EXHIBIT 10.56
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into as of
January 21, 2000, by and between NHancement Technologies Inc., a Delaware
corporation (the "Company"), Xxxxxxx Xxxxxx (the "Employee").
RECITAL
The Employee has been hired by the Company to serve as the Chief
Marketing Officer of the Company.
The Company and the Employee desire to set forth the terms and
conditions of the Employee's employment. This Agreement supersedes and replaces
all existing employment agreements between the parties, oral or written.
AGREEMENT
In consideration of the mutual promises, covenants and agreements
contained in this Agreement, and intending to be legally bound, the parties
agree as follows:
1. AGREEMENT TO SERVE
1.1 TITLE. The Company shall employ the Employee and the
Employee shall serve in the employ of the Company as President of eRM Software
Group of NHancement Technologies Inc. and Chief Marketing Officer.
1.2 DUTIES. The Employee shall assume and discharge the
responsibilities of President eRM Software Group of the Company and Chief
Marketing Officer, as well as such other duties and responsibilities as may be
assigned to him by the Chief Executive Officer and the Board of Directors of the
Company and as are appropriate to the offices he holds. The Employee shall
perform his duties to the best of his abilities and shall devote most of his
business time and attention to the good faith performance of his duties. The
Employee shall not engage in other businesses or activities for compensation
during the term of this Agreement to the extent such other business or
activities would constitute a conflict of interest with the interests of the
Company or would substantially interfere with the performance of his duties
hereunder. The Employee shall perform his services to the Company at its
principal offices in San Diego.
2. TERMS OF EMPLOYMENT
2.1 BASIC TERM. The term of the Employee's employment under this
Agreement (the "Term") shall be for a period of two (2) years from the effective
date of this Agreement (the "Initial Term"), subject to the remaining provisions
of this Section 2. The Term will be extended for successive one-year periods
beginning on the first day after the final day of the Initial Term, except in
the event the Employee or the Company provides written notice to the
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other at least 180 days before the beginning of such one-year period, of the
intention not to extend the Term. During the Term, the same terms and conditions
contained in this Agreement (including salary as may be determined under Section
3.1) shall remain in effect during the continuance of the Employee's employment.
2.2 TERMINATION FOR CAUSE. The Company shall have the right to
terminate the Employee for cause and said termination shall be effected by and
upon written notification to Employee. Grounds for termination for cause will
be: (i) the Employee's material breach of any terms of the Agreement, if such
material breach has not been substantially cured within thirty (30) days
following written notice of such breach to the Employee from the Company setting
forth with specificity the nature of the breach or, if cure cannot reasonably be
effected within such 30-day period, if the Employee does not commence to cure
the breach within such 30-day period and thereafter pursue such cure
continuously and with due diligence until cure has been fully effected; (ii) the
Employee's willful dishonesty towards, fraud upon, crime against,
misrepresentation, embezzlement, deliberate or attempted injury or bad faith
action with respect to, or deliberate or attempted injury to, the Company; (iii)
the Employee's gross negligence in the performance of, willful failure or
refusal to perform, the services required of him under this Agreement, or to
carry out proper directions by the Board of Directors of the Company with
respect to the services rendered by him under this Agreement or the manner of
rendering such services, his willful misconduct in the performance of his duties
under this Agreement or the manner of rendering such services, his willful
misconduct in the performance of his duties under this Agreement; (iv) any
unlawful or criminal activity of a serious nature; or (v) the Employee's
conviction for any felony crime (whether in connection with the Company's
affairs or otherwise).
2.3 TERMINATION WITHOUT CAUSE. The Company shall have the
right, upon sixty (60) days written notification to the Employee, to terminate
the Employee's employment without cause (as defined above). Except as otherwise
provided in Section 3.5, upon any termination without cause pursuant to this
Section 2.3, the Employee shall be paid all accrued salary, vested deferred
compensation (other than pension plan or profit-sharing plan benefits, which
will be paid in accordance with the provisions of the applicable plan), any
benefits then due under any plans of the Company in which the Employee is a
participant, accrued vacation pay, sick-leave pay, and any appropriate business
expenses incurred by the Employee in connection with his duties under this
Agreement, all to the effective date of termination ("Accrued Compensation"),
and all severance compensation provided for in Section 4.1.
2.4 DISABILITY. If, during the Term of this Agreement, the
Employee, in the reasonable judgement of the Board of Directors of the Company,
has failed to perform his duties under this Agreement on the account of illness
or physical or mental disability, which condition renders the Employee incapable
of performing the duties of his office (disability as defined by a disability
insurance policy purchased by Company on the Employee), and such condition
continues for a total of six months during any 12-month (or shorter) period, the
Company shall have the right to terminate the Employee's employment upon written
notification to the Employee (which may also be considered notice not to extend
the Term pursuant to Section 2.1) and payment to the Employee of all Accrued
Compensation to the date of termination, and disability benefits as provided in
Section 4.2, severance and all other reimbursement accrued by the Employee.
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2.5 DEATH. In the event of the Employee's death during the Term
of this Agreement, the Employee's employment shall be deemed to have terminated
as of the last day of the month during which his death occurs, and the Company
shall pay to his estate all Accrued Compensation to the date of termination,
severance and all other reimbursement accrued by the Employee.
2.6 TERMINATION UPON CHANGE IN CONTROL.
(a) In the event of a Termination Upon change in Control,
the Employee shall immediately be paid all Accrued Compensation and the
severance compensation provided for in Section 4.1. "Termination Upon a Change
in Control" shall mean a termination by the Company without cause, or by the
Employee for "Good Reason", of the Employee's employment with the Company
following a "Change in Control", as defined below.
(b) For the purpose of this Agreement. "Good Reason" shall
include but not be limited to, any of the following (without the Employee's
express written consent):
(i) within the first 12 months after the Change in Control,
the assignment to the Employee by the Company of duties inconsistent with, or a
substantial alteration in the nature or status of, the Employee's
responsibilities immediately prior to a Change in Control;
(ii) within the first 12 months after the Change in Control,
a reduction by the Company in the Employee's compensation or benefits as in
effect on the date of the Change in Control;
(iii) the Company's relocation of the Employee to any place
other than the principal offices of the Company in San Diego (or such other
location as the Board of Director has agreed the Employee may be located
pursuant to Section 1.2), except for reasonably required travel by the Employee
on the Company's business;
(iv) any material breach by the Company of any provision of
this Agreement, is such material breach has bot been cured within thirty (30)
days following written notice of such breach by the Employee to the Company
setting forth with specificity the nature of the breach or, if the cure cannot
reasonably be effected within such 30-day period, then if the Company does not
commence to cure the breach within such 30-day period and thereafter in good
faith pursue such cure; or
(v) any failure by the Company to obtain the assumption and
performance of this Agreement by any successor (by merger, consolidation or
otherwise) or assign of the Company.
(c) For purposes of this Agreement, a "Change in Control"
shall be deemed to have occurred if:
(i) any "person" or "group" (within the meaning of Sections
13(d) and 14(d)(2) of the Securities and Exchange Act of 1934), other than a
trustee or other fiduciary
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holding securities under an employee benefit plan of the Company is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the 1934 Act), directly
or indirectly, of more than 51% of the then outstanding voting stock of the
Company; or
(ii) at any time during any period of three consecutive years
(not including any period prior to the date of this Agreement), individuals who
at the beginning of such period constitute the Board (and any new director whose
election by the Board or whose nomination for election by the Company's
stockholders were approved by a vote of at least two-thirds of the directors
then still in office who either were directors at the beginning of such period
or whose election or nomination for election was previously so approved) cease
for any reason to constitute a majority of the Board; or
(iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior to the merger or consolidation continuing to
represent (either by remaining outstanding or by being converted into securities
of the surviving entity) at least 50% of the combined voting power of the voting
securities or at least 50% of the total value of the Company or such surviving
entity outstanding immediately after such merger or consolidation, or the
stockholders approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or substantially all
of the Company's assets.
2.7 VOLUNTARY TERMINATION. In the event Sections 2.2, 2.3, 2.4
and 2.6 are not applicable, and the Employee voluntarily terminates his
employment, the Company shall promptly pay all Accrued Compensation to the date
of termination, but no other compensation or reimbursement of any kind,
including, without limitation severance pay.
3. COMPENSATION.
3.1 BASE SALARY. During the term of this Agreement, the
Company agrees to pay the Employee for his services a salary at the initial rate
of $170,000.00 pre annum ("Base Salary") payable in equal semi-monthly
installments. The Base Salary is the minimum Base Salary for the Employee. The
Base Salary for each year during the Term of the Agreement shall be increased,
subject to the approval of the Board of Directors, by the greater of: (a) an
amount equal to the average annual incremental increase applicable to the
Company's senior executive management or (b) an amount equal to the annual
increase in the consumer price index.
3.2 BENEFITS. The Employee's shall be entitled to participate in
any of the company's benefit and deferred compensation plans as are from time to
time available to the Employee's of the Company, including, but not limited to,
profit-sharing, medical, dental, health and annual physical examination plans,
life and disability insurance plans (provided, however, that the Employee's
benefits may be modified or the Employee may be denied participation in any such
plan because of a condition or restriction imposed by law or regulation or
third-party-insurer or other provider relating to participation of Employees).
All other benefits currently provided by Triad Marketing to The Employee will be
maintained by The Company.
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3.3 BONUS. The Employee shall be entitled to receive an
annual bonus pursuant to a written bonus plan approved by the Board of
Directors, subject, however, to the Company meeting its goals and financial
performance targets for such period, where failure to meet such goals will
reduce or eliminate Employee's annual bonus.
3.4 OTHER ALLOWANCES AND VACATION. The Employee shall be
entitled to reasonable expense reimbursements upon presentation of supporting
documentation in accordance with Company policies. The Company agrees to
provide Employee with a vehicle allowance in an amount equal $ 750 per month.
Employee shall be entitled to all holidays applicable to all employees of the
Company, four weeks paid vacation per year, and such other benefits appropriate
to the office of President of eRM Software Group and Chief Marketing Officer as
the Board may deem reasonable.
3.5 PROHIBITION AGAINST CERTAIN GOLDEN PARACHUTE PAYMENTS.
Notwithstanding any other provision of the Agreement or of any other agreement,
the Employee shall not be entitled to receive the amount (or portion thereof),
if any, of compensation or severance reimbursement that (a) would be treated as
a "parachute payment" for purposes of Section 280G of the Internal Revenue Code
and (b) would subject the Employee to an excise tax on "excess parachute
payments" under Section 4999 of the Internal Revenue Code such that the Employee
would receive, on an after-tax basis, total compensation, severance and
reimbursement amounts that the Employee otherwise would have received if no
"parachute payment" had been made to the Employee.
4. SEVERANCE AND OTHER PAYMENTS.
4.1 SEVERANCE COMPENSATION
4.1.1 In the event the Employee's employment is terminated
under Sections 2.3 or 2.6. the parties acknowledge that the Employee will
sustain actual damages, the amount of which is indefinite, uncertain and
difficult to exactly ascertain because of the uncertainties of successfully
relocating and seeking a comparable position. In order to avoid dispute as to
the amount of such damages and the mutual expense and inconvenience such dispute
would entail, the Company and the Employee have agreed that the Company shall
pay to the Employee severance compensation determined in the manner below. In
the event the Company terminates the Employees employment at any time prior to
the end of the Term:
(i) if a Termination Without Cause pursuant to
Section 2.3, then the Company shall pay severance compensation in an amount
equal to the Employee's Base Salary (at the rate payable at the time of
termination) for the greater of a period of two (2) years following the date of
termination or the balance of the Term, plus a bonus for each such year (or pro
rate part thereof) equal to the average of the bonus received by the Employee
for each of the two (2) years preceding the year in which termination occurs, in
the manner specified in Section 3.1; or
(ii) if a Termination upon a Change of Control
pursuant to Section 2.6, then the Company shall pay severance compensation in an
amount equal
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to two times the sum of (x) the Employee's Base Salary (at the rate payable at
the time of termination) plus a bonus calculated in the manner provided in
clause (I) payable in the manner specified in Section 3.1
In either such event, the Employee shall be entitled to a letter of credit or
other security reasonably acceptable to the Employee to secure payment to him of
the amounts owed. The Company will provide to Employee said letter of credit or
other security at the time of termination. It is agreed that in the event of
such termination by the Company, the Employee shall receive the amounts provided
in this Section 4.1, not as a penalty, but as the Employee's agreed severance
compensation and sole damages for the termination of the Agreement, in lieu of
Employee's proof of his actual damages on that account. All severance
compensation shall be without prejudice to the Employee's right to receive all
Accrued Compensation earned and unpaid up to the time of termination.
(b) Following a termination under Sections 2.3 or 2.6, the
Employee may in the Employee's sole discretion, by delivery of a notice to the
company within thirty (30) days following such termination, elect to receive
from the company a lump sum severance payment by bank cashier's check equal to
the present value of the flow of cash payments that would otherwise be paid to
the Employee pursuant to Section 4.1(a). The present value shall be determined
as of the date of delivery of the notice of election of the Employee and shall
be based on a discount rate equal to the interest rate on 90-day U.S. Treasury
Bills, as reported in the Wall Street Journal (or similar publication) on the
date of delivery of the election notice. If the Employee elects to receive a
lump sum severance payment, the Company shall make payment to the Employee
within sixty (60) days following the date on which the Employee notifies the
Company of the Employee's election.
(c) No deduction shall be made by the Company under Section
4.1 for any compensation earned by the Employee from any other employment or for
any other monies otherwise received by the Employee subsequent to termination of
Employee's employment.
(d) In the event or termination under Sections 2.3 or 2.6,
at the Employee's sole discretion, the vesting schedule, if any, for all stock
options previously granted to Employee shall be accelerated and all such options
shall become fully vested as of the date of this termination.
4.2 DISABILITY BENEFITS. In the event of termination of the
Employee's employment by reason of disability pursuant to Section 2.4, the
Company shall pay to the Employee the difference between (I) 75% of the sum of
the Employee's Base Salary at the rate and times payable at the time of
termination and (ii) amounts received by the Employee from long term disability
insurance carried by the Company, during the remaining Term of this Agreement.
5. NON-COMPETITION.
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5.1 NO COMPETITION. Employee agrees that, unless terminated
without Cause, he will not, anywhere in the world, without the prior written
approval of the Board of Directors, until the lapse of two (2) years after his
termination pursuant to Sections 2.1, 2.2, 2.4 or 2.7, engage, directly or
indirectly, in a "Competing Business", as defined below, whether as a sole
proprietor, partner, corporate Employee, employee, director, shareholder,
consultant, agent, independent contractor, trustee, or in any other manner by
which Employee holds any beneficial interest in a Competing Business.
"Competing Business" shall bean the design, development, manufacture or
marketing of products in any line of business in which the Company is, or has in
the past been, involved, or is or has planned or considered involvement. The
provisions of this paragraph will not, however, restrict Employee from owning
less than one percent (1%) of the outstanding stock of a publicly traded
corporation engaged in a Competing Business.
5.2 NO SOLICITATION OF CUSTOMERS. Employee will not, directly or
indirectly until the lapse of two (2) years after termination pursuant to
Sections 2.1, 2.2, 2.4, or 2.7, without the prior written approval of the Board
of Directors, call upon, cause to be called upon, solicit or assist in the
solicitation of, any customer or potential customer of the Company for the
purpose of diverting any existing or future business of such customers to a
Competing Business.
5.3 NO HIRING EMPLOYEES. Employee will not, directly or
indirectly, until the lapse of two (2) years after termination pursuant to
Sections 2.1, 2.2, 2.4 or 2.1, without the prior written approval of the Board
of Directors, employ, engage, or seek to employ or engage, directly or
indirectly, any employee of the Company.
5.4 EQUITABLE REMEDIES. The services to be rendered by
Employee and the information disclosed to Employee prior to and during the Term
of the Agreement are of a unique and special character, and any breach of
Section 5 will cause the Company immediate and irreparable injury and damage,
for which monetary relief would be inadequate or difficult to quantify.
Therefor, the Company will be entitled to, in addition to all other remedies
available to it, injunctive relief and specific performance to prevent a breach
and to secure the enforcement of all provisions of Section 5. Injunctive relief
may be granted immediately upon the commencement of any such action.
6. MISCELLANEOUS.
6.1 SEVERABILITY. Should a court or other body of competent
jurisdiction determine that any provision of this Agreement is excessive in
scope or otherwise invalid or unenforceable, such provision shall be adjusted
rather than voided, if possible, so that it is enforceable to the maximum extent
possible, and all other provisions of the Agreement shall be deemed valid and
enforceable to the extent possible.
6.2 WITHHOLDINGS. All compensation and benefits to the
Employee shall be reduced by all federal, state, local and other withholdings
and similar taxes and payments required by applicable law.
6.3 ARBITRATION. The parties agree that any dispute or
controversy arising out of or relating to this Agreement, Employee's employment
or the termination or cancellation
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of Employee's employment or this Agreement, including limitation any claim by
Employee under any federal, state or local law or statue regarding
discrimination in employment, shall be settled by arbitration by a panel of
three (3) arbitrators in accordance with the Commercial Arbitration Rules of the
American Arbitration Association from time to time in force. The hearing on any
such arbitration shall be held in San Francisco, California. If such Commercial
Arbitration Rules and practices shall conflict with the California Rules of
Civil Procedure or any other provision of California law then in force, such
California rules and provision shall govern. Arbitration of any such dispute or
controversy shall be a condition precedent to any legal action thereon. This
submission and agreement to arbitration shall be specifically enforceable.
Within thirty (30) days of the receipt by one party of a written
notice to arbitrate delivered by the other party, each party shall select one
arbitrator by written notice to the other party. Within thirty (30) days of the
delivery of both notices, the two arbitrators will select a third arbitrator.
If the two cannot agree on such third arbitrator, the selection of a third
arbitrator will be made in accordance with the procedures of the American
Arbitration Association.
Awards shall be final and binding on all parties to the extent
and in the manner provided by California law. Each award shall expressly
entitle the prevailing party to recover such party's attorney's fees and costs,
and the award specifically allocate such fees and costs between the parties.
All awards may be filed by either party with the appropriate clerk of one or
more courts, state or federal, having jurisdiction over the party against whom
such an award is rendered or its property, and a judgement entered thereon and
execution issued therefor.
9.4 ENTIRE AGREEMENT MODIFICATIONS. This Agreement represents
the entire agreement between the parties an may be amended, modified, superseded
or cancelled, and any of the terms may be waived, only by a written instrument
executed by each party, or in the case of a waiver, by the party waiving
compliance. The failure of either party at to require performance of any of the
provisions shall not affect the right at a latter time to enforce the same. No
waiver by any party of the breach of any provision in this Agreement, whether by
conduct or otherwise, in any one or more instances, shall be deemed to be or
construed as a further or continuing waiver of any such breach or of any other
term of this Agreement.
9.5 APPLICABLE LAW. This Agreement shall be construed under and
governed by the laws of the state of California.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first above written.
NHancement Technologies, Inc. Employee
By: /s/ Xxxxxxx X. Xxxx /s/ Xxxxxxx Xxxxxx
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Xxxxxxx X. Xxxx Xxxxxxx Xxxxxx
President and Chief Executive Officer
