EXHIBIT 10.16
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, made effective as of the /s/20th day of
September, 2004 (the "EFFECTIVE DATE"), by and between NECI ACQUISITION, INC., a
Florida Corporation having offices at 00 Xxxxx Xxxx Xxxxxx, Xxxxx 000, Xxxxxx,
Xxx Xxxxxx 00000 ("NECI"), and XXXXXX XXXX, residing at 0000 Xxxxxxx Xxxx,
Xxxxxxxxx, Xxxxxxx, 00000 ("XXXX").
WHEREAS, NECI desires to have the services of Xxxx as its President and
Xxxx desires to be employed by NECI, on the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties agree as follows:
1. TERM OF EMPLOYMENT; DUTIES.
1.1. NECI hereby employs Xxxx as President of NECI, and Xxxx hereby
agrees to serve NECI in such capacity and to perform such duties consistent
therewith as the Co-Chairman of NECI from time to time shall determine for a
period of three (3) years commencing on September 17, 2004 (the "INITIAL TERM"),
and which Employment Agreement shall automatically renew for a period of one (1)
year on each anniversary of such date ("RENEWAL TERM") unless notice of
termination is provided to the other party ("NOTICE OF NON-RENEWAL"). Said
notice shall be in writing and shall be delivered not less than ninety (90) days
prior to an anniversary date or unless the agreement is earlier terminated
pursuant to the terms and conditions set forth in Section 4 of this Employment
Agreement.
2. COMPENSATION.
2.1. For all services rendered pursuant to the terms hereof, Xxxx shall
receive a base salary of $137,500 ("BASE SALARY") for each of the 12 month
periods (a "CONTRACT YEAR") ending June 30, and each June, thereafter, which
Base Salary may be reviewed by the Co-Chairman of NECI for each of the Contract
Years after the fiscal year ending June 30, 2005, to determine whether the Base
Salary should be changed for any such year. The Base Salary shall be paid to
Xxxx in equal periodic installments not less frequently than monthly. In
addition and not in lieu thereof, Xxxx shall be entitled to receive such fringe
benefits and to participate in such benefit plans and programs as are generally
made available by NECI to other senior executive employees, including, but not
limited to, health insurance, and a car allowance or company vehicle. Should
Xxxx choose to have his own car, NECI will pay him $800.00 per month car
allowance.
2.2. The terms and conditions of the NECI Employee Handbook, if any,
are incorporated as terms herein. In the event the terms of this agreement
conflict with the provisions of the Employee Handbook, the terms of this
agreement shall prevail.
2.3. Xxxx shall receive an annual monetary bonus (the "BONUS") for each
Contract Year of two percent (2%) of the pre-tax profits of NECI. The Bonus, if
any, shall be payable every year on or before November 1, for the preceding
fiscal year.
3. SERVICES TO BE PROVIDED.
3.1. Xxxx is currently the President of NECI. The foregoing sentence
notwithstanding Xxxx shall serve at the discretion of the Co-Chairman of NECI
and shall perform all duties, obligations and responsibilities as shall be
assigned to him by the Co Chairman of NECI, and shall devote his full attention
to the performance of the duties, obligations and responsibilities assigned to
him and he will devote his full time and attention exclusively to the business
and affairs of NECI. Xxxx also agrees that he shall act solely for NECI's
benefit in all matters connected with his employment and further agrees that he
shall not take personal advantage of any business opportunities which arise
during his employment and which may benefit NECI. All material facts regarding
such opportunities must be promptly reported to the Co-Chairman of NECI for
consideration.
4. TERMINATION OF EMPLOYMENT.
4.1. During the Initial Term or Renewal Term, Xxxx'x employment may be
terminated by the Co-Chairman of NECI on the occurrence of any one or more of
the following events without liability for the payment of any severance payments
as set forth in Section 9 hereof.
(a) The death of Xxxx; in which event Xxxx'x salary and benefits
owing to Xxxx at the date of Xxxx'x death shall be paid to his estate. Xxxx'x
estate will not be entitled to any other compensation under this Agreement; or
(b) The Disability (as defined in Section 4.2 below) of Xxxx;
subject to the provision of Section 4.2 below; or
(c) Termination of Xxxx for "CAUSE", which shall mean any of the
following: (i) the intentional failure by Xxxx to perform his duties hereunder
for reasons other than death or disability in the discretion of either Chairman
of NECI; or (ii) if Xxxx is convicted or enters a plea of nolo contendo to a
misdemeanor involving fraud, perjury or embezzlement, or any felony; or (iii) if
Xxxx engaged in fraud, misappropriation of funds, disloyalty, dishonesty, breach
of fiduciary duty or embezzlement with respect to NECI and/or its assets; (iv)
gross negligence in the performance of duties; or (vi) a material violation of
Section 7.2. In the event that Xxxx is terminated for cause as defined in
Section 4.1(c) all benefits and entitlements shall cease immediately, including,
but not limited to, termination of all non-exercised options described in
Section 8 hereof, and only such benefits that have previously vested shall be
paid. Notwithstanding termination of employment, Xxxx'x obligations under
Sections 6 and 7 shall continue pursuant to the terms and conditions of this
Employment Agreement.
4.2. If Xxxx becomes mentally or physically disabled for a period of
three (3) consecutive months such that he is not able to perform his duties
substantially as contemplated herein ("DISABILITY"), NECI's obligations to pay
the Base Salary and the Bonus, if any, shall cease from and after the last day
of such three (3) month period and shall not be resumed unless and until Xxxx
has returned to his duties on a full time basis for a period of two (2)
consecutive months. During such two (2) month period, Xxxx shall be paid at the
rates of Base Salary and Bonus, if any, which would then have been prevailing
hereunder had he not become so disabled. Xxxx shall, as a result of any physical
or mental disability, become unable to perform substantially all of the duties
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customarily performed by him for a continuous period of ninety (90) days, either
Chairman of NECI, at its option, may terminate Xxxx'x employment with NECI and
NECI's obligation hereunder to pay the Base Salary and Bonus, if any, will
continue for six (6) months following termination. NECI shall have no further
obligation or liability to Xxxx. However, Xxxx'x obligations under Sections 6
and 7 shall continue pursuant to the terms and conditions of this Employment
Agreement. Disability shall be deemed to have become permanent when, as a result
of the injury or illness, Xxxx becomes wholly and continuously disabled and is
thus unable to perform the material and substantial duties of his employment as
set forth in Section 3 above.
5. REIMBURSEMENT OF EXPENSES.
NECI shall reimburse Xxxx for all reasonable expenses incurred in
connection with the promotion of the business of NECI, including expenses for
travel, entertainment, reasonable mechanical auto repairs and similar expenses
incurred by Xxxx on NECI's behalf. No such reimbursement shall be made except
upon the presentation by Xxxx of an itemized account of such expenses or other
evidence thereof for which reimbursement then is being sought, all in form
reasonably satisfactory to the Co-Chairman of NECI.
6. DISCLOSURE OF INFORMATION AND COMPANY PROPERTY.
All memoranda, notes, correspondence, records, lists, files,
communications (electronic and written), or other documents made or compiled by
Xxxx or made available to him during the course of his employment with NECI
concerning the business of NECI is considered NECI's property and not the
property of Xxxx. Said property shall be delivered to NECI by Xxxx on the
termination of Xxxx'x employment. Xxxx further represents that he will not copy,
nor cause to be copied, print out, nor cause to be printed out any documents,
software or other materials originating with or belonging to NECI. Xxxx
additionally represents that on termination of his employment with NECI he will
not retain, nor dispose of, any such property.
7. RESTRICTIVE COVENANTS AND NON-COMPETITION AGREEMENTS.
7.1. Xxxx acknowledges that his position with NECI is fiduciary,
special, unique and intellectual in character and his position with NECI will
place him in a position of confidence and trust with employees and clients of
NECI.
7.2. NON-COMPETITION. Xxxx acknowledges and recognizes the highly
competitive nature of NECI's business and accordingly agrees that during the
Initial Term and Renewal Term of this Employment Agreement as defined in Section
1, and for a period of one (1) year thereafter (the "NON-COMPETE PERIOD") Xxxx
will not directly or indirectly (i) whether as director, officer, consultant,
principal, employee, agent, lender, stockholder or otherwise, engage in or
contribute Xxxx'x knowledge and/or abilities to any business or entity in
competition with NECI; or (ii) employ or attempt to employ or assist anyone in
employing any person who is an employee of NECI or was an employee of NECI at
any time during the period commencing two (2) years from Xxxx'x termination; or
(iii) attempt in any manner to solicit from any client business of the type
performed by NECI or persuade any client of NECI to cease doing business or
reduce the amount of business that such client has customarily done with NECI;
or (iv) solicit, entice or induce, whether individually or in concert with
others any manufacturer and/or supplier whose products are distributed by NECI
to act as manufacturer or supplier for any other party of the same or similar
goods that it supplies to NECI. If Xxxx is terminated for any reason other than
the reasons set forth in Section 4.1(c), the provisions contained within this
Section 7.2 shall also terminate.
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7.3. CONFIDENTIALITY. Xxxx acknowledges that he will have access to
certain proprietary and confidential information of NECI. Unless authorized by
NECI, at no time shall Xxxx use for himself or others or divulge to others, any
proprietary or confidential information of NECI obtained by him as a result of
his employment during the Initial Term, Renewal Term or thereafter. For purposes
of this Section, the term "PROPRIETARY OR confidential" information: shall mean
all information which (i) is known only to Xxxx or to Xxxx and other employees,
former employees, consultants of NECI, or others in a confidential relationship
with NECI, (ii) relates to specific matters such as trade secrets, customers and
client lists, potential customers, vendor lists, pricing and credit techniques,
research and development activities, books and records, and commission
schedules, contemplated new products and services, and sales projections,
creative, marketing and advertising campaigns, commission schedules and
financial information of NECI, as they may exist from time to time, which Xxxx
may have acquired or obtained by virtue of work heretofore or hereafter
performed for or on behalf of NECI, or which he may acquire or may have acquired
knowledge of during the performance of such work, and (iii) is not readily
available to others.
7.4. ENFORCEMENT.
(a) Xxxx agrees that the restrictions set forth in this Section 7
are reasonable and necessary to protect the interests and goodwill of NECI. If
any of the covenants set forth herein are deemed to be invalid or unenforceable
based upon the duration or otherwise, the parties agree that such provision(s)
shall be modified to make them enforceable to the fullest extent permitted by
law.
(b) In the event of a breach or threatened breach by Xxxx of the
provisions set forth in this Section 7, Xxxx acknowledges that NECI will be
irreparably harmed and that monetary damages shall be an insufficient remedy to
NECI. Therefore, Xxxx consents to enforcement by means of temporary or permanent
injunction restraining Xxxx from violating or breaching any of the provisions of
this Section 7, including, but not limited to, disclosing in whole or in part
the aforementioned proprietary or confidential information of NECI or from
rendering any services to any person, firm, corporation, association or other
entity to whom or to which such proprietary or confidential information in whole
or in part has been disclosed or is threatened to be disclosed, and from
competing with NECI in violation of this Section 7.2, and consents to such other
appropriate equitable relief in any competent court in addition to any other
remedies NECI may have under this Employment Agreement or otherwise, including
recovery of damages from Xxxx.
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8. OPTIONS.
Subject to the terms of a Stock Incentive Plan to be adopted by
Sagamore Holdings, Inc. ("Sagamore"), the Company's parent, and a separate Stock
Option Agreement, between Sagamore and Xxxx, Xxxx shall be entitled to receive
options to purchase two and one-half percent (2.5%) of the outstanding common
stock or other similar equity interest of Sagamore for each year of the next
three (3) years that Xxxx is employed by NECI. The Stock Incentive Plan and
Stock Option Agreement shall contain limitations and conditions, including, but
not limited to, vesting schedules, continued employment and forfeiture
provisions.
9. SEVERANCE PAYMENTS.
If NECI terminates Xxxx'x employment hereunder for any reason other
than a reason set forth in Section 4 hereof, in exchange for a release of all
claims against NECI, Xxxx shall be entitled to severance payments equal to two
(2) year of the current Base Salary, paid over two (2) years, in accordance with
NECI's regular salary payment intervals.
10. NOTICES.
Any notices required or permitted to be given under the provisions of
this Employment Agreement shall be in writing: (i) delivered personally; or (ii)
sent by recognized overnight courier, or (iii) mailed by certified or registered
mail, return receipt requested and postage prepaid, to the persons and at the
addresses first set forth above, or to such other person at such other address
as the party may request by notice in writing sent by recognized overnight
courier or by certified or registered mail, return receipt requested and postage
prepaid, to the other party to this Employment Agreement. Notices which are hand
delivered or delivered by recognized overnight courier shall be effective upon
delivery. Notices which are mailed shall be effective upon the third business
day after mailing.
11. CONSTRUCTION.
This Employment Agreement shall be construed in accordance with, and be
governed by, the laws of the State of New Jersey.
12. SUCCESSORS AND ASSIGNS.
This Employment Agreement shall be binding on the successors and
assigns of NECI and shall inure to the benefit and be enforceable by and against
its successors and assigns. This Employment Agreement is personal in nature and
may not be assigned or transferred by Xxxx without the prior written consent of
NECI.
13. ENTIRE AGREEMENT.
This Employment Agreement contains the entire understanding and
agreement between the parties relating to this subject matter hereof, and
neither this Employment Agreement nor any provision hereof may be waived,
modified, amended, changed, discharged, or terminated, except by an agreement in
writing signed by both parties.
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14. COUNTERPARTS.
This Employment Agreement may be executed simultaneously in
counterparts, each of which shall be deemed an original, and all of which
counterparts shall together constitute a single agreement.
15. ILLEGALITY.
In case any one or more of the provisions of this Employment Agreement
shall be invalid, illegal, or unenforceable in any respect, the validity, the
legality, and enforceablility of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
16. ARBITRATION.
Any disputes arising under this Employment Agreement shall be subject
to arbitration under the rules of the American Arbitration Association, brought
in New Jersey, each side to bear their own fees, costs and disbursements. Any
award issued by the arbitrator is to be enforced by the Courts of the State of
New Jersey, venue Middlesex County, to the exclusion of all other rules and
procedures of any other jurisdiction.
17. CAPTIONS.
The captions of the sections hereof are for convenience only and shall
not control or affect the meaning or construction of any of the terms or
provisions of this Employment Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
NECI ACQUISITION, INC.
By: /s/ Illegible
--------------------------------
Name:
Its:
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XXX XXXX
Dated: this /s/20th day of September 2004
Witness: /s/Illegible
