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EXHIBIT 10.4
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement ("Agreement") is
executed pursuant to Board approval dated March 13, 1998, to rescind, replace,
amend and restate the Employment Agreement (the "Initial Agreement") originally
intended to be entered into as of the 15th day of November, 1996, between
AUTOMATIC TIME SYSTEMS CORP., a Michigan corporation (the "Company"), and XXXXXX
X. XXXXX (the "Employee").
In order to correct certain errors and omissions inadvertently made in
connection with the Initial Agreement and to update certain references to
reflect the acquisition by Advanced Systems International, Inc. of all the
shares of the capital stock of the Company which occurred in July 1997, and in
consideration of the mutual promises contained in this Agreement, the parties
agree as follows:
SECTION 1. OPERATION OF AGREEMENT.
This Agreement rescinds, replaces, amends and restates the Initial
Agreement ab initio, for all intents and purposes as if this Agreement had been
the document executed instead of the Initial Agreement. For service as an
officer and/or employee of the Company, the Employee shall be entitled to the
full protection of the applicable indemnification provisions of the Articles of
Incorporation and Bylaws of the Company, as they may be amended from time to
time. In addition, the Company will indemnify Employee and hold him harmless, in
advance and on demand, from any and all loss or liabilities he my incur as a
result of claims asserted against Employee in connection with his employment or
his status as a stockholder of the Company's parent, Advanced Systems
International, Inc. ("Parent"), except for claims resulting from Employee's
willful conduct.
SECTION 2. TERM OF AGREEMENT.
This Agreement shall remain in effect until it is terminated pursuant
to Section 5.
SECTION 3. SERVICES.
The Employee shall serve the Company in the capacity, with the title,
and with the present and anticipated future job descriptions, duties and
positions, as are set forth in the attached Exhibit A. He shall have such
general powers of supervision and management and such other responsibilities as
are consistent with such positions, at all times subject to the control and
supervision of the Board of Directors; provided, however, that the Employee may
serve in such other Employee position as is mutually acceptable to the Company
and the Employee. The Employee shall serve the Company faithfully and
diligently. The Employee shall devote such of his productive time, ability and
attention to the business of the Company during the term of this Agreement as
may be required to dispatch his duties hereunder in a competent manner.
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Employee's principal job location shall not change from the metropolitan Detroit
area without consent.
SECTION 4. SALARY, BONUS, BENEFITS AND EXPENSES.
The Company shall pay or provide Employee with the base salary, bonus,
equity compensation, and fringe and other benefits as are set forth in the
attached Exhibit B.
SECTION 5. TERMINATION OF EMPLOYMENT.
(A) TERMINATION BY THE COMPANY. The Company may terminate this
Agreement at any time for any reason, either with or without "Cause". For
purposes of this Agreement, "Cause" shall mean: (i) the willful misconduct of
Employee materially injurious to the Company; (ii) any violation by Employee of
any law, rule or regulation related to the business of the Company that results
in a material injury to the Company; or (iii) the failure by Employee to follow
any written policy adopted by the Company (provided that such policy does not
conflict with the provisions of this Agreement), which failure results in a
material injury to the Company; No act or failure to act on the Employee's part
shall be considered "willful" unless done, or not done, by the Employee in bad
faith and without reasonable belief that the act or omission was in the best
interest of the Company. Notwithstanding the foregoing, the Employee shall not
be deemed to have been terminated for Cause unless the Company shall have
delivered to the Employee a notice of such termination within thirty (30) days
after the date that the Company becomes aware of the occurrence of the event
giving rise to Cause. The Employee shall be entitled to invoke the arbitration
procedures set forth in this Agreement in the event of a dispute between the
Company and the Employee as to the existence of "Cause".
(B) INVOLUNTARY OR VOLUNTARY TERMINATION BY EMPLOYEE. The Employee's
employment with the Company shall also be terminated upon the occurrence of any
of the following:
(i) the Employee's voluntary termination of employment with
the Company for any reason, including, but not limited to, for "Good
Cause;" or
(ii) the Employee's involuntary termination of employment with
the Company for any reason, including, but not limited to, the death or
Disability of the Employee.
For purposes of this Agreement, "Good Cause" shall mean any material change in
the responsibilities or duties of the Employee as described in Section 3 hereof
except as may be permitted therein, or the Company's breach of any other
material term or material condition of this Agreement. For purposes of this
Agreement, a "Disability" shall be deemed to have occurred if the Employee is
prevented from performing his duties hereunder by reason of physical or mental
incapacity for a period of ninety (90) consecutive days. During the term of
disability the employee will receive his normal pay for the first sixty (60)
days, 50% of his normal pay for the next thirty (30) days and thereafter shall
be compensated by way of and according to the terms of the disability insurance
policy.
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SECTION 6. TERMINATION BENEFITS.
(A) Upon termination of the Employee's employment by the Company other
than for Cause, or upon the voluntary termination for Good Cause by the Employee
of his employment with the Company, the Company shall pay to the Employee, or
his legal representative, an amount equal to twelve months salary together with
any bonus accrued up to the date of termination; provided, that with respect to
any bonus plan, the Company shall be deemed to have attained one hundred percent
(100%) of the bonus targets for the performance period in which the termination
of the Employee's employment occurs and the corresponding bonus payments shall
be payable to the Employee as if the Employee's employment had not been
terminated. All amounts payable to the Employee hereunder which are not paid to
the Employee within thirty (30) days after the due date therefor shall include
interest at the prime rate (published in the "Money Rates" column of The Wall
Street Journal on the date thirty (30) days after such due date) (the "Prime
Rate") plus two percent (2%). The Company may, at its sole option, purchase
insurance to cover all or any part of the compensation and benefits payable to
the Employee upon termination of employment under this Section 6(a).
(B) Notwithstanding anything in Subsection (a) of this Section 6 to the
contrary, upon termination of the Employee's employment for any reason, the
Company will continue to provide the Employee and his spouse with medical and
hospitalization insurance only to the extent, for the time periods and at
Employee's expense, as mandated by COBRA or any similar successor law.
SECTION 7. CHANGE IN CONTROL.
A "Change in Control" shall be deemed to have occurred if both (i) any
person or "group" other than shareholders as of the date of this Agreement
acquires "beneficial ownership" (in each case as defined by applicable
regulations promulgated by the Securities and Exchange Commission) of 51% or
more of the Parent's outstanding equity securities. Upon a Change in Control,
the Employee's stock ownership and options shall accelerate and vest 100%.
SECTION 8. COVENANT NOT TO COMPETE.
(A) During the term of this Agreement and for a two year period
commencing on the date of termination of this Agreement, Employee will not,
directly or indirectly, engage in, or have an interest in or be associated with
(whether as an officer, director, stockholder, partner, associate, employee,
consultant, owner or otherwise) any corporation, firm or enterprise which is
engaged in the sale of products in competition with those of the Company,
anywhere within a 500 mile radius of the Company's then executive offices;
provided, however, that Employee shall be permitted to make passive investments
in companies which may compete with the Business (as hereinafter defined), as
long as such investments do not exceed 5% of the equity interests of such
companies.
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(B) Employee will not at any time, for so long as any Confidential
Information (as defined below) shall remain confidential or otherwise remain
wholly or partially protectable, either during the term of this Agreement or
thereafter, use or disclose, directly or indirectly to any person outside of the
Company or any corporation owned or controlled by the Company or under common
control with the Company ("Affiliate") any Confidential Information.
(C) During the term of this Agreement and for a two year period
commencing on the date of termination of this Agreement, Employee shall not
directly or indirectly divert, or by aid to others, do anything which would tend
to divert, from the Company or any Affiliate any trade or business with any
customer or supplier with whom Employee had contact or association during the
term of his association with the Company or with any party whose identity or
potential as a ' customer or supplier was confidential or learned by Employee
during his association with the Company.
(D) During the term of this Agreement and for a two year period
commencing on the date of termination of this Agreement, Employee shall not,
either directly or indirectly, induce or attempt to induce any person with whom
Employee was acquainted while associated with the Company to leave the
employment of the Company or any of the affiliates.
(E) As used in this Agreement, the term "Confidential Information"
shall mean all business information of any nature and in any form which at the
time or times concerned is not generally known to those persons engaged in
business similar to that conducted or contemplated by the Company or any
affiliate (other than by the act or acts of an employee not authorized by the
Company to disclose such information) and which relates to any one or more of
the aspects of the present or past business of the Company or any of the
Affiliates or any of their respective predecessors, including, without
limitation, patents and patent applications, inventions and improvements
(whether or not patentable), development 'projects, policies, processes,
formulas, techniques, know-how, and other facts relating to sales, advertising,
promotions, financial matters, customers, customer lists, customer purchases or
requirements, and other trade secrets.
(F) As used in this Agreement, the Company's "Business" shall mean the
development, design, manufacture, documentation, distribution and sales of
computer hardware, computer software and associated equipment relating to time
and attendance.
(G) Employee agrees and understands that the remedy at law for any
breach by him of this Covenant Not to Compete will be inadequate and that the
damages flowing from such breach are not readily susceptible to being measured
in monetary terms. Accordingly, it is acknowledged that, upon adequate proof of
Employee's violation of any legally enforceable provision of this Covenant Not
to Compete, the Company shall be entitled to immediate injunctive relief and may
obtain a temporary order restraining any threatened or further breach. Nothing
in this Covenant Not to Compete shall be deemed to limit the Company's remedies
at law or in equity for any breach by Employee of any of the provisions of this
Covenant which may be pursued or availed of by the Company.
SECTION 9. TAX WITHHOLDING.
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The Company may withhold from any amounts payable under this Agreement,
or shall require Employee to remit to the Company at the time of receipt of
payments, all applicable federal, state, local or other withholding taxes.
SECTION 10. BINDING EFFECT.
(A) This Agreement shall be binding upon the successors and assigns of
the Company. The Company shall take whatever actions are necessary to ensure
that any successor to its operations (whether by purchase, merger,
consolidation, sale of substantially all assets or otherwise) assumes all of the
Company's obligations under this Agreement, and the Company shall obtain from
such successor a written agreement satisfactory to the Employee evidencing the
successors assumption of such obligations.
(B) This Agreement shall be binding upon, and shall inure to the
benefit of, and be enforceable by, the Employee and his legal representatives
and heirs. However, the rights of the Employee under this Agreement shall not be
assigned, transferred, pledged, hypothecated or otherwise encumbered.
SECTION 11. AMENDMENT OR MODIFICATION OF AGREEMENT.
This Agreement may not be modified or amended except by instrument in
writing signed by the parties hereto.
SECTION 12. VALIDITY.
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall continue in full force and effect.
SECTION 13. LIMITATION ON RIGHTS.
(A) Subject to the terms and conditions set forth herein: (i) this
Agreement shall create no right in the Employee to continue in the Company's
employment for any specific period of time or create any other rights of the
Employee or obligations on the part of the Company; and (ii) this Agreement
shall not restrict the right of the Company to terminate the Employee or
restrict the right of the Employee to terminate his employment.
(B) This Agreement shall not be construed to exclude the Employee from
participation in any other compensation or benefit programs in which he is
specifically eligible to participate either prior to or following the execution
of this Agreement, or any such programs that generally are available to other
Employee personnel of the Company, nor shall it affect the kind and amount of
other compensation to which the Employee is entitled.
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SECTION 14. ARBITRATION.
Disputes under this Agreement shall be settled pursuant to binding
arbitration before three arbitrators in Oakland County, Michigan, in accordance
with the commercial arbitration rules of the American Arbitration Association,
as then in effect. For purposes of choosing the arbitrators, the Company shall
designate one arbitrator, the Employee shall choose one arbitrator and the two
arbitrators jointly shall designate a third arbitrator, in accordance with the
commercial arbitration rules referenced above. The arbitrators' sole authority
shall be to interpret and apply the provisions of this Agreement; they shall not
change, add to, or subtract from, any of its provisions. The arbitrators shall
have the power to compel attendance of witnesses at the hearing. Any court
having jurisdiction over this matter may enter a judgment based upon such
arbitration. All decisions of the arbitrators shall be final and binding on the
claimant and the Company without appeal to any court.
SECTION 15. FEES AND EXPENSES.
To the extent that the Employee is successful as the result of any
controversy over the interpretation, enforceability or validity of any provision
in this Agreement, the Company shall reimburse the Employee for any and all fees
and expenses, including, but not limited to, attorneys' fees, incurred by the
Employee in connection with such dispute. The Company shall reimburse the
Employee for such fees and expenses within twenty days following written demand
therefor by the Employee. Payments of fees and expenses made by the Company more
than twenty (20) days after written demand therefor (for any reason) shall
accrue interest at the Prime Rate (on the twentieth day following the due date
thereof) plus two percent (2%), which interest shall begin accruing on the
twentieth day following such date.
SECTION 16. MISCELLANEOUS.
A waiver of the breach of any term or condition of this Agreement shall
not be deemed to constitute a waiver of any subsequent breach of the same or any
other term or condition. This Agreement is intended to be performed in
accordance with, and only to the extent permitted by, all applicable laws,
ordinances, rules and regulations. The headings in this Agreement are inserted
for convenience of reference only and shall not be a part of or control or
affect the meaning of any provision hereof.
SECTION 17. GOVERNING LAW.
To the extent not preempted by federal law, this Agreement shall be
governed and construed in accordance with the laws of the State of Michigan.
SECTION 18. ENTIRE AGREEMENT.
This document represents the entire agreement and understanding of the
parties with respect to the subject matter of the Agreement and it may not be
altered or amended except by an agreement in writing.
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SECTION 19. NOTICE.
All notices and other communications hereunder shall be in writing and
shall be deemed to have been given when delivered personally or mailed in the
United States by certified or registered mail, postage prepaid, return receipt
requested, to the parties at the following addresses or at such other addresses
as may be given in writing by one party to the other at least five (5) days
prior to the mailing or delivery of such notice:
Employee: Xxxxxx X. Xxxxx
000 Xxxxxx Xxx
Xxxxxxxxxx, XX 00000
Company: AUTOMATIC TIME SYSTEMS CORP.
00000 X. Xxxx Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: President
In all events, with a copy to:
Jaffe, Raitt, Heuer & Xxxxx,
Professional Corporation
Xxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxx X. Xxxxxx, Esq.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
AUTOMATIC TIME SYSTEMS CORP.,
a Michigan corporation
By:
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Xxxxxxx Xxxxxxxxx, Chief
Financial Officer
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Xxxxxx X. Xxxxx
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EXHIBIT A TO EMPLOYMENT AGREEMENT
XXXXXX X. XXXXX
JOB TITLE: Chief Executive Officer
RESPONSIBILITIES
- Lead the Company operations to successful growth while ensuring a profitable
return to investors.
- Contribute to the establishment of the overall strategic direction and
oversee the execution of same.
- Shape product direction within the context of the Company business strategy.
- Evaluate, develop, lead and motivate the management team.
- Develop a tight relationship with customers and partners.
- Be proactive to industry and the trends and issues likely to impact ATS and
respective markets.
- Be the Company spokesperson.
- Lead the ATS team to behave within the following culture and principles:
- Communicate effectively with the complete organization sharing
information widely and openly.
- People make the difference.
- Ensure customer satisfaction is sustained through motivated employees
who have a passion for their work.
- Recognize people who can and will initiate change.
- Ensure the Corporation responds promptly to opportunities, problems and
conflicts.
- Behave with a high level of trust, honesty, fairness and mutual
respect.
- Reward those who achieve results while practicing these principles.
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EXHIBIT B TO THE
EMPLOYMENT AGREEMENT
XXXXXX X. XXXXX
COMPENSATION
- $12,500/month for the first 3 months thereafter $16,666/mth subject to
review annually
- Accommodation expenses in Detroit for the first 90 days.
- Moving expenses to move household goods from Toronto to Detroit
BONUS will be paid as follows:
- $25,000 if gross sales reach $7 million
- Bonus will increase by $25,000 for every million in sales thereafter
- Bonus is based upon the current business plan and does not include any
sales that might be achieved through acquisitions or mergers.
OPTIONS are granted for up to 500,000 shares of Parent's stock at $1.00 per
share, according to the terms and conditions of an Option Agreement (form
attached).
BENEFITS
The Company currently provides the following benefits all of which may be
reviewed periodically:
HEALTH BENEFITS
The Company currently provides comprehensive health benefits for the
employee. The employee must pay the expense associated with adding
other family members to the coverage. The specific terms and benefits
of the policy are subject to periodic review and revision.
DENTAL PLAN
Coverage in accordance with the Company policy is provided for the
employee, with the employee having the option of adding other family
members. The specific terms and benefits of the policy are subject to
periodic review and revision.
RETIREMENT BENEFIT
At this time, the employee is responsible for privately arranging their
own retirement program.
LIFE INSURANCE
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The Company will provide $500,000 of term life insurance for the
employee
DISABILITY INSURANCE
The Company will provide Disability Insurance for the employee, which
will commence after 90 days of disability as defined in the policy. The
specific terms and benefits of the policy are subject to periodic
review and revision
EXPENSE RECOVERY
The employee will be reimbursed for all expenses properly incurred on behalf of
the Company. All expenses must be within the policy guidelines as established
from time to time by Company management, and must be properly supported by
receipts. Expense claims are to be submitted at the end of each month with full
details for each expense item, and on the expense form provided by the Company.
Automobile usage will be reimbursed at $.35/mile driven on Company business.
Policy guidelines include economy airline travel, approved hotels include Best
Western, Holiday Inns, Ramada Inns, Choice Hotels, and others of similar class.
Food expenses when traveling is based on a $25.00 daily guideline. Reimbursement
will be within two weeks of expense form submission.
VACATION/TIME OFF
Three weeks of vacation annually and all statutory and corporately recognized
holidays.
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