EMPLOYMENT AGREEMENT
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AGREEMENT dated as of July 7, 1999, between TSG Global Education Web, Inc.
("Company"), a Delaware corporation, having its principal place of business
located at X.X. Xxx 000, 000 Xxxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxx, and Xxxxxx
X. Xxxxxxxxxx ("Employee"), residing at 00 Xxxx Xxxx Xxxx, Xxxxxxx, XX 00000.
WITNESSETH:
WHEREAS, the Employee has expertise in the management of a company that
provides educational and other consulting services to major corporations through
the means of a secure internet connection, which company has been merged into
the Company concurrently with the execution of this Agreement;
WHEREAS, the parties acknowledge that the Employee's abilities and services
are unique and essential to the prospects of the Company; and
WHEREAS, in light of the foregoing, the Company desires to employ the
Employee to perform Employee and other services for the Company, and the
Employee desires to accept such employment, subject to the terms and conditions
set forth herein.
NOW, THEREFORE, the parties hereto agree as follows:
1. Employment. The Company hereby employs the Employee as President and
Chief Employee Officer and the Employee hereby accepts employment upon the terms
and conditions hereinafter set forth.
2. Term. The term of this Agreement shall be three (3) years, commencing on
the date hereof ("Effective Date") and ending July , 2002, subject to earlier
termination as provided in this Agreement ("Term") and subject to certain
provisions hereof which survive the Term. The Term shall be extended for
additional one (1) year periods automatically unless either party shall give the
other party a written termination notice, which notice shall be given at least
ninety (90) days prior to the end of the Term.
3. Compensation.
(a) For all services rendered under this Agreement:
(i) The Company shall pay the Employee a base salary at the
rate of $150,000.00 per annum payable in equal monthly installments. ("Base
Salary"), as may be adjusted from time to time by the CPI Factor (as defined
below) as provided in Section 3(b) below, or such greater amount as shall be
approved by the Company's Board of Directors from time to time; and
(ii) The Company shall pay the Employee Incentive
Compensation, calculated and payable as set forth on Exhibit A attached hereto
and made a part hereof.
(iii) The Company shall agree to grant to the Employee on the
Effective Date options to acquire TSG $0.001 par value Common Stock ("Shares")
pursuant to the provisions of the Company's qualified Incentive Stock Option
Plan ("ISO") attached as Exhibit B and the number of Shares and the xxxxx xxxxx
of the ISO Shares in accordance with the table in Exhibit C.
(iv) The Company shall also agree to sell to the Employee on
the Effective Date the numbers of Shares in accordance with the table on Exhibit
D.
(b) The Base Salary shall be subject each year to adjustment to reflect
changes in the cost of living as set forth in this Section 3(b). Effective on
each May 1st the Base Salary shall be changed to the amount derived by
multiplying the Base Salary by a fraction, the numerator of which shall be the
Consumer Price Index for All Urban Consumers, [U.S. City Average] (1982-84 =
100) for the month of March immediately preceding such May 1st and the
denominator of which shall be 165.0, the said Consumer Price Index for the month
of March, 1999 ("CPI Factor). The amount so determined shall be the Base Salary
for the calendar year beginning as of that May 1st until the next May 1st or the
end of the Term, whichever occurs sooner.
4. Duties. The Employee shall perform on a full time basis such duties
of an executive nature as shall be customarily associated with the offices of
President and Chief Executive Officer subject to the direction of the Board of
Directors. The Employee shall perform and discharge well and faithfully the
duties which may be assigned to him from time to time by the Company in
connection with the conduct of its business. If the Employee is elected or
appointed a director or officer of the Company or any subsidiary thereof during
the term of this Agreement, the Employee will serve in such capacity without
further compensation.
5. Extent of Services. So long as during the Term of this Agreement the
Company has not notified the Employee of his disability pursuant to Section
10(a) hereof, the Employee shall devote his full business time, attention and
energies to the business of the Company subject to reasonable absences for
vacation and illness and may not during the term of this Agreement be engaged
(whether or not during normal business hours) in any other business or
professional activity, whether or not such activity is pursued for gain, profit
or other pecuniary advantage.
6. Benefits/Expenses.
(a) During the term of his employment, the Employee shall be entitled
to participate in employee benefit plans or programs of the Company, provided
that they should conform to the benefits which are now offered to the Employee
in his current position, if any, to the extent that his position, tenure,
salary, age, health and other qualifications make him eligible to participate,
subject to the rules and regulations applicable thereto. Such additional
benefits shall include, subject to the approval of the Board of Directors,
medical and dental insurance, paid vacation and qualified pension and profit
sharing plans.
(b) The Company will furnish the Employee, $1,000.00 each month to be used
for the purchase or lease of an automobile and an amount sufficient each month
to cover auto insurance for such vehicle.
(c) The Company shall maintain term life insurance with Mass Mutual Life
Insurance Company with annual premium payment not to exceed $2,716.92 with the
beneficiary to be designated by the Employee.
(d) The Employee shall be entitled to reimbursement of all out of pocket
expenses reasonably incurred by him in the performance of his duties to the
Company, subject to the presenting of appropriate vouchers in accordance with
the Company's policy.
7. Disclosure of Information.
(a) The Employee represents and warrants to the Company that Exhibit E
hereto sets forth, to the best of Employee's knowledge:
(i) All rights, in respect of the Employee's engaging in any
business activity (whether or not for profit), of former employers, clients,
principals, partners or others with whom or for whom the Employee has performed
services since 1988; and
(ii) All of the business activities (whether or not for
profit) of the Employee applicable to periods after the time such services were
performed.
(b) The Employee recognizes and acknowledges that the Company's
confidential or proprietary data or information as they have existed, will
exist, may continue to exist from time to time, are valuable, special and unique
assets of the Company's business, access to and knowledge of which are essential
to the performance of the Employee's duties hereunder. The Employee will not,
during or after the term of his employment by the Company, in whole or in part,
directly or indirectly disclose, divulge or communicate such secrets,
information or processes to any person, firm, corporation, association or other
entity for any reason or purpose whatsoever, nor shall the Employee make use of
any such property for his own purposes or for the benefit of any person, firm,
corporation or other entity (except the Company) under any circumstances
provided that after the term of his employment these restrictions shall not
apply to such secrets, information and processes which are then in the public
domain (provided that the Employee was not responsible, directly or indirectly,
for such secrets, information or process entering the public domain without the
Company's consent). The Employee agrees to hold as the Company's property, all
memoranda, books, papers, letters, formulas and other data, and all copies
thereof and therefrom, in any way relating to the Company's business and
affairs, whether made by him or otherwise coming into his possession, and on
termination of his employment, or on demand of the Company, at any time, to
deliver the same to the Company.
(c) The term "confidential or proprietary data or information": as used in
this Agreement shall mean information not generally available to the public,
including without limitation, all database information, personnel information,
financial information, customer lists, supplier lists, trade secrets, patented
or proprietary information, forms, information regarding operations, systems,
services, know how, computer and any other processed or collated data, computer
programs, pricing, marketing and advertising data.
(d) All written materials, records and documents made by the Employee or
coming into Employee's possession during Employee's employment by the Company
concerning any products, processes or equipment manufactured, used, developed,
investigated, purchased, sold or considered by the Company or otherwise
concerning the business or affairs of the Company shall be the sole property of
the Company, and upon termination of Employee's employment by the Company, or
upon request of the Company during Employee's employment by the Company,
Employee shall promptly deliver the same to the Company. In addition, upon
termination of Employee's employment by the Company, Employee will deliver to
the Company all other Company property in Employee's possession or under
Employee's control, including but not limited to, financial statements,
marketing and sales data, customer and supplier lists, database information and
other documents, and any Company credit cards.
8. Inventions. The Employee hereby sells, transfers and assigns to the
Company or to any person, or entity designated by the Company, all of the entire
right, title and interest of the Employee in and to all inventions, ideas,
disclosures and improvements, whether patented or unpatented, and copyrightable
material, made or conceived by the Employee, solely or jointly, or in whole or
in part, during or before the term hereof (but after the Effective Date) which
(i) relate to methods, apparatus, designs, products, processes or devices sold,
leased, used or under construction or development by the Company or any
subsidiary or (ii) otherwise relate to or pertain to the business, functions or
operations of the Company or any subsidiary, or (iii) arise (wholly or partly)
from the efforts of the Employee during the term hereof. The Employee shall
communicate promptly and disclose to the Company, in such form as the Company
requests, all information, details and data pertaining to the aforementioned
inventions, ideas, disclosures and improvements; and, whether during the term
hereof or thereafter, the Employee shall execute and deliver to the Company such
formal transfers and assignments and such other papers and documents as may be
required of the Employee to permit the Company or any person or entity
designated by the Company to file and prosecute the patent applications and, as
to copyrightable material, to obtain copyright thereon. Any invention by the
Employee within one year following the termination of this Agreement shall be
deemed to fall within the provisions of this paragraph unless proved by the
Employee to have been first conceived and made following such termination.
9. Restrictive Covenant. During the Term of this Agreement and for a period
of three (3) years after the date of such termination for any reason Employee
shall not without the prior written consent of the Company:
(a) Non-Competition. Act as an individual proprietor, partner, stockholder,
officer, principal, agent, employee, supervisor, manager, consultant, guarantor,
creditor, lender, co- endorser or in any other capacity whatsoever, own,
participate in the ownership of, manage, operate, exercise any control over,
render services to, or engage in any of the foregoing for any business, firm,
corporation, limited liability company, its successors or assigns, partnership
or other entity which operates a business similar to or competitive with any of
the products or services developed by the Company during the period commencing
on October 1, 1992, until termination of employment which are conducted in any
of the geographic areas, including the continental United States, in which the
Company's business is conducted. These products include, but are not limited to
the following products or services:
(a) Foxbox Technology;
(b) ESCN Training;
(c) PROFIT COACH ;
(d) PROFIT COACH TOOL KIT ;
(e) Organizational Competitive Benchmark Studies of major oil companies;
and
(f) Leader/Lead classroom training.
(b) Non-Solicitation. Solicit any business from any current customers or
clients of the Company, its successors or assigns, or from any prospective
customers or clients of Company, its successors or assigns from whom the
Company's employees or agents have engaged in, or solicited business within the
three (3) year period immediately preceding the termination date of the
Executive's employment for the purpose of selling products or services similar
to or competitive with those offered or sold or provided by the Company.
(c) Solicitation of Employees. In any manner, whether directly or
indirectly, seek to persuade any director, officer, or other employee of
Company, its successors or assigns to discontinue their employment or
relationship with Company, its successors or assigns, nor will such Employee
solicit, entice, induce or retain any such person for such purpose.
(d) The parties hereto intend that the covenants contained in this Section
9, which pertain only to geographic areas where the Company is engaged in
business, shall be deemed a series of separate covenants for each applicable
area of the relevant country, state, county and city. If, in any judicial
proceeding, a court shall refuse to enforce all the separate covenants deemed
included in this Section 9 because, taken together, they cover too extensive a
geographic area, the parties intend that those of such covenants (taken in order
of the cities, counties, states and countries therein which are least populous)
which if eliminated would permit the remaining separate covenants to be enforced
in such proceeding shall, for the purpose of such proceeding, be deemed
eliminated from the provisions of this Section 9.
(e) Nothing in this Section 9 shall reduce or abrogate the Employee's
obligations during the term of this Agreement under Sections 4 and 5 hereof.
10. Termination.
(a) Disability. The Company shall have the right to terminate this
Agreement at any time, without cause, upon ninety (90) days prior notice, or in
the event of the permanent disability of the Employee, upon five (5) days prior
written notice. Upon termination, the Company shall pay the Employee all
compensation earned under Section 3 through the date of termination; provided
that the incentive compensation shall be payable within one hundred twenty (120)
days after termination as set forth in Exhibit A. In addition, the Employee
shall receive a termination payment computed and payable as described in Section
10(e). For the purposes of this subparagraph "permanent disability" shall mean
the physical or mental incapacity of the Employee for any consecutive three (3)
month period or any aggregate period of six (6) months in any twelve (12) month
period of such a nature that the Employee shall be unable diligently to perform
the duties of advisor to the President and Chief Employee Officer as
contemplated hereby. Such determination shall be made by the mutual agreement of
the parties hereto, or in the event such agreement cannot be reached, by the
following procedure:
(i) If the Company maintains a disability income policy, the
definition set forth in such policy shall control, provided the
issuing insurance company agrees to commence disability payments
as a result of such permanent disability.
(ii) If the Company does not maintain a disability income policy:
(A) Each party shall select an independent physician who shall
examine the subject Employee. The mutual agreement of the
two examining physicians shall control, and their decision
shall be binding.
(B) If the two physicians cannot agree, they (the physicians)
shall select a third physician to examine the subject
Employee. The majority opinion of such three physicians
shall control, and their decision shall be binding.
(b) Death. This Agreement shall terminate automatically upon the death of
the Employee. In such event, the Company shall pay the estate of the Employee,
within thirty (30) days after the date of death, all compensation earned under
Section 3 through the date of termination, provided the incentive compensation
shall be payable within one hundred twenty (120) days after termination as set
forth in Exhibit A. In addition, the estate of the Employee shall receive a
termination payment computed and payable as described in Section 10(e) herein.
(c) For Cause. In addition to its rights under Section 10(a) above, the
Company shall have the right, at its sole option, to terminate this Agreement
"for cause", as hereinafter defined, at any time, without any further payment to
the Employee other than compensation earned under Section 3(a)(i) prior to the
date of termination, by notice to the Employee (or his personal representative,
as the case may be), specifying the reason for such termination, and the
Employee shall be entitled to any incentive compensation on a pro rata basis for
the period ending on the date of such termination. For purposes of this Section
10(c), "cause" shall mean solely (i) the Employee's conviction of a felony or a
crime of moral turpitude, (ii) the Employee's willful misconduct or gross
negligence materially detrimental to the Company, or (iii) the breach by the
Employee of a material term of this Agreement which continues for thirty (30)
days after written notice thereof, specifying the nature of the breach, is given
to the Employee.
(d) Without Cause. If the Employee is terminated by the Company without
Cause he shall be entitled to all Incentive Compensation earned under Section 3
through the date of termination provided that the compensation shall be paid
within one hundred twenty (120) days after termination as set forth in Exhibit
A.
(e) Termination Payment. If the Employee's employment is terminated under
Section 10(a), 10(b) or 10(d) herein, the Employee shall be entitled to receive,
as a termination payment, any amount equal to his annual Base Salary, as
adjusted by the CPI Factor, in effect on the date of termination, payable
through July , 2002, or such other date as this Agreement may have been extended
to pursuant to Section 2 herein, in the same manner as such compensation was
paid prior to termination. The amount of payment under Section 10 (a) shall be
reduced by the amounts, if any, paid to the Employee by the Company's disability
insurance policy. In the event of termination upon death, the Company will fund
such payments with term life insurance at standard rates and the Employee will
pay any additional amount over and above the standard rate amount.
(f) Loans. Upon termination of the Employee's employment under this
Agreement for any reason (including expiration of the term hereof), (i) all
loans made to the Employee shall become immediately due and payable, except that
if the Employee's employment is terminated under Section 10 (a) or 10 (b), he
(or his personal representatives) shall have the option to elect, by notice to
the Company within ten (10) days after the date of such termination, to repay
such loans in twelve (12) equal monthly installments following termination, with
interest, from the date of termination of employment, at the prime rate of
interest announced by Citibank N.A. from time to time. In such event, the
Employee (or his personal representatives) shall execute a promissory note and
other documentation evidencing such loans as the Company shall reasonably
request; and (ii) all loans due Employee and any deferred compensation owed to
the Employee by the Company shall become due and payable to the Employee be paid
in accordance with its terms.
11. Remedies. If there is a breach or threatened breach of the provisions
of Section 5, 7(b), 8 or 9 of this Agreement, the Company shall be entitled to
an injunction restraining the Employee from such breach. Nothing herein shall be
construed as prohibiting the Company from pursuing any other remedies for such
breach or threatened breach.
12. Insurance. The Company may, at its election and for its benefit, insure
the Employee through key man insurance up to $2,000,000.00 or otherwise, against
accidental loss or death and the Employee shall submit to such physical
examination and supply such information as may be required in connection
therewith.
13. Location of Performance. The Employee's services will be performed in
the Guilford, Connecticut area. The Employee's performance hereunder shall be
within such area or its environs. The parties acknowledge, however, that the
Employee may be required to travel some in connection with the performance of
his duties hereunder.
14. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the successors and assigns of the Company, and unless clearly
inapplicable, all references herein to the Company shall be deemed to include
any successors. In addition, this Agreement shall be binding upon and inure to
the benefit of the Employee and his heirs, executors, legal representatives and
assigns; provided, however, that the obligations of Employee hereunder may not
be delegated without the prior written approval of the Board of Directors of the
Company.
15. Successor Company. The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform as if no such succession
had taken place.
16. Notices. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and shall be deemed given when
delivered personally or three days after being sent by first-class registered or
certified mail, return receipt requested, to the party for which intended at its
or his address set forth at the beginning of this Agreement (which, in the case
of the Company, shall be sent "Attention: Chairman of the Board") or to such
other address as either party may hereafter specify by similar notice to the
other.
17. Waiver of Breach. A waiver by the Company or the Employee of a breach
of any provision of this Agreement by the other party shall not operate or be
construed as a waiver of any subsequent breach by the other party.
18. Entire Agreement. This Agreement supersedes all prior agreements
between the parties, written and oral, and cannot be amended or modified except
by a writing signed by both parties. It may be executed in one or more
counterpart copies, each of which shall be deemed an original, but all of which
shall constitute the same instrument.
19. Choice of Law/Forum. This Agreement shall be governed and construed in
accordance with the laws of the State of New York, without regard to principles
of conflicts of law. Any disputes arising out of this Agreement shall be
adjudicated in the Federal or State court presiding in the Counties of New York,
Nassau or Suffolk, State of New York.
20. Captions/Exhibits. Captions used in this Agreement are for convenience
of reference only and shall not be deemed a part of this Agreement nor used in
the construction of its meaning. Exhibits attached to this Agreement shall be
deemed as fully a part of this Agreement as if set forth in full herein.
21. Severability. If any provision of this Agreement shall be deemed
invalid or unenforceable as written it shall be construed, to the greatest
extent possible, in a manner which shall render it valid and enforceable and any
limitations on the scope or duration of any such provision necessary to make it
valid and enforceable shall be deemed to be part thereof; no invalidity or
unenforceability shall affect any other portion of this Agreement unless the
provision deemed to be so invalid or unenforceable is a material element of this
Agreement, taken as a whole.
22. Acknowledgment. Employee acknowledges that he has carefully read this
Agreement and hereby represents and warrants to the Company that Employee's
entering into this Agreement, and the obligations and duties undertaken by
Employee hereunder, will not conflict with, constitute a breach of or otherwise
violate the terms of any other agreement to which Employee is a party and that
Employee is not required to obtain the consent of any person or entity in order
to enter into and perform his obligations under this Agreement.
With respect to the covenants contained in Sections 7, 8 and 9 of this
Agreement, Employee agrees that any remedy at law for any breach or threatened
or attempted breach of such covenants may be inadequate and that the Company
shall be entitled to specific performance or any other mode of injunctive and/or
other equitable relief to enforce its rights hereunder or any other relief a
court might award without the necessity of showing any actual damage or
irreparable harm or the posting of any bond or furnishing of other security.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first hereinabove written.
[SIGNATURES APPEAR ON NEXT PAGE]
TSG GLOBAL EDUCATION WEB, INC.
By: /s/ Xxxxxx X. Xxxxxxx
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[Title]
/s/ Xxxxxx X. Xxxxxxxxxx
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Xxxxxx X. Xxxxxxxxxx
Employee
