Exhibit 4.2
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made by and between MicroSignal, Inc., a Pennsylvania
corporation, with its principal place of business at 000 Xxxxxxxxxxx Xxxxxxxxx
Xxxxx 000, Xxxxxxxxxx, Xxxxxxxxxxxx (hereinafter "Company") and Xxxxxxx
XxXxxxxxx, hereinafter ("Executive"), to be effective as of July 1, 2002 (the
"Effective Date").
WHEREAS, the Executive's services are critical to the successful realization of
the Company's current corporate goals and objectives; and
WHEREAS, the Company has determined that its interests would best be served by
having the Executive to be employed by Company and to discharge his
responsibilities in the best interests of the Company.
NOW, THEREFORE, in consideration of the mutual promises contained herein, and
intending to be legally bound, the Company and the Executive agree as follows:
1.1 EMPLOYMENT
The Company hereby employs the Executive, and the Executive hereby accepts
employment by the Company, upon the terms and conditions set forth in this
Agreement.
1.2 TERM
Subject to the provisions of Section 5, the term of the Executive's
employment under this Agreement will be two years, beginning on the Effective
Date and ending on the second anniversary of the Effective Date, unless
terminated as provided herein, and continuing annually thereafter, unless
Executive elects not to renew his employment, by providing ninety (90) days
written notice before such anniversary of his intention not to renew.
1.3 DUTIES
(A) The Executive will have such duties as are assigned or delegated to
the Executive by the Board of Directors, and will serve as Chief Executive
Officer and President of the Company for the initial two year term of this
Agreement.
(B) Executive's duties shall include overall direction and focus of the
Company; technical and sales issues.
(C) The Executive will devote his time, attention, skill, and energy to
the business of the Company, will use his efforts to promote the success of the
Company's business, and will cooperate fully with the Board of Directors in the
advancement of the best interests of the Company.
(D) Nothing in this Section 1.3, however, will prevent the Executive from
engaging in additional activities in connection with personal investments,
community and professional affairs that are not inconsistent with the
Executive's duties under this Agreement.
(E) If the Executive is a director of the Company or as a director or
officer of any of its affiliates, the Executive will fulfill his duties as such
director or officer without additional compensation.
2.1 BASIC COMPENSATION
(A) Salary. The Executive will be paid an annual salary of
$90,000.00, for the first year and $100,000 for the second year, subject to
adjustment as provided below (the "Base Salary"), which will be payable in equal
periodic installments according to the Company's customary payroll practices,
but no less frequently than monthly. The Salary will be reviewed by the Board
of Directors no less frequently than annually, and may be adjusted upward in the
sole discretion of the Board of Directors, but in no event will the Salary be
less than $90,000.00 per year.
(B) Benefits. The Executive will, during his employment by Company,
be permitted to participate in such pension, profit sharing, bonus, incentive,
deferred compensation, life insurance of at least $1.5 million, hospitalization,
major medical, dental, long term disability providing at least 60% Base Salary
replacement through age 65 and other employee benefit plans of the Company that
may be in effect from time to time, to the extent the Executive is eligible
under the terms of those plans, and for this purpose, if the Executive is
otherwise eligible to participate in one or more plans or programs in which
participation is in the Company's discretion, the Executive shall not become
ineligible to participate in any such plan or program because of the Company's
exercise of its discretion (collectively, the "Benefits"). Further, the Company
shall maintain directors and officers liability insurance and advance to the
Executive the costs of defense of any lawsuit against him with respect to his
service as director or officer. All business expenses shall be reimbursed
within 30 days, Company shall provide Executive a Company credit card. The
Company shall pay Executive's legal fees to negotiate employment documents and
to enforce his rights unless in bad faith.
(C) Stock. Company shall award Executive 200,000 shares of common
stock. If, after the Effective Date, the Company issues any stock, common or
preferred, or if any stock is purchased as the result of the exercise of a
warrant, Executive shall be paid stock to establish or preserve Executive's
ownership of the Company such that the Executive's ownership can not be diluted
at a rate which is more than any shareholder.
2.2 INCENTIVE COMPENSATION
(A) As additional compensation (the "Incentive Compensation") for the
services to be rendered by the Executive pursuant to this Agreement, the Company
will pay the Executive with respect to each fiscal year during the Executive's
employment, commencing on the Effective Date, an amount equal to 35 percent
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(35%) of the Executive's then current Base Salary and 100,000 shares of common
stock for each $2,000,000 of gross sales. Additionally, the Company
periodically shall issue to Executive 100,000 shares worth of common stock as
incentive compensation for achievement of recognized milestones. Further, the
Company agrees to continue negotiating with Executive a bonus Incentive
Compensation (section 2.2) package, and have it amended to said contract, with a
deadline of no later than November 29, 2002.
(B) The Company will cause to be prepared, at its own expense and
within a reasonable period of time after the end of each fiscal year during the
term of this Agreement, unaudited financial statements showing the Company's
gross sales as provided above. Subject to Section 6 below, the Executive will
be paid the Incentive Compensation within one month after the end of the fiscal
year to which the Incentive Compensation relates. If the Executive dies while
eligible to receive said retention bonus, payment shall be made to his estate.
3.1 GENERAL
The Company will furnish the Executive office space, equipment, supplies,
and such other facilities and personnel, as the Company deems necessary or
appropriate for the performance of the Executive's duties under this Agreement.
The Company will pay the Executive's dues in such professional societies and
organizations as the Chairman of the Board deems appropriate, and will pay on
behalf of the Executive (or reimburse the Executive for) reasonable expenses
incurred by the Executive at the request of, or on behalf of, the Company in the
performance of the Executive's duties pursuant to this Agreement, and in
accordance with the Company's employment policies, including reasonable expenses
incurred by the Executive in attending conventions, seminars, and other business
meetings, in appropriate business entertainment activities, and for promotional
expenses. The Executive must file expense reports with respect to such expenses
in accordance with the Company's policies. Further, the Company shall provide
Executive a Company car of Executive's choosing and shall remit to him
$750/month for vehicular expenses including, lease payments, insurance,
maintenance and gasoline.
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4.1 VACATIONS AND HOLIDAYS
The Executive will be entitled to three weeks paid vacation each calendar
year in accordance with the vacation policies of the Company in effect for its
executive officers from time to time. The Executive will also be entitled to
the paid holidays and other paid leave set forth in the Company's policies.
Vacation days and holidays during any fiscal year that are not used by the
Executive during such Fiscal Year may be used in any subsequent fiscal year.
5.1 EVENTS OF TERMINATION
The Executive's employment, the Executive's Basic Compensation and
Incentive Compensation, and any and all other rights of the Executive under this
Agreement or otherwise as an employee of the Company will terminate (except as
otherwise provided in this Section 5):
(A) upon the death of the Executive;
(B) upon the disability of the Executive (as defined in Section 5.2)
upon not less than thirty days' prior written notice from either party to the
other provided, however, that nothing herein shall constitute a waiver of
Executive's rights under any State or Federal law governing the treatment of
persons with a disability;
(C) for cause (as defined in Section 5.3), upon not less than thirty
days' prior written notice from the Company to the Executive, or at such later
time as such notice may specify; or
(D) for good reason (as defined in Section 5.4) upon not less than
thirty days' prior notice from the Executive to the Company.
5.2 DEFINITION OF DISABILITY
For purposes of Section 5.1, the Executive will be deemed to have a
"disability" if, for physical or mental reasons, the Executive is unable to
perform the Executive's duties under this Agreement for 180 consecutive days
during any twelve-month period, as determined in accordance with this Section
5.2. The disability of the Executive will be determined by a medical doctor
selected by written agreement of the Company and the Executive upon the request
of either party by notice to the other. If the Company and the Executive cannot
agree on the selection of a medical doctor, each of them will select a medical
doctor and the two medical doctors will select a third medical doctor who will
determine whether the Executive has a disability. The determination of the
medical doctor selected under this Section 5.2 will be binding on both parties.
If the Executive is not legally competent, the Executive's legal guardian or
duly authorized attorney-in-fact will act in the Executive's stead, under this
Section 5.2, for the purposes of submitting the Executive to the examinations,
and providing the authorization of disclosure, required under this Section 5.2.
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If the Company's disability insurance policy shall certify the Executive's
condition as a disability, then any determination under this Section
notwithstanding, the Executive shall have a right to elect to have a condition
declared a disability.
5.3 DEFINITION OF "FOR CAUSE"
(A) For purposes of Section 5.1, the phrase "for cause" means:
(i) willful or gross misconduct or willful or gross negligence in the
performance of his duties for the Company;
(ii) the intentional or habitual neglect of his duties for the Company (not
resulting from physical or mental incapacity);
(iii)the theft or misappropriation of Company funds; or
(iv) the conviction of a felony.
(B) Notwithstanding Section 5.3(A), if the act or failure to act giving
rise to the Executive's termination of employment pursuant to Section 5.3(A)(i)
or (A)(ii) above is reasonably capable of being cured by the Executive, no
termination of the Executive's employment with the Company shall be a
termination for cause unless the Company provides written notice to the
Executive of said act or failure to act and the Executive fails to cure said act
or failure to act within thirty (30) days of said notice.
5.4 DEFINITION OF "FOR GOOD REASON"
For purposes of Section 5.1, the phrase "for good reason" means any of the
following:
(A) the Company's material breach of this Agreement;
(B) the assignment of the Executive without his consent to a position,
responsibilities, or duties of a materially lesser status or degree of
responsibility than his position, responsibilities, or duties at the Effective
Date;
(C) the relocation of the Company's principal executive offices outside
the metropolitan Pittsburgh area without the Executive's consent; or
(D) the requirement by the Company that the Executive be based anywhere
other than the Company's principal executive offices, without the Executive's
consent.
5.5 TERMINATION PAY
Effective upon the termination of this Agreement, the Company will be
obligated to pay the Executive (or, in the event of his death, his designated
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beneficiary as defined below) such compensation as is provided in this Section
5.5. For purposes of this Section 5.5, the Executive's designated beneficiary
will be such individual beneficiary or trust, located at such address, as the
Executive may designate by notice to the Company from time to time or, if the
Executive fails to give notice to the Company of such a beneficiary, the
Executive's estate.
(A) Termination by the Executive for Good Reason. If the Executive
terminates this Agreement for good reason, the Company will pay the Executive:
(i) three times the Executive's annual rate of base salary as of the date
of his termination of employment with the Company (but not less than
$270,000, i.e., three times his annual rate of base salary as of the
Effective Date); plus
(ii) three times the average cash distribution received by the Executive as
Incentive Compensation for the last three (3) calendar years of his
employment with the Company, or if three years have not transpired since
the Effective Date, three times the average of all disbursements made to
Executive as Incentive Compensation; plus
(iii) any amount forfeited by the Executive under the Company's profit
sharing or bonus plans.
Such payment shall be paid to the Executive in a single cash payment on the
first day of the calendar month next following his eligible termination of
employment. If the Executive dies while eligible to receive said such
payment, payment shall be made to his estate.
(B) Termination by the Company for Cause. If the Company terminates
this Agreement for cause, the Executive will be entitled to receive his Salary
only through the date such termination is effective, but will not be entitled to
any Incentive Compensation for the fiscal year during which such termination
occurs or any subsequent Fiscal Year.
(C) Termination upon Disability. If this Agreement is terminated by
either party as a result of the Executive's disability, as determined under
Section 5.2, the Company will pay the Executive his Salary through the remainder
of the calendar month during which such termination is effective, or until the
Executive is entitled to disability payments, whichever is longer.
(D) Termination upon Death. If this Agreement is terminated because
of the Executive's death, the Executive will be entitled to receive his Salary
through the end of the calendar month in which his death occurs, and that part
of the Executive's Incentive Compensation, if any, for the fiscal year during
which his death occurs, prorated through the end of the calendar month during
which his death occurs.
(E) Benefits. If the Executive's employment with the Company is
involuntarily terminated by the Company, for any reason other than termination
for just cause, or if Executive terminates his employment for good reason, the
Executive shall be entitled to the following:
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(i) continued coverage after such termination of employment, at no
direct cost to the Executive, under the Company's health plans
(including any dental plans) for the Company's salaried employees as
are in effect on the date of such termination of employment (or as
they may be amended from time to time by the Company for all such
salaried employees) until the earlier of two (2) years following such
termination or his commencement of employment with another employer;
provided, however, that in lieu of such continued coverage, the
Company, in its sole discretion and with thirty (30) day's prior
written notice to the Executive, may make a monthly cash payment to
the Executive which is equal to the value of such coverage for such
month for the period ending two (2) years following such termination
or his commencement of employment with another employer, whichever is
earlier;
(ii) maintenance of the Company's keyman insurance policies on the
Executive and conversion of the beneficiary of such policies from the
Company to a beneficiary of Executive's designation; and
(ii) outplacement counseling, at no direct cost to the Executive, with
a party mutually agreeable to the Executive and the Company, to begin
within one (1) month from the date of such termination of employment.
(F) Golden Parachute. Notwithstanding anything to the contrary, if
all or any portion of the payments or entitlement provided to the Executive
pursuant to this Agreement, either alone or together with other payments or
entitlement which the Executive has the right to receive from the Company, would
constitute a parachute payment within the meaning of the Internal Revenue Code,
then the amount of the payments or entitlement under this Agreement, or
otherwise provided to the Executive, shall be reduced to the extent necessary so
that no portion thereof shall be subject to the excise tax imposed by Internal
Revenue Code. The determination of any reduction to be made pursuant to this
Section 5.5 shall be made by the accounting firm that serves as the Company's
principal independent auditors at the time the Executive's employment with the
Company terminates or by any public accounting firm of national recognition
mutually selected by the Executive and the Company.
5.6 SUCCESSOR COMPANY
(A) This Section shall apply in lieu of Sections 1 through 4 of this
Agreement if:
(i) the assets of the Company are sold within two years from the
Effective Date;
(ii) the Company determines its interests would best be served by
the Executive's employment with the purchaser of said assets; and
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(iii) the Executive is offered a position with said purchaser
which is substantially similar in scope, responsibility, and direct
compensation to his position with the Company as of the Effective date
and its work location is within the metropolitan Pittsburgh area.
(B) If the Executive accepts employment with said purchaser pursuant to
Section 5.6(A) above, the Company shall issue the Executive the payment in the
amount and manner set forth in Section 5.5(A) of this Agreement and shall
continue benefits in accordance with Section 5.5(E) if:
(i) the Executive's employment with said purchaser is terminated
before two (2) years from the Effective Date by said purchaser for any
reason other than termination for cause; or
(ii) the Executive's position with said purchaser ceases to be
substantially similar in scope, responsibility, or base compensation
to his position with the Company as of the Effective Date and the
Executive voluntarily terminates his employment with the purchaser
within sixty (60) days of said event; or
(iii) said purchaser moves the Executive's work location out of
the metropolitan Pittsburgh area and the Executive voluntarily
terminates his employment with the purchaser within sixty (60) days of
said event.
(C) For purposes of Section (B) above, the term termination for cause shall
have the same meaning as under Section 5.3 of this Agreement, but with said
purchaser substituted for Company hereunder.
6.1 CONFIDENTIALITY
During employment, the Executive shall not disclose to anyone outside of
the Company, or not designated by it, any secret or confidential information or
data relating to the Company and its business that is not public knowledge
(excluding such information that became generally available to the public as a
result of a disclosure by the Executive) unless such disclosure is made in the
ordinary course of performing his duties with the Company, is made with the
express written consent of the Company, or is ordered by a court of competent
jurisdiction.
7.1 BINDING EFFECT
(A) This Agreement shall inure to the benefit of, and shall be binding
upon, the parties hereto and their respective successors, assigns, heirs, and
legal representatives, including any entity with which the Company may merge or
consolidate or to which all or substantially all of its assets may be
transferred.
(B) The Company shall require any successor of the Company (direct or
indirect, by consolidation, liquidation, purchase of securities, acquisition of
assets, or otherwise) to expressly assume and perform the Company's
responsibilities and liability hereunder to the same extent that the Company
would have been required to perform if no succession had taken place.
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7.2 NOTICES
All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by facsimile
(with written confirmation of receipt), provided that a copy is mailed by
registered mail, return receipt requested, or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and facsimile
numbers set forth below (or to such other addresses and facsimile numbers as a
party may designate by notice to the other parties):
If to Company: Xxxxxx X. Xxxxx
000 X. Xxxxx Xxx.
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxx
Facsimile No.: 000-000-0000
If tothe Executive: Xxxxxxx X. XxXxxxxxx
000 Xxxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. XxXxxxxxx
Facsimile No.: 000-000-0000
Copy To: Xxxxxxx Law Offices
Xxxxx X. Xxxxxxx
000 Xxxxxxxxxx Xxxx Xxx 000
Xx. Xxxxxxx, XX 00000-0000
000-000-0000 ofc.
000-000-0000 fax
Copy To: Xxxxx & Fraade, P.C.
Xxxx Xxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
000-000-0000 ofc.
000-000-0000 fax
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7.3 ENTIRE AGREEMENT: AMENDMENTS
This Agreement contains the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior agreements and
understandings, oral or written, between the parties hereto with respect to the
subject matter hereof. This Agreement may not be amended orally, but only by an
agreement in writing signed by the parties hereto.
7.4 GOVERNING LAW
This Agreement will be governed by the laws of the Commonwealth of
Pennsylvania without regard to conflicts of laws principles.
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7.5 DISPUTES
(A) Any dispute, controversy or claim arising out of or relating to
this Agreement or to any breach or alleged breach thereof, shall upon the
request of the Executive, be submitted to binding arbitration in the
Commonwealth of Pennsylvania pursuant to the rules then in effect of the
American Arbitration Association, before a panel of three arbitrators, one of
whom shall be selected by the corporation, the second of whom shall be selected
by the indemnified representative and the third of whom shall be selected by the
other two arbitrators (or at any other place or under any other form of
arbitration mutually acceptable to the Executive and the Company). Any award
rendered shall be final and conclusive upon the Executive and the Company, and a
judgment may be entered by the courts of the Commonwealth of Pennsylvania.
(B) If the Executive is successful, in whole or in part, in enforcing his
rights under the Agreement, the Company shall pay reasonable attorney fees and
costs incurred by the Executive in enforcing such rights. The expenses of
arbitration, other than attorney fees and costs incurred by the Executive
(unless the Executive is successful), shall be paid by the Company.
7.6 SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation. All references to
"Section" or "Sections" refer to the corresponding Section or Sections of this
Agreement unless otherwise specified. All words used in this Agreement will be
construed to be of such gender or number, as the circumstances require. Unless
otherwise expressly provided, the word "including" does not limit the preceding
words or terms.
7.7 SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provisions of this Agreement held invalid
or unenforceable only in part or degree will remain in full force and effect to
the extent not held invalid or unenforceable.
7.8 ASSIGNMENT
(A) The Executive's and his beneficiary's rights and interest hereunder
shall not be assignable (in law or equity) or subject to any manner of
alienation, sale, transfer, claims of creditors, pledge, attachment,
garnishment, levy, execution, or encumbrances of any kind, and any attempt to do
so shall be void.
(B) Any assignment of the Company's responsibilities and liability
hereunder shall not relieve the Company of its responsibilities and liability
hereunder.
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7.9. WITHHOLDING
All amounts payable hereunder shall be subject to withholding for taxes
(federal, state, and local) to the extent required by applicable law.
7.10 WAIVERS
The Executive's or the Company's failure to insist upon strict compliance
with any provision of this Agreement shall not be deemed to be a waiver of such
provision. Any waiver of any provision of this Agreement shall not be deemed to
be a waiver of any other provision, and any waiver of default in any provision
of this Agreement shall not be deemed to be a waiver of any later default.
7.11 COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which
will be deemed to be an original copy of this Agreement and all of which, when
taken together, will be deemed to constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first written above.
Company: EXECUTIVE:
By:______________________________ By:________________________________
44915.6
