EXHIBIT 10.17
EMPLOYMENT AGREEMENT
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This Agreement made as of this 3rd day of September, 1997, by and
between Scangraphics, Inc., a Corporation of the Commonwealth of Pennsylvania
(the "Company"), and Xxxxxx X. Xxxxxxx (the "Employee").
WITNESSETH:
1. Employment. The Company hereby agrees to employ Employee and Employee
hereby accepts employment by the Company for the period and the terms and
conditions hereinafter set forth.
2. Capacity and Duties.
a) Employee shall be employed by the Company in the capacity of Vice
President Sales, Distribution and Service of Tangent Imaging Systems, a division
of Scangraphics and Employee shall have such authority and shall perform such
key executive duties and responsibilities as may from time-to-time reasonably be
specified by the President of Tangent Imaging Systems with respect to the
Company and its affiliates.
b) During the term of this Agreement, Employee shall devote his time,
in exercising his best efforts to the performance of his duties hereunder.
c) Notwithstanding the foregoing, Employee shall be entitled to have
investments in other enterprises provided, however, that he shall not have any
investments or financial interest in any business enterprise which conducts
business activities competitive with any business activities conducted by the
Company now or at any time during the term of the Employee's employment
hereunder (other than an investment of no more than 5% of any class of equity
securities of a company the securities of which are traded on a national
securities exchange).
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However, in the event the Company enters into a new field in which the Employee
has previously invested, the Employee agrees to disclose his investment, if said
investment exceeds 5% of equity of the company in which the Employee has
invested. If the Employee is so requested by the Board of Directors of the
Company, the Employee shall divest himself of the said investment within one
year after said request.
3. Compensation. Employee's compensation shall be as reflected in
Exhibit 1.
4. Expenses. Employee is authorized to incur reasonable expenses for
promoting the business of the Company and in carrying out his duties hereunder,
including without limitation, reasonable expenses for automobile, travel and
similar items. The Company shall reimburse Employee for all such ordinary and
necessary expenses upon the presentation by Employee from time-to-time of an
itemized account of such expenditures. Employee shall present an itemized
account of expenditures not less frequently than monthly.
5. Term of Agreement; Separation.
a) The term of this Employment Agreement, shall be from September 15,
1997 to December 31, 1999. Renewal, if desired, will be negotiated between the
parties.
These negotiations should commence 90 days prior to end of term.
b) The Company may terminate this Employment Agreement for cause,
defined as follows:
1) Deliberate disclosure of Company secrets for
consideration; or
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2) Conviction of Employee of a felony involving moral
turpitude, or of any other law which may reasonably be deemed to cause a
detrimental effect upon the Company as a result of mutual association. If the
Company separates the Employee for cause, the Company will have no further
liability or obligation except to pay the Employee earned and unpaid
compensation.
c) The Company may separate the Employee; a) without cause, or b)
should the Employee die or become disabled such that the Employee has been
unable to perform any duties here under for ninety (90) days during any year of
this Employment Agreement or for any period of sixty (60) consecutive days. In
the event of such separation, the severance package described in Exhibit 1,
Section 5 applies.
d) In the event of change of control of the Company, Employee may elect
to terminate his employment in which event he shall receive the severance
package describe in Exhibit 1, Section 5. For these purposes, change of control
includes the following: Sale of a majority of the outstanding shares or assets
of the Company, Change in composition of more than 50% of the Board of Directors
as presently constituted.
6) Restrictions on Competition. Employee covenants and agrees that:
(a) during the initial term and any renewal terms of his employment hereunder
and, (b) if, but only if, this Employment Agreement is terminated by the
Employee (as hereinafter defined) during the initial term, or any renewal term
hereof, for a period on one (1) year after termination of his employment
hereunder, he shall not, directly or indirectly, engage in any business
activities within the limits of the Continental United States, the same as, or
in competition with, business activities carried on by the Company during the
period of the Employee's employment by the Company, or in the definitive
planning stages at the time of termination of Employee's employment.
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The term "engage in" shall include, without being limited to,
activities as proprietor, partner, stockholder, principal, agent, employee or
consultant. However, nothing contained in this Paragraph shall prevent Employee
from having investments of the types permitted in Subparagraph 2 c) hereof.
These restrictions shall not apply if separation is by the Company
under Section 5c of this Employment Agreement.
7. Trade Secrets. During the term of employment under this Employment
Agreement, the Employee will have access to, and become familiar with, various
trade secrets, consisting of formulas, patterns, devices, secret inventions,
processes, compilation of information, records and specifications, which are
owned by the Company and which are regularly used in the operation of the
business of the Company.
The Employee shall not disclose any of the aforesaid trade secrets,
directly or indirectly, nor use them in any way, either during the term of this
Agreement or at any time thereafter, except as required in the course of his
employment by the Company.
All files, records, documents, drawings, specifications, equipment, and similar
items relating to the business of the Company, whether prepared by the Employee
or otherwise coming into his possession, shall remain the exclusive property of
the Company and be returned to the Company by request of the Company, provided
the same information is not available to the general public.
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8. Miscellaneous Provisions.
a) Any notices pursuant to this Agreement shall be validly given or
served if in writing and delivered personally or sent by registered or certified
mail, postage prepaid, to the following addresses:
If to Company: Tangent Imaging Systems
c /o SCAN-GRAPHICS, Inc.
000 X. Xxxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attn: President
If to Employee: Xxxxxx X. Xxxxxxx
0 Xxxxx Xxxx Xxxxx
Xxxxx Xxxxx, XX 00000
or to such other addresses as either party may hereafter designate to the other
in writing.
b) Notices delivered personally shall be deemed communicated as of the
actual receipt; notices mailed shall be deemed communicated as of five (5) days
after mailing.
c) If any provision of this Agreement shall be or become illegal or
unenforceable in whole or in part for any reason whatsoever, the remaining
provisions shall nevertheless be deemed valid, binding and subsisting.
d) The waiver by either party of a breach or violation of any provision
of this Employment Agreement shall not operate or be construed as a waiver of
any subsequent breach or violation thereof.
e) This writing represents the entire Employment Agreement and
understanding of the parties with respect to the subject matter hereof; it may
not be altered or amended except by agreement in writing.
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f) The Employment Agreement has been made in and its validity,
performance and effect shall be determined in accordance with the laws of the
Commonwealth of Pennsylvania.
g) The headings of paragraphs in this Employment Agreement are for
convenience only; they form no part of this Agreement and shall not affect its
interpretation.
h) This Employment Agreement supersedes any earlier Employment
Agreement and as such is the only Employment Agreement in force.
IN WITNESS WHEREOF, and intending to be legally bound, the parties have executed
this Employment Agreement under seal on the day and year first above written.
SCAN-GRAPHICS, INC.
ATTEST: /S/ Xxxxxxxx X. Xxxxxxxxxx /S/ Xxxxxxx Xxx
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Assistant Secretary Xxxxxxx Xxx
President, Tangent Imaging Systems
EMPLOYEE:
/S/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
SCANGRAPHICS, INC. EXHIBIT 1
COMPENSATION AND BENEFITS
COMPENSATION PLAN FOR.... Xxxxxx X. Xxxxxxx
POSITION: Vice President, Sales, Distribution and Service; Tangent Imaging
Systems.
1) BASE SALARY: 1997 -- $130,000 (for remainder of year); 1998 -- $140,000;
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1999 -- $150,000
2) INCENTIVE COMPENSATION / COMMISSION:
Commissions -- on Revenue received (to begin with revenue received
after 9/1/97):
1997 1998 1999
---- ---- ----
Rev up to $5M 1% to $7M 1% to $11M 1%
$5 to $10M 2% $7-12M 2% $11 to 16M 2%
$10M to 15M 2.5% $12-17M 2.5% $16 to 21M 2.5%
over $15M 0.5% over $17M 0.5% over $21M 0.5%
3) EQUITY - OPTIONS
50,000 Options to Purchase Common Shares for a period of 5 years at
an exercise price equal to the closing bid price on the day of
contract signing, with vesting as follows:
5,000 vest upon commencement of work
15,000 vest at obtaining (cumulatively) each of $10M, $15M, $20M in
revenues received (by YE 99) from Tangent Imaging Systems products
and services.
4) Travel and Relocation
An allowance not to exceed $2000 per month will be provided to defer
reasonable and actual living expenses including travel to and from
work location and home.
An allowance to apply unused Living Expense allowance (that is
$2000/month x 28 months = $56,000), not to exceed $24,000, will be
provided to defer reasonable and actual relocation expenses when you
relocate to the Doylestown area or other agreed upon location.
5) SEPARATION:
In the event of separation, under Section 5c or 5d, the Company will
provide a separation package as follows:
a) salary for 6 months, if separated within first 6
months, service plus severance would equal 1 year.
b) benefits for 6 months or until employee obtains
full-time employment with benefits whichever is sooner.
6) BENEFITS:
As a "Full Time" Employee, Employee will be compensated bi-weekly,
and the Employee will be included in the Company's general employee
benefit programs.
As a medical benefit alternative, Scangraphics will pay Employee or
Employee's insurance carrier an amount equal to the cost of the
Scangraphics provided medical benefit. This amount is currently
$553.16/month.
7) Business Expenses: normal, plus fax, portable computer, cellular phone.
Employee: For the Company:
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/S/ Xxxxxx X. Xxxxxxx /S/ Xxxxxxx Xxx
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Xxxxxx X. Xxxxxxx Xxxxxxx Xxx
President, Tangent Imaging Systems
Date: 9/15/97 Date: 9/15/97
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