FORM OF
EMPLOYMENT AGREEMENT
Employment Agreement ("Agreement") made and entered into as of January
1, 1997 by and between IFS International, Inc., a Delaware corporation (the
"Company"), and Xxxxx X. Xxxxxxxx, residing at 1 Feather Foil Way, Ballston Spa,
New York 12020 (the "Executive").
The Executive is being employed by the Company as an executive officer.
The parties desire to enter into an employment agreement and to set forth herein
the terms and conditions of the Executive's continued employment by the Company
and its subsidiaries.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and the mutual benefits to be derived herefrom, the Company and
the Executive agree as follows:
1. Employment.
a. Duties. The Company shall employ the Executive, on the
terms set forth in this Agreement, as its Chairman of the Board of Directors.
The Executive accepts such employment with the Company and shall perform and
fulfill such duties as are assigned to him hereunder consistent with his status
as a senior executive of the Company, devoting his best efforts and entire
professional time and attention to the performance and fulfillment of his duties
and to the advancement of the interests of the Company, subject only to the
direction, approval, control and directives of the Company's Board of Directors
(the "Board"). Nothing contained herein shall be construed, however, to prevent
the Executive from trading in or managing, for his own account and benefit, in
stocks, bonds, securities, real estate, commodities or other forms of
investments (subject to law and Company policy with respect to trading in
Company securities). Without any additional consideration, Executive shall also
continue to serve as an employee and officer of any or all subsidiaries of the
Company. Unless otherwise indicated by the context, the term "Company" shall
include the Company and all its subsidiaries.
b. Place of Performance. In connection with his employment by
the Company, the Executive shall be based at the Company's principal place of
business in the Albany metropolitan area except when required for travel on
Company business.
2. Term. The Executive's employment under this Agreement shall commence
as of January 1, 1997 (the "Commencement Date") and shall, unless sooner
terminated in accordance with the provisions hereof, continue uninterrupted
until December 31, 1999 (the "Term"). As used herein "Year" shall refer to a
twelve month period ending December 31st. Unless notice of nonrenewal is given
by either party at least sixty (60) days prior to the end of the Term or prior
to the end of any Year thereafter, the Term of this Agreement shall be
automatically extended for an additional period of one year.
-1-
3. Compensation.
a. Base Salary. During the first two (2) Years of the Term,
the Executive shall be entitled to receive an annual salary (the "Base Salary")
of One Hundred Ten Thousand Dollars ($110,000) payable in installments at such
times as the Company customarily pays its other executive officers (but in any
event not less often than monthly). For each Year thereafter, the Company shall
increase the Base Salary by an amount to be determined by the Board of
Directors.
b. Commissions. Except as described hereinafter or in Schedule
A, during each year, Executive shall also receive a commission of 8% of revenues
in excess of $425,000 derived from installations of the Company's products
pursuant to license agreements obtained hereinafter through the efforts of
Executive. The board of directors shall resolve any dispute with Executive
concerning whether commissions shall be credited to Executive as a result of his
efforts in obtaining any license agreement. The maximum commission payable to
all personnel of the Company on revenues derived from any agreement shall not
exceed 8% of such revenues.
c. Bonus. The Board of Directors may at its sole discretion
grant bonuses to the Executive.
d. Health Insurance and Other Benefits. During the Term, the
Executive shall be entitled to all employee benefits generally offered by the
Company to its executive officers and key management employees, including,
without limitation, all pension, profit sharing, retirement, stock option,
salary continuation, deferred compensation, disability insurance,
hospitalization insurance, major medical insurance, medical reimbursement,
survivor income, life insurance or any other benefit plan or arrangement
established and maintained by the Company, subject to the rules and regulations
then in effect regarding participation therein.
4. Reimbursement of Expenses. The Executive shall be reimbursed for all
items of travel, entertainment and miscellaneous expenses that the Executive
reasonably incurs in connection with the performance of his duties hereunder,
provided the Executive submits to the Company such statements and other evidence
supporting said expenses as the Company may reasonably require.
5. Automobile Allowance. The Executive shall be reimbursed for the
expenses of owning or leasing an automobile suitable for his position and
consistent with Company practices during 1996, including the expenses of
operating, insuring and parking such automobile, provided the Executive submits
to the Company such statements and other evidence supporting such expenses as
the Company may require.
6. Vacation. The Executive shall be entitled to not less than three (3)
weeks of vacation in any calendar year.
-2-
7. Termination of Employment.
a. Death or Total Disability. In the event of the death of the
Executive during the Term, this Agreement shall terminate as of the date of the
Executive's death. In the event of the Total Disability (as that term is defined
below) of the Executive for sixty (60) days in the aggregate during any
consecutive nine (9) month period during the Term, the Company shall have the
right to terminate this Agreement by giving the Executive thirty (30) days'
prior written notice thereof, and upon the expiration of such thirty (30) day
period, the Executive's employment under this Agreement shall terminate. If the
Executive shall resume his duties within thirty (30) days after receipt of such
a notice of termination and continue to perform such duties for four (4)
consecutive weeks thereafter, this Agreement shall continue in full force and
effect, without any reduction in Base Salary and other benefits, and the notice
of termination shall be considered null and void and of no effect. Upon
termination of this Agreement under this Paragraph 7(a), the Company shall have
no further obligations or liabilities under this Agreement, except to pay to the
Executive's estate or the Executive, as the case may be, (i) the portion, if
any, that remains unpaid of the Base Salary for the Year in which termination
occurred, but in no event less than six (6) months' Base Salary; and (ii) the
amount of any expenses reimbursable in accordance with Paragraph 4 above, and
any automobile allowance due under Paragraph 5 above; and (iii) any amounts due
under any Company benefit, welfare or pension plan. Any stock options not vested
at the time of the termination of this Agreement under this Paragraph 7(a) shall
immediately become fully vested.
The term "Total Disability," as used herein, shall
mean a mental or physical condition which in the reasonable opinion of an
independent medical doctor selected by the Company renders the Executive unable
or incompetent to carry out the material duties and responsibilities of the
Executive under this Agreement at the time the disabling condition was incurred.
In the event the Executive disagrees with such opinion, the Executive may, at
his sole expense, select an independent medical doctor and, in the event that
doctor disagrees with the opinion of the doctor selected by the Company, they
shall select a third independent medical doctor, and the three doctors shall, by
majority vote, determine whether the employee has suffered Total Disability. The
expense of the third doctor shall be shared equally by the Company and the
Executive. Notwithstanding the foregoing, if the Executive is covered under any
policy of disability insurance under Paragraph 3(d) above, under no
circumstances shall the definition of Total Disability be different from the
definition of that term in such policy.
b. Discharge for Cause. The Company may discharge the
Executive for "Cause" upon notice and thereby immediately terminate his
employment under this Agreement. For purposes of this Agreement the Company
shall have "Cause" to terminate the Executive's employment if the Executive, in
the reasonable judgment of the Company, (i) materially breaches any of his
agreements, duties or obligations under this Agreement and has not cured such
breach or commenced in good faith to correct such breach within thirty (30) days
after notice; (ii) fails
-3-
to carry out a lawful directive of the Board; (iii) embezzles or converts to his
own use any funds of the Company or any client or customer of the Company; (iv)
converts to his own use or unreasonably destroys, intentionally, any property of
the Company, without the Company's consent; (v) is convicted of a crime; (vi) is
adjudicated an incompetent; or (vii) is habitually intoxicated or is diagnosed
by an independent medical doctor to be addicted to a controlled substance (any
disagreement of Executive shall be resolved using the procedure provided in
Paragraph 7(a) above).
c. Termination by Executive. Executive may terminate this
Agreement for the failure by the Company to comply with the material provisions
of this Agreement which failure is not cured within thirty (30) days after
notice ("Good Reason").
8. Restrictive Covenant.
a. Competition. Executive undertakes and agrees that during
the term of this Agreement and for a period of two (2) years after the date of
termination of this Agreement pursuant to Section 7(b) or for a period of one
(1) year after the date of termination if this Agreement is not renewed, he will
not compete, directly or indirectly, or participate as a director, officer,
employee, agent, consultant, representative or otherwise, or as a stockholder
(except as a stockholder in a corporation whose shares are traded on The Nasdaq
Stock Market or a national securities exchange, provided that such ownership
shall not exceed 3% of the outstanding stock of such corporation), partner or
joint venturer, or have any direct or indirect financial interest, including,
without limitation, the interest of a creditor, in any business competing
directly or indirectly with the business of the Company or any of its
subsidiaries. Executive further undertakes and agrees that during the term of
the Agreement and for a period of two (2) years after the date of termination of
this Agreement pursuant to Section 7(b) or for a period of one (1) year after
the date of termination if this Agreement is not renewed, he will not, directly
or indirectly employ, cause to be employed, or solicit for employment any of
Company's or its subsidiaries' employees. The provisions of this Section 8(a)
shall not apply if the Agreement is terminated by Executive pursuant to Section
7(c).
b. Scope of Covenant. Should the duration, geographical area
or range or proscribed activities contained in Paragraph 8(a) above be held
unreasonable by any court of competent jurisdiction, then such duration,
geographical area or range of proscribed activities shall be modified to such
degree as to make it or them reasonable and enforceable.
c. Non-Disclosure of Information.
(1) The Executive shall (i) never, directly or
indirectly, disclose to any person or entity for any reason, or use for his own
personal benefit, any "Confidential Information" (as hereinafter defined) either
during his employment with the Company or following termination of that
employment for any reason (ii) at all times take all precautions necessary to
-4-
protect from loss or disclosure by him of any and all documents or other
information containing, referring or relating to such Confidential Information,
and (iii) upon termination of his employment with the Company for any reason,
the Executive shall promptly return to the Company any and all documents or
other tangible property containing, referring or relating to such Confidential
Information, whether prepared by him or others.
(2) Notwithstanding any provision to the contrary in
this Paragraph 8(c), this paragraph shall not apply to information which the
Executive is called upon by legal process regular on its face (including,
without limitation, by subpoena or discovery requirement) to disclose or to
information which has become part of the public domain or is otherwise publicly
disclosed through no fault or action of the Executive.
(3) For purposes of this Agreement, "Confidential
Information" means any information relating in any way to the business of the
Company disclosed to or known to the Executive as a consequence of, result of,
or through the Executive's employment by the Company which consists of technical
and nontechnical information about the Company's products, processes, computer
programs, concepts, forms, business methods, data, any and all financial and
accounting data, marketing, customers, customer lists, and services and
information corresponding thereto acquired by the Executive during the term of
the Executive's employment by the Company. Confidential Information shall not
include any of such items which are published or are otherwise part of the
public domain, or freely available from trade sources or otherwise.
(4) Upon termination of this Agreement for any
reason, the Executive shall turn over to the Company all tangible property then
in the Executive's possession or custody which belongs or relates to the
Company. The Executive shall not retain any copies or reproductions of computer
programs, correspondence, memoranda, reports, notebooks, drawings, photographs,
or other documents which constitute Confidential Information.
d. Injunctive Relief. The parties hereto agree that the remedy
at law for any breach of the provisions of this Section 8 will be inadequate and
that the Company or any of its subsidiaries or other successors or assigns shall
be entitled to injunctive relief without bond. Such injunctive relief shall not
be exclusive, but shall be in addition to any other rights and remedies Company
or any of its subsidiaries or their successors or assigns might have for such
breach.
9. Miscellaneous.
a. Notices. Any notice, demand or communication required or
permitted under this Agreement shall be in writing and shall either be
hand-delivered to the other party or mailed to the addresses set forth below by
registered or certified mail, return receipt requested or sent by overnight
express mail or courier or facsimile to such address, if a party has a facsimile
machine. Notice shall be deemed to have been given and received when so
hand-delivered or after
-5-
three (3) business days when so deposited in the U.S. Mail, or when transmitted
and received by facsimile or sent by express mail properly addressed to the
other party. The addresses are:
To the Company:
IFS International, Inc.
000 Xxxxxx Xxxx
Xxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000 Attn: President
To the Executive:
Xxxxx X. Xxxxxxxx
0 Xxxxxxx Xxxx Xxx
Xxxxxxxx Xxx, XX 00000
The foregoing addresses may be changed at any time by notice given in the manner
herein provided.
b. Integration; Modification. This Agreement constitutes the
entire understanding and agreement between the Company and the Executive
regarding its subject matter and supersedes all prior negotiations and
agreements, whether oral or written, between them with respect to its subject
matter. This Agreement may not be modified except by a written agreement signed
by the Executive and a duly authorized officer of the Company.
c. Enforceability. If any provision of this Agreement shall be
invalid or unenforceable, in whole or in part, such provision shall be deemed to
be modified or restricted to the extent and in the manner necessary to render
the same valid and enforceable, or shall be deemed excised from this Agreement,
as the case may require, and this Agreement shall be construed and enforced to
the maximum extent permitted by law as if such provision had been originally
incorporated herein as so modified or restricted, or as if such provision had
not been originally incorporated herein, as the case may be.
d. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties, including and their respective heirs,
executors, successors and assigns, except that this Agreement may not be
assigned by the Executive.
e. Waiver of Breach. No waiver by either party of any
condition or of the breach by the other of any term or covenant contained in
this Agreement, whether by conduct or otherwise, in any one (1) or more
instances shall be deemed or construed as a further or
-6-
continuing waiver of any such condition or breach or a waiver of any other
condition, or the breach of any other term or covenant set forth in this
Agreement. Moreover, the failure of either party to exercise any right hereunder
shall not bar the later exercise thereof with respect to other future breaches.
f. Governing Law. This Agreement shall be governed by the
internal laws of the State of New York.
g. Headings. The headings of the various sections and
paragraphs have been included herein for convenience only and shall not be
considered in interpreting this Agreement.
h. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
i. Due Authorization. The Company represents that all
corporate action required to authorize the execution, delivery and performance
of this Agreement has been duly taken.
IN WITNESS WHEREOF, this Agreement has been executed by the Executive
and, on behalf of the Company, by its duly authorized officer on the day and
year first above written.
IFS INTERNATIONAL, INC.
By:
---------------------------------
Xxxxxxx X. Xxxxxxx, President
----------------------------------
Xxxxx X. Xxxxxxxx, Executive
-7-
Schedule A
No commissions shall be paid on license agreements relating to
the first seven sites of the Visa Smart Card pilot program and thereafter only
if the license agreement was obtained through the efforts of Executive.
Commissions may be reduced on designated house accounts. The
accounts and commissions shall be determined by the Board of Directors.
-8-