determined in accordance with the
provisions of Code Section 280G(d)(4).
Average Compensation means the average of Executive's W-2 wages from the
Company for the five (5) calendar years (or such fewer number of calendar years
of employment with the Company) completed immediately prior to the calendar year
in which the Change of Control or Corporate Transaction is effected. Any W-2
wages for a partial year of employment will be annualized, in accordance with
the frequency which such wages are paid during such partial year, before
inclusion in Average Compensation.
4.6 Resolution Procedure. For purposes of the foregoing Benefit Limit,
the following provisions will be in effect:
(a) In the event there is any disagreement between Executive and the
Company as to whether one or more Payments to which Executive becomes entitled
under this Agreement constitute parachute payments under Code Section 280G or as
to the determination of the present value thereof, such dispute will be resolved
as follows:
(i) In the event temporary, proposed or final Treasury
Regulations in effect at the time under Code Section 280G (or applicable
judicial decisions) specifically address the status of any such Payment or the
method of valuation therefor, the characterization afforded to such Payment by
the Regulations (or such decisions) will, together with the applicable valuation
methodology, be controlling.
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(ii) In the event Treasury Regulations (or applicable judicial
decisions) do not address the status of any Payment in dispute, the matter will
be submitted for resolution to a nationally-recognized independent accounting
firm mutually acceptable to Executive and the Company ("Independent
Accountant"). The resolution reached by the Independent Accountant will be final
and controlling; provided, however, that if in the judgment of the Independent
Accountant the status of the payment in dispute can be resolved through the
obtainment of a private letter ruling from the Internal Revenue Service, a
formal and proper request for such ruling will be prepared and submitted, and
the determination made by the Internal Revenue Service in the issued ruling will
be controlling. All expenses incurred in connection with the retention of the
Independent Accountant and (if applicable) the preparation and submission of the
ruling request shall be borne by the Company.
4.7 Reduction of Benefits. To the extent the aggregate present value of
the Payments would exceed the Benefit Limit, the salary continuation payments
will first be reduced, and then the accelerated vesting of the options (based on
their parachute value under Code Section 280G) will be reduced, to the extent
necessary to assure that such Benefit Limit is not exceeded.
ARTICLE V
GENERAL PROVISIONS
5.1 Severability. The Executive acknowledges and agrees that (i) he has
had an opportunity to seek advice of counsel in connection with this Agreement
and (ii) the Restrictive Covenants are reasonable in geographical and temporal
scope and in all other respects. If it is determined that any of the provisions
of this Agreement, including, without limitation, any of the Restrictive
Covenants, or any part thereof, is invalid or unenforceable, the remainder of
the provisions of this Agreement shall not thereby be affected and shall be
given full effect, without regard to the invalid portions.
5.2 Duration and Scope of Covenants. If any court or other decision-maker
of competent jurisdiction determines that any of Executive's covenants
contained in this Agreement, including, without limitation, any of the
Restrictive Covenants, or any part thereof, is unenforceable because of the
duration or geographical scope of such provision, then, after such determination
has become final and unappealable, the duration or scope of such provision, as
the case may be, shall be reduced so that such provision becomes enforceable
and, in its reduced form, such provision shall then be enforceable and shall be
enforced.
5.3 Arbitration.
(a) Except as provided in Section 3.6, any controversy, dispute, or
claim between the parties to this Agreement, including any claim arising out of,
in connection with, or in relation to the formation, interpretation, performance
or breach of this Agreement shall be settled exclusively by arbitration, before
a single arbitrator experienced in employment matters, in accordance with this
section and the then most applicable rules of the American Arbitration
Association. Judgment upon any award rendered by the arbitrator may be entered
by any state or federal court having jurisdiction thereof. Such arbitration
shall be administered by
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the American Arbitration Association. Arbitration shall be the exclusive remedy
for determining any such dispute, regardless of its nature. Notwithstanding the
foregoing, either party may in an appropriate matter apply to a court pursuant
to California Code of Civil Procedure Section 1281.8, or any comparable
provision, for provisional relief, including a temporary restraining order or a
preliminary injunction, on the ground that the award to which the applicant may
be entitled in arbitration may be rendered ineffectual without provisional
relief.
(b) In the event the parties are unable to agree upon an arbitrator,
the parties shall select a single arbitrator from a list of nine arbitrators
drawn by the parties at random from the "Independent" (or "Gold Card") list of
retired judges or, at Executive's option, from a list of nine persons from the
Employment Panel provided by the American Arbitration Association. If the
parties are unable to agree upon an arbitrator from the list so drawn, then the
parties shall each strike names alternately from the list, with the first to
strike being determined by lot. After each party has used four strikes, the
remaining name on the list shall be the arbitrator. If such person is unable to
serve for any reason, the parties shall repeat this process until an arbitrator
is selected.
(c) This agreement to resolve any disputes by binding arbitration
shall extend to claims against any parent, subsidiary or affiliate of each
party, and, when acting within such capacity, any officer, director,
shareholder, employee or agent of each party, or of any of the above, and shall
apply as well to claims arising out of state and federal statutes and local
ordinances as well as to claims arising under the common law. In the event of a
dispute subject to this paragraph the parties shall be entitled to reasonable
discovery subject to the discretion of the arbitrator. The remedial authority of
the arbitrator shall be the same as, but no greater than, would be the remedial
power of a court having jurisdiction over the parties and their dispute. The
arbitrator shall, upon an appropriate motion, dismiss any claim without an
evidentiary hearing if the party bringing the motion establishes that he, she or
it would be entitled to summary judgment if the matter had been pursued in court
litigation. In the event of a conflict between the applicable rules of the
American Arbitration Association and these procedures, the provisions of these
procedures shall govern.
(d) Any filing or administrative fees shall be borne initially by
the party requesting arbitration. The Company shall be initially responsible for
the costs and fees of the arbitrator, unless Executive wishes to contribute (up
to 50%) of the costs and fees of the arbitrator. The prevailing party in such
arbitration, as determined by the arbitrator, and in any enforcement or other
court proceedings, shall be entitled, to the extent permitted by law, to
reimbursement from the other party for all of the prevailing party's costs
(including but not limited to the arbitrator's compensation), expenses, and
attorneys' fees.
(e) The arbitrator shall render an award and written opinion, and
the award shall be final and binding upon the parties. If any of the provisions
of this Section 5.3, or of this Agreement, are determined to be unlawful or
otherwise unenforceable, in whole or in part, such determination shall not
affect the validity of the remainder of this Agreement, and this Agreement shall
be reformed to the extent necessary to carry out its provisions to the greatest
extent possible and to insure that the resolution of all conflicts between the
parties, including those arising out of statutory claims, shall be resolved by
neutral, binding arbitration. If a court should find that this Section's
arbitration provisions are not absolutely binding, then the parties
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intend any arbitration decision and award to be fully admissible in evidence in
any subsequent action, given great weight by any finder of fact, and treated as
determinative to the maximum extent permitted by law.
(f) Unless mutually agreed by the parties otherwise, any arbitration
shall take place in Orange County, California.
5.4 Proprietary Information and Inventions. Contemporaneously with the
execution of this Agreement, Executive shall execute a Proprietary Information
and Inventions Agreement with the Company. The terms of said agreement are
incorporated by reference in this Agreement, and Executive agrees to be bound
thereby.
5.5 Covenant to Notify Management. Executive agrees to abide by the ethics
policies of the Company as well as the Company's other rules, regulations,
policies and procedures which he has received in writing. Executive agrees to
comply in full with all governmental laws and regulations as well as ethics
codes applicable to the business or profession. In the event that Executive is
aware or suspects the Company, or any of its officers or agents, of violating
any such laws, ethics codes, rules, regulations, policies or procedures,
Executive agrees to bring all such actual and suspected violations to the
attention of the Company immediately so that the matter may be properly
investigated and appropriate action taken.
5.6 Assistance/Cooperation With Litigation. In connection with the
Company's participation in current or future litigation relating to events which
occur during Executive's employment or about which Executive has information,
Executive agrees to cooperate fully and devote such time as may be reasonably
required in the preparation, prosecution or defense of the Company's case or
cases, including, but not limited to, the execution of truthful declarations or
providing information and/or documents requested by the Company. The Company
shall reimburse Executive, promptly upon receipt of satisfactory evidence
thereof, for all reasonable expenses (not including any amount for Executive's
time) incurred by Executive in connection with such assistance and/or
cooperation with the Company with respect to such litigation.
5.7 Notices. All notices or deliveries authorized or required pursuant to
this Agreement shall be deemed to have been given when in writing and when (i)
deposited in the U.S. mail, certified, return receipt requested, postage
prepaid, or (ii) otherwise delivered by hand or by overnight delivery, against
written receipt, by a common carrier or commercial courier or delivery service
addressed to the parties at the following addresses or to such other addresses
as either may designate in writing to the other party:
to the Company: Xxxxxxx.xxx, Inc.
000 Xxxxx Xxxx., 00xx Xxxxx
Xxxxx Xxxx, XX 00000
Attn: Chief Executive Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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to Executive: Xxxxx Xxxxxx
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
5.8 Entire Agreement. This Agreement, along with the Proprietary
Information and Inventions Agreement by and between Executive and Company of
even date herewith and the stock option agreements described in Section 2.3,
contain the entire agreement between the parties with respect to the subject
matter hereof and thereof and supersedes all prior agreements, written or oral,
with respect thereto.
5.9 Waivers and Amendments. This Agreement may be amended, superseded,
canceled, renewed or extended, and the terms hereof may be waived, only by a
written instrument signed by the parties or, in the case of a waiver, by the
party waiving compliance. No delay on the part of any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall
any waiver on the part of any party of any such right, power or privilege nor
any single or partial exercise of any such right, power or privilege, preclude
any other or further exercise thereof or the exercise of any other such right,
power or privilege.
5.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES.
5.11 Assignment. This Agreement, and Executive's rights and obligations
hereunder, may not be assigned by Executive; any purported assignment by
Executive in violation hereof shall be null and void. In the event of any sale,
transfer or other disposition of all or substantially all of the Company's
assets or business, whether by merger, consolidation or otherwise, the Company
may assign this Agreement and its rights hereunder; provided that such
assignment shall not limit the Company's liability under this Agreement to
Executive.
5.12 Withholding. The Company shall be entitled to withhold from any
payments or deemed payments any amount of tax withholding required by law.
5.13 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors, permitted assigns,
heirs, executors and legal representatives.
5.14 Counterparts. This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original but all such counterparts together shall constitute one and the same
instrument. Each counterpart may consist of two copies hereof each signed by one
of the parties hereto.
5.15 Survival. Anything contained in this Agreement to the contrary
notwithstanding, the provisions of Article III, Sections 5.2, 5.3, 5.5, 5.6,
5.10 and 5.17, and the other provisions of this Section 5 (to the extent
necessary to effectuate the survival of Article III, Sections 5.2, 5.3, 5.5,
5.6, 5.10 and 5.17), shall survive termination of this Agreement and any
termination of Executive's employment hereunder.
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5.16 Headings. The headings in this Agreement are for reference only and
shall not affect the interpretation of this Agreement.
5.17 Indemnification; Directors and Officers Insurance: To the fullest
extent permitted by law, the Company shall indemnify; defend and hold harmless
Executive from and against all actual or threatened actions, suits or
proceedings, whether civil or criminal, administrative or investigative;
together with all attorneys' fees and costs, fines, judgments or settlements
imposed upon or incurred by Executive in connection therewith, that arise from
Executive's employment by, or serving as an officer of, the Company, so long as
Executive acted or refrained from acting legally and in good faith or reasonably
believed that his actions or refraining from acting were legal and performed or
omitted in good faith.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
"EMPLOYER"
XXXXXXX.XXX, INC.,
a Delaware corporation
By: /s/ XXXXXX XXXXXXX
------------------------------------
Xxxxxx Xxxxxxx,
Chief Executive Officer
"EXECUTIVE"
/s/ XXXXX XXXXXX
----------------------------------------
Xxxxx Xxxxxx
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EXHIBIT A
NON-DISCLOSURE AND NON-COMPETITION AGREEMENT
Please list terms of any agreements with any previous employer or other
party which restrains you from using or disclosing any trade secret or
confidential or proprietary information in the course of your employment with
Xxxxxxx.xxx, Inc. or restrains you from competing directly or indirectly with
the business of such previous employer or any other party.
Date Signed by
Executive:
5/6/02 /s/ XXXXX XXXXXX
---------------------- ----------------------------------------
Signature of Executive
XXXXX XXXXXX
----------------------------------------
Printed Name of Executive
Reviewed and accepted by
---------------------------------
On
-----------------------------
By: /s/ XXXXXX XXXXXXX
-----------------------------
