EXHIBIT 10-15
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made as of May 17, 1996 between
New Image Industries, Inc., a Delaware corporation, located at 0000 Xxxxxx
Xxxxx, Xxxxxxxx, Xxxxxxxxxx ("Company"), and Xxxx Xxxxxxx ("Executive"), as
follows:
WHEREAS, a subsidiary of Company and Insight Imaging Systems, Inc., a
California corporation, ("Insight") plan to merge pursuant to an Agreement and
Plan of Reorganization dated May 17, 1996 ("the Merger") and the date of the
Merger will be known herein as the Closing Date.
WHEREAS, Executive is the president of Insight.
WHEREAS, Company and Executive wish to enter into this Agreement to state
the employment terms of Executive with Company during the term of the Agreement
after the Closing Date of the Merger.
1. TERM OF EMPLOYMENT
1.1 SPECIFIED TERM. Company hereby employs Executive and Executive hereby
accepts employment with Company for the period from the date of this Agreement
through June 30, 1997.
1.2 EARLIER TERMINATION. This Agreement may be terminated earlier as
hereinafter provided.
2. DUTIES AND OBLIGATIONS OF EXECUTIVE
2.1 TITLE AND DESCRIPTION OF DUTIES. Executive shall serve as Senior
Vice-President for Business Development of New Image Industries, Inc. and shall
have his office at the Company headquarters in Carlsbad, California. In that
capacity, Executive shall do and perform all services, acts, or things necessary
or advisable to fulfill the duties of a Senior Vice-President with business
development responsibilities, as may be more specifically described by the
President or the Board of Directors from time to time. Executive shall at all
times be subject to the direction of the President, and to the policies
established by the Board of Directors, of Company.
2.2 LOYAL AND CONSCIENTIOUS PERFORMANCE OF DUTIES. Executive agrees that
to the best of his ability and experience he will at all times loyally and
conscientiously perform all of the duties and obligations required of him either
expressly or implicitly by the terms of this Agreement.
2.3 DEVOTION OF ENTIRE TIME TO COMPANY'S BUSINESS.
2.3.1 Executive shall devote his entire productive time, ability,
and attention to the business of Company during the term of this Agreement.
2.3.2 During the term of this Agreement, Executive shall not
engage in any other business duties or pursuits whatsoever. Furthermore, during
the term of this Agreement, Executive shall not, whether directly or indirectly,
render any services of a commercial, or professional nature to any other person
or organization, whether for compensation or otherwise, without the prior
written consent of Company's President.
2.3.3 This Agreement shall not be interpreted to prohibit
Executive from making passive personal investments or conducting private
business affairs if those activities do not materially interfere with the
services required under this Agreement. However, Executive shall not, directly
or indirectly, acquire, hold, or retain any interest in any business competing
with or similar in nature to the business of Company.
2.4 COMPETITIVE ACTIVITIES. During the term of this Agreement Executive
shall not, directly or indirectly, either as an Executive, company, consultant,
agent, principal, partner, stockholder, corporate officer, director, or in any
other individual or representative capacity, engage or participate in any
business that is in competition in any manner whatsoever with the business of
Company.
2.5 INDEMNIFICATION FOR NEGLIGENCE OR MISCONDUCT. Executive shall
indemnify and hold Company harmless from all liability for loss, damage, or
injury to persons or property resulting from the negligence or misconduct of
Executive.
2.6 TRADE SECRETS.
2.6.1 The parties acknowledge and agree that during the term of
this Agreement and in the course of the discharge of his duties hereunder,
Executive shall have access to and become acquainted with information concerning
the operation of Company, including without limitation, financial, personnel,
sales, planning, and product development information that is owned by Company
and regularly used in the operation of Company's business and that this
information constitutes Company's trade secrets.
2.6.2 Executive agrees that he shall not disclose any such trade
secrets, directly or indirectly, to any other person or use them in any way,
either during the term of this Agreement or at any other time thereafter, except
as is required in the course of his employment with Company.
2.6.3 Executive further agrees that all files, records, documents,
equipment, and similar items relating to Company's business, whether prepared by
Executive or others, are and shall remain exclusively the property of Company
and that they shall be removed from the premises of Company only as required in
the performance of Executive's duties hereunder.
3. OBLIGATIONS OF COMPANY
3.1 GENERAL DESCRIPTION. Company shall provide Executive with the
compensation, incentives, benefits, and business expense reimbursement specified
elsewhere in this Agreement.
3.2 OFFICE AND STAFF. Company shall provide Executive with a private
office, stenographic help, office equipment and supplies, and other facilities
and services, suitable to Executive's position and adequate for the performance
of his duties.
3.3 INDEMNIFICATION OF LOSSES OF EXECUTIVE. Except as provided in Section
2.5, Company shall indemnify Executive for all losses sustained by Executive in
direct consequence of the discharge of his duties on Company's behalf.
4. COMPENSATION OF EXECUTIVE
4.1 ANNUAL SALARY. As compensation for the services to be rendered by
Executive hereunder, Company shall pay Executive an annual salary at the rate of
$130,000 per annum payable in equal bi-weekly installments each month during the
period of employment, prorated for any partial employment period.
4.2 ACCRUED BONUS. In connection with the Merger, Company has agreed to
assume the payment of the bonus which Executive earned as president of Insight
in the amount of $45,167, which bonus shall be paid in installments as follows:
DATE PAYMENT
---- -------
June 15, 1996 $10,000
September 15, 1996 $10,000
December 15, 1996 $10,000
March 15, 1997 $10,000
June 15, 1997 $ 5,167
In consideration of this bonus, Executive agrees to waive any claim he may
have against Insight Imaging Systems, Inc. arising out of his employment
relation with that Company.
4.3 TAX WITHHOLDING. Company shall have the right to deduct or withhold from
the compensation due to Executive hereunder any and all sums required for
federal income and Social Security taxes and all state or local taxes now
applicable or that may be enacted and become applicable in the future.
5. EXECUTIVE INCENTIVES
5.1 CASH BONUS BASED ON PROFITABILITY.
5.1.1 Executive shall be entitled to participate in the fiscal
year 1997 annual cash incentive plan for management ("the Plan") once the Plan
and its target performance levels ("Target") have been established by the Board
of Directors. Executive shall be entitled to receive a bonus of 35% of his base
salary if the Company reaches Target in addition to any other compensation which
he is entitled to receive hereunder. This bonus shall be paid within three
months after the close of Company's fiscal year in which the bonus is earned,
but only if Executive's services hereunder have not been terminated prior to the
end of that fiscal year.
5.1.2 For the purposes of this bonus provision, financial results
shall be based on the audited financial statements of the Company for the period
to which the bonus relates.
5.2 STOCK OPTIONS.
As additional compensation, Company agrees to grant to Executive options to
purchase 40,000 shares of the Company's common stock $.001 par value, under one
of its stock incentive plans. Such options shall be based on closing bid price
for such common stock on the business day prior to the Closing Date; and shall
vest as follows:
DATE SHARES VESTED
---- -------------
May 31, 1997 10,000
May 31, 1998 13,000 additional shares
May 31, 1999 17,000 additional shares
------
Total 40,000
6. EXECUTIVE BENEFITS
6.1 GENERAL BENEFITS. Executive shall be entitled to three weeks paid
vacation per year and the Company shall pay the cost of the Company's dental and
health plan for Employee and his family. Employee shall receive other benefits
consistent with those afforded other Executives of Company at the level of Vice
President.
6.2 RELOCATION BENEFITS. Executive shall be entitled to the following
relocation benefits:
6.2.1 Executive shall be reimbursed for reasonable travel, meals
and lodging for up to four round trips and up to eight days for Executive and
his wife to look for housing in the Carlsbad area.
6.2.2 Executive shall be reimbursed up to $10,000 for the cost of
moving household goods from his current residence to the Carlsbad area.
6.2.3 All reimbursements shall be subject to the requests being
supported by receipts meeting the documentary requirement of Section 7.1.3.
7. BUSINESS EXPENSES
7.1 BUSINESS EXPENSES.
7.1.1 Company shall promptly reimburse Executive for all
reasonable business expenses incurred by Executive in promoting the business of
Company, including expenditures for entertainment, gifts, and travel.
7.1.2 Each such expenditure shall be reimbursable only if it is of
a nature qualifying it as a proper deduction on the federal and state income tax
return of Company.
7.1.3 Each such expenditure shall be reimbursable only if
Executive furnishes to Company adequate records and other documentary evidence
required by federal and state statutes and regulations issued by the appropriate
taxing authorities for the substantiation of that expenditure as an income tax
deduction.
7.2 REPAYMENT BY EXECUTIVE OF DISALLOWED BUSINESS EXPENSES. In the event
that any business expense paid for Executive or any reimbursement of expense
paid to Executive shall, in the preparation or audit or other examination of
Company's income tax returns, be determined not to be allowable deductions from
Company's gross income, Executive shall repay to Company the amount of the
disallowed expenses.
8. TERMINATION OF EMPLOYMENT
8.1 TERMINATION FOR CAUSE.
8.1.1 Company reserves the right to terminate this Agreement if
Executive (i) willfully breaches, habitually neglects, or fails to perform the
duties which he is required to perform under the terms of this Agreement; (ii)
is unwilling to follow the direction of the person(s) to whom he reports; (iii)
discloses or uses trade secrets, confidential information or customer lists in
an unauthorized manner; (iv) is incapacitated on the job by reason of the
habitual use or abuse of alcohol or drugs; (v) commits an act of dishonesty,
fraud, misrepresentation, theft, or other act of moral turpitude or (vi) engages
in conduct which materially contributes to a stressful or unhealthy working
environment for others.
8.1.2 Company may at its option terminate this Agreement for the
reasons stated in this section by giving written notice of termination to
Executive without prejudice to any other remedy to which Company may be entitled
either at law, in equity, or under this Agreement.
8.1.3 The notice of termination required by this section shall
specify the ground for the termination and shall be supported by a statement of
pertinent facts.
8.1.4 Termination under this section shall be considered "for
cause" for the purposes of this Agreement.
8.2 TERMINATION WITHOUT CAUSE.
8.2.1 This Agreement shall be terminated upon the death of
Executive.
8.2.2 Company reserves the right to terminate this Agreement if
Executive suffers any physical or mental disability that would prevent the
performance of his duties under this Agreement and such condition is permanent.
(For this purpose, any such condition which persists for five months shall be
deemed to be permanent.) Such a termination shall be effected by giving 10
days' written notice of termination to Executive.
8.2.3 Termination under this section shall not be considered "for
cause" for the purposes of this Agreement.
8.3 EFFECT ON COMPENSATION. In the event that this Agreement is
terminated prior to the completion of the term of employment specified herein by
Company for any of the causes set forth in Sections 8.1 or 8.2 above, or if
Executive voluntarily terminates this Agreement. Executive shall be entitled to
the compensation earned by and vested in him prior to the date of termination as
provided for in this Agreement, computed pro rata up to and including that date
and Executive shall be entitled to no further compensation as of the date of
termination. If Executive is terminated for any other reason he shall be
entitled to all compensation due him for the remainder of the term of employment
specified herein in accordance with the time of payment set forth herein.
9. GENERAL PROVISIONS
9.1 NOTICES. Any notices to be given by either party to the other shall
be in writing and may be transmitted either by personal delivery or by mail,
registered or certified, postage prepaid with return receipt requested. Mailed
notices shall be addressed to the parties at the addresses appearing in the
introductory paragraph of this Agreement, but each party may change that address
by written notice in accordance with this section. Notices shall be deemed
communicated as of the date of actual receipt.
9.2 DISPUTES. Any dispute or controversy between the parties arising out
of this Agreement, including disputes as to the validity and enforceability of
this Agreement which cannot be resolved by agreement of the parties (each
dispute or controversy being referred to as a "Dispute") shall, upon the demand
of either party, be determined and settled by arbitration in San Diego,
California under California
substantive law and the Commercial Arbitration Rules of the American
Arbitration Association. This method of resolving disputes shall be
exclusive. The parties further agree that:
(i) ATTORNEYS FEES. The arbitrator shall include attorney fees and
costs in the award to the prevailing party.
(ii) DISCOVERY. The parties shall be entitled to reasonable and
necessary discovery in accordance with the provisions of California Code of
Civil Procedure Section 1283.05.
(iii) FINDINGS AND CONCLUSIONS. The award shall include findings
of fact and conclusions of law showing the legal and factual basis for the
arbitrator's decision.
(iv) ERRORS OF LAW. The award shall be subject to appeal to the San
Diego Superior Court with respect to errors of law (but not with respect to
errors of fact). For an appeal to be given effect, the party seeking to appeal
must give notice of intent to appeal to the arbitrator and the other party to
the arbitration within ten days following the date notice of the award is
received by such party and the appeal itself must be filed with the court within
30 days of receipt of such notice of award.
(v) ENFORCEMENT. Subject to any appeal pursuant to (iv), the award
may be entered by any court of competent jurisdiction.
9.3 ENTIRE AGREEMENT. This Agreement supersedes any and all other
agreements, either oral or in writing, between the parties hereto with respect
to the employment of Executive by Company, and contains all of the covenants and
agreements between the parties with respect to that employment in any manner
whatsoever. Each acknowledges that no representations, inducements, promises,
or agreements, orally or otherwise, have been made by the other party, or anyone
acting on behalf of the other party, which are not embodied herein, and that no
other agreement, statement, or promise not contained in this Agreement shall be
valid or binding.
9.4 MODIFICATIONS. Any modification of this Agreement will be effective
only if it is in writing signed by the party to be charged.
9.5 EFFECT OF WAIVER. The failure of either party to insist on strict
compliance with any of the terms, covenants, or conditions of this Agreement by
the other party shall not be deemed a waiver of that term, covenant, or
condition, nor shall nay waiver or relinquishment of any right or power at any
one time or times be deemed a waiver or relinquishment of that right or power
for all or any other times.
9.6 PARTIAL INVALIDITY. If any provision in this Agreement is held by a
court of competent jurisdiction to be invalid, void, or unenforceable, the
remaining provisions shall nevertheless continue in full force without being
impaired or invalidated in any way.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
9.7 LAW GOVERNING AGREEMENT. This Agreement shall be governed by and
construed in accordance with the laws of he State of California.
Executed on May ___, 1996 at San Diego, California.
COMPANY
NEW IMAGE INDUSTRIES, INC.
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------
Xxxxx X. Xxxxxxx, President
EXECUTIVE
/s/ Xxxx X. Xxxxxxx
------------------------------------
Xxxx X. Xxxxxxx
