1
EXHIBIT 10(f)
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of the _15th ___ day of ___June___, 1998,
between Technology Guardian, Inc., a California corporation (the "Employer") and
Xxxxx X. Xxxxxxx (the "Employee").
WHEREAS, Employee presently is employed by Employer;
WHEREAS, Employer wishes to enter into an Employment Agreement with
Employee;
WHEREAS, Employee and Employer agree that this Employment Agreement
Supersedes all other Employment Agreements between the Employee and Employer
written, implied or otherwise.
NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement, the Employer and Employee hereby agree as follows:
ARTICLE I
TERM OF EMPLOYMENT
1.1 Employment. The Employer agrees to employ the Employee and the
Employee agrees to be employed by the Employer upon the terms and conditions
hereinafter set forth.
1.2 Term. The employment of the Employee by the Employer as provided
herein shall commence on September 25, 1997 and shall end five years from such
date, unless sooner terminated by mutual agreement or in accordance with the
provisions of Article IV.
1.3 Office and Support. Employee shall be provided an office and support
staff, including but not limited to secretarial services, at Employer's
principal place of business. Such office and services shall be comparable to the
office and support services provided at the time of commencement of this
Agreement.
1.4 Place of Performance. In connection with Employee's employment by
Employer, Employee shall be based at Employer's office in Westminster,
California, except for required travel on Employer's business to an extent
substantially consistent with Employee's customary business travel obligations.
ARTICLE II
DUTIES OF THE EMPLOYEE
2.1 Duties. The Employee shall be employed with the title of Chairman,
Chief Executive Officer and President, with responsibilities and authority as
are customarily performed by such an officer including, but not limited to those
duties described in Schedule 2.1 and as may from time to time be assigned to
Employee by the Board of Directors of Employer. Employee will continue to have
for the term of this Agreement all authority and responsibility that Employee
had at the time this Agreement commenced.
2
2.2 Extent of Duties. Employee shall devote substantially his full time,
attention and energies to the business of the Employer.
2.3 Disclosure of Information.
2.3.1 The Employee recognizes and acknowledges that the
information, processes, developments, experimental work, work in progress,
business, list of the Employer's customers and any other trade secret or other
secret or confidential information relating to Employer's business as they may
exist from time to time are valuable, special and unique assets of Employer's
business. Therefore, Employee agrees that:
(i) Employee will hold in strictest confidence and not
disclose, reproduce, publish or use in any manner, whether during or subsequent
to his employment, without the express authorization of the Board of Directors
of the Employer, any information, process, development or experimental work,
work in process, business, customer lists, trade secret or any other secret or
confidential matter relating to any aspect of the Employer's business, except as
such disclosure or use may be required in connection with Employee's work for
the Employer.
(ii) Upon request or at the time of leaving the employ
of the Employer, the Employee will deliver to the Employer, and not keep or
deliver to anyone else, any and all notes, memoranda, documents and, in general,
any and all material relating to the Employer's business.
2.3.2 In the event of a breach or threatened breach by the Employee
of the provisions of this section 2.3, the Employer shall be entitled to an
injunction (i) restraining the Employee from disclosing, in whole or in part,
any information as described above or from rendering any services to any person,
firm, corporation, association or other entity to whom such information, in
whole or in part, has been disclosed or is threatened to be disclosed; and/or
(ii) requiring that Employee deliver to Employer all information, documents,
notes, memoranda and any and all other material as described above upon
Employee's leave of the employ of the Employer. Nothing herein shall be
construed as prohibiting the Employer from pursuing other remedies available to
the Employer for such breach or threatened breach, including the recovery of
damages from the Employee.
3
ARTICLE III
COMPENSATION OF THE EMPLOYEE
3.1 Compensation. As compensation for services rendered under this
Agreement, the Employee shall receive a salary at the rate of $150,000 per annum
to be paid in accordance with Employer's normal practices. This salary shall be
increased for cost-of-living at the rate of 2 1/2% per annum, plus any other
increase which may be determined from time to time in the discretion of the
Employer's Board of Directors. If increased, this salary shall not be decreased
thereafter during the term of this Agreement without the consent of the
Employee. The salary provided in this subsection shall in no way be deemed
exclusive and shall not prevent Employee from participating in any other
compensation or benefit plan of Employer.
3.1.a Bonus. As additional performance based compensation a Bonus equal
to 10% of the after tax, net profits of the company, on a annual basis will be
paid within 30 days of the Independent Auditors Annual Report.
3.2 Benefits. Employee shall be entitled to the benefits as set forth in
Schedule 3.2. Employee shall be entitled to participate in all of Employer's
employee benefit plans and employee benefits, including any retirement, pension,
profit-sharing, stock option, insurance, hospital or other plans and benefits
which now may be in effect or which may hereafter be adopted, it being
understood that Employee shall have the same rights and privileges to
participate in such plans and benefits as any other executive employee during
the term of this Agreement. Participation in any benefit plans shall be in
addition to the compensation provided for in Section 3.1. Employee shall be
provided with a car by Employer on such lease terms to be determined by
Employer, provided that the monthly operating costs (including the lease
payment) to be paid by Employer shall not exceed $_750.00___. [The total
operating costs on the vehicle shall be paid 80% by Employer and 20% by
Employee.]
3.3 Expenses. Employee shall be entitled to prompt reimbursement for all
reasonable expenses incurred by Employee in the performance of his duties
hereunder. Employer shall advance reasonable estimates of such expenses upon
request of the Employee. Employee shall not incur more than $30,000 per year in
total expenses without prior approval by Employer's Board of Directors.
ARTICLE IV
TERMINATION OF EMPLOYMENT
4.1 Termination. The Employee's employment hereunder may be terminated
without any breach of this Agreement only under the following circumstances:
4.1.1 By Employee. Upon the occurrence of any of the following
events this Agreement may be terminated by the Employee by written notice to
Employer:
(i) the sale by Employer of substantially all of its
assets;
4
(ii) the sale, exchange or other disposition, in one
transaction or a series of related transactions, of at least 40% percent of the
outstanding voting shares of Employer;
(iii) a decision by Employer to terminate its business
and liquidate its assets;
(iv) the merger or consolidation of Employer with
another entity or an agreement to such a merger or consolidation or any other
type of reorganization;
(v) Employer makes a general assignment for the benefit
of creditors, files a voluntary bankruptcy petition, files a petition or answer
seeking a reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any law, there shall have been filed any
petition or application for the involuntary bankruptcy of Employer, or other
similar proceeding, in which an order for relief is entered or which remains
undismissed for a period of thirty days or more, or Employer seeks, consents to,
or acquiesces in the appointment of a trustee, receiver, or liquidator of
Employer or any material party of its assets; or
(vi) there are material changes in Employee's duties and
responsibilities without his written consent.
4.1.2 Death. This Agreement shall terminate upon the death of
Employee.
4.1.3 Disability. This Agreement shall not terminate upon the
temporary disability of the Employee, but the Employer may terminate this
Agreement upon the permanent disability of the Employee. Employee shall be
considered permanently disabled if: (1) he is disabled as defined in a
disability insurance policy purchased by or for the benefit of the Employee; or
(2) if no such policy is in effect, he is incapacitated to such an extent due to
a medically determinable physical or mental condition that he is unable to
perform substantially all of his duties for 9 consecutive months for Employer
that he performed prior to such incapacitation.
4.1.4 Cause. The Employer may terminate the Employee's employment
hereunder for Cause. For purposes of this Agreement, the Employer shall have
"Cause" to terminate the Employee's employment hereunder upon the following: (1)
the willful and continued failure by the Employee substantially to perform his
duties hereunder (other than any such failure resulting from the Employee's
incapacity due to physical or mental illness), after demand for substantial
performance is delivered by the Employer that specifically identifies the manner
in which the Employer believes the Employee has not substantially performed his
duties; or (2) the willful engaging by the Employee in misconduct which is
materially injurious to the Employer, monetarily or otherwise; or (3) the
willful violation by the Employee of the provisions of this Agreement. For
purposes of this paragraph, no act, or failure to act, on the part of the
Employee shall be considered "willful" unless done, or omitted to be done, not
in good faith and without reasonable belief by him that his action or omission
was in the best interest of the Employer.
5
Notwithstanding the foregoing, the Employee shall not be deemed to have
been terminated for Cause without (i) reasonable notice to the Employee setting
forth the reasons for the Employer's intention to terminate for Cause and
granting Employee 90 days to cure or remedy (if possible) the reasons for
termination; (ii) an opportunity for the Employee, together with his counsel, to
be heard before the Board, and (iii) delivery to the Employee of a Notice of
Termination as defined in section 4.2 hereof from the Board finding that in the
good faith opinion of the Board the Employee was guilty of conduct set forth
above in clause (1), (2) or (3) of the preceding paragraph and was unable to
cure or remedy the reasons for termination, and specifying the particulars
thereof in detail.
4.2 Notice of Termination. Any termination of the Employee's employment
by the Employer or by the Employee (other than termination pursuant to
subsection 4.1.2 above) shall be communicated by written Notice of Termination
to the other party. For purposes of this Agreement, a "Notice of Termination"
shall mean a notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of employment under
the provision so indicated.
4.3 Date of Termination. "Date of Termination" shall mean (i) if the
Employee's employment is terminated by his death, the date of his death; and
(ii) if the Employee's employment is terminated for any other reason, the date
on which a Notice of Termination is received by Employer or Employee.
4.4 Payment of Salary/Severance Pay Following Termination.
4.4.1 In the event of temporary or permanent disability of the
Employee as described in subsection 4.1.3 hereof Employee shall be entitled to
receive all compensation payable up to the Date of Termination notwithstanding
his temporary or permanent disability; any such payment, however, shall be
reduced by disability insurance benefits, if any, paid to Employee under
policies (other than group policies) for which Employer pays all premiums and
Employee is the beneficiary.
4.4.2 Following the termination of this Agreement by the Employer
for Cause as provided in subsection 4.1.4 hereof, the Employee shall be entitled
only to compensation through the Date of Termination.
4.4.3 Following the termination of this Agreement by Employer for
any reason other than Cause or permanent disability, Employer shall pay Employee
a lump sum severance payment equal to two times the Employee's annual salary at
the date of termination, which amount shall be paid within five business days of
the date the Notice of Termination is delivered to Employee.
4.5 Remedies. Any termination of this Agreement shall not prejudice any
other remedy to which the Employer or Employee may be entitled, either at law,
equity, or under this Agreement.
ARTICLE V
6
INDEMNIFICATION
5.1 Indemnification. To the fullest extent permitted by applicable law,
Employer agrees to indemnify, defend and hold Employee harmless from any and all
claims, actions, costs, expenses, damages and liabilities, including, without
limitation, reasonable attorneys' fees, hereafter or heretofore arising out of
or in connection with activities of Employer or its employees, including
Employee, or other agents in connection with and within the scope of this
Agreement or by reason of the fact that he is or was a director or officer of
Employer or any affiliate of Employer. To the fullest extent permitted by
applicable law, Employer shall advance to Employee expenses of defending any
such action, claim or proceeding. However, Employer shall not indemnify Employee
or defend Employee against, or hold him harmless from any claims, damages,
expenses or liabilities, including attorneys' fees, resulting from the gross
negligence or willful misconduct of Employee. The duty to indemnify shall
survive the expiration or early termination of this Agreement as to any claims
based on facts or conditions which occurred or are alleged to have occurred
prior to expiration or termination.
ARTICLE VI
GENERAL PROVISIONS
6.1 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
6.2 Arbitration. Any controversy or claim arising out of or relating to
this Agreement or the breach thereof shall be settled by arbitration in the
County of Orange , California in accordance with the rules then existing of the
American Arbitration Association and judgment upon the award may be entered in
any court having jurisdiction thereof.
6.3 Entire Agreement. This Agreement supersedes any and all other
Agreements, whether oral or in writing, between the parties with respect to the
employment of the Employee by the Employer.
6.4 Successors and Assigns. This Agreement, all terms and conditions
hereunder, and all remedies arising herefrom, shall inure to the benefit of and
be binding upon Employer, any successor in interest to all or substantially all
of the business and/or assets of Employer, and the heirs, administrators,
successors and assigns of Employee. Except as provided in the preceding
sentence, the rights and obligations of the parties hereto may not be assigned
or transferred by either party without the prior written consent of the other
party.
6.5 Notices. For purposes of this Agreement, notices, demands and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid, addressed as
follows:
7
If to Employee: Xxxxx X. Xxxxxxx
00000 Xxxxxxxxxx Xxxxxxx Xxxx #000
Xxxxxxxxxx Xxxxx, XX 00000
If to Employer: Technology Guardian, Inc.
00000 Xxxxxxxxxx Xxxxxx #000
Xxxxxxxxxxxx, XX 00000
Attn: Xxxx Xxxxxxx, Secretary/ Treasurer
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
6.6 Severability. If any provision of this Agreement is prohibited by or
is unlawful or unenforceable under any applicable law of any jurisdiction as to
such jurisdiction, such provision shall be ineffective to the extent of such
prohibition without invalidating the remaining provisions hereof.
6.7 Section Headings. The section headings used in this Agreement are
for convenience only and shall not affect the construction of any terms of this
Agreement.
6.8 Survival of Obligations. Termination of this Agreement for any
reason shall not relieve Employer or Employee of any obligation accruing or
arising prior to such termination.
6.9 Amendments. This Agreement may be amended only by written agreement
of both Employer and Employee.
6.10 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original but all of which, when
taken together, shall constitute only one legal instrument. This Agreement shall
become effective when copies hereof, when taken together, shall bear the
signatures of both parties hereto. It shall not be necessary in making proof of
this Agreement to produce or account for more than one such counterpart.
8
6.11 Fees and Costs. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys fees, costs and necessary disbursements in
addition to any other relief to which that party may be entitled.
"EMPLOYER"
Technology Guardian, Inc.
By
---------------------------------
Xxxx Xxxxxxx, Secretary/Treasurer
"EMPLOYEE"
-------------------------------------
Xxxxx X. Xxxxxxx
9
SCHEDULE 2.1
DUTIES OF EMPLOYEE
Employee shall be responsible for policy making decisions with respect
to Employer, provided that such policy making decisions may be subject to
approval by Employer's Board of Directors. Employee shall also be responsible
for the day to day operations of Employer as well as the overall leadership and
management of Employer.
10
SCHEDULE 3.2
Employer shall pay 100% of the cost of health insurance and dental
insurance for Employee, Employee's spouse and Employee's two dependents.
Employee also will be entitled to all paid holidays as customarily are extended
to executive employees. Employee will accrue vacation time and sick leave in
accordance with the provisions contained in the Employee Handbook, and any
supplement thereto.
