EMPLOYMENT AND NON-COMPETE AGREEMENT
Exhibit 10.19
EMPLOYMENT AND NON-COMPETE AGREEMENT
This Employment and Non-Compete Agreement (“Employment Agreement”) is made this 22nd day of December, 1999 by and between Applied Digital Solutions, Inc., a Missouri corporation, with its principal office located at 000 Xxxxx Xxxx Xxx, Xxxxx 000, Xxxx Xxxxx, Xxxxxxx 00000 (the “Employer”) and Xxxxx X. Xxxx (the “Employee”).
WHEREAS, Employer desires to retain the services of the Employee; and
WHEREAS, Employee is willing to be employed by Employer.
NOW, THEREFORE, in consideration of the premises, and the mutual covenants and agreements contained herein and for other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:
1. Term of Employment. Subject to the provisions of Section 4 of this Employment Agreement, Employer hereby agrees to employ Employee for a period of three (3) years commencing January 17, 2000 (the "Employment Term").
2. Office and Duties.
(a) Office: During the Employment Term, Employee shall serve as both a Vice President and Chief Scientist of Applied Digital Solutions, Inc. (“ADS”) and as President and Chief Scientist of ADS’ wholly owned subsidiary of Digital Xxxxx.xxx, Inc. In such positions, Employee shall have such duties and authority as shall be determined from time to time by the Chairman of the Board and Chief Executive Officer of ADS. During the Employment Term, Employee’s employment by Employer shall be Employee’s exclusive full time employment. Such duties shall be provided at the Employer’s offices located in New York the Long Island area, or any other location or locations as reasonably required by the Employer from time to time.
(b) Duties: During the Employment Term, Employee shall devote his best efforts to performance of his duties hereunder and shall not directly or indirectly engage in any other business, profession or occupation for compensation or otherwise which would conflict with the performance of such duties without the prior written consent of the Board of Directors (the “Board”), which consent shall not unreasonably be withheld, delayed or conditioned. Employee’s specific Duties shall include but are not limited to: drafting an implementation plan for the development of a prototype of the Digital Angel . In each year thereafter the Employee and Employer shall mutually agree upon a research plan for the continued development of the Digital Angel and the underlying technology.
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3. Compensation and Benefits.
(a) Base Compensation: As compensation for the services provided by Employee under this Employment Agreement, Employer will pay Employee One Hundred Thirty Five Thousand Dollars ($135,000.00) on an annualized basis, in accordance with Employer’s usual payroll procedures. Nothing contained herein shall prohibit the Board of Directors of the Employer in its sole discretion, from increasing the compensation payable to the Employee pursuant to this Employment Agreement, and/or including cost of living increases, and/or making available to the Employee other benefits in addition to those to which the Employee is entitled hereunder.
(b) Benefits: The Employee shall also be entitled to participate in any and all employee benefit plans, medical insurance plans, life insurance plans, disability income plans and other benefit plans, from time to time, that maybe in effect for employees of Employer. Such participation shall be subject to the terms and conditions of the applicable plan documents, generally applicable Employer policies and the discretion of the Board or any administrative or other committee provided for in, or contemplated by, such plan.
(c) Vacation; Holidays: The Employee shall be entitled on an annual basis to ten (10) days of paid vacation in each year of this Employment Agreement. Vacation shall be taken at a time that is mutually convenient to Employer and Employee and may not be accumulated or carried over without the express written consent of Employer. The Employee shall be entitled to the standard company holidays.
(d) Business Expenses: In accordance with Employer’s policy, the Employee will be reimbursed for all “out-of-pocket” and other direct business expenses (exclusive of commuting costs), upon presentation of appropriate receipts and documentation.
(e) Car Allowance: During the Employment Term, and provided Employee is actively employed, Employee shall be eligible to receive a car allowance of Seven Hundred Fifty Dollars ($750.00) per month.
(f) Stock Options: Upon the execution and delivery of this Employment Agreement and Employee commences employment pursuant to the terms of this Employment Agreement, Employer shall grant Employee the option to purchase fifty thousand (50,000) shares of the common stock of Employer at eighty five percent (85%) of the closing price of such stock as published in the Wall Street Journal, Eastern Edition on December 31, 1999.
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Such Options shall vest over a three (3) year period, one third the first year, the second third on the anniversary of the second year of this Employment Agreement and finally Employee shall become completely vested on the third anniversary of the Employment Agreement.
Notwithstanding the above, such options are governed by the ADS Stock Option Plan documents, as amended.
(g) Relocation Expenses: In the event that Employee is relocated by Employer at any time during the Employment Term and Employee’s moving expenses are reimbursed or paid by Employer, and if Employee terminates employment, for any reason, within one (1) year from the date of such relocation, Employee shall be liable to Employer for the repayment of 100% of the total amount of the Relocation Expenses paid on behalf of or reimbursed to Employee.
4. Termination.
(a) For Cause by Employer: Notwithstanding any other provision of this Employment Agreement, Employee’s employment hereunder may be terminated by Employer at any time for Cause. For purposes of this Employment Agreement, “Cause” shall be defined as (i) Employee’s willful and continued failure to perform his duties hereunder (other than as a result of total or partial incapacity due to physical or mental illness) for a period of ten (10) days after a written cure notice delivered to Employee on behalf of Employer, which specifically identifies the manner in which it is alleged that Employee has not substantially performed his duties, (ii) Employee’s dishonesty in the performance of his duties hereunder, (iii) an act or acts on Employee’s part involving moral turpitude or constituting a felony under the laws of the United States or any state thereof, (iv) any other act or omission which materially injures the financial condition or business reputation of Employer or any of its subsidiaries or affiliates, or (v) Employee’s material breach of his obligations under Section 5 and 7 hereof. In the event that Employee fails to cure such breach within the time period provided hereinabove, Employer may terminate this Employment Agreement without further notice and its only liability shall be to pay Employee’s Base Compensation through such date of termination.
(b) Permanent Disability: For the purposes of this Employment Agreement, the term “Permanent Disability” shall mean the Employee’s inability to perform his duties as prescribed in this Employment Agreement, which, following a written request by either Employer or the Employee, shall be determined by agreement between the parties and, if they cannot agree, by a panel of three (3) physicians, one of whom will be selected by Employer, one by the Employee and the third by the first two so selected. Said panel shall also fix the date of the occurrence of the Permanent Disability. Said panel’s determination shall be conclusive. Notwithstanding anything to the contrary set forth herein, the Employee shall be presumed to be permanently disabled thus terminating this Employment Agreement, as of the date he is receiving payments for Permanent Disability under any disability insurance policies that may be in effect, or under the Social Security Act.
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(c) Temporary Disability: If, due to physical or mental illness, disability or injury, the Employee is unable to perform substantially all of his duties and responsibilities hereunder, the Employer may designate another person to act in his place during the period of such disability. Notwithstanding any such designation, the Employee shall continue to receive his full salary and benefits under Section 3 of this Employment Agreement until he becomes eligible for disability income under Employer disability income plan. In the absence of a disability income plan at the time of such disability, Employer shall pay the Employee benefits equal to those the Employee would have received if Employer’s current disability income plan were in effect at such time; provided however, that Employer’s obligations hereunder shall cease three (3) months from the onset of such disability.
(d) Death: Employee’s employment hereunder shall terminate immediately in the event of the Employee’s death. If Employee’s employment is terminated by the death of Employee, Employer shall pay to Employee’s estate, or his legal representative, Base Compensation due through the date of Employee’s death. Employee’s rights to any other payments and/or consideration shall terminate as of such date, except as to those other benefits that Employee may be eligible in accordance with the plans, policies and practices of Employer.
(e) Without Cause by Employer: The Employee’s employment hereunder may be terminated by Employer at any time, without Cause as defined hereinabove. If Employee’s employment is terminated by Employer without Cause (other than by reason of disability or death), Employer shall continue to pay Employee the Base Compensation to which he is entitled pursuant to Section 3 of this Employment Agreement for the balance of the Employment Term as if such termination had not occurred. The payment to Employee of any other benefits following the termination of Employee’s employment pursuant to this Section 4(e) shall be determined by the Board in accordance with the plans, policies and practices of Employer.
(f) Termination by Employee: Employee’s employment hereunder may be terminated by Employee, at any time, upon not less than sixty (60) days prior written notice from Employee to Employer. If Employee terminates his employment with Employer pursuant to this Section 4(f), Employer shall only pay Employee’s Base Compensation through the date of termination. Employee’s rights to any other payments and/or consideration shall terminate as of such date.
(g) Notice of Termination: Any purported termination of employment by Employer or by Employee shall be communicated by written “Notice of Termination” to the other party hereto in accordance with Section 13 hereof. For purposes of this Employment Agreement, a Notice of Termination shall mean a notice which shall indicate the specific termination provision in this Employment Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of employment under the provision so indicated.
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5. Non-Competition.
(a) Employee acknowledges and recognizes the highly competitive nature of the businesses of Employer and its affiliates and accordingly agrees that during the Employment Term and continuing until the later of (i) the date that Employee ceases to receive payments pursuant to Section 4 of this Employment Agreement and (ii) for one (1) year from the date of the termination of Employee’s employment:
(i) Employee will not engage in any activity which is competitive with any business now, or at any time during the Employment Term, conducted by Employer, its subsidiaries or affiliates, including without limitation becoming an employee, investor (except for passive investments of not more than five percent (5%) of the outstanding shares of, or any other equity holdings of a competitor of Employer's that is traded on the New York Stock Exchange, Nasdaq or any other over-the-counter securities market), officer, agent, partner or director of, or other participant in, any firm, person or other entity in any geographic area that either directly or indirectly competes with Employer, its subsidiaries or affiliates. Notwithstanding any provision of this Employment Agreement to the contrary, upon the occurrence of any breach of this Section 5(a)(i), and provided that Employee is employed by Employer, Employer may immediately terminate the employment of Employee for Cause pursuant to Section 4, and Employer's obligations to make any further payments to Employee under this Employment Agreement shall terminate.
(ii) Employee will not directly or indirectly assist others in engaging in any of the activities in which Employee is prohibited to engage by clause (i) above.
(iii) Employee will not directly or indirectly (A) induce any employee of Employer, its subsidiaries or affiliates to engage in any activity that Employee is prohibited from engaging by clause (i) above, or (B) to terminate his employment with Employer, its subsidiaries or affiliates, or (C) employ or offer employment to any person who was employed by Employer, its subsidiaries or affiliates unless such person shall have ceased to be employed by Employer, its subsidiaries or affiliates for a period of at least one (1) year.
(b) It is expressly understood and agreed that (i) although Employee and Employer consider the restrictions contained in this Section 5 to be reasonable, if a final judicial determination is made by a court of competent jurisdiction that the time or geographic restrictions or any other restriction contained in this Employment Agreement is unenforceable, this Employment Agreement shall not be rendered void but rather shall be deemed to be enforceable to such maximum extent as such court may judicially determine or indicate to be enforceable, and (ii) if any restriction contained in this Employment Agreement is determined to be unenforceable and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions or provisions contained herein.
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6. Resignation as Officer and/or Director. In the event that Employee’s employment is terminated for any reason whatsoever or Employee voluntarily terminates his employment, the Employee agrees to, as the case may be, and if applicable resign immediately as an Officer and/or Director of Employer.
7. Confidentiality; Inventions.
(a) Confidentiality: Employee will not at any time (whether during or after his employment with Employer) disclose or use for his own benefit or purposes or the benefit or purposes of any other person, firm, partnership, joint venture, association, corporation or other organization, entity or enterprise other than Employer and any of its subsidiaries or affiliates, any Confidential Information. As used herein, the term “Confidential Information” shall mean any trade secrets, information, data, or other confidential information (excluding information which is not unique to Employer or which is generally known to the industry) or development programs, costs, marketing, trading, investment, sales activities, promotion, credit processes, formulas, data, software, drawings, specifications, source and object code, financial and pricing information, marketing information and business and development plans or the business and affairs of Employer generally, or of any subsidiary or affiliate of Employer. Employee agrees that upon termination of his employment with Employer for any reason, he will return to Employer immediately all copies of any Confidential Information, together with any memoranda, books, papers, plans, information, letters and other data, and all copies thereof or therefrom, in any way relating to the confidential information, except that he may retain personal notes, notebooks and diaries. Employee further agrees that he will not retain or use for his account at any time any trade name, trademark or other proprietary business designation used or owned in connection with the business of Employer, its subsidiaries or its affiliates.
(b) Disclosure of Inventions: Employee shall promptly disclose to the Employer (or any persons designated by it) all discoveries, developments, designs, improvements, inventions, blueprints, formulae, processes, techniques, computer programs, strategies, and data, whether or not patentable or registerable under copyright or similar statutes, made or conceived or reduced to practice or learned by Employee, either along or jointly with others, during the period of employment that are related to the business of the Employer, result from tasks assigned to Employee by the Employer or result from the use of premises or property (including computer systems and engineering facilities) owned, leased or contracted for by the Employer (all such discoveries, developments, designs, improvements, inventions, formulae, processes, techniques, computer programs, strategies, blueprints, know-how and data are hereinafter referred to as “Inventions”). Employee will also promptly disclose to the Employer, and the Employer hereby agrees to receive all such disclosures in confidence, all other discoveries, developments, designs, improvements, inventions, formulae, processes, techniques, computer programs, strategies, blueprints and data, whether or not patentable or registerable under copyright or similar statutes, made or conceived or reduced to practice or learned by Employee, either along or jointly with others, during the period of employment for the purpose of determining whether they constitute “Inventions”, as defined above.
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(c) Ownership of Inventions: All Inventions shall be the sole property of the Employer and its assigns, and the Employer and its assigns shall be the sole owner of all patents, copyrights, trademarks and other rights in connection therewith. Employee does hereby assign to the Employer any rights Employee may have or acquire in such Inventions. Employee shall assist the Employer in every proper way as to all such Inventions (but at the Employer’s expense) to obtain and, from time to time, enforce patents, copyrights, trademarks and other rights and protections relating to said Inventions in any and all countries, and to that end, Employee will execute all documents for use in applying for and obtaining such patents, copyrights, trademarks and other rights and protections on and enforcing such Inventions, as the Employer may desire, together with any assignments thereof to the Employer or persons designated by it. Employee’s obligation to assist the Employer in obtaining and enforcing patents, copyrights, trademarks and other rights and protections relating to such Inventions in any and all countries shall continue beyond the termination of employment, but the Employer shall compensate Employee at a reasonable rate after the termination for time actually spent by Employee at the Employer’s request on such assistance. In the event the Employer is unable, after reasonable effort, to secure Employee’s signature on any document or documents needed to apply for or prosecute any patent, copyright or other right or protection relating to an Invention, for any reason whatsoever, Employee does hereby irrevocably designate and appoint the Employer and its duly authorized officers and agents as my agent and attorney-in-fact, to act for and on his behalf to execute and file any such application or applications and to do all other lawfully permitted acts to further the prosecution and issuance of patents, copyrights or similar protections thereon with the same legal force and effect as if executed by Employee and Employee does ratify, affirm and approve all such lawfully permitted acts accordingly.
8. Other Agreements. Employee represents and warrants that the execution and delivery of this Employment Agreement and the performance of all the terms of this Employment Agreement does not and will not breach any agreement to keep in confidence proprietary information acquired by Employee in confidence or trust. Employee has not entered into and shall not enter into any agreement, either written or oral, in conflict herewith.
9. Use of Confidential Information of Other Persons. Employee represents that he has not brought and will not bring with him to the Employer or use at the Employer any materials or documents of an employer or a former employer that are not generally available to the public, unless express written authorization from such employer for their possession and use has been obtained. Employee also understands that he may not breach any obligation of confidentiality that he has to any employer or former employer and agree to fulfill all such obligations during the period of his affiliation with the Employer. Employee shall indemnify and hold Employer harmless for a breach of the representations made in sections 8 and 9.
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10. Specific Performance. Employee acknowledges and agrees that Employer’s remedies at law for a breach or threatened breach of any of the provisions of Section 5 or Section 7 would be inadequate and, in recognition of this fact, Employee agrees that, in the event of such a breach or threatened breach, in addition to any remedies at law, Employer, without posting any bond, shall be entitled to obtain equitable relief in the form of specific performance, temporary restraining orders, temporary or permanent injunctions or any other equitable remedy which may then be available.
11. Restriction on Authority of Employee. Notwithstanding anything set forth in this Employment Agreement to the contrary, the Employee, in the performance of his duties hereunder, shall not take any of the following actions without the prior written consent of the Board:
a. Enter into negotiations or execute documents that would materially affect the existing debt and/or structure or alter, modify or change any banking relations.
12. Representations and Warranties. The Employee hereby represents and warrants that he is free to enter this Employment Agreement and to render his services pursuant hereto and that neither the execution and delivery of this Employment Agreement, nor the performance of his duties hereunder, violates the provisions of any other agreement to which he is a party or by which he is bound. It is further provided that Employee shall indemnify Employer for any and all damages and/or expenses (including attorney’s fees) that may result from a breach of such representations.
13. Notices. Any notice, request, instruction or other document required or permitted under this Employment Agreement shall be in writing and shall be deemed delivered when delivered in person, by electronic facsimile transmission, by overnight courier, or deposited in the United States mail, postage paid, addressed as follows:
| Employer: | Applied Digital Solutions, Inc. 000 Xxxxx Xxxx Xxx Xxxxx 000 Xxxx Xxxxx, XX 00000 Attention Xxxxxxx Xxxxxxx, Esquire |
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| Employee: | Xx. Xxxxx Xxxx 00 Xxxxxxxxx Xxxx Xxxxxxxxxx, XX 00000 |
14. Such addresses may be changed from time to time by either party by providing written notice in the manner set forth above.
14. Entire Agreement. This Employment Agreement together with any attachments or Exhibits hereto contains the entire agreement of the parties with respect to the subject matter and there are no other promises or conditions in any other agreement, whether oral or written. This Employment Agreement supersedes any prior written or oral agreements between the parties.
15. Expenses. Each party shall pay its own expenses incident to the performance or enforcement of this Employment Agreement, including all fees and expenses of its counsel for all activities of such counsel undertaken pursuant to this Employment Agreement, except as otherwise herein specifically provided.
16. Waivers and Further Agreements. Any waiver of any terms or conditions of this Employment Agreement shall not operate as a waiver of any other breach of such terms or conditions or any other term or condition, nor shall any failure to enforce any provision hereof operate as a waiver of such provision or of any other provision hereof; provided, however, that no such written waiver, unless it, by its own terms, explicitly provides to the contrary, shall be construed to effect a continuing waiver of the provision being waived and no such waiver in any instance shall constitute a waiver in any other instance or for any other purpose or impair the right of the party against whom such waiver is claimed in all other instances or for all other purposes to require full compliance with such provision. Each of the parties hereto agrees to execute all such further instruments and documents and to take all such further action as the other party may reasonably require in order to effectuate the terms and purposes of this Employment Agreement.
17. Amendments. This Employment Agreement may not be amended, nor shall any waiver, change, modification, consent or discharge be effected except by an instrument in writing executed by or on behalf of the party against whom enforcement of any waiver, change, modification, consent or discharge is sought.
18. Severability. If any provision of this Employment Agreement shall be held or deemed to be, or shall in fact be, invalid, inoperative or unenforceable as applied to any particular case in any jurisdiction or jurisdictions, or in all jurisdictions or in all cases, because of the conflict of any provision with any constitution or statute or rule of public policy or for any other reason, such circumstance shall not have the effect of rendering the provision or provisions in question invalid, inoperative or unenforceable in any other jurisdiction or in any other case or circumstance or of rendering any other provision or provisions herein contained invalid, inoperative or unenforceable to the extent that such other provisions are not themselves actually in conflict with such constitution, statute or rule of public policy, but this Employment Agreement shall be reformed and construed in any such jurisdiction or case as if such invalid, inoperative or unenforceable provision had never been contained herein and such provision reformed so that it would be valid, operative and enforceable to the maximum extent permitted in such jurisdiction or in such case.
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19. Counterparts. This Employment Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument, and in pleading or proving any provision of this Employment Agreement, it shall not be necessary to produce more than one of such counterparts.
20. Survival. Section 5, 6, 7, 8, 9 and 10 shall survive the termination of this Employment Agreement.
21. Section Headings. The headings contained in this Employment Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Employment Agreement.
22. Gender. Whenever used herein, the singular number shall include the plural, the plural shall include the singular, and the use of any gender shall include all genders.
23. Governing Law. This Employment Agreement shall be governed by and construed and enforced in accordance with the law (other than the law governing conflict of law questions) of the State of Florida.
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24. Arbitration. Any and all disputes and differences between or among the parties with respect to the construction or performance of the terms of this Agreement which cannot be resolved amicably shall be resolved by arbitration before the American Arbitration Association in accordance with its rule then sitting in the State of Florida.
The parties have executed this Employment Agreement the day and year first above written.
| EMPLOYER: |
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| By: | /s/ Xxxxxxx X. Xxxxxxxx |
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| Xxxxxxx X. Xxxxxxxx Its duly authorized President |
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| EMPLOYEE: |
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| /s/ Xxxxxxxxx X. Xxxxxx |
By: | /s/ Xx. Xxxxx Xxxx |
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| Witness | Xx. Xxxxx Xxxx | ||
Xxxxxxxxx X. Xxxxxx Notary Public, State of New York No. 01 HE5063405 Qualified in Suffolk County Commission Expires July 22, 2000 |
