58
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as of August 27,
1998 (the "Effective Date") by and between SVI Holdings, Inc., a Nevada
corporation ("Employer"), and Xxxxx Xxxxxxx ("Employee"), with reference to the
following facts:
A. Employee is experienced in managing the business formerly conducted
by Applied Retail Solutions, Inc., a California corporation ("Old ARS").
B. Old ARS has been merged into a wholly-owned subsidiary of Employer
pursuant to the Agreement of Merger and Plan of Reorganization dated July 1,
1998 among Applied Retail Solutions, Inc., a Delaware corporation, Applied
Retail Solutions, Inc., a California corporation, the Shareholders of Applied
Retail Solutions, Inc., a California corporation and Employer (the "Merger
Agreement") evenly dated herewith, which has been named "Applied Retail
Solutions, Inc." ("New ARS").
C. Employer desires to employ Employee to perform the duties and
responsibilities described herein on the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants herein contained, the parties agree as follows:
1. EMPLOYMENT. Employer hereby employs Employee and Employee hereby
accepts such employment upon the terms and conditions hereinafter set forth.
2. DUTIES. Subject to the terms and provisions of this Agreement,
Employee hereby is employed by Employer as the Executive Vice President of New
ARS. Employee's duties shall consist of such duties as customarily are
associated with service as the president and chief executive officer of a
corporate business, with full responsibility and authority for managing the
day-to-day operations of New ARS and implementing such policies as the Board of
Directors of New ARS may from time to time promulgate. Employee shall report
directly to the Chief Executive Officer and the Board of Directors of New ARS.
3. SCOPE OF SERVICES. Employee shall devote substantially all of his
business time, attention, energies, skills, learning and efforts to New ARS'
business.
4. TERM OF EMPLOYMENT AND VOLUNTARY TERMINATION. Subject to prior
termination of this Agreement as hereinafter provided, the term of this
Agreement shall commence on the Effective Date and shall continue through March
31, 2000 and may thereafter be terminated upon six months written notice which
may be given by either Employer or Employee at any time after March 31, 2000.
5. COMPENSATION.
5.1. As consideration for Employee's entering into this Agreement
and agreeing to a covenant not to compete set forth in Section 11, below,
Employer shall pay to Employee on the date of this Agreement $825,412.
59
5.2. Employee's annual compensation ("Base Compensation") under
this Agreement, prorated for any partial year, shall be $190,000 per year,
commencing on the Effective Date. The Base Compensation shall be payable
bi-weekly in arrears from the Effective Date in accordance with the ordinary
payroll procedures of New ARS.
6. OTHER BENEFITS. Employee shall also be entitled to receive all other
benefits, such as health insurance, vacations, sick pay and retirement plan
participation, as are made available to other personnel employed by Employer or
New ARS, as set forth in the New ARS employee handbook.
7. TERMINATION. The employment of Employee may be terminated as
follows:
7.1. TERMINATION BY MUTUAL AGREEMENT. Employer and Employee may
mutually agree in writing to terminate Employee's employment.
7.2. TERMINATION FOR DEATH. Employee's employment shall terminate
immediately upon Employee's death.
7.3. TERMINATION UPON DISABILITY. Employee's employment shall
terminate if Employee should become totally and permanently disabled. For
purposes of this Agreement, Employee shall be considered "totally and
permanently disabled" if Employee would be treated as "disabled" under any
disability insurance policy maintained by New ARS or Employer. In the event any
such policy is either not in force or the benefits are not available under such
policy, then "total and permanent disability" shall mean the inability of the
Employee, as a result of substance abuse, any mental, nervous or psychiatric
disorder, or physical condition, injury or illness to perform substantially all
of his duties on a full-time basis currently and in the foreseeable future, as
determined by the Board of Directors of New ARS.
7.4. TERMINATION BY EMPLOYER. The Employer may terminate this
Agreement: (a) at will, for any reason, or for no reason at all, on or after the
earlier of (i) March 31, 2000 or (ii) upon release to Employee of the "Escrowed
Shares" as defined in the Merger Agreement upon 30 days' written notice to
Employee after, or (b) for "Cause" upon three days' written notice. For purposes
of this Agreement, "Cause" shall mean the existence or occurrence of any of the
following:
7.4.1. Employee's conviction of a felony.
7.4.2. Employee's commission of theft, embezzlement or fraud.
7.4.3. Employee's willful violation of a reasonable Employer
policy previously made known to him or a directive of the Board of Directors of
New ARS.
7.4.4. Employee's breach of his obligations set forth in
Sections 9, 10 and 11, below.
7.4.5. Any neglect or breach of duty by Employee, or any
failure by Employee to perform, to the reasonable satisfaction of the Board of
Directors of New ARS.
60
7.4.6. If Employee breaches any material term of the Merger
Agreement and remains in breach for 10 days after receipt of written notice
describing such breach.
7.5. TERMINATION BY EMPLOYEE. At any time after March 31, 2000,
Employee may terminate his employment upon six months' prior written notice to
Employer.
8. REPRESENTATIONS AND WARRANTIES. Employee hereby represents and
warrants that as of the date of execution of this Agreement: (i) this Agreement
will not cause or require Employee to breach any obligation to, or agreement or
confidence with, any other person; (ii) except as disclosed in writing by
Employee to Employer prior to the execution of this Agreement, Employee is not
representing, or otherwise affiliated in any capacity with, any other lines of
products, manufacturers, vendors or customers of Employer; and (iii) Employee
has not been induced to enter into this Agreement by any promise or
representation other than as expressly set forth in this Agreement. In addition,
in connection with the issuance of the SVI Holdings Shares (the "Shares"),
Employee hereby represents and warrants that the following factual statements
are true and accurate as of the Effective Date and will be true and accurate as
of the Closing: (a) Employee has a preexisting business relationship with
Employer, or by reason of its business or financial experience, is capable of
evaluating the risks and merits of an investment in the Shares and of protecting
its own interests in connection with the investment; (b) Employee has received
and reviewed all information it considers necessary or appropriate for deciding
whether to accept the Shares; (c) Employee has had an opportunity to ask
questions and receive answers from Employer and its officers, directors, and
employees regarding the business, financial affairs, and other aspects of
Employer and has further had the opportunity to obtain all information which it
deems necessary to evaluate the investment and to verify the accuracy of
information otherwise provided it; and (d) Employee is acquiring the Shares for
his own account and not with a view to their distribution within the meaning of
Section 2(11) of the Securities Act.
9. CONFIDENTIALITY. Employee hereby acknowledges that Employer has made
(or may make) available to Employee certain customer lists, product design
information, performance standards and other confidential and/or proprietary
information of Employer or licensed to Employer, including without limitation
trade secrets, copyrighted materials and/or financial information of Employer
(or any of its Affiliates, as defined in Section 11.5 below), including without
limitation, financial statements, reports and data (collectively, the
"Confidential Material"). Except as essential to Employee's obligations under
this Agreement, neither Employee nor any agent, employee, officer, or
independent contractor of or retained by Employee shall make any disclosure of
this Agreement, the terms of this Agreement, or any of the Confidential
Material. Except as essential to Employee's obligations under this Agreement,
neither employee nor any agent, employee, officer, or independent contractor of
or retained by Employee shall make any duplication or other copy of any of the
Confidential Material. Immediately upon request from Employer, Employee shall
return to Employer all Confidential Material. Employee shall notify each person
to whom any disclosure is made that such disclosure is made in confidence, that
the Confidential Material shall be kept in confidence by such person, and that
such person shall be bound by the provisions of this Section.
10. PROPRIETARY INFORMATION. For purposes of this Agreement,
"Proprietary Information" shall mean any information, observation, data, written
61
material, record, document, computer program, software, firmware, invention,
discovery, improvement, development, tool, machine, apparatus, appliance,
design, promotional idea, customer list, practice, process, formula, method,
technique, trade secret, product and/or research related to the actual or
anticipated research, marketing strategies, pricing information, business
records, development, products, organization, business or finances of Employer.
All right, title and interest of every kind and nature whatsoever in and to the
Proprietary Information made, discussed, developed, secured, obtained or learned
by Employee during the term of this Agreement, or the 60-day period immediately
following termination of this Agreement, shall be the sole and exclusive
property of Employer for any purposes or uses whatsoever, and shall be disclosed
promptly by Employee to Employer. The covenants set forth in the preceding
sentence shall apply regardless of whether any Proprietary Information is made,
discovered, developed, secured, obtained or learned (a) solely or jointly with
others, (b) during the usual hours of work or otherwise, (c) at the request and
upon the suggestion of Employer or otherwise, or (d) with the Employer's
materials, tools, instruments or on the Employer's premises or otherwise. All
Proprietary Information developed, created, invented, devised, conceived or
discovered by Employee that are subject to copyright protection are explicitly
considered by Employee and Employer to be works made for hire to the extent
permitted by law. Employee hereby assigns to Employer all of Employee's right,
title and interest in and to the Proprietary Information. Employee hereby
forever fully releases and discharges Employer, any Affiliates of Employer and
their respective officers, directors and employees, from and against any and all
claims, demands, damages, liabilities, costs and expenses of Employee arising
out of, or relating to, any Proprietary Information. Employee shall execute any
documents and take any action the Company may deem necessary or appropriate to
effectuate the provisions of this Agreement, including without limitation
assisting Employer in obtaining and/or maintaining patents, copyrights or
similar rights to any Proprietary Information assigned to Employer, if Employer,
in its sole discretion, requests such assistance. Employee shall comply with any
reasonable rules established from time to time by Employer for the protection of
the confidentiality of any Proprietary Information. Employee irrevocably
appoints the Chief Executive Officer of Employer to act as Employee's agent and
attorney-in-fact to perform all acts necessary to obtain and/or maintain
patents, copyrights and similar rights to any Proprietary Information assigned
by Employee to Employer under this Agreement if (a) Employee refuses to perform
those acts, or (b) is unavailable, within the meaning of any applicable laws.
Employee acknowledges that the grant of the foregoing power of attorney is
coupled with an interest and shall survive the death or disability of Employee.
Employee shall promptly disclose to Employer, in confidence (a) all Proprietary
Information that Employee creates during the term of this Agreement, and (b) all
patent applications filed by Employee within one year after termination of this
Agreement. Any application for a patent, copyright registration or similar right
filed by Employee within one year after termination of this Agreement shall be
presumed to relate to Proprietary Information created by Employee during the
term of this Agreement, unless Employee can prove otherwise. Nothing contained
in this Agreement shall be construed to preclude Employer from exercising all of
its rights and privileges as sole and exclusive owner of all of the Proprietary
Information owned by or assigned to Employer under this Agreement. The Employer,
in exercising such rights and privileges with respect to any particular item of
Proprietary Information, may decide not to file any patent application or any
copyright registration on such Proprietary Information, may decide to maintain
such Proprietary Information as secret and confidential, or may decide to
abandon such Proprietary Information or dedicate it to the public. Employee
shall have no authority to exercise any rights or privileges with respect to the
62
Proprietary Information owned by or assigned to Employer under this Agreement.
This Agreement does not apply to any Proprietary Information that qualifies
fully under the provisions of California Labor Code Section 2870 or any similar
or successor statute.
11. COVENANT NOT TO COMPETE AND NONCOMPETITION. Employee acknowledges
that this Agreement is being entered in connection with the acquisition by
Employer of all of the shares of a corporation with respect to which Employee
and his spouse are major shareholders. To the extent permitted by applicable
law, during the period of time set forth in Section 11.5 below:
11.1. Employee shall not, directly or indirectly, engage or invest
in, own, manage, operate, finance, control, or participate in the ownership,
management, operation, or control of, be employed by, associated with, or in any
manner connected with, or render services or advice to, any business whose
products or activities compete in whole or in part with the products or business
of Employer anywhere in the world, which business consists of developing,
marketing and selling computer software for use in point of sale computers in
retail businesses.
11.2 Employee shall not undertake any employment or activity
competitive with the Employer's business, including without limitation the
inducement or solicitation of the Employer's customers, if the duties or work
of, in connection with or related to such competitive employment or activity
would or might cause Employee to reveal or use any Confidential Material or
Proprietary Information. The restriction set forth in this Section 11 shall not
be limited to a particular geographical area.
11.3. Employee shall not, directly or indirectly, either for
himself or any other person, (i) induce or attempt to induce any employee of
Employer or any Affiliate (as defined below) to leave the employ of such
employer, (ii) in any way interfere with the relationship between Employer or
any Affiliate and any employee of such Employer, (iii) employ, or otherwise
engage as an employee, independent contractor, or otherwise, any employee of
Employer or any Affiliate, or (iv) induce or attempt to induce any customer,
supplier, licensee, or business relation of the Employer or any Affiliate to
cease doing business with such company, or in any way interfere with the
relationship between any customer, supplier, licensee, or business relation of
such employer.
11.4. Employee shall not, directly or indirectly, either for
himself or any other person, solicit the business of any person known to
Employee to be a customer of the Employer or any Affiliate, whether or not
Employee had business or personal contact with such person, unless Employee's
solicitation of such person is done in connection with a business that is not
competitive with that of Employer or any Affiliate.
11.5. The duration of the covenants set forth in this Section 11
shall be the entire term of Employee's employment with Employer plus a period of
four years after the termination of such employment. Employee agrees that this
covenant is reasonable with respect to its duration, geographical area, and
scope. Notwithstanding such restriction, Employee may purchase or otherwise
acquire up to (but not more than) one percent (1%) of any class of securities of
any enterprise (but without otherwise participating in the activities of such
enterprise) if such securities are listed on any national or regional securities
exchange or have been registered under Section 12(g) of the Securities Exchange
Act of 1934.
63
In the event of a breach by Employee of any covenant set forth in
this Section 11, the term of such covenant will be extended by the period of the
duration of such breach, provided, however, that such extension shall be limited
to four years. In addition to the Employer's right to damages and any other
rights it may have, to obtain injunctive or other equitable relief to restrain
any breach or threatened breach or otherwise to specifically enforce the
provisions of this Section, Employee agrees that money damages alone would be
inadequate to compensate Employer and would be an inadequate remedy for such
breach. If a court of competent jurisdiction holds that the obligations of
Employee pursuant to this Section 11 are unenforceable due to the duration,
geographical areas or scope of this covenant, then such duration, geographical
area or scope of this covenant shall be reduced to the least degree necessary to
render this covenant enforceable. For purposes of this Agreement, "Affiliate"
shall mean any partner, employee, director, shareholder, officer of Employer or
any person or entity controlled by, controlling, or under common control with,
directly or indirectly, Employer, and shall include New ARS or its successor in
title and interest.
12. BUSINESS OPPORTUNITIES. During the term of this Agreement, if
Employee (or any agent, employee, officer or independent contractor of or
retained by Employee) becomes aware of, or develops, creates, invests, devisees,
conceives or discovered, any project, investment, venture, business or other
opportunity (any of the preceding, an "Opportunity") that is similar to,
competitive with, related to or in the same field as Employer or any Affiliate,
or any project, investment, venture, or business of Employer or any Affiliate,
then Employee shall so notify the Employer immediately in writing of such
Opportunity and shall use Employee's good-faith efforts to cause the Employer to
have the opportunity to invest in, participate in or otherwise become affiliated
with such Opportunity.
13. SECTION HEADINGS. The section headings or captions in this
Agreement are for convenience of reference only and do not form a part hereof,
and do not in any way modify, interpret or construe the intent of the parties or
affect any of the provisions of this Agreement.
14. SURVIVAL. The obligations and rights imposed upon the parties
hereto by the provisions of this Agreement which relate to acts or events
subsequent to the termination of this Agreement shall survive the termination of
this Agreement and shall remain fully effective thereafter.
15. VENUE AND JURISDICTION. For purposes of venue and jurisdiction,
this Agreement shall be deemed made and to be performed in the City of San
Diego, California.
16. SEVERABILITY. Should any one or more of the provisions of this
Agreement be determined to be illegal or unenforceable in any relevant
jurisdiction, then such illegal or unenforceable provision shall be modified by
the proper court, if possible, but only to the extent necessary to make such
provision enforceable, and such modified provision and all other provisions of
this Agreement shall be given effect separately from the provision or portion
thereof determined to be illegal or unenforceable and shall not be affected
thereby; provided, that any such modification shall apply only with respect to
the operation of this Agreement in the particular jurisdiction in which such
determination of illegality or unenforceability is made.
64
17. WAIVER. The failure of either party to enforce any provision of
this Agreement shall not be construed as a waiver of any such provision, nor
prevent such party thereafter from enforcing such provision or any other
provision of this Agreement. The rights granted both parties herein are
cumulative and the election of one shall not constitute a waiver of such party's
right to assert all other legal remedies available under the circumstances.
18. PARTIES IN INTEREST. Nothing in this Agreement, whether express or
implied, is intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the parties hereto and the successors,
assigns and affiliates of Employer, nor is anything in this Agreement intended
to relieve or discharge the obligation or liability of any third person to any
party to this Agreement, nor shall any provision give any third person any right
of action over or against any party to this Agreement.
19. ASSIGNMENT. The rights and obligations under this Agreement shall
be binding upon, and inure to the benefit of, the heirs, executors, successors
and assigns of Employee and Employer. Except as specifically provided in this
Section 19, neither Employer nor Employee may assign this Agreement or delegate
their respective responsibilities hereunder without the consent of the other
party hereto. Employer may assign this Agreement to an employee leasing company
retained by Employer to provide personnel to or for the benefit of Employer.
Upon the sale, exchange or other transfer of substantially all of the assets of
the Employer, the Employer shall assign this Agreement to the transferee of such
assets. No assignment of this Agreement by Employer shall relieve Employer of,
and Employer shall remain obligated to perform, its duties and obligations under
this Agreement, including, without limitation, payment of the annual salary set
forth in Section 5, above.
20. ATTORNEYS' FEES. In the event of any suit, action or arbitration to
enforce any of the terms or provisions of this Agreement, the prevailing party
shall be entitled to its reasonable attorneys' fees and costs. The foregoing
entitlement shall also include attorneys' fees and costs of the prevailing party
on any appeal of a judgment and for any action to enforce a judgment.
21. MODIFICATION. This Agreement may be modified only by a contract in
writing executed by the party(ies) to this Agreement against whom enforcement of
such modification is sought.
22. PRIOR UNDERSTANDINGS. This Agreement contains the entire agreement
between the parties to this Agreement with respect to the subject matter of this
Agreement, is intended as a final expression of such parties' agreement with
respect to such terms as are included in this Agreement, is intended as a
complete and exclusive statement of the terms of such agreement, and supersedes
all negotiations, stipulations, understandings, agreements, representations and
warranties, if any, with respect to such subject matter, which precede or
accompany the execution of this Agreement.
23. INTERPRETATION. Whenever the context so requires in this Agreement,
all words used in the singular shall be construed to have been used in the
plural (and vice versa), each gender shall be construed to include any other
genders, and the word "person" shall be construed to include a natural person, a
corporation, a firm, a partnership, a joint venture, a trust, an estate or any
other entity.
65
24. PARTIAL INVALIDITY. Each provision of this Agreement shall be valid
and enforceable to the fullest extent permitted by law. If any provision of this
Agreement or the application of such provision to any person or circumstance
shall, to any extent, be invalid or unenforceable, the remainder of this
Agreement, or the application of such provision to persons or circumstances
other than those as to which it is held invalid or unenforceable, shall not be
affected by such invalidity or unenforceability, unless such provision or such
application of such provision is essential to this Agreement.
25. ENTIRE AGREEMENT. This Agreement contains the entire agreement of
the parties and no representation, inducement, promise or agreement, oral or
otherwise, between the parties not embodied herein shall be of any force or
effect. No modification, termination or attempted waiver shall be valid unless
in writing and signed by the party against whom such modification, termination
or waiver is sought to be enforced. 26. Counterparts.
26. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
27. APPLICABLE LAW. This Agreement and the rights and obligations of
the parties hereunder shall be construed under, and governed by, the laws of the
State of California without giving effect to conflict of laws provisions.
28. DRAFTING AMBIGUITIES. Each party to this Agreement has reviewed and
revised this Agreement. Each party to this Agreement has had the opportunity to
have such party's legal counsel review and revise this Agreement. The rule of
construction that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or of any
amendments or exhibits to this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
EMPLOYER:
SVI HOLDINGS, INC., a Nevada corporation
By:
----------------------------------------
EMPLOYEE:
----------------------------------------
Xxxxx Xxxxxxx
