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EXHIBIT 10.32
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and effective as of May 9, 1995 by and between
BEEBA'S CREATIONS, INC., a California corporation ("Company"), with its
principal executive offices in San Diego, California, and Xxxxxx X. Xxxxxx
("Executive"), an individual residing in the State of California, with
reference to the following:
WHEREAS, Executive is currently employed by the Company in the
capacity as its President and Chief Executive Officer, and Executive's
background, expertise and efforts have contributed to the success and financial
strength of the Company; and
WHEREAS, the relative rights and obligations of employers and
employees in California may be, in the absence of agreement or policy, subject
to the uncertainties of future changes in California law and judicial
decisions; and
WHEREAS, the Company and Executive desire to define their respective
rights and obligations as provided herein; and
WHEREAS, the Company wishes to assure itself of the continued
opportunity to benefit from Executive's services for the period provided in
this Agreement, and Executive is willing to serve in the employ of the Company
on a full-time basis solely in accordance with the terms hereof for said
period; and
WHEREAS, the Board has determined that the best interests of the
Company would be served by Executive's continued employment under the terms of
this Agreement by the Company and its Affiliates in Executive's current
capacity or such capacities as
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the Board may delegate to him or her from time to time during the term of this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereby agree as follows:
1. Definitions.
(a) "Affiliate" shall mean any Person that controls or is
controlled by or under common control with the Company, whether now or
hereafter formed, including but not limited to Body Drama, Inc., a California
corporation.
(b) "Agreement" means this Employment Agreement and any
amendments hereto complying with Section 15(f) hereof.
(c) "Base Amount" shall have the meaning set forth in
Section 280G of the Code.
(d) "Board" means the Board of Directors of the Company
unless the context otherwise requires.
(e) "Cause" means (1) Executive's personal dishonesty,
gross incompetence (which is intended to be far beyond failure to meet
performance goals), willful misconduct, conflict of interest or breach of
fiduciary duty involving intent for or obtainment of personal or family profit,
willful violation of any law, rule, or regulation to the extent detrimental to
the Company's business or reputation or the Executive's ability to perform this
Agreement, causing the issuance of a final cease-and- desist order, or a
material breach of any provision of this Agreement; or (2) the willful and
continued failure by Executive to substantially perform Executive's duties with
the Company or its Affiliates
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(other than any failure resulting from Disability) after a written demand for
substantial performance is given to Executive by the Board which demand
specifically identifies the manner in which the Board believes that Executive
has not substantially performed his or her duties.
(f) "Code" shall mean the Internal Revenue Code of 1986,
as amended.
(g) "Compensation Committee" is the committee of the
Board appointed as such under Corporations Code Section 311 to act on behalf of
the full Board in matters of executive compensation and benefits.
(h) "Disability" means physical or mental illness
resulting in Executive's absence on a full-time basis from Executive's duties
with the Company or its Affiliates for one hundred eighty (180) consecutive
calendar days, subject to the procedure referenced in Section 9(a).
(i) "Expiration" means the termination of this Agreement
(including Executive's employment hereunder) and of any further obligations of
the parties (except as specified in this Agreement) upon completion of the
Term.
(j) "Fiscal Year" means the year ending August 31.
(k) (Definition no used).
(l) "Parachute Payment" shall have the meaning set forth
in Section 280G of the Code and the regulations promulgated thereunder.
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(m) "Person" means an individual, a group acting in
concert, a corporation, a partnership, an association, a joint stock company, a
trust, any unincorporated organization or a government or political subdivision
thereof.
(n) "Retirement" or "Retire" means the Termination by
Executive of his employment with the Company and its Affiliates based upon
retirement in accordance with the Retirement Plan.
(o) "Retirement Plan" means any retirement plans of
Company applicable to Executive in effect on the date of Executive's
Termination or resignation.
(p) "Term" means the initial term of this Agreement and
any extensions hereof, as provided in Section 4.
(q) "Termination" and "Terminate(d)" means the
termination of Executive's employment hereunder for any of the following
reasons unless the context indicates otherwise: (i) Retirement, (ii) Death of
Executive, (iii) Disability, (iv) Expiration, (v) resignation by Executive,
(vi) liquidation of the Company, (vii) Termination Without Cause, and (viii)
Termination for Cause.
(r) "Termination Without Cause" and "Terminate(d) Without
Cause" means the cessation of Executive's employment hereunder for any reason
except (i) a voluntary resignation by Executive, (ii) Termination for Cause,
(iii) Retirement, (iv) Disability, (v) liquidation of the Company, (vi) Death,
or (vii) Expiration.
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(s) "Unexpired Term" has the meaning specified in Section
10(e)(1).
2. Employment.
The Company agrees to continue Executive in its employ, and
Executive agrees to remain in the employ of the Company, for the period stated
in Section 4 hereof and upon the terms and conditions herein provided.
3. Position and Responsibilities.
The Company shall employ Executive in his or her current
capacity with the Company, and Executive shall serve the Company as such for
the Term and on the conditions hereinafter set forth. Executive agrees to
perform such services not materially inconsistent with Executive's position as
shall from time to time be assigned to Executive by the Board or its designee.
4. Term of Employment.
Subject to the provisions and conditions of this Agreement,
the period of Executive's employment under this Agreement shall be deemed to
have commenced as of May 9, 1995, and shall continue for a term ending on
August 31, 1998. In the event the Company retains Executive as an employee
following the expiration of the Term, such employment, absent a written
agreement to the contrary, will be on an at-will basis with such compensation
to which the parties may then agree, subject to termination at any time with or
without cause, and without liability. If the Company does not retain Executive
as an
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employee after Expiration of the Term, Executive's employment shall cease
without further liability to Executive unless otherwise provided in this
Agreement. Executive's employment shall also terminate, and the Term of this
Agreement will expire, upon Executive's resignation, Retirement, Death or
Disability as described in Section 9(a), upon Executive's Termination for Cause
as described in Section 9(b) or upon the liquidation of the Company.
5. Duties.
(a) The Company and Executive hereby agree that, subject
to the provisions of this Agreement, the Company shall employ Executive, and
Executive shall serve the Company as an executive for the Term of this
Agreement. The specific executive position(s) in which Executive will serve
will be designated from time to time by the Board or its Compensation
Committee, with his or her initial position(s) to be as set forth in this
Agreement.
(b) In the event that Executive is assigned to a position
involving different responsibilities and duties of office than those he or she
is currently exercising or is provided with a different title than that
stipulated in this Agreement, then such changed position and title shall at a
minimum be equivalent to Executive's then current position and title including
but not limited to his or her reporting relationship within the Company.
(c) During the Term hereof, Executive shall devote
substantially all of his or her business time, attention, skill
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and efforts to the faithful performance of the business of the Company to the
fullest extent necessary to properly discharge his or her duties and
responsibilities hereunder, whether such business is operated directly by the
Company or through one or more of its Affiliates. Executive's position and
duties with Affiliates, if any, shall be as identified from time to time by the
Board of Directors of such Affiliate(s). Further, with the approval of the
Board, from time to time, Executive may serve, or continue to serve, on the
boards of directors of, and hold any other offices or positions in, companies
or charitable, political or civic organizations, which, in the Board's
judgment, will not present any material conflict of interest with the Company
or its Affiliates, and will not unfavorably affect the performance of
Executive's duties pursuant to this Agreement.
6. Working Facilities.
Executive shall be furnished with a private office,
secretarial and other necessary clerical assistance, and such other facilities,
amenities and services as are presently or may hereafter be furnished to
similarly situated executives of the Company, and as are appropriate for
Executive's position and adequate for the performance of his or her duties
hereunder.
7. Place of Performance.
The Company shall provide and the Executive shall maintain an
office located at the Company's current principal executive offices, within 30
miles of the Company's principal
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executive offices or such other location as the Company and the Executive shall
mutually agree upon.
8. Salary, Bonus, Expenses and Benefits.
(a) Salary. The Company shall pay Executive a base
annual salary of $180,000, or such higher amount as the Board may set in its
sole discretion, payable in at least monthly installments. Any increase in
annual salary shall not serve to limit or reduce any other obligations to
Executive under this Agreement.
(b) Bonus. In addition to said salary, Executive shall
receive an annual bonus ("Bonus") for each fiscal year as follows:
(1) For fiscal year 1995, any bonus shall be paid
in the discretion of the Board; and
(2) Beginning for the year ending August 31,
1996, an amount not less than 6.55% of the excess of (i) the
pretax book income of the Company (exclusive of the Bonus)
over (ii) (a) $1,500,000 for fiscal year ending August 31,
1996 and (b) $1,800,000 for fiscal years ended August 31, 1997
and 1998.
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Executive must be employed for the entire fiscal year in order to
receive such Bonus except that a pro rata portion of the Bonus shall be paid to
Executive based on the period Executive worked during the fiscal year in the
event Executive is Terminated Without Cause. The Board may elect in its sole
discretion to pay an additional Bonus for any year. The Bonus shall be paid
within 15 days of the Company's independent accountants' audit opinion date on
the Company's annual fiscal year-end financial statement. Executive shall also
receive such additional compensation and rights as the Board may, from time to
time, expressly grant to him or her in its sole discretion.
(c) Reimbursement of Expenses. The Company shall pay or
reimburse Executive, on a monthly basis, for reasonable travel, entertainment,
promotional and other expenses incurred by Executive in the performance of his
or her obligations under this Agreement, pursuant to Company expense
reimbursement policies in effect for all executive employees from time to time.
The Company also will reimburse Executive for initiation fees and dues
associated with membership in such professional, social, civic and service
clubs of which Executive is now a member, and which have been or are hereafter
approved for reimbursement on a case by case basis by the Board of Directors.
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(d) Vacation Leave. Executive shall be entitled to
vacation time each year during the Term hereof in accordance with normal
Company policy for executives of comparable tenure and position.
(e) Holidays, Leave Days. Etc. Executive shall be
entitled to such holidays, sick leave, leaves of absence and other absences in
accordance with normal Company policy for executives of comparable tenure and
position.
(f) Participation in Welfare and Benefit Plans. During
the Term hereof, in addition to the foregoing, Executive shall be entitled to
participate in (personally and/or for the benefit of his or her family or other
beneficiaries) any Company welfare, insurance and benefit plans that are
available to other executives of the Company of comparable tenure and position,
in accordance with the terms of such plans.
(g) Pension and Profit-Sharing Plans. In accordance with
the general terms and provisions of such plans, Executive shall be entitled to
all benefits payable under the Company's qualified profit-sharing plan, or
other present or future retirement plans or programs, which are available to
other executives of the Company of comparable tenure and position.
9. Termination.
Executive's employment during the Term may be ended by the
Board or its designee, or by Executive, as herein provided, without further
obligation or liability except as expressly provided herein:
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(a) Resignation, Retirement, Death or Disability.
Executive's employment hereunder shall cease at any time by Executive's
voluntary resignation or by Executive's Retirement, Death or Disability.
Disability shall be deemed to have occurred only after the following procedure
has been satisfied: If within thirty (30) days after written notice of
proposed Termination for Disability is given to Executive by the Company,
Executive has not returned to the full-time performance of his or her duties,
the Company may end Executive's employment by giving written notice of
Termination for Disability. Such notice may be given by the Company following
Executive's absence from Executive's duties by reason of physical or mental
disability for one hundred fifty (150) consecutive calendar days.
(b) Termination for Cause. Executive's employment
hereunder shall cease upon a good faith finding of Cause by the Board;
provided, however, that Executive shall be given written notice of the Board's
finding of conduct by Executive amounting to Cause for such Termination. Said
notice shall be accompanied by a copy of a resolution duly adopted by the
affirmative vote of not less than a majority of the Board at a duly-noticed
meeting of the Board, finding that in the good faith opinion of the Board,
Executive was guilty of conduct amounting to Cause and specifying the
particulars thereof.
(c) Termination Without Cause. Executive's employment
may be Terminated Without Cause upon five (5) days' notice for
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any reason, subject to the payment of all amounts required by Section 10(e)
hereof.
(d) Expiration. Executive's employment shall cease, or
shall continue on an at-will basis as provided in Section 4, upon the
expiration of the Term of this Agreement as provided in Section 4.
10. Payments to Executive Upon Termination.
(a) Disability or Retirement. In the event of
Termination of this Agreement due to Executive's Retirement, Death or
Disability, Executive or Executive's spouse and/or estate shall be entitled to
all benefits generally available to Company employees, or their spouses and/or
estates, as of the date of such, Disability or Retirement, without reduction,
including but not limited to payments under the plans identified in Sections
8(f) and (g).
(b) Death. In the event of Termination of this Agreement
due to Executive's Death, Executive or Executive's spouse and/or estate shall
be entitled to all benefits generally available to Company executives, or their
spouses and/or estates, as of the date of such Death without reduction,
including but not limited to payments under the plans identified in Sections
8(f) and (g).
(c) Resignation or Expiration. In the event of
Executive's voluntary resignation, or upon Expiration, neither the Company nor
any Affiliate shall have any further obligation
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to Executive under this Agreement or otherwise, except as may be expressly
required by law.
(d) Termination for Cause. In the event Executive is
Terminated by the Company for Cause, neither the Company nor any Affiliate
shall have any further obligation to Executive under this Agreement or
otherwise, except as may be expressly required by law.
(e) Termination Without Cause. Upon the occurrence of a
Termination Without Cause the Company shall, as damages for breach of contract:
(1) Pay to Executive within 15 days of said
termination, a lump sum payment equal to the amount that the Executive would
have received (without reduction for the time value of money) if this Agreement
would have remained in effect, without renewal, but for such Termination
Without Cause ("Unexpired Term"); and
(2) Pay to Executive a pro rata portion of the
Bonus under the terms set forth under Section 8(b).
(3) Continue to provide to Executive during the
Unexpired Term hereof, at the Company's expense, those benefits afforded to
Executive under Section 8(f) as if Executive continued to remain in the employ
of the Company or, if that is infeasible, shall compensate Executive for the
value thereof.
(4) Within ninety (90) days of the end of each
plan year during the Unexpired Term hereof, pay to Executive sums equivalent to
those which Executive would have received under
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Section 8(g) but for such Termination Without Cause. The objective of this
provision is to place Executive, so far as is financially reasonable, in the
same position as if he or she had been employed throughout the Unexpired Term
of this Agreement and any such retirement plans continued to provide the same
benefits after the Executive's Termination Without Cause as before such
Termination Without Cause.
(5) The receipt of the amounts and benefits
provided by this Section 10(e) shall constitute the sole remedy of Executive as
against the Company, its Affiliates and their respective past, present and
future officers, directors, shareholders, employees and agents, in the event of
a Termination Without Cause, or other material breach by the Company of the
terms of this Agreement unless specified to the contrary herein,
(f) Liquidation of Company. In the event the Company
plans to liquidate, prior to the liquidation of the Company the Company shall
pay to Executive a lump sum payment equal to the remaining amount that would
have been due Executive pursuant to Section 8(a) for the remainder of the Term
of this Agreement; provided, however, that if the liquidation occurs after
August 31, 1996, Executive shall also receive an additional one year's salary
set forth in Section 8(a). In the event of a liquidation of the Company, this
Agreement shall terminate and the Company shall have no further obligation to
Executive except as set forth herein.
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(g) Payment Limitation. Notwithstanding anything to the
contrary in this Agreement which is treated as a Parachute Payment, the total
compensation paid to Executive pursuant to this Agreement, together with any
other payment or the value of any benefit received or to be received by the
Executive which is treated as a Parachute Payment shall not exceed 2.99 times
the Executive's Base Amount. In the event a reduction of the payments set
forth in this Agreement is required pursuant to this Section, the Executive may
select the compensation which will be reduced in order to fall within the 2.99
times Base Amount limitation.
(h) Source of Payments. All payments provided in Section
10 shall be paid in cash from the general funds of the Company, and no special
or separate fund need be established and no other segregation of assets need be
made to assure payment. Executive shall have no right, title, or interest
whatever in or to any investments which the Company may make to aid the Company
in meeting its obligations hereunder.
(i) Sole Remedy. The receipt of the amounts described in
this Section 10 shall constitute the Executive's sole remedy for breach of this
Agreement against the Company, its Affiliates, and their respective officers,
directors, shareholders, employees and agents.
11. Confidential Information.
During the Term of this Agreement and thereafter, Executive
shall not, to the detriment of the Company or its
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Affiliates, disclose or reveal to any unauthorized person any confidential
information relating to the Company or its' Affiliates, or to any of the
businesses operated by them, and Executive confirms that such information
constitutes the exclusive property of the Company and its Affiliates.
12. Federal Income Tax Withholding.
The Company may withhold from any compensation or benefits
payable under this Agreement, including amounts payable under Section 10, all
federal, state, city or other taxes or deductions as shall be required pursuant
to any law, governmental regulation or ruling.
13. Effect of Prior Agreements.
This Agreement contains the entire understanding between the
parties hereto with respect to the subject matter hereof and supersedes any
prior or contemporaneous agreements, representations or understandings, whether
oral or written, express or implied, between the Company, its Affiliates, and
Executive with respect to Executive's employment by the Company. The parties
do not intend for this Agreement to supersede or invalidate the terms of any
written employee benefit or welfare plans with the Company covering Executive,
unless necessary to carry out the purposes of this Agreement.
14. Arbitration.
Any controversy between the parties hereto, including the
construction, application or breach of any of the terms, covenants or
conditions of this Agreement, and all claims
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relating to or arising from Executive's employment or termination, including
all statutory claims (including but not limited to all statutes dealing with
employment discrimination), shall on timely written request of one party served
upon the other, be submitted to confidential arbitration and be governed by the
California Arbitration Act as set forth in the California Code of Civil
Procedure (presently Sections 1280 et seq.). The parties agree that any
written request for arbitration must be made within twelve months after the
initiating party first learned or should have learned in the exercise of
reasonable diligence of the essential facts upon which the claim is based, or
first suffered any harm, or first learned or should have learned in the
exercise of reasonable diligence of the breach of this Agreement, whichever is
earlier. Any claim not raised within such time limitation shall be waived and
forever barred. The arbitration shall take place in the City of San Diego,
California. The parties may agree upon one arbitrator, but in the event they
cannot agree the arbitrator shall be a retired judge designated by the then
Presiding Judge of the San Diego Superior Court. Arbitration shall be the
exclusive remedy of Executive and the Company and the award of the arbitrator
shall be final and binding upon the parties.
15. General Provisions.
(a) Nonassignability. Neither this Agreement nor any
right or interest hereunder shall be assignable by Executive or Executive's
beneficiaries or legal representatives without the
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Company's prior written consent, provided, however, that nothing in this
Section 15(a) shall preclude (i) Executive from designating a beneficiary to
receive any benefits payable hereunder upon his or her death, or (ii) the
executors, administrators, or other legal representatives of Executive or his
or her estate from assigning any rights hereunder to the person or persons
entitled thereto.
(b) Assumption. The Company shall require any successor
in interest (whether direct or indirect or as a result of purchase, merger,
consolidation, Change in Control or otherwise) to all or substantially all of
the business and/or assets of the Company to expressly assume and agree to
perform the obligations under this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place.
(c) No Attachment. Except as required by law, no right
to receive payments under this Agreement shall be subject to anticipation,
commutation, alienation, sale, assignment, encumbrance, charge, pledge, or
hypothecation or to execution, attachment, levy, or similar process of
assignment by operation of law, and any attempt, voluntary or involuntary, to
effect any such action shall be null, void and of no effect.
(d) Effect of Termination of Agreement. Notwithstanding
any Termination of this Agreement and Executive's employment in accordance
with the provisions hereof, such Termination shall not be construed to relieve
any party of the obligation to pay
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any sums which are accrued and owing under this Agreement but unpaid as of the
date of such Termination, or to affect benefits which have become vested either
pursuant to the terms hereof or to the plan under which such benefits have been
granted.
(e) Binding Agreement. This Agreement shall be binding
upon, and inure to the benefit of, Executive, the Company and its Affiliates,
and their respective heirs, successors and assigns. Each party acknowledges
that no representations, inducements, promises, or agreements have been made by
any party, or anyone acting on behalf of any party, which are not embodied
herein and that no other agreement, statement, or promise not contained in this
Agreement shall be valid or binding on either party except as provided herein.
(f) Amendment or Augmentation of Agreement. This
Agreement may not be modified or amended except by an instrument in writing
signed by the parties hereto. Unless expressly agreed to in writing by the
parties hereto, no additional rights or compensation, even if given or
accepted, shall be deemed to modify or otherwise affect the express terms and
conditions of this Agreement.
(g) Waiver. No term or condition of this Agreement shall
be deemed to have been waived, nor shall there be any estoppel against the
enforcement of any provision of this Agreement except by written instrument of
the party charged with such waiver or estoppel. No such written waiver shall
be deemed a continuing waiver unless specifically stated therein, and each
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waiver shall operate only as to the specific term or condition waived and shall
not constitute a waiver of such term or condition for the future or as to any
act other than that specifically waived.
(h) Severability. If, for any reason, any provision of
this Agreement is held invalid, such invalidity shall not affect any other
provision of this Agreement not held so invalid, and each such other provision
shall to the full extent consistent with law continue in full force and effect.
If any provision of this Agreement shall be held invalid in part, such
invalidity shall in no way affect the rest of such provision not held so
invalid, and the rest of such provision together with all other provisions of
this Agreement shall, to the full extent consistent with law, continue in full
force and effect.
(i) Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if personally delivered or if mailed by United States certified or
registered mail, prepaid, to the parties or their permitted assignees at the
following addresses (or at such other address as shall be given in writing by
either party to the other):
To: Beeba's Creations, Inc.
0000 Xxxxxxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: President
To: Executive at the last known
address contained in the personnel
records of the Company
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(j) Headings. The headings of paragraphs herein are
included solely for convenience of reference and shall not control the meaning
or interpretation of any of the provisions of this Agreement.
(k) Governing Law. This Agreement has been executed and
delivered in the State of California, and its validity, interpretation,
performance, and enforcement shall be governed by the laws of said State.
(l) Advice of Counsel. Executive has been encouraged to
consult with legal counsel of his or her choosing concerning the terms of this
Agreement prior to executing this Agreement. Any failure by Executive to
consult with competent counsel prior to executing this Agreement shall not be a
basis for rescinding or otherwise avoiding the binding effect of this
Agreement. The parties acknowledge that they are entering into this Agreement
freely and voluntarily, with full understanding of the terms of the Agreement.
Interpretation of the terms of this Agreement shall not be construed for or
against either party on the basis of the identity of the party who drafted the
provision in question.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by a duly authorized representative, and Executive
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has signed this Agreement, all as of the day and month first above written.
BEEBA'S CREATIONS, INC. EXECUTIVE
By: L. A. XXXXXXXXX XXXXXX X. XXXXXX
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Xxxxxx X. Xxxxxx
Its: Director
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By: XXXXXX X. XXXXX XX
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Its: Director
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By: ARJUN X. XXXXX
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Its: Director
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